Lloyd's Maritime and Commercial Law Quarterly
THE DEVELOPMENT OF TRACING RULES IN COMMERCIAL CASES
Christa Band *
Tracing rules are being applied with increasing frequency: the recovery of misapplied funds is clearly a growth area. This has led to a proliferation in the number of instances of tracing which the courts have had to consider and, in turn, to important developments. This paper aims to consider what remains of the traditional tracing rules, and how they fulfil their functions, in the light of those cases. It also attempts to summarize what issues still remain to be resolved.
Where the plaintiff has to trace, it is necessary that he should be able to do so by reference to a fixed, easily identifiable set of rules. The courts are showing signs of being willing to adapt the traditional tracing rules to deal with factual situations which are considerably more complex than those addressed in the authorities in which the rules were developed. For example, Taylor v. Plumer
1 (itself a case which has given rise to confusion, but nonetheless of central importance in determining the traditional tracing rules) centred on the defendant’s stockbroker absconding with certain American securities and 71 gold doubloons, bought with the defendant’s money. The stockbroker was apprehended at Falmouth with the property still on his person, as he tried to board a ship bound for the
*Solicitor, Herbert Smith, London.
Abbreviated citations are used in the footnotes for the following:
P. Birks, “The English Recognition of Unjust Enrichment” [1991] LMCLQ 473.
P. Birks, “Establishing a Proprietary Base” [1995] Restitution Law Review 83.
P. Birks (ed.), Laundering and Tracing (Clarendon Press, Oxford: 1995): “Laundering & Tracing”.
P. Birks, “Misdirected Funds Again” (1989) 105 L.Q.R. 528.
P. Birks, “Misdirected Funds: Restitution from the Recipient” [1989] LMCLQ 296.
P. Birks, “Mixing and Tracing: Property and Restitution” (1992) 45 C.L.P. 69.
P. Birks, “Persistent Problems in Misdirected Money: A Quintet” [1993] LMCLQ 218.
P. Birks, Restitution—The Future (Federation Press, Leichhardt: 1992).
P. Birks, “Tracing Misused” (1995) 9 Tr.L.1. 91.
P. Birks, “Trusts Raised to Reverse Unjust Enrichment: The Westdeutsche Case” [1996] Restitution Law Review 3.
A. S. Burrows, The Law of Restitution (1993): “Burrows”.
M. Cope, “Compound Interest and Restitution” (1996) 112 L.Q.R. 521.
Goff & Jones, The Law of Restitution, 4th edn (1993): “Goff & Jones”.
L. Gullifer, “Recovery of Misappropriated Assets: Orthodoxy Re-established?” [1995] LMCLQ 446.
S. Khurshid & P. Matthews, “Tracing Confusion” (1979) 95 L.Q.R. 78.
Sir Peter Millett, “Tracing the Proceeds of Fraud” (1991) 107 L.Q.R. 71.
A. J. Oakley, “Proprietary Claims and their Priority in Insolvency” [1995] C.L.J. 377.
A. J. Oakley, “The Prerequisites of an Equitable Tracing Claim” (1975) 28 C.L.P. 64.
R. A. Pearce, “A Tracing Paper” (1976) 40 Conv. 277.
L. Smith, “Tracing in Taylor v. Plumer: Equity in the Court of King’s Bench” [1995] LMCLQ 240.
L. Smith, “Tracing into the Payment of a Debt” [1995] C.L.J. 290.
J. Stevens, “Simple Interest Only?: Autonomous Unjust Enrichment and the Relationship between Equity and the Common Law” [1996] LMCLQ 441.
1. (1815) 3 M. & S. 562.
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