''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. Trust law, Trusts were a creation of the English law of English property law, property and English contract law, obligations, a ...

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 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

Sir George 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 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 Pennell may refer to: Persons * Caroline Pennell (born 1995), American singer-songwriter * Chris Pennell (born 1987), English rugby union player * Eagle Pennell (1952–2002), American independent filmmaker * Edward Pennell (1894–1974), Royal Fl ...

''. 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 is a leading case on the English law of trusts, concerning tracing and the availability of proprietary relief following a breach of trust. Facts In breach of trust, Mr Murphy took £20,440 from a company he controlled. Over 200 investors ( ...

'' 0011 AC 102, where the

House of Lords The House of Lords is the upper house of the Parliament of the United Kingdom. Like the lower house, the House of Commons of the United Kingdom, House of Commons, it meets in the Palace of Westminster in London, England. One of the oldest ext ...

held that the beneficiary has the option of choosing an equitable lien or a constructive trust in the case of a mixed fund. 0011 AC 102 at page 131 per

Lord Millett Peter Julian Millett, Baron Millett, , (23 June 1932 – 27 May 2021) was a British barrister and judge. He was a Lord of Appeal in Ordinary from 1998 to 2004. Biography Early life Millett was born in Hampstead, London, on 23 June 1932, to ...

. A constructive trust would allow a claim in the new asset in proportion to the contribution of the beneficiary's trust fund.

Notes

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References