If a trustee steals money from a trust to pay off an overdrawn bank account, the beneficiary can no longer use subrogation as they no longer have a proprietary interest (due to funds being untraceable).
Therefore if the only solution is a personal remedy of compensation, surely that makes the trustee unjustly enriched as they avoided the interest in the overdrawn bank account?
The time value of funds which are used in breach of trust can potentially be a form of unjust enrichment. This is a complex and unsettled area of law, but in general, trustees are liable to account for the profits of a breach of trust.
However, there is a general equitable jurisdiction to order the payment of interest where money has been misapplied by a trustee. Pre-judgment interest is routinely awarded for common law claims as well. This provides a simpler way for the plaintiff to get compensation in this situation, without pleading a complex unjust enrichment claim.
