… I argue here that efforts to subsume bank payments within an homogenous law of tracing have been misguided: a bank transfer does not involve a rights-substitution of the kind envisaged by exchange product tracing. Rather, the process that we have called ‘tracing money’ through a bank transfer involves two steps: (i) converting bank money, by artifice, into an asset independent of the underlying account; (ii) following that asset from one location to another. Together, I call these steps ‘dummy asset tracing’. Thus, there are two kinds of tracing: exchange product tracing is the process of linking two rights through an exchange by a single person; dummy asset tracing is the process of pursuing a notional asset (thing or right) from one person to another. In Pt 2 of this article, I describe the orthodox account of exchange-product tracing, and argue that we should treat bank transfers as a case apart from unauthorised substitution. In Pt 3, I explain how we have substantiated the connection between the claimant from whom bank money has been misdirected, and the third party to whom it has been paid. I call this ‘dummy asset tracing’, and I show that it manifests differently in equity and at law: in equity, the claimant follows a notional right into the hands of the defendant; at law, the claimant follows a notional cash thing. I conclude Pt 3 by showing that dummy asset tracing has had important remedial consequences: …
Tatiana Cutts, ‘Dummy asset tracing’ (2019) 135 Law Quarterly Review 140.