Re Oatway
Where a trustee withdraws money from a mixed account to buy an investment and then dissipates the rest, the beneficiaries can claim the investment.
Facts
Mr Oatway, a trustee, paid trust money into his own bank account, which contained his own money. He then withdrew money from the account to buy shares, at a time when there was enough left in the account to cover the trust money. He later withdrew and spent all the remaining money in the account. When he died insolvent, the beneficiaries claimed the shares, which had been sold for a profit.
Legal principle
Joyce J held that the beneficiaries were entitled to the shares, or their proceeds. He said that the trustee cannot rely on the rule in Re Hallett to say that the shares were bought with his own money, when the rest of the money in the account was later dissipated. The beneficiaries are entitled to a charge on the whole of the mixed fund and anything bought with it, and the trustee cannot maintain that the investment that remains represents his own money until the trust money has been restored.
Related cases on tracing and third party liability
- Agip (Africa) Ltd v Jackson [1991] Ch 547
- Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA [1993] 1 WLR 509
- Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37, [2006] 1 WLR 1476
- Barlow Clowes International Ltd v Vaughan [1992] 4 All ER 22
- BCCI (Overseas) Ltd v Akindele [2001] Ch 437
- Bishopsgate Investment Management Ltd v Homan [1995] Ch 211
- Devaynes v Noble (Clayton's Case) (1816) 1 Mer 572
- El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685
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