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133 L. Q. Rev. 565 (2017)
The Beneficiaries' Right to Elect Remedies for Misapplied Funds

handle is hein.journals/lqr133 and id is 569 raw text is: October 2017] judicial and academic, in other jurisdictions (see e.g., Doe v Wal-Mart Stores Inc 572 F. 3d. 677 (9th Cir., 2009); Revak (2012) 63 Hastings L.J. 1645; Farrell (2013) 44 Georgetown J. Int. Law 1491; Conway (2015) 40 Queen's L.J. 741). It remains to be addressed in Britain.* James Goudkamp Keble College, University of Oxford THE BENEFICIARIES' RIGHT TO ELECT REMEDIES FOR MISAPPLIED FUNDS In Tang Ying Loi v Tang Ying Yip [2017] HKCFA 3; [2017] 2 H.K.C. 502, Lord Millett, non-permanent judge of the Hong Kong Court of Final Appeal, categorically restated an orthodox trust principle of at least over 200 years (at [23]). It is that when a trustee misappropriates trust property and uses it to acquire property, the beneficiaries can elect whether to falsify the disbursement and seek restoration of the depleted amount, or adopt the purchase and treat the substitute property as part of the trust fund. But the choice is with the beneficiaries, not the trustee. Accordingly, it is not open to a trustee to deny the beneficiaries' right of election by insisting that his or her subsequent repayment of the misapplied trust fund property discharged his or her liability to reconstitute the trust fund. Lord Millett also warned against confusing the claim to take account to enforce the trustee's duty to deliver up the property with that for an account of secret profits made by a fiduciary. In his view, Tang v Tang involves the former, not the latter, and it is irrelevant to cite authorities on secret profits, let alone engage in prolonged argument about causation between the breach and the profits. Tang v Tang involved misapplication of funds from a large estate comprised mainly of land in a fast-developing area of Hong Kong. The estate was held in favour of five sons in equal shares and administered by the eldest son of the second wife of the widowed testator. In 2003, when land prices in Hong Kong were at a low ebb due to the SARS epidemic, the administrator planned to acquire a property for himself at HK$28.4 million (E2.96 million). After paying the deposit out of his own funds, he misappropriated some HK$11.5 million (f1.2 million) from the estate to pay for about 40% of the purchase price. Some seven months later, on the advice of his solicitor, he repaid the amount to the estate with interest. When the claimant beneficiary, the eldest son of the first wife, found out about these dealings, he sought to recover not just the misapplied amount but also the massive profits that had been made from the investment. The lower courts held that, in deliberately taking money from the estate to fund his personal purchase, the administrator had breached his fiduciary duty to avoid a conflict of interest. The administrator argued that there was no causal link between the breach and the profits, as he could have financed the purchase himself, and he had already paid the deposit and acquired a beneficial interest under the sale and purchase agreement for the property, before misusing the estate's money. Further, Duty ofcare; Environmental damage; Foreign companies; Jurisdiction; Negligence; Oil and gas industry; Parent companies; Subsidiary companies; Torts (2017) 133 L.Q.R. October 0 2017 Thomson Reuters and Contributors Notes 565