Tracing and Property Rights: The Categorical Truth
| Author | Ross Grantham,Charles Rickett |
| DOI | http://doi.org/10.1111/1468-2230.00301 |
| Date | 01 November 2000 |
| Published date | 01 November 2000 |
Tracing and Property Rights: The Categorical Truth
Ross Grantham and Charles Rickett*
Once regarded as something of a legal terra incognita, the law of tracing has in
recent years become far more accessible. The sustained theoretical analysis which
has been brought to bear as a consequence of the emergence of the law of
restitution has done much to reveal the doctrinal geography and function of
tracing.1It is thus now clear that despite earlier characterisations tracing properly
so-called is neither a right nor a remedy.2Tracing is an evidential process by which
one asset is permitted to stand in the place of another asset for the purposes of
whatever rights or claims the plaintiff may have had in respect of the first asset.3
Where the asset in which the plaintiff holds rights is used to acquire or is
exchanged for another asset (‘the traceable product’), the rights in the original asset
are transmitted4to the traceable product. Even though the plaintiff would otherwise
have no right or claim to the traceable product, it is nevertheless treated as the
subject of his rights in place of the original asset. The function, then, of the specific
rules of tracing is to identify those acquisitions or exchanges which are legally
relevant and, thereby, which asset may properly be said to be the traceable product
of the original asset.
While the broad outline and function of tracing is now understood, many serious
questions nevertheless remain to be answered. The issue we seek to address in this
short paper concerns the origin of the plaintiff’s rights in the traceable product. In
particular, where the plaintiff asserts a proprietary right in a traceable product,
what is the event or cause of action to which that right can properly be the
response? The identification of the source of the right in the traceable product is
not, moreover, a matter of idle academic interest. As Lord Millett has recently
noted,5taxonomy and classification have important practical implications. The
classification of the origin of the plaintiff’s right in the traceable product has
consequences for the range of potential defences to the plaintiff’s claim to the
traceable product6and the nature or type of the right which may appropriately be
recognised in the traceable product.7
The dominant academic view of the origin of the plaintiff’s right in the traceable
product is that the right always and necessarily arises as a response to the principle
ßThe Modern Law Review Limited 2000 (MLR 63:6, November). Published by Blackwell Publishers,
108 Cowley Road, Oxford OX4 1JF and 350 Main Street, Malden, MA 02148, USA. 905
* University of Auckland.
1 Generally, see L. Smith, The Law of Tracing (Oxford: Clarendon, 1997); R. Grantham and C. Rickett,
Enrichment and Restitution in New Zealand (Oxford: Hart, 2000) chap 19.
2Boscawen vBajwa [1996] 1 WLR 328, 334 per Millett LJ; Foskett vMcKeown [2000] 2 WLR 1299,
1323 per Lord Millett.
3 Tracing may be used to facilitate a claim to a proprietary remedy. It may also be used to identify the
correct defendant in cases where the value does not pass directly from plaintiff to defendant: see
Grantham and Rickett, n 1 above, 63–65.
4Foskett vMcKeown [2000] 2 WLR 1299, 1322 per Lord Millett.
5ibid 1324. Compare Lord Millett, ‘The Law of Restitution: Taking Stock’ (1999) 14 Amicus Curiae,
4, 4–5.
6 Thus, for example, a claim in unjust enrichment may be met by the defence of change of position. A
claim to vindicate one’s property right may be met by the defence of bona fide purchase.
7 The presumptive response to a claim in unjust enrichment is in personam. If, therefore, the plaintiff’s
claim to the traceable product is in fact based in unjust enrichment, some additional factors are
required to justify a proprietary response.
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