Proprietary Claims Against Strangers - Equitable Proprietary Claims against Innocent Volunteers

4 important questions on Proprietary Claims Against Strangers - Equitable Proprietary Claims against Innocent Volunteers

In a mixed-asset purchase, how are the assets distributed between the innocent volunteer and the trust?

The innocent volunteer and the trust can claim a proportionate share of their contributions to the purchase price (Foskett v McKeown).

Explain Clayton's case and whether it can be applied if it is impractical? What is the authority for this?

Use Clayton's Case 'first in, first out' unless it would be impractical or unjust Barlow Clowes v Vaughan; Russell-Cooke Trust Co v Prentis.

When can innocent volunteers use the defence of inequitable results in Re Diplock

Innocent volunteers can use the defence if they can show that tracing and the resulting proprietary claim would produce an inequitable result (Re Diplock). In (Re Diplock) the executors mistakenly believed the will to be valid. The word 'benevolent' meant that the trust was not exclusively charitable. The executors had distributed residue to charities (mainly hospitals).  The next in kin tried to reclaim the money under intestacy. It was held the beneficiaries were not allowed to claim a charge over the hospital because it would be inequitable to allow them to force a sale.
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In a situation where some charities used the trust money to improve and extend buildings, explain whether this money can be traced?

Where the innocent volunteer has contributed land (house) and the trust has contributed to improvements (eg, installation of a kitchen), it would be inequitable to allow tracing because the volunteer will be required to sell their land to satisfy the charges which in turn deprives the volunteer of the land.

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