¹ That is why it is unhelpful to treat them as two different manifestations of a common exercise. See for example Denning, A.T., “The Recovery of Money” (1949) 65 L.Q.R. 37,Google Scholar at 39; cf. Nelson v. Larholt [1948] 1 K.B. 339. When one traces, and thus identifies a substitute asset, one is not identifying the original asset in a “changed form”; one is ignoring the original asset and concentrating on what was acquired in exchange for it. See Birks, P.B.H., “Mixing and Tracing [:] Property and Restitution” (1992) 45(2) C.L.P. 69, pp. 85–86.Google Scholar

^1a Boscawen v. Bajwa (unreported, 10 April 1995, C.A.), transcript at 10.

² Re Hallett's Estate (1880) 13 Ch.D. 696 (C.A.)

³ Lipkin Gorman v. Karpnale Ltd. [1991] 2 A.C. 548 (H.L.).

⁴ See Boscawen, supra, note la, at 10; Agip (Africa) Ltd. v. Jackson [1991] Ch. 547 (C.A.) In the Court of Appeal in Lipkin Gorman v. Karpnale Ltd. [1989] 1 W.L.R. 1340, counsel for the plaintiff firm apparently argued that the money could be traced to its receipt by the defendant Karpnale and hence into Karpnale's bank account: see at 1350B. On appeal, pursuant to the Court of Appeal's judgment in Agip, this was dropped: see [1991] 2 A.C. 548 at 553E.

⁵ The position in this paper therefore differs from that taken in Birks, P.B.H., An Introduction to the Law of Restitution, rev. ed. (Oxford 1989), pp. 84,Google Scholar 93–98, 372–375, 397–399.

⁶ Indeed, the normal effect of a contract of sale of specific goods is that there will be a period of credit, albeit often a brief one. This is because property in the goods passes immediately to the buyer, and he becomes obliged to pay the price: Atiyah, P.S., The Sale of Goods, 8th ed. (London 1990),Google Scholar chs. 15 and 17. So even a “cash sale” involves credit, if the cash is paid after the contract is made. There is a fortiori necessarily a period of credit any time specific goods are paid for by cheque. The payor assumes a debt, which is paid when the cheque is honoured. The position in the text leads to the logical position that the asset bought is the traceable product of the money with which the cheque is met.

⁷ 184 F. 480 (S.D.N.Y. 1911).

⁸ Showing an interest in the land depended on tracing; showing an interest in the extracted gold actually depended on following, since the gold was part of the land until removed. Then tracing could be used to show an interest in the proceeds of the gold.

⁹ ' [1994] 4 All E.R. 980 (Q.B.D.); affd on other points [1994] 1 W.L.R. 938; [1994] 4 All E.R. 980 (C.A.)

¹⁰ (1991) 79 D.L.R. (4th) 22 (Sask. C.A.).

¹¹ This was required in order for the plaintiff to show that it had a special kind of statutory security interest in the cattle called a “purchase money security interest”, under the Personal Property Security Act, S.S. 1979–80, c. P–6.1, s. 2(gg)(ii). If it could not have shown that it had this interest, the cattle would have been exempt from seizure under the Farm Security Act, S.S. 1988–89, c. S–17.1.

¹² [1948] Ch. 465 (C.A.), 548–549, affd on other points [1951] A.C. 251 (H.L.).

¹³ The plaintiffs also sought the benefit of the security released; see the next section, C. Tracing and Reviving Subrogation; and now see Boscawen, supra note la, at 22–24.

¹⁴ [1991] 1 N.Z.L.R. 545 (C.A.).

¹⁵ [1994] 4 All E.R. 980 (Q.B.D.); affd on other points; [1994] 1 W.L.R. 938; [1994] 4 AJ1 E.R. 980 (C.A.).

¹⁶ [1948] Ch. 465 (C.A.), afTd on other points [1951] A.C. 251 (H.L.).

¹⁷ Birks, op cit., note 5, pp. 394–397, 399–400; Bank of Nova Scotia v. Kelly (1973) 41 D.L.R. (3d) 273 (P.E.l.S.C).

¹⁸ Except in regard to defences.

¹⁹ It has been argued that there can be proprietary claims to value which survives generally among the defendant's assets: see for example D.A. Oesterle, “Deficiencies of the Restitutionary Right to Trace Misappropriated Property in Equity and in UCC 9–306” (1983) 68 Cornell L.R. 172.This unorthodox view appears to be based on a misunderstanding, since Oesterle seems to be unaware of the difference between generally surviving enrichment and specifically surviving enrichment. He posits a type of right which provides the benefits of a proprietary right (priority in insolvency), and yet which does not have a specific subject matter. But proprietary rights must have a specific subject matter: Re Goldcorp Exchange [1995] A.C. 74 (P.C.).

²⁰ (1876) 4 Ch.D. 537 (Ch.D), afTd (1876) 4 Ch.D. 553 (C.A.), affd (1877) 3 App.Cas. 94 (H.L.).

²¹ At p. 545.

²² Birks, op. cit., note 5. This view permits Birks to say that claims based on “reviving subrogation” are simply one type of personal claim to surviving enrichment. The view taken here requires the conclusion that subrogation has a different basis: see the next, C. Tracing Revinving subrogation.

²³ Birks, op. cit., note 5, p. 375.

²⁴ Birks's view would mean that in every exchange, the enrichments acquired are (i) the asset received and (ii) the “negative asset” of the discharged obligation to pay the price. The payment of any purchase price is an inevitable expenditure, once the purchase has been made. A narrower test than Birks's would look at the transaction before it was entered into, and say that the discharged obligation to pay the price only counts as a continuing enrichment if the purchaser would inevitably have had to make the purchase. Even here, though, the continuing enrichment is not a specific enrichment: it is the general, bottom-line enrichment which comes from not having to spend other money.

