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There is a faint suggestion in the judgment of Gummow J in Re Stephenson Nominees (1987) 76 ALR 485, p 507, that giving up unknown rights may be amount to valuable consideration, citing Taylor v London and County Banking Company [1901] 2 Ch 231, p 257, which is in the same line of authorities as Taylor v Blakelock (1886) 32 ChD 560 (CA). Lionel distinguishes Taylor v Blakelock on the ground that the defendant in the American case was unaware that he had become an unsecured creditor. But that also seems to have been the case in Taylor v Blakelock (there does not seem to be any suggestion of such knowledge in the facts and see p 564 in the report of the argument, distinguishing Thorndike v Hunt 3 DeG& J 563).

I agree that at one level it does seem odd that I can give up rights that I do not know that I have. I get the best of both worlds: acquiescence, election, waiver and so on require knowledge of the rights I am giving up, so I can turn around and say I didn't know I was giving up something of value to me; but if the giving up turns out to be beneficial I can adopt it.

But on the facts we are considering does what I know really make a difference? I think I am getting $45m in exchange for a right to call on you to vest $45m in me; in fact I am getting $45m in exchange for a right to have you pay me $45m that I got in exchange for the right to call on you to vest $45m in me. Had I known that you had stolen my investment I could have sued you or otherwise required you to make over $45m to me in the same way.

How does the difference in what I know affect the relative merits of the claim that I have against you and the claim that the tracing claimant has? (Knowledge of the existence of my claim is distinct from my knowledge of the source of the funds that you use to satisfy it.) If I do know that you have stolen my money, I win and the other claimant loses. If I don't know, what difference does it make?

In any event, ultimately insolvency law will result in proration of the available $45m between the two claimants (modulo everything happening in the right time frame), because both claimants have become unsecured creditors without knowing it.

Seems fair to me.

Simon.