Chapter 19 Self-Test Questions

'Proprietary claims and proprietary remedies are the same thing.'

True.

False.

Which of the following is true?

All equitable proprietary claims result in proprietary remedies.

Equitable proprietary claims and remedies are the same thing.

All equitable proprietary claims result in personal remedies.

Some equitable proprietary claims result in proprietary remedies whereas others result in personal remedies.

Matt is a trustee. He misappropriates 100 bottles of wine from the trust worth £1,000. Matt gives the bottles of wine to his brother, Stephen.
What options are available to the beneficiaries?

The beneficiaries can recover the bottles of wine from Stephen.

The beneficiaries can bring a claim against Matt for breach of trust.

The beneficiaries can bring a claim against Stephen for the value of the wine, namely £1,000.

The beneficiaries can recover the bottles of wine from Stephen, and bring a claim against Matt for breach of trust and seek compensation from Stephen.

A trustee misappropriates money from the trust and gives it to her husband. The husband buys shares. The beneficiaries are able to bring a proprietary claim in respect of those shares.
How does Birks explain the beneficiaries' right to claim over substitute property?
Section reference: 19.1

The third party (the husband) has been unjustly enriched at the expense of the beneficiaries.

The third party (the husband) has assisted with the breach of trust by crystallizing the harm.

The beneficiaries have suffered a wrongdoing.

It cannot be justified.

What is tracing?

Tracing is an evidentiary process.

Tracing is a remedy.

Tracing tells us about legal and equitable rights in assets.

Tracing is a type of claim.

A fiduciary, in looking after the principal's property, misappropriated the principal's property and mixed it with their own, such that the fiduciary acquired the legal title. Why does Equity consider that the principal has an equitable proprietary base suitable for tracing?

Fiduciaries automatically hold all property on trust for the principal.

There was a presumed express trust.

The principal does not have an equitable proprietary base.

The fiduciary has acted in breach of duty and so holds the principal's property on constructive trust.

A fiduciary, in looking after the principal's property, misappropriated the principal's property by selling it and retaining the proceeds. The fiduciary never acquired the legal title. Why does Equity consider that the principal has an equitable proprietary base suitable for tracing?

The fiduciary held the property on a presumed express trust.

The fiduciary could not hold the property on trust as the fiduciary did not have the legal title.

The fiduciary held the property on constructive trust as the fiduciary had a possessory title which is good against all except the principal.

Fiduciaries automatically hold all property on trust for the principal.

'The mere existence of a fiduciary relationship is not sufficient to enable the claimant to assert a proprietary claim.'

True.

False.

'If property given to a fiduciary is kept separate from the fiduciary's own assets, then it is a key indication that the property is to be held on trust for the principal.'

True.

False.

Jeremy has a proprietary interest in £100. That money is mixed in a bag which contains £50 of Darren's money.
What difference does it make if Jeremy's proprietary interest was legal or equitable?

If Jeremy's proprietary interest was equitable, Jeremy could trace his £100 into the bag.

If Jeremy's proprietary interest was equitable, Jeremy could not trace his £100 into the bag.

If Jeremy's proprietary interest was legal, Jeremy could trace his £100 into the bag.

If Jeremy's proprietary interest was legal, Jeremy could not trace his £100 into the bag.

What was difficult about the operation of the tracing rules in Foskett v McKeown?

It was difficult to show that the claimants' money had been used to pay the two insurance premiums.

It was difficult to trace from the insurance premiums into the payment of the death benefit.

The policy was not dependent on the premiums paid with the claimants' money and so there was no link between the payment of the premiums and the receipt of the death benefit.

It could not be proved that the money used by the trustee was trust money.

Which of the following is true?

Tracing is a matter of causation.

Tracing is about attribution.

Tracing is about creating legal rights.

Tracing is a matter of remoteness.

'Tracing is concerned with identifying chains of property.'

True.

False.

What is the difference between tracing at Common Law and Equity?

Tracing is unavailable at Common Law.

Common Law tracing concerns physical assets, whereas tracing in Equity relates to the value inherent in an asset.

Common Law tracing is relevant when a claimant has a legal proprietary base and equitable tracing is relevant where a claimant has an equitable proprietary base.

Tracing at Common Law, unlike in Equity, does not depend on a causal link between substitute assets.

How are equitable proprietary remedies awarded?

The award of proprietary remedies is a matter of right.

The award of proprietary remedies is a matter of judicial discretion.

The award of proprietary remedies is a matter of chance.

The award of proprietary remedies derives entirely from statute.

'The appropriate remedy depends on whether substitutions are clean or mixed.'

True.

False.

Where a trustee uses trust money and their own money to purchase an asset, what options are available to the beneficiary?

The beneficiary can only obtain a charge to secure their personal claim.

The beneficiary can only claim a proportionate share of the asset.

The beneficiary can seek equitable compensation.

The beneficiary can either obtain a charge or claim a proportionate share of the asset.

What was the award in Foskett v McKeown?

A proportionate share of the death benefit.

A charge over the death benefit.

A constructive trust over the death benefit.

No remedy was awarded.

What is the effect of awarding an equitable charge or lien?

The claimant can recover the value received and retained but nothing more.

The claimant can recover the value received and retained with interest.

The claimant can recover the value received and any increase in value.

The claimant can recover the property received irrespective of its value.

What is the effect of the bona fide purchaser for value defence on proprietary claims?

The defence defeats the proprietary claim of the claimant only in part.

The defence defeats the proprietary claim absolutely.

The defence shifts the liability of the bona fide purchaser from proprietary to personal liability.

The defence has no effect on proprietary claims.

How does the defence of bona fide purchaser for value interact with legal interests?

The defence defeats legal interests as it does with equitable interests.

The defence defeats most, but not all, legal interests.

The defence does not generally defeat legal interests, with some exceptions.

The defence never defeats legal interests.

A recipient purchaser will have acted in good faith if their agent had actual or constructive notice of a defect in title as long as the recipient purchaser did not have notice.

True.

False.

Evan is a trustee for Corbin. Evan has misappropriated £10,000 from the trust and given it to Campbell. Campbell was unaware that the money was trust money and spent the money on a cruise.
Can Corbin bring a proprietary claim against Campbell?

Corbin can bring a proprietary claim against Campbell as he received the £10,000 from the trust.

Corbin could have brought a claim against Campbell, but Campbell has changed position upon receipt of the money.

Campbell has changed his position, but it would be unjust not to order him to make restitution, so Corbin would still succeed in bringing a claim.

Corbin could not have brought a claim against Campbell as the requirements for tracing have not been met. It cannot be proved that the £10,000 received by Campbell came from the trust.

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