UK Trust Law - A Case Study on Tracing

Abstract

Tracing is the process by which assets or property can be traced into the hands of a third party. Tracing can also be the ‘process of identifying a new asset as the substitute for the old' . Within the field of tracing there are two types – tracing at common law and tracing at equity. In order to trace at common law, one must hold the legal title to the property, so in this case one must use tracing at equity as the property is held on trust.

In order to establish whether a tracing at equity available, three things must first be satisfied. Firstly there must exist a fiduciary relationship, as confirmed in Westdeutsche Landesbank Girozentrale v Islington London Borough Council . In this case the relationship exists as there is a trust. The other two conditions are that the property must be traceable and then lastly that in tracing an inequitable result is not produced. These last conditions can be discussed whilst tracing each item of property.