# Equitable tracing overview

> **Key takeaway:** Equitable tracing needs proprietary/fiduciary base. Mixing: Hallett/Oatway; LIB (Roscoe v Winder). Foskett on substitutes. Stops at BFPVN and dissipation. Process of identification, not a cause of action alone.

- **Jurisdiction:** England & Wales
- **Practice area:** Trusts And Chancery
- **Last reviewed:** 2026-08-04
- **Interactive page:** https://kttclegal.info/library/notes/TrustsAndChancery/equitable-tracing-overview
- **Keywords:** tracing, equitable tracing, Re Hallett, Foskett v McKeown, mixed account, lowest intermediate balance, proprietary claim, breach of trust

## What is this about?

Tracing is the process of identifying value as it moves through assets, enabling proprietary or personal claims. Equity's tracing rules are more flexible than the common law's, especially through mixed bank accounts, subject to bona fide purchaser and dissipation limits.

## What is the core rule?

Where a fiduciary or trust relationship (or other equity) exists, the claimant may trace misapplied value into substitute assets and mixed funds using equitable rules (Re Hallett; Re Oatway; Roscoe v Winder lowest intermediate balance). Equity can charge mixed accounts and sometimes reverse the order of withdrawals against a wrongdoer. Tracing stops against a bona fide purchaser for value without notice and where value is dissipated. Proprietary claims differ from personal account/liability in unjust enrichment or knowing receipt.

## What are the elements or test?

1. Is there a proprietary base / fiduciary relationship supporting equitable tracing?
2. Can the value be identified into a substitute or mixed fund?
3. Apply mixing rules and lowest intermediate balance
4. Any bona fide purchaser defence?
5. Proprietary remedy vs personal claim more appropriate?

## Which authorities matter?

- **Re Hallett's Estate (1880) 13 Ch D 696** — Presumption that a wrongdoing fiduciary spends their own money first from a mixed account.
- **Re Oatway [1903] 2 Ch 356** — Qualification allowing the beneficiary to claim a profitable investment acquired from a mixed fund.
- **Foskett v McKeown [2001] 1 AC 102** — House of Lords on tracing into insurance proceeds and proprietary claims to mixed substitute assets.
- **Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548** — Leading common-law unjust enrichment/tracing against a volunteer recipient (casino) — contrast equitable tracing requirements.

## How does this apply in practice?

Not every claimant can use equitable tracing — a fiduciary or equivalent proprietary base is usually required. Banking and crypto-asset tracing raise evidential challenges. Pair with breach-of-trust remedies and fiduciary duties notes.

## What are common pitfalls?

- Tracing through a bona fide purchaser
- Ignoring lowest intermediate balance in fluctuating accounts
- Treating tracing as itself a claim rather than an identification process
- Assuming common-law and equitable mixing rules are identical

## When would a practitioner use this?

Fraud recovery, breach of trust follow-the-money analysis, and proprietary injunction strategy.

## Quick reference

Equitable tracing needs proprietary/fiduciary base. Mixing: Hallett/Oatway; LIB (Roscoe v Winder). Foskett on substitutes. Stops at BFPVN and dissipation. Process of identification, not a cause of action alone.

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*Reference material from [KTTC Legal](https://kttclegal.info/), not legal advice. Work product supports instructing solicitors and barristers under their supervision. England & Wales.*