Is it possible to know ALL the background research in your field? As in, would you advise me to read as many books as possible on my background research BEFORE I start my PhD in June? How much am I expected to know about my theories etc before I start on the project?

You should definitely read as much as you can before you start. It will make your life considerably easier. Whether your supervisor "expects" this or not is irrelevant. You should want to do this for yourself. This is your PhD journey, not theirs.

I agree with pm133, read as much as possible without stressing yourself. You are not expected to know everything but knowing the basics would be a great help. I would also encourage you to read broadly and go over the stuff early in your undergrad. Having a firm foundation before you start is good way to go forward with your PhD. A few months into my PhD, I realized I had to relearn an entire topic from my undergrad because my memory of it wasn't good enough (even though I got 82% on that module), which was a drag.