²⁵ Birks, op. cit., note 5, pp. 116–121; Lord Goff of Chieveley and Jones, G., The Law of Restitution, 4th ed. by Jones, G. (London 1993), pp. 22–26;Google ScholarBurrows, A., The Law of Restitution (London 1993), pp. 9–11.Google Scholar See also Beatson, J., “Benefit, Reliance and the Structure of Unjust Enrichment” (1987)Google Scholar 40 C.L.P. 71, critically analyzing various ideas of enrichment, but accepting (at p. 77) that the saving of a necessary expense is an enrichment.

²⁶ Birks, op. cit., note 5, pp. 123–124, 399–400.

²⁷ See generally Mitchell, C., “The Law of Subrogation” (Oxford 1994);Google ScholarScott, A.W. and Fratcher, W.F., The Law of Trusts, 4th ed. (Boston 1989), vol. V, pp. 592–599;Google ScholarMaddaugh, P.D. and McCamus, J.D., The Law of Restitution (Aurora 1990), pp. 159–185.Google Scholar

²⁸ The terms are Mitchell's: ibid. Simple subrogation is often considered to have a contractual basis. If it is explicable in terms of unjust enrichment, it arises from enrichment and deprivation which are not connected by tracing.

^28a Boscawen, supra, note la, at 12–13.

²⁹ Re Hammond (1869) 20 L.T. 547 (Ct. of Bankruptcy); Alias Inc. v. U.S., 459 F.Supp. 1000 (D.N.D. 1978); Central Capital Corp. v. Clausi (1993) 13 O.R. (3d) 335 (Gen. Div.). That will usually be a mixed substitution, however, unless the whole mortgage was paid with the money being traced; in other words, the mortgaged asset was not usually acquired solely with the value being traced.

³⁰ The distinctness of the two sources of rights was recognised in Patten v. Bond (1889) 60 L.T. 585 (Ch.D.).

³¹ The difficulty of this point is revealed in Baker, P.V. and Langan, P.St.J., Snell's Equity, 29th ed. (London 1990), p. 302n26,Google Scholar and Waters, D.W.M., The Law of Trusts in Canada, 2nd ed. (Toronto 1984), p. 1042n43.Google Scholar Both texts refer to the possibility of tracing money which paid a debt into what was acquired in exchange for incurring the debt; but both mix this up with subrogation, which only leads to the rights formerly held by the creditor, not the traceable proceeds of the value.

³² Re Lord Churchill (1888) 39 Ch.D. 174 (Ch.D.); Re United States Lines Inc., 79 Bankr. 542 (Bankr. S.D.N.Y. 1987).

³³ Baroness Wenlock v. The River Dee Co. (1887) 19 Q.B.D. 155 (C.A.).

³⁴ Re Beavan [1912] 1 Ch. 196 (Ch.D.).

³⁵ Malaurie, M., Les Restitutions en Droit Civil (Paris 1991), pp. 114–125;Google ScholarMalaurie, P. and Aynès, L., Cours de Droit Civil: Les Sûrétes, La Publicité Foncière, 5th ed. (Paris 1993), §§ 403,Google Scholar 696.

³⁵ Mazeaud, H. et al. , Leçons de Droit Civil, Tome II, Vol. 1, 8th ed. by Chabas, F. (Paris 1992),Google Scholar §84Iff.; P. Malaurie and L. Aynés, ibid., §§687, 692.

³⁷ Mazeaud et al., ibid., §841, translated.

³⁸ Note the interaction of BGB §774(1) with §401(1); cf. Baroness Wenlock v. The River Dee Co. (1887) 19Q.B.D. 155 (C.A.), 165 per Fry L.J.

³⁹ [1990] Ch. 264 (Ch.D.), afTd [1991] Ch. 547 (C.A.).

⁴⁰ The same point had actually been decided by the Court of Appeal over a century earlier. In Baroness Wenlock v. The River Dee Co. (1887) 19 Q.B.D. 155 (C.A.), the issue was whether the plaintiffs value had been used to pay creditors of the defendant, which would entitle the plaintiff to be subrogated to the rights of the creditors. Some creditors had been paid by the defendant's bank, which thereby acquired a debt owing from the defendant; then, the money being traced was paid to the bank in discharge of this debt. It was held (at 166) that there was no difficulty in tracing this money to the payments received by the creditors.

⁴¹ As was said in Agip and in Jaffe v. Weld, 155 App.Div. 110, 139 N.Y.S. 1101 (1913), where tracing was disallowed on similar facts.

^41a Boscawen, supra, note la, at 10.

⁴² (1812) 18 Ves. 499, 34 E.R. 406 (Rolls Ct.).

⁴³ [1994] 3 W.L.R. 1270 (C.A.), leave to appeal denied [1995] 1 W.L.R. 31 (H.L.); noted by L.D. Smith (1994) 8 Trust Law International 102.

⁴⁴ I am grateful to Professor Daniel Friedmann for this argument.

⁴⁵ I am grateful to Mr. Robert Chambers for this elegant observation.

⁴⁶ See Boscawen, supra, note la. This suggests that Birks's dichotomy, between claims measured by the value received and claims measured by the value traceably retained, might be non-exhaustive. On the view taken here, a claim based on reviving subrogation is not measured in either of these ways. It is measured by the value “received and used to discharge subrogation-yielding debts”.