Fusion and Fission in Tracing: Solving the Innocent Volunteers Conundrum

On 3 September 2021, at the 112^th Annual Conference of the Society of Legal Scholars hosted by Durham University, Professor Kelvin FK Low, together with Professor Lusina Ho (the University of Hong Kong) presented a keynote address (virtually) for the restitution section of the conference entitled “Fusion and Fission in Tracing: Solving the Innocent Volunteers Conundrum”.

They suggested that lawyers’ attention towards the jurisdictional fusion (of common law and equity) within the law of tracing has diverted attention away from the need to segregate tracing and claiming against innocent recipients from all other cases of tracing and claiming. They proposed that current assumptions that tracing and claiming against fiduciaries, knowing recipients, and innocent recipients are unified in theory are simply that: assumptions. When closely examined, actual cases of tracing and claiming against innocent volunteers are few and far between.

Present unitary theories of tracing against third party recipients such as property or unjust enrichment are unsatisfactory and unappealing because they fail to treat innocent volunteers separately and differently from wrongdoers. A careful study of the few cases actually involving tracing and claiming against innocent recipients reveal that it is premised on a different basis than tracing and claiming against knowing wrongdoers. Tracing and claiming against knowing recipients, like that against trustees, is based on accounting (albeit the duty is imposed by law rather than consensually undertaken) whereas tracing and claiming against innocent recipients is based on unjust enrichment.