A trustee has £2,000 of his own money in his deposit account. He puts in £3,000 of Trust B’s money and then £6,000 of Trust C’s money. He spends £6,000 on shares which are now worth £12,000. He then dissipates the remaining £5,000. Later he pays in £1,000.
First look at the situation between the trustee and the trust funds and apply Re Oatway as the later funds are dissipated. This means the £6,000 spent on shares will all be money from the two trusts rather than the trustee’s own money. Then look at the situation between the two trusts. They share rateably (Re Diplock), so Trust B has 1/3 rd of the shares (now worth £4,000) and Trust C has 2/3 rd of the shares (now worth £8,000). The dissipated money includes £2,000 from the trustee’s money, £1,000 from Trust B and £2,000 from Trust C. This trust money cannot be replaced by the later payment in of £1,000 (Roscoe v Winder).