34. Tracing in equity – tracing into bank
accounts
Mixture of two trust funds or mixture with innocent volunteer’s money
Reading: Hudson, paras 19.4.2 and 19.4.3
a)
The traditional rule
*Clayton’s Case (1816) 1 Mer 572 - first in, first out w.r.t current accounts
Re Diplock, supra - ‘Where an innocent volunteer (as distinct from a purchaser for value
without notice) mixes ‘money’ of his own with ‘money’ which in equity belongs to another
person, or is found in possession of such a mixture, although that other person cannot
claim a charge on the mass superior to the claim of the volunteer, he is entitled,
nevertheless, to a charge ranking pari passu with the claim of the volunteer … Such a
person is not in conscience bound to give precedence to the equitable owner of the other of
the two funds.’ [1948] Ch 465, 524.
b)
The retreat from Clayton’s Case
Re Ontario Securities Commission (1985) 30 DLR (4d) 30 - proportionate share.
Re Registered Securities [1991] 1 NZLR 545
**Barlow Clowes International v. Vaughan [1992] 4 All ER 22, [1992] BCLC
910; noted Birks [1993] LMCLQ 218 - rolling charge.
**Russell-Cooke Trust Co v Prentis [2003] 2 All ER 478
Commerzbank AG v IMB Morgan plc [2004] EWHC 2771
c)
Tracing into pension fund rights
Clark v Cutland [2003] 4 All ER 733, [2003] EWCA Civ 810
Cf. Foskett v McKeown [2000] 3 All ER 97
4.
Loss of right to trace
Reading: Hudson, para 19.5.5
Roscoe v. Winder [1915] 1 Ch. 62 - cannot claim more than lowest intermediate
balance.
*Bishopsgate Investment Management v. Homan [1995] Ch 211
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