Tracing

The modern approach to the rules of tracing the proceeds of a fraud is an area where case law has benefited greatly from the influence of academics and academic writing, says Paul McGrath , barrister at Essex Court Chambers. In order to keep abreast of this area, it is essential, he says, that the practitioner be aware of these writings because one can be sure that if the practitioner is not, the judge is likely to be. They tend to be found in disparate journals not always readily to hand in most practitioners’ libraries, such as Trust Law International and Restitution Law Review, as well as the more common Legal Quarterly Review (LQR) and Lloyd’s Maritime and Commercial Law Quarterly (LMCLQ).

In part two, Paul McGrath considers Equity tracing. He may be contacted on tel: +44 (0) 20 7813 8000; email: pmcgrath@essexcourt.net. This article reproduces a paper that the author presented at the C5 Euro Legal Fraud and Asset Tracing and Recovery conference in London. For further information on C5 events visit www.c5-online.com

What is tracing?

It may be easier to clear the decks by outlining what tracing is not. There is no doubt that a proper understanding of what is tracing has been hampered in the past by a failure to appreciate that tracing is neither a claim nor a remedy. It does not, in itself, involve any assertion of a right. So it is neither helpful nor correct to adopt the traditional language of a “tracing claim” or talk of having a “right to trace”. Prior use of this language has undoubtedly maintained the much-maligned distinction between legal and equitable tracing rules, based upon a mistaken view that different rules as to tracing should apply dependent on whether the claim is at law or in equity.