A plaintiff's ability to pursue a claim for knowing receipt may be lost if the property passes through a jurisdiction in which its beneficial interest is extinguished by the law of that jurisdiction.

Fraud litigators have significant weapons in their arsenal to trace and recover assets that have been transferred in breach of trust (eg, company assets that have been transferred on the orders of delinquent directors, where there is no benefit to the company, or trust assets that have been transferred on the orders of delinquent trustees). One common claim that can be brought against third-party recipients of such assets is a claim for knowing receipt.

A claim for knowing receipt can be established where the third party knows the assets were transferred in breach of duty. However, in a recent decision in England (which is likely to be followed in the Cayman Islands), it was held that a claim for knowing receipt may not be available if the beneficial interest in the assets has been extinguished by the law of a jurisdiction through which the assets have passed.

In Byers v Saudi National Bank,(1) Mr A held shares in five Saudi Arabian banks on trust for a Cayman Islands company (S). The trust was governed by Cayman Islands law. In breach of trust, Mr A transferred the shares to a Saudi Arabian bank to discharge his indebtedness to it.

The English Court of Appeal held that S could not recover the value of the shares from the bank on the grounds of knowing receipt because, for a claim for knowing receipt to succeed, the property must be subject to a trust at the time it is received.

Byers has not yet been the subject of any reported or unreported decision in the Cayman Islands. However, as Cayman Islands law tends to follow English law in cases concerning accessory liability in the context of civil fraud, the Cayman Islands courts are likely to follow Byers if a similar situation arose in the jurisdiction.(2) Though the shares in Byers were situated in Saudi Arabia, the position would seem to be the same if property that was otherwise capable of being traced passed through a jurisdiction that did not recognise the concept of a trust (or if the trust was defeated for some other reason), even if all the other jurisdictions through which it passed did do so.

Byers therefore provides a useful warning to anyone seeking to pursue a claim for knowing receipt where property is situated in, or has passed through, a jurisdiction other than the Cayman Islands. That warning is to obtain expert advice about the law of the jurisdiction in question to ensure the claim will not be defeated on the grounds that the property was not subject to a trust when the recipient received it.

A claim for "dishonest assistance" might still be available because such a claim does not require the assister to have received the property.(3) However, such a claim requires the plaintiff to plead and prove dishonesty. But if it cannot do so (and the claimant in Byers did not do so), no accessory liability claim would seem to be available.(4)

For further information on this topic please contact Jennifer Fox, James Clifford or Oliver Payne at Ogier by telephone (+1 345 949 9876) or email ([email protected], [email protected] or [email protected]). The Ogier website can be accessed at www.ogier.com.


(1) [2022] EWCA Civ 43; [2022] 4 1 WLR 22.

(2) A decision in the same litigation (Byers v Samba Financial Group Fancourt J [2020] EWHC 853 (Ch)) was considered in In the Matter of Sina Corporation FSD 128 of 2021 (RJP), 25 January 2022 (unreported) at paragraph [66], but that was in relation to a different point.

(3) Byers v Saudi National Bank at paragraph [13].

(4) Byers v Saudi National Bank at paragraph [8]. Something less than dishonesty is sufficient for a claim in knowing receipt.