A legal proceeding taken under the law of equity where the plaintiff attempts to reclaim specific property, through the court, whether the property is still in the first acquirer’s hands or it has passed onto others, and even if the property has been converted (related common law terms: conversion, detinue).
In Foskett v McKeown, the House of Lords noted that:
"Tracing is the process of identifying a new asset as the substitute for the old. Where one asset is exchanged for another, a claimant can ... trace its value into the new asset in the hands of the same owner."
In Agricultural Credit Corp. of Saskatchewan v. Pettyjohn, Justice Sherstobitoff of the Saskatchewan Court of Appeal aptly summarized the law in regards to tracing by stating:
"Tracing at common law and equity is a proprietary remedy.
"It involves following an item of property either as it is transformed into other forms of property, or as it passes into other hands, so that the rights of a person in the original property may extend to the new property.
"In establishing that one piece of property may be traced into another, it is necessary to establish a close and substantial connection between the two pieces of property, so that it is appropriate to allow the rights in the original property to flow through to the new property.
"The question has most often arisen in the context of a trust, when the trustee has improperly disposed of the trust assets."
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