The Transformation of Equitable Tracing


The Transformation of Equitable Tracing

Level 10 Boardroom (access via Level 9 stairs)
Law 106
185 Pelham Street, Carlton


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T: (03) 8344 5992

Trust and fiduciary law describes and justifies tracing better that seeing it as a process supporting a property claim absent aspects of obligation. It permits an effective scheme of separating the remedies of priority over creditors and taking any increase in value. This split is impossible if the claim is seen as one of property. This seminar examines how property view came to be and why it could fall out of favour.

The law of tracing grew alongside trust and fiduciary law and both were bound together in their formative years. As trust and fiduciary law were settled into strict rules, equitable interests came to be seen as a right or property, since their protections were broadly the same. Accordingly, tracing came to be seen as based in property too. This view of tracing is nowadays the conventional wisdom in England: Foskett v McKeown [2001] 1 AC 102 (HL); and perhaps this is true of Australia too: Evans v European Bank Ltd [2004] NSWCA 82.

This was a process of ‘lumping’ different facets of trust and fiduciary obligations law ill-defined but harsh ‘trustees’ duties’ in the nineteenth century. By the 1990s, however, trust and fiduciary law was splitting: in England see Bristol & West BS v Mothew [1998] Ch 1 (CA); and in Australia see Breen v Williams (1996) 186 CLR 71 (HCA). It became more sophisticated and its obligations better defined and less beneficiary-sided.

Consequently, modern trust and fiduciary law is a better fit for tracing and yields fairer, more balanced, outcomes than the Foskett property model. Moreover, some new case law supports this proposition. The rules cohere around a central idea. The idea has changed from strict beneficiary-sided rules to more balanced ones. The rules once cohered around the old idea, and are now changing in order to cohere around the new one. This is happening to tracing as it is to fiduciary law in general.

This seminar’s doctrinal aspect demonstrates how some of the questions from the first principles analyses of proprietary remedies in, eg, Bant & Bryan (2016) 6 J Eq 181 can be answered in the context of trust law. Its coherence argument will assist those wishing to counter the criticism in the literature that the new cases lack precedent and stray too far into obiter dicta discussing general principles. On the contrary, this is necessary given the shift in the central idea.


  • Dr Derek Whayman