Tracing

Tracing is often confused with the remedy that follows it, but the Supreme Court has been clear that the two are conceptually distinct. In Bank of Cyprus UK Ltd v Menelaou, the Court approved the classic formulation that 'tracing properly so-called, however, is neither a claim nor a remedy but a process.' It is, in other words, simply an evidential and analytical exercise: identifying the chain of substitutions by which the claimant's original property (or its value) ended up in the defendant's hands, even where it has changed form — for example, money used to buy a house, which is then used to buy a different asset.

Once a claimant establishes this 'tracing link', a separate question arises as to what remedy, if any, the law should then provide — whether a proprietary claim to the traceable proceeds, a personal claim in unjust enrichment, or (as in the Bank of Cyprus case itself) subrogation to a lien or security that would otherwise have been discharged. The Supreme Court held that establishing a tracing link between the claimant's money and the asset in the defendant's hands was central to deciding whether a remedy was available at all, even though tracing itself does not determine which remedy is appropriate.