Byers v Saudi National Bank [2022] EWCA Civ 43

Facts

  • This case concerned a commercial dispute involving the misappropriation of trust funds by a corporate trustee.
  • Significant sums were transferred by the trustee to Saudi National Bank (SNB), allegedly in breach of fiduciary duties.
  • The claimants, beneficiaries of the trust, sought to recover the funds from SNB on the basis of knowing receipt.
  • The court examined SNB’s knowledge of the breaches and the diligence performed to verify the transactions’ legitimacy.
  • The transactions in question were said to be inconsistent with the trustee’s usual practices and allegedly raised red flags.

Issues

  1. Whether SNB could be held liable for knowing receipt of trust property, specifically whether it had the requisite knowledge of the trustee’s breach.
  2. Whether constructive knowledge—failure to inquire where there are red flags—suffices for knowing receipt liability.
  3. The distinction and application of the legal tests for dishonest assistance versus knowing receipt.
  4. The scope and limitations of equitable tracing in recovering misappropriated trust property.

Decision

  • The court held Saudi National Bank liable for knowing receipt, finding SNB had constructive knowledge of the breach due to failure to conduct due diligence amid suspicious circumstances.
  • The court reaffirmed that knowing receipt liability arises where the recipient’s knowledge (actual or constructive) makes it unconscionable for them to retain the property.
  • It clarified that constructive knowledge (i.e., failing to make reasonable inquiries) suffices for knowing receipt.
  • SNB was ordered to account for the misappropriated funds pursuant to equitable tracing.
  • The judgment distinguished between the mental elements required for dishonest assistance (dishonesty) and knowing receipt (knowledge of breach).

Legal Principles

  • Knowing receipt liability requires that the recipient of trust property has actual or constructive knowledge that the property was transferred in breach of trust.
  • Constructive knowledge applies where a reasonable person in the recipient’s position should have known of the breach and failed to investigate.
  • The court reaffirmed the distinction between dishonest assistance (requiring proof of dishonesty) and knowing receipt (focusing on knowledge but not necessarily dishonesty).
  • Equitable tracing allows for the recovery of trust property even when it has been mixed with other assets, provided identification is possible.
  • The recipient’s liability is grounded in equitable principles that protect beneficiaries and prevent third parties from benefitting from breaches of trust.

Conclusion

The Court of Appeal provided significant clarification on the requirements for knowing receipt and the role of constructive knowledge, distinguishing it from dishonest assistance and emphasizing due diligence obligations for recipients of trust property, particularly in commercial contexts.

The answers, solutions, explanations, and written content provided on this page represent PastPaperHero's interpretation of academic material and potential responses to given questions. These are not guaranteed to be the only correct or definitive answers or explanations. Alternative valid responses, interpretations, or approaches may exist. If you believe any content is incorrect, outdated, or could be improved, please get in touch with us and we will review and make necessary amendments if we deem it appropriate. As per our terms and conditions, PastPaperHero shall not be held liable or responsible for any consequences arising. This includes, but is not limited to, incorrect answers in assignments, exams, or any form of testing administered by educational institutions or examination boards, as well as any misunderstandings or misapplications of concepts explained in our written content. Users are responsible for verifying that the methods, procedures, and explanations presented align with those taught in their respective educational settings and with current academic standards. While we strive to provide high-quality, accurate, and up-to-date content, PastPaperHero does not guarantee the completeness or accuracy of our written explanations, nor any specific outcomes in academic understanding or testing, whether formal or informal.
No resources available.

Job & Test Prep on a Budget

Compare PastPaperHero's subscription offering to the wider market

PastPaperHero
Monthly Plan
$10
Assessment Day
One-time Fee
$20-39
Job Test Prep
One-time Fee
$90-350

Note the above prices are approximate and based on prices listed on the respective websites as of May 2025. Prices may vary based on location, currency exchange rates, and other factors.

Get unlimited access to thousands of practice questions, flashcards, and detailed explanations. Save over 90% compared to one-time courses while maintaining the flexibility to learn at your own pace.

All-in-one Learning Platform

Everything you need to master your assessments and job tests in one place

  • Comprehensive Content

    Access thousands of fully explained questions and cases across multiple subjects

  • Visual Learning

    Understand complex concepts with intuitive diagrams and flowcharts

  • Focused Practice

    Prepare for assessments with targeted practice materials and expert guidance

  • Personalized Learning

    Track your progress and focus on areas where you need improvement

  • Affordable Access

    Get quality educational resources at a fraction of traditional costs

Tell Us What You Think

Help us improve our resources by sharing your experience

Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

Saptarshi Chatterjee

Saptarshi Chatterjee

Senior Associate at Trilegal