PROPRIETARY REMEDY

TRACING: is a process by which a claimant establishes the property chain of the trust property or fund, by identifying the different persons having consecutively sold and purchased his property. He can then claim property against the property or any asset substituted for the original property.

Tracing allows transmission of legal claims from the original assets to either the proceeds of sale of the assets or new substituted assets.

A tracing order is an equitable remedy available when a personal action will not suffice, such as in case of insolvency of the trustee. Ask for a tracing order. B can establish the proprietary chain (tracing) and claim the assets acquired by T with the trust funds.

Depend on the subsequent use of the trust fund by the trustee

A title is relative: A -> B -> C -> D

Need of an initial fiduciary relationship between the person claiming to trace and the defendant. This requirement is satisfied because there is fiduciary duty between trustee and beneficiary in any type of trust.

Property in a traceable form: there must be something to trace into, that is, a property that the defendant acquired with the money resulting from his breach of trust.

• If the trust fund remains intact and kept separately à B entitled to trace into the fund
• If T purchased a specific asset with trust money without mixing it with its own à B entitled to tract into the asset. He can claim the asset itself!!
• Problem arises when trust fund mixed with T's funds
• Equitable remedy -> discretionary and must lead to equitable result
• Advantage: It allows the claimant to recover a greater amount than his original amount.

FOLLOWING:  possible to establish the proprietary chain (tracing or following) and to claim trust money or trust property which has been transferred by T, even though the recipient is innocent.

• A title is relative: A -> B -> C -> D. That means that B can only recover a property from C and D.
• Problem when mixed trust fund, determined by the court

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