Tracing in English law

Tracing in English law is a procedure to identify property (such as money) that has been taken from the claimant involuntarily. It is not in itself a way to recover the property, but rather to identify it so that the courts can decide what remedy to apply. The procedure is used in several situations, broadly demarcated by whether the property has been transferred because of theft, breach of trust, or mistake.

Tracing is divided into two forms, common law tracing and equitable tracing. Common law tracing relies on the claimant having legal ownership of the property, and will fail if the property has been mixed with other property, the legal title has been transferred to the defendant, or the legal title has been transferred by the defendant to any further recipient of the property. Equitable tracing, on the other hand, relies on the claimant having an equitable interest in the property, and can succeed where the property has been mixed with other property.

Defences to tracing are possible, particularly if returning the property would harm an innocent defendant, where the claimant has made false representations that the defendant relied on to his detriment, or where the property has been transferred to an innocent third party without anything given to the defendant in return that the claimant could recover in lieu.

Tracing is a process that allows for the recovery of property (such as land or money) by the owner if it is taken involuntarily, and the owner has not consented to the transfer of title. This can be through theft, breach of trust, or mistake. Owners can recover their property and perhaps also any profits made from it, or in situations where the property cannot be recovered (as it has been mixed in with other property, or cannot be found), substitute property. The process has two steps, following and tracing. In Foskett v McKeown,Lord Millett defined them by saying that "[Following and tracing] are both exercises in locating assets which may or may be taken to represent an asset belonging to the [claimants] and to which they assert ownership. The process of following and tracing are, however, distinct. Following is the process of following the same asset as it moves from hand to hand. Tracing is the process of identifying a new asset as the substitute for the old". Following, therefore, is simply establishing who the original owner of property is, where that property is, and returning it to the original owner. Tracing arises when the property cannot be returned and the court is asked to recognise an interest in new property, such as whatever the defendant received in exchange for the claimant's original property. Tracing can occur at both the common law and equity. It is not a remedy for breach of trust; tracing is merely the process of identifying the property. It is then up to the courts to decide what will happen to it.

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