Case law update

IPA Insolvency Practitioner newsletter, February 2024

An insolvency case law update prepared by Henry Glen, Associate Director at Manolete Partners PLC.

Henry joined Manolete Partners PLC in January 2020. He was previously part of the Restructuring and Insolvency team at Mayer Brown International LLP. Henry qualified as a solicitor in March 2010 at Eversheds and has acted primarily for Insolvency Practitioners throughout his career on a wide variety of insolvency claims and corporate recovery matters. His practice has focused on proceedings in the business and property courts, including representing claimant office holders in a multi-million pound misfeasance action. Henry has written a number of articles on insolvency law and contributed to several different restructuring publications.

Knowing Receipt: When Knowledge is Not Enough 

Byers & Ors v Saudi National Bank [2023] UKSC 51


The Supreme Court has upheld a decision dismissing a knowing receipt claim against a Saudi Arabian bank in circumstances where the relevant trust property was transferred in breach of trust and the bank was aware of such breach at the time of the transfer.  This was because the claimant did not retain an equitable proprietary interest in the property following the transfer.  Such interest had been extinguished as a matter of Saudi Arabian law, which governed the transfer.   


The appellants were Saad Investments Co Ltd (“SICL”), a company registered in the Cayman Islands, and its joint liquidators.  SICL entered into liquidation in the Cayman Islands in 2009, which was recognised in England as foreign main proceedings pursuant to the Cross Border Insolvency Regulations 2006.

By a number of transactions between 2002 and 2008, a Mr Al-Sanea came to hold shares in five Saudi Arabian companies (“Shares”) on trust for SICL, under various trusts governed by Cayman Islands law.

Shortly before the commencement of the liquidation of SICL, Mr Al-Sanea transferred the Shares to a Saudi Arabian bank, the Samba Financial Group (“Samba”) to discharge personal liabilities to Samba (“Share Transfer”).  This was done in breach of trust: at the time of the transfer, Samba knew that Mr Al-Sanea held the Shares on trust for SICL.

The law governing the Share Transfer was Saudi Arabian law, which does not distinguish between legal and beneficial ownership (as English law does) with the effect that the registration of the Shares in Samba’s name extinguished SICL’s equitable proprietary interest in the Shares.

SICL’s liquidators brought a claim against Samba for knowing receipt of the Shares, alleging that it had received the Shares in breach of trust and with knowledge of SICL’s equitable interest (which would normally comprise the key components of a knowing receipt claim).  However, the High Court and the Court of Appeal ruled that SICL’s claim for knowing receipt failed, since it did not have a continuing equitable proprietary interest (“Continuing Interest”) in the Shares following the Share Transfer.

Issue before the Supreme Court

SICL’s liquidators appealed to the Supreme Court, to which it fell to decide whether a claim in knowing receipt requires the claimant to have a Continuing Interest in the relevant trust property once it has been transferred to the recipient.

SICL’s liquidators argued that liability for knowing receipt did not depend on the existence of a Continuing Interest but rather on the unconscionable receipt or retention of the property by the defendant.

The Decision

The Supreme Court unanimously dismissed the appeal.  

In reaching its decision, the Court applied equitable principles to the facts of the case as the relevant authorities did not provide a clear answer.  Lord Hodge summarised what was agreed in respect of these principles and their application to the case in his leading judgment, as follows: 

  • The transfer of trust property to a bona fide purchaser for value without notice (i.e. “equity’s darling”) extinguishes or overrides the proprietary equitable interest of the beneficiary.
  • A personal claim in knowing receipt against a transferee is closely linked to a proprietary claim for the return of the property. A personal claim in knowing receipt comes into play when the transferee, who is not a bona fide purchaser for value without notice, no longer has the property, such as when the transferee transfers, dissipates or destroys the property in question and thereby prevents a proprietary claim.” (Paragraph 5)   
  • “…the extinction or overriding of a proprietary equitable interest by the time when the recipient receives the property defeats a proprietary claim. As Lord Briggs observes, given the close link between the proprietary claim and the personal claim in knowing receipt, it would be logically inconsistent for the law to allow the personal claim in knowing receipt to survive where the proprietary claim has been defeated by the lack of a continuing proprietary equitable interest.” (Paragraph 6) 

Applying this reasoning to the facts of this case, the Court concluded that, as Saudi Arabian law extinguished SICL’s equitable interest in the Shares at the time of the Share Transfer, SICL could not claim for knowing receipt, despite Mr Al-Sanea’s breach of trust and Samba’s knowledge that the transfer was in breach of trust.


Aside from the application of Saudi Arabian law to the Share Transfer, this was an unusual knowing receipt claim on its facts because, normally, the recipient will have disposed of or dissipated the relevant trust property.  Where, as in this case, the recipient has retained the property, a proprietary claim that the property be transferred back to the claimant/trustee would usually be pursued instead.  However, the claimants here accepted that full title in the Shares had passed to Samba under Saudi Arabian law and so a proprietary claim was not viable.    

This case effectively adds another item to the checklist of constituent elements for a good knowing receipt claim: whether anything has happened which might have extinguished the claimant’s equitable proprietary interest in the relevant property. 

It is notable that the claimants did not plead unjust enrichment in this case and were time-barred from doing so when the Supreme Court judgment was handed down.  Generally, it is worth considering whether pleading unjust enrichment in tandem with a claim for knowing receipt might be advisable, depending on the relevant facts.     

Disclaimer: This article provides a general overview of the case and is not intended to offer legal advice.

Content courtesy of IPA corporate partner Manolete Partners PLC.

Please note that guest content does not necessarily represent the views of the IPA.