Byers v Saudi National Bank [2023] UKSC 51

Saad Investments Company Ltd held shares in Saudi Arabian companies through a Cayman Islands trust structure. In breach of trust, Mr Al-Sanea, the registered holder, transferred the securities to Samba Financial Group, later succeeded by Saudi National Bank, to discharge debts he owed to Samba. Under Saudi Arabian law, registration of the transfer extinguished the claimant's equitable proprietary interest because that law did not preserve the trust interest against the bank. Saad entered liquidation, and its liquidators pursued a knowing-receipt claim in England. They argued that the recipient's awareness and unconscionability could found personal liability despite the extinguishment of the proprietary interest on transfer.

Can knowing-receipt liability arise when the claimant's equitable proprietary interest was extinguished before or upon receipt under the law governing the transferred asset?

The Supreme Court unanimously dismissed the appeal. Lord Hodge held that knowing receipt requires the defendant to receive property in which the claimant retains a beneficial interest. It is not enough that the property was previously subject to a trust or that the recipient's conduct might be characterised as unconscionable. Saudi law governed the transfer of the Saudi shares and extinguished Saad's equitable interest when Samba was registered. There was therefore no subsisting proprietary interest capable of supporting knowing receipt. The court treated the claim as one protecting equitable property rights through personal relief against a recipient. It did not decide every disputed question about the degree of knowledge or unconscionability required where receipt of trust property is established.

Knowing receipt requires beneficial receipt of an asset that remains subject to the claimant's equitable proprietary interest. If the applicable property law extinguishes that interest before or on receipt, the recipient cannot be liable in knowing receipt merely because it knew of an earlier breach.

Byers resolves an important debate about the juridical basis of knowing receipt. The action is not a free-standing liability for unconscionable behaviour; it depends first on the receipt of property still impressed with the claimant's equitable interest. This distinguishes knowing receipt from dishonest assistance, which does not require the assistant to receive trust property. The decision also illustrates the importance of choice-of-law rules: foreign law governing the transfer may determine whether an English equitable interest survives. Questions about the recipient's knowledge arise only after the proprietary foundation is established.