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''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

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References

* English trusts case law Court of Appeal (England and Wales) cases 1880 in British law 1880 in case law