Supreme Court confirms no claim in "knowing receipt" where claimant's equitable interest extinguished in the property received

The Supreme Court has unanimously upheld a decision dismissing a claim brought against a bank in knowing receipt, in circumstances where the claimants’ shares were transferred to the bank in breach of trust and the bank was aware of the breach of trust at the time of the transfer. Under the applicable Saudi Arabian law the transfer gave the bank clear title to the shares, free from the claimant’s beneficial interest. Therefore, a claim in knowing receipt was not available, despite the bank's knowledge that the transfer was in breach of trust: Byers & Ors v Saudi National Bank [2023] EWCA Civ 43.

The Supreme Court’s judgment provides helpful clarification of the requirements for a claim in knowing receipt. However, a number of important elements are left unresolved and will require subsequent court guidance, including the precise test for “knowledge” in knowing receipt claims, and whether a claim in knowing receipt should be categorised formally as ancillary to a proprietary claim.

For more information see this post on our Banking Litigation Notes blog.