Knowing Receipt: Court Of Appeal Clarifies The Necessary Elements

The Court of Appeal has dismissed a knowing receipt claim against a bank for receipt of shares transferred to it in breach of trust, on the basis that the claimant did not have a continuing proprietary interest in the shares: Byers & Ors v The Saudi National Bank [2022] EWCA Civ 43.

The decision provides helpful clarification as to the elements required to make good a claim in knowing receipt. It confirms that liability for knowing receipt arises from the recipient's knowledge of the fact that it has received trust property that has been transferred in breach of trust. This includes where a recipient has received the property without knowing that it was transferred in breach of trust and only later discovers the fact. Once the recipient acquires such knowledge, it makes it unconscionable for the recipient to retain the property and imposes a duty on the recipient to treat the property as if they are a trustee of it and to restore it to the trust. This contrasts