Akers v Samba Financial Group Ltd [2017] AC 424

Key Point

  • Where a trust exists, legal and beneficial interests in the trust property are held distinctly by the trustee and beneficiaries respectively
  • A transfer of the legal interest by the trustee does not transfer the beneficial interest, which remains with the beneficiaries. The beneficial interest becomes enforceable against any third party recipient, subject to the bona fide purchaser defence


  • Section 127 of the Insolvency Act 1986 prima facie voids any “disposition of the company’s property … made after the commencement of the winding up”
  • Shares in various Saudi banks had been held on trust for SICL in liquidation by one Mr Al-Sanea; Mr Al-Sanea, six weeks after the compulsory winding up of SICL had begun, transferred his legal title to those shares to Samba
  • If Samba was a bona fide purchaser for value without notice, SICL’s beneficial interest in the shares was liable to being overridden if the transfer was valid
  • Therefore, SICL and its liquidators sought to impugn the transfer as a void ‘disposition of … property’’ under section 127 of the Insolvency Act 1986
  • The precise issues argued in the High Court and Court of Appeal changed throughout the litigation process; but the question for the Supreme Court on appeal was whether there was a ‘disposition’ of SICL’s beneficial interest in the shares involved in the transfer of the legal title between Mr Al-Sanea and Samba


  • Was the transfer of shares to D a ‘disposition’ within section 127 of the Insolvency Act 1986?

Held (Supreme Court)

  • Appeal allowed; there was no ‘disposition’ for the purposes of section 127 of the Insolvency Act 1985
  • The transfer of Mr Al-Sanea’s legal interest to Samba was not a disposition of any equitable interest of SICL’s in the shares; but SICL’s equitable interest was enforceable against Samba subject to the “usual equitable defences” (Lord Sumption at [88]), namely that Samba was a bona fide purchaser for value without notice

Lord Mance JSC

Transfers by trustees

  • ‘What is clear, on any analysis, is that, where a trust exists, the legal and beneficial interests are distinct, and what affects the former does not necessarily affect the latter. Where an asset is held on trust, the legal title remains capable of transfer to a third party, although this undoubted disposition may be in breach of trust. But the trust rights, including the right to have the legal title held and applied in accordance with the terms of the trust, remain. They are not disposed of. They continue to be capable of enforcement unless and until the disposition of the legal title has the effect under the lex situs [the relevant State’s law] of the trust asset of overriding the protected trust rights.’: [51]
  • ‘The trustee acting in breach of trust can transfer the legal title, but cannot vest the beneficial interest in the property in a bona fide purchaser for value without notice, since he does not own that title and is not acting in a way which enables him, under the trust, to overreach the beneficiaries’ equitable interest. Despite that inability, the availability of the bona fide purchaser defence means that a transaction in favour of a bona fide purchaser for value without notice is as effective as it would be if he could vest the beneficial title in the purchaser.’

Current case

  • ‘Mr Al-Sanea disposed of his legal interest in the shares. That involved him in a breach of trust. But it did not involve any disposition of SICL’s property. SICL’s property, whether it consisted of an equitable proprietary interest or personal rights to have the shares held for its benefit, continued, despite the disposal of the legal title, unless and until that disposal overrode it.’: [54]

Lord Sumption JSC

  • “As the beneficiary of a trust, SICL had two main legal rights. First, it had a right to have the trust administered according to its terms. This was a personal right against the trustee. The only relevant condition for its enforceability is that Samba should be before the court. Since it has been properly served with the proceedings, that condition is satisfied. Secondly, SICL had a true proprietary right. The proprietary character of an equitable interest in property has sometimes been doubted, but in English law … the position must be regarded as settled. An equitable interest possesses the hallmark of any right in rem, namely that it is good against third parties into whose hands the property or its traceable proceeds may have come, subject to the rules of equity for the protection of bona fide purchasers for value without notice: see Westdeutsche Landesbank Girozentrale (Lord Browne-Wilkinson)” [82]