''Re Hallett’s Estate'' (1880) 13 Ch D 696 is an
English trusts law
English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trusts were a creation of the English law of property and obligations, and share a subsequent history with countries across the ...
case, concerning
asset tracing.
Facts
Mr Hallett, a solicitor, held
bonds for Mrs Cotterill worth £2145 until he wrongfully sold them and put the proceeds in his current bank account, with Winning’s Bank, mixed with his own money. When he died the account had £3000.
Judgment
High Court
Fry J
Sir Edward Fry, (4 November 1827 – 19 October 1918) was an English Lord Justice of Appeal (1883–1892) and an arbitrator on the Permanent Court of Arbitration.
Biography
Joseph Fry (1795-1879) and Mary Ann Swaine were his parents. He was ...
was concerned with whether Mr Hallett had a fiduciary relation, given he held as a bailee, and not a trust, strictly speaking. He held the first in first out rule applied, following Pennell v Deffell (1853) 4 De GM&G 372, so that a large proportion of Mrs Cotterrill’s money was in fact already paid out.
Court of Appeal
Lord Jessel MR held that there was a fiduciary relationship, and the proceeds of the sale of the bonds could be traced. It then went back to determine how much could be traced. A trustee cannot say trust money is merely lost. He reversed
Fry J
Sir Edward Fry, (4 November 1827 – 19 October 1918) was an English Lord Justice of Appeal (1883–1892) and an arbitrator on the Permanent Court of Arbitration.
Biography
Joseph Fry (1795-1879) and Mary Ann Swaine were his parents. He was ...
and held that the claimants were entitled to an equitable charge of £2,145 over the fund. There was a presumption that a fiduciary is acting honestly and therefore intends not to dissipate the beneficiary’s money rather than his own.
Baggallay LJ concurred.
Thesiger LJ dissented, arguing they were bound by ''
Pennell v Deffell''.
The Court also held that in the case of a mixture of trust funds with the trustee's own money, only an equitable lien would be available as a remedy. This has since been overruled by ''
Foskett v McKeown''
001 001, O01, or OO1 may refer to:
*1 (number), a number, a numeral
*001, fictional British agent, see 00 Agent
*001, former emergency telephone number for the Norwegian fire brigade (until 1986)
*AM-RB 001, the code-name for the Aston Martin Valkyrie ...
1 AC 102, where the
House of Lords held that the beneficiary has the option of choosing an equitable lien or a constructive trust in the case of a mixed fund.
001 001, O01, or OO1 may refer to:
*1 (number), a number, a numeral
*001, fictional British agent, see 00 Agent
*001, former emergency telephone number for the Norwegian fire brigade (until 1986)
*AM-RB 001, the code-name for the Aston Martin Valkyrie ...
1 AC 102 at page 131 per Lord Millett. A constructive trust would allow a claim in the new asset in proportion to the contribution of the beneficiary's trust fund.
See also
*
English trusts law
English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trusts were a creation of the English law of property and obligations, and share a subsequent history with countries across the ...
*
Foskett v McKeown
Notes
{{reflist, 2
References
*
English trusts case law
Court of Appeal (England and Wales) cases
1880 in British law
1880 in case law