Trust Law

Proprietary Remedies Cases

Re Oatway [1903] 2 Ch 356

Key Point

• Where an asset has been purchased from a mixed fund of the wrongdoer’s money and trust money belonging to an innocent beneficiary and the rest of the money is dissipated, the law treats the asset as being purchased with the trust money and the wrondoer’s money as dissipated
• The rule in Clayton’s case (1816) 1 Mer 572 will not apply where the innocent beneficiary’s money has been mixed with the wrongdoer’s money

Facts

• Mr Oatway was the trustee of a will
• In breach of trust, Mr Oatway paid trust money into his personal bank account, which was then used to purchase Oceana shares using a cheque
• Following this, the rest of the money in the account was dissipated
• Mr Oatway claimed that the money which was dissipated constituted the trust money and that the Oceana shares were purchased from his own money

Issue

Could the beneficiaries under the will trace into the proceeds of the Oceana shares?