It is clearly identifiable that Sue is acting in breach of trust. It is vital to note that Will was distracted by his personal life so as to decide how liability should be imposed on each defendant. Will’s distraction may lead one to say that he had been negligent for his absence of knowledge of the transactions that Sue was involved. However this is just a possibility the main defendant under this situation is Sue and the victims will have a variety of remedies to choose from in order to.
The prize won by the GLEE club amounted to a sum of £750,000 Sue withdrew £125,000 from the trust fund and paid it into her personal bank account, which had previously been in credit to the sum of £75,000. So the fact that the trustee has mixed £125,000 of the trust fund with that of her own money implies to possible tracing in equity to trace ownership; tracing at common law is lost where monies have been mixed in trust funds.  The beneficiaries will face the task of fulfilling the following requirements in order to trace in equity; there must be a fiduciary relationship  , money must exist in a traceable form ‘either as a separate fund or as a part of a mixed fund or as a latent in property acquired by means of such a fund.’  , and lastly there must be a ‘proprietary base’. Furthermore there must be a fiduciary relationship present, this was accepted in the House of Lords in Westdeutsche v Islington Borough Council  . Agip( Africa).
The fact that money has changed form, from money to share, is no obstacle in equitable tracing if it proved that the shares were purchased with the beneficiary’s money. The victims will have the option between a personal or proprietary claim. Will need to choose whether to sue for breach of trust or claim a proprietary interest in the shares or a charge over the shares.
b) £50,000 – used to buy a half-share in Poly-Sue! - a company specialising in the manufacture and marketing of polyester tracksuits; ---> Company sounds like it has gone bad, want a personal claim (+ charge) for the £50,000 rather than a proprietary interest in the shares
) £20,000 – the money was used to pay the final instalment of a life insurance policy taken out on Sue’s business partner Figgins (Figgins was the co-owner of Poly-Sue! and had paid the first three instalments); --> The policy has paid out, so the pay-out is going to be more valuable than the 20k. You need to think about whether the beneficiaries get a proprietary interest in only part of the payment; or whether they can claim ALL the pay-out on the basis that it was the final payment that activated the policy. In Foskett v McKeown, the key principle highlighted in the case is that were the trust monies had been used to partly pay the premiums of an insurance policy, the beneficiaries were entitled to a pro rata share of the policy monies. The house of Lords allowed the appeal by the claimant on the basis that they were claiming a proprietary interest in the policy monies arising from the fact that the money used to pay for some of the premiums belonged to them. Their Lordships recognised that as such there was no discretion for the court to exercise.
d) £25,000 – used to pay for a life-size statue of Sue; --> Obviously don't want a proprietary interest and a charge wouldn't be any use either, only option really is a personal claim. Can you claim a proprietary interest in the 25k against the statute-maker? No, he is a bona fide purchaser for value and so he has a defence.
Three distinct rules apply where the money has been mixed. Rule one is the mixed fund rule. Under the application of this rule since Sue has mixed £125,000 of the trust fund with £75,000 of her own money
The entire mixed fund is subject to an equitable charge for the repayment of £125,000 with interest to Will and the beneficiaries. The fact that claimants have an equitable charge over it gives him a priority over general creditors in his claim for £125,000 if the fraudster becomes insolvent. Furthermore in Re Hallett’s case where the rule follows that when a trustee mixes trust funds with his own monies, the trustee is presumed to have used his own money before the trust funds are used.
the rule in Oatway Joyce.J that ‘ when any money drawn out has been invested remais in the name or under the control of the trustee, the est of the balanace having been dissipated by him, he cannot maintain that the investment which remains represent his own money alone, and that what has been spent and can no longer be traced and recovered was money belonging to the trust.’ might be applicable since Sue used
sue’s squad school: Re tilley’s Thomas J- where the profits arising from the use of trust monies in breach of turst, the beneficiary could adopt the investment and retain the profits arising from it to the extend to which the investment had been acquired through the use of trust monies.
The money spent on the bottle of Screaming Eagle Wine will not be amenable to following or tracing as it has been drunk. The money was used in such a way it was impossible to make recovery. Re Diplock.
The choice of the right remedy is significant as each one will have different compensation attached to it. The amount of money in the trust fund initially amounts to £200,000 and this amount has been totally dissipated The case mentions that Sue withdraws a further amount of £50,000 and used half of it to place a bet in a local betting shop that Vital Adrenaline would beat GLEE in an up-coming singing competition, however the bet was lost.
Whether you take a personal or proprietary remedy is also relevant to how much money you get. For example, with regards to the bet for the singing competition, suing Sue for loss to the trust would only get the amount of the bet back. On the contrary if the bet was won, the beneficiaries want their claim against Sue to be gain-based (or, better, proprietary, so they claim the monies directly and don't take the risk that Sue becomes bankrupt) so they get the amount the bet actually won.
Re hallett the trustee is deemed to have used his own monies first before using trust monies where the trustee hs misxed trust funds with his own. The beneficiaries were therefore entitled to trace into the defendant’s bank account. However the case does not tell us if Sue has gone bankrupt thus we have no information if there are sufficient funds to meet the beneficiaries claims which claim had priority.
Lastly it is mentioned that Sue in her drunken state tells Will about all the transactions she has been involved. This gives rise to a complex issue of whether any further liability will be attached on Will. Does the fact that he now has knowledge of the breach of trust make him a constructive trustee? Since at the time of when Sue breached the trust he had no dishonest intention he will be held innocent. However no further information is given about how Will acts after he has been told by Sue so no liability can be imposed yet.
In conclusion while there is no doubt that Sue is in breach of trust and will face liabilities for her unlawful transactions. Although the case of Will is problematic he is likely to escape to personal liability as he has not acted in any dishonest or fraudulent way  . There is no doubt that the courts will accept beneficiaries will be capable of claiming on the basis since both conditions of property being in a traceable form and tracing must not be inequitable are satisfied, except in the case of wine were the right has been lost.