Trust and Tracing Claims

Tracing is the process by which a Claimant is able to demonstrate what has happened to his assets and identify those persons who have handled or received them. This thereby establishes a claim for assets had and received and for which the remedy is an order for an account and payment. Tracing is not a claim in itself but merely serves as the evidential means by which a claim is established. The claim (through the process of tracing) can be in respect of the original asset, its proceeds of sale or a new substituted asset.

A trust (and hence breach of trust claim) can be created in a number of different ways. The most obvious is where there is an express trust created by a trust deed and which will appoint trustees who will owe (as a consequence of that position) certain duties to the beneficiaries of that trust. If the trustees do not act in accordance with those duties, they are likely to be in breach of trust and as such vulnerable to a claim by the beneficiaries for any loss that those beneficiaries may have suffered as a consequence of the breach of duty.

In other situations the trust is implied by the law. Where a relationship exists/amounts (in the eyes of the law) to one of trust, the Court may impose what is called a “constructive trust” upon those involved. The classic example of a constructive trust is where a person (a constructive trustee) holds the property of another (the beneficiary) in a fiduciary capacity for the benefit of that third party. Another example is where a stranger receives property which he or she knows is trust property given to him in breach of trust. Any such person can also be considered a constructive trustee and may not claim personally any benefit such as an increase in the property or any profits and if he does so is subject to a claim for knowing receipt or dealing and/or knowing assistance.

One of the reasons for the Court imposing a constructive trust is so as to return the misappropriated funds to the rightful owner. Where trust assets have been wrongly converted or dealt with in breach of a trust (whether it be an express or a constructive one), it is possible to follow and recover those assets through the means of tracing as explained above.

Unfortunately, it happens all too often that the trustee (being a constructive trustee or a traditional trustee) misappropriates trust funds for their own benefit. Thankfully for beneficiaries, however, this misappropriated money has not necessarily gone for good. By tracing the trust’s assets, the Court is able to ensure that a beneficiary maintains a continuing interest in the former trust property and also its proceeds. In the end, the money should end up where it was originally intended to go, despite the fraud.

Trust and tracing claims are often technical and invariably require an extensive amount of patience, thoroughness and dogged determination. We display all three qualities at Healys. We have a high degree of experience and expertise in such matters and have been involved in a number of high-profile fraud cases such as the van Hoogstraten litigation.

We offer the full range of funding options (other than government funding) to include fixed fees, conditional fee arrangements, after the event insurance and third party funding. We also always provide cost estimates as soon as reasonably practicable and remain within those estimates or, where (for good reason) not possible, agree a revised estimate before the previous one is exceeded. This, together with our regular billing policy and transparency on costs, means you retain a degree of control and certainly over your legal spend.