Supreme Court confirms no knowing receipt claim where equitable interest is destroyed: Byers v Saudi National Bank

17 April 2024. Published by Jake Hardy, Partner and Ana Margetts, Associate

In Byers v Saudi National Bank, the Supreme Court affirmed the findings of the lower courts by holding that a claim for knowing receipt cannot be made if a claimant’s equitable interest in the property in question has been extinguished by the time of the defendant’s knowing receipt of the property. 

As noted in our previous article on the Court of Appeal decision, the claim arose out of the legal fallout from the corporate collapse of both the Ahmad Hamad Algosaibi & Brothers Company (AHAB) and the Saad Group in 2009.  Those collapses, the creditors' pursuit of recoveries, and the subsequent allegations of fraud involving those behind the Saad Group have played out in courts around the world over the last 14 years. The latest and final judgment relating to this particular claim is the culmination of an ultimately unsuccessful attempt by the liquidators of a Saad Group entity to bring a claim in knowing receipt in relation to its alleged interests in various shares transferred to a bank in Saudi Arabia shortly before the Saad Group's collapse. 

The case will be of interest to those who may be looking to advance a claim in knowing receipt, particularly where the transfer of the relevant property is governed by foreign law that does not recognise an equivalent distinction to that in English law between legal title to property versus an equitable interest in it. 

More broadly, the case also highlights what the court referred to as the "essential fragility" of a purely equitable interest, because of its vulnerability to being overridden even by a trustee acting in breach of trust (as was the case here). Although a key function of equity is to restrain unconscionable conduct in the context of equitable rights, this must be balanced against "the need to respect the public interest in the certainty and therefore the marketability of title", which the court found to be the overriding consideration in this case.1


The claimants were Saad Investments Company Limited (SICL), a company registered in the Cayman Islands, and its joint official liquidators, Mr Mark Byers and Mr Hugh Dickson. A winding up order was made against SICL on 18 September 2009.

The claim arose in September 2009 from a transfer of shares in five Saudi Arabian banks from Mr Maan Al-Sanea to Samba (another Saudi Arabian bank, whose assets and liabilities were subsequently transferred to the defendant, the Saudi central bank) (the Transfer). Mr Maan Al-Saena was the driving force behind the Saad Group and had been holding the shares on trust for SICL.

Under English law, there is a distinction between:

  • legal title to property (in this case, the title held in the shares by Mr Al-Sanea as trustee); and
  • equitable interest in property (here, the interest in the shares held by SICL as beneficiary of the trust).

However, the governing law of the Transfer was Saudi Arabian law, which does not recognise this distinction. There was no dispute between the parties that the effect of the Transfer under Saudi Arabian law was to extinguish SICL’s equitable interest in the shares. Samba therefore became the sole owner of the shares following the Transfer. Accordingly, the only question for the Supreme Court was whether the equitable claim in knowing receipt depended upon the claimants retaining an equitable proprietary interest in the shares transferred to the defendant.

The claimants alleged that the Transfer was made in breach of trust, and that Samba was liable as a knowing recipient of the shares because it had knowledge of SICL’s interest in the shares. 


A claim in knowing receipt usually arises where a trustee transfers trust property beneficially owned by the claimant to the defendant in breach of trust, and the defendant learns about that breach before disposing of the property (either by transfer to a third party or by dissipation or destruction of it). In such a case, the claimant can no longer pursue a proprietary claim requiring the defendant to transfer the property back to it, because the defendant no longer holds the property. However, in those circumstances the defendant will generally be liable to account or to pay compensation to the claimant, as if the defendant were a trustee of the property.

The facts in this claim did not fit the above standard fact pattern, because the defendant (or rather, Samba as its predecessor) did not transfer, destroy or dissipate the trust property (i.e. the shares).  It still held them. However, as held by the Court of Appeal (and as was common ground between the parties before the Supreme Court), the claimants were unable to pursue a proprietary claim for the return of the shares because the effect of Saudi Arabian law was to extinguish the claimants' equitable interest in the shares. In other words, the defendant became the sole owner of the shares under Saudi Arabian law, which governed the Transfer.

Accordingly, the Supreme Court was asked to determine whether an equitable claim in knowing receipt depends upon the claimant retaining an equitable proprietary interest in the property transferred to the defendant. The claimants argued that the claim in knowing receipt did not require any such continuing equitable interest. They argued that the only requirement was for Samba to know that the shares were transferred to it in breach of trust, so that it would be unconscionable for Samba to use the shares for its own benefit.

The court rejected the claimants' arguments and unequivocally found that the claimant must retain an equitable interest in the property in order for a knowing receipt claim to succeed. Lord Briggs commented that the claimants' focus on unconscionability would create an "unpredictable test for liability, with unacceptable adverse consequences for certainty in resolving issues as to priority of title to property".The Judge therefore found the need for certainty regarding priority of title to be the paramount consideration in defining the requirements for a knowing receipt claim, even though preventing unconscionable conduct is a central objective of equitable claims.

Although in English law a proprietary claim3 would usually be available instead in similar circumstances, the Supreme Court's ratio in this case is not necessarily only applicable to instances where a claimant's beneficial interest in the relevant property is extinguished by the operation of foreign law.  It could potentially apply in a purely English law context, such as where the claimant's equitable interest in the property in question is extinguished by the operation of statute. 

1.  Byers v Saudi National Bank [2023] UKSC 51 at [39].

2. Byers v Saudi National Bank [2023] UKSC 51 at [82].

3. A proprietary claim is one which attaches to specific property (as opposed to a personal remedy, i.e. a damages claim for money).

Stay connected and subscribe to our latest insights and views 

Subscribe Here