I don't think there is any required order which must be pursued in claiming traceable proceeds?

If we treat the relationship between the defendant and the third party simply as that between customer and banker, when the defendant customer lodged his assets with the third party banker, the customer generates a debt in his favour (represented in a bank account), and also pays for and receives banking services. On our facts, the defendant has satisfied that antecedent debt by paying over the impugned payment. Though in advance, that payment is still in exchange for the lodgement.

I agree with that entirely, but I think the relationship between rogue and defendant was trustee-beneficiary, so:

In the alternative, if we use the language of trust, and treat the relationship between the defendant and the third party as that between beneficiary and trustee, when the defendant beneficiary transferred his assets to the third party trustee, and thereafter instructs the trustee to retransfer the trust assets to the beneficiary, a debt arises at that stage by virtue of the instruction and the defendant satisfies that debt by paying over the impugned payment.

I'm not sure that's right. A debt only arises between trustee and beneficiary if there has been a misappropriation of trust property. If a beneficiary who has the right to call for the trust property does so, and he gets it, I don't think there is ever a time when he is an unsecured creditor. That is why I find this case difficult: defendant was an unsecured creditor without knowing it.

By the way, if there has been a breach of trust and so a debt arises, and this debt is paid with property belonging to another trust, there is authority that bfp is available, which seems to make sense: Taylor v. Blakelock (1886), 32 Ch. D. 560 (C.A.). What is different about my case is the defendant's ignorance that he has become an unsecured creditor.

Finally, I thought that there might be a third possible identifiable end product: the chose in action which the third party had against the defendant (if one arises)

I don't think that is a traceable product of any of the plaintiff's value. It was acquired in exchange for the defendant's own value, deposited earlier.

Lionel