Where a company seeks to recover money from a third party recipient and alleges only that the directing mind lacked authority (not breach of duty or dishonesty), only common law remedies are available, not equitable tracing. Common law tracing cannot follow money into an overdrawn bank account because no new asset is created. Where a director has both an entitlement to demand repayment of a loan account and access to other company funds, the director is presumed under the common law rule in Frith v Cartland and Parker v The Queen to have drawn on funds he was entitled to demand. The practical consequence is that the company's action for money had and received lies against the director, not the third party recipient.
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