D1 fraudulently got cheques from his employer, P, to be paid into his bank account, and he then wrote a cheque transferring the money to D2’s account. D2 dissipated some of the money, but part was left in. The court held that P could trace the stolen money into D2’s account and was entitled to what was left of it. Tracing at common law was available because the money had not been mixed with other monies (there was no other money in D2’s account prior to the cheque from D1) and the account wasn’t overdrawn (which would have been like D2’s bank’s money being in the account).
Scrutton J: NB that the equity extends the common law ability to trace so that where the Re Hallett’s doctrine applies
Atkin J: “The case of In re Hallett's Estate makes it plain that the Court will investigate a banking account into which another person's money has been wrongfully paid, and will impute all drawings out of the account in the first instance to the wrongdoer's own moneys, leaving the plaintiff's money intact so far as it remains in the account at all.” He says that there is no reason for having different rules of tracing in common law and equity, and they are to be regarded as the same. Given the contrary precedent, this is more of an expression of hope than reality.