A trustee pays £3,000 of Trust X’s money into his current account which was previously empty. He then pays in £2,000 of his own money and then £5,000 of Trust Y’s money. He withdraws £2,000 and dissipates it. He then withdraws £3,000 and dissipates that money as well. There is £5,000 left in the account.
First look at the situation between the trustee and the trust funds. Re Hallett’s Estate will apply so the first payment out of £2,000 will be the trustee’s own money.
Then look at the situation between the two trust funds. It is a current account, so, according to Re Diplock, the rule in Clayton’s Case applies. The first payment in was from Trust X, so the first payment out of £3,000 is Trust X’s money. Trust Y can claim the £5,000 left in the bank account.