An asset was transferred by a trustee, in breach of trust, for value without notice, had there been a disposition of the beneficiary’s interest?

May 18, 2017

No, there had not. Below is Toby Bishop’s 5-point summary of the Supreme Court’s decision in Akers and Ors v Samba Financial Group [2017] UKSC 6. Their Lordships’ analysis is not limited to share transfers or the narrow insolvency point decided, it applies to any trust, subject to additional considerations in relation to the nature of the asset, for example, in relation to land, overreaching and the provisions of the Land Registration Act may apply.


Short facts:

Mr Al-Sanea held shares in Saudi Arabian banks on trusts for SICL. SICL went into liquidation. Six weeks later, in breach of those trusts, Mr Al-Sanea transferred the shares, worth around US$318m, to Samba in discharge of his personal liabilities. SICL and its liquidators brought proceedings against Samba relying on s.127 of the Insolvency Act 1986, which provides:

Avoidance of property dispositions, etc.

In a winding up by the court, any disposition of the company’s property, and any transfer of shares… made after the commencement of the winding up is, unless the court otherwise orders, void…’


  1. Section 127 did not apply because Mr Al-Sanea transferred the legal interest to Samba, that being the only interest he had. Mr Al-Sanea did not dispose of SICL’s equitable interest, only SICL could do that.
  2. SICL might pursue Al-Sanea personally for his breach of trust, notwithstanding the shares were in a jurisdiction which did not recognise trusts (Saudi Arabia).
  3. The disposition of the legal interest did not itself extinguish SICL’s equitable interest. Any rights of SICL against Samba depended on a constructive trust, subject to the usual equitable defences. Samba’s position in law was that it took the shares on a bare trust to restore them to the beneficial owner, unless it was a bona fide purchaser for value without notice (equity’s darling).
  4. Since Samba gave value, by discharging Al-Sanea’s debt, liability turned on notice. SICL had not pleaded that Samba had notice of its interest. Unless it sought to amend, its pleadings were liable to be struck out. [88-90]
  5. The case is an example of the Court taking a different view to the advocates, as per Lord Collins [93-4]: ‘this case does not raise the interesting and difficult questions on the Hague Convention which were argued, first before the Chancellor and the Court of Appeal, and then in the oral argument in this court [by 5 silks] This appeal came to this court as a preliminary issue on a wholly artificial basis…’.