“House of Lords clarifies tracing rules for mixed trust funds”
Murphy, a solicitor and trustee, used money from a trust fund to pay two of five premiums on a life insurance policy before his death by suicide. The beneficiaries of the trust sought to claim a proportionate share of the insurance proceeds based on the trust money used for premiums.
Whether beneficiaries could trace into insurance proceeds where trust money was used to pay premiums, and whether they were entitled to a proportionate share of the proceeds or merely a personal remedy.
The House of Lords held that the beneficiaries were entitled to a proportionate share of the insurance proceeds corresponding to the proportion of premiums paid with trust money (two-fifths of the total proceeds).
This case fundamentally reshaped English law on proprietary restitution and tracing, establishing clear principles for when proprietary rather than personal remedies are available. It remains the leading authority on tracing mixed funds in equity.
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OSCOLA Citation
Foskett v McKeown [2001] 1 AC 102 (HL)
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