Ritesh Surana & Anor v Ruchi Surana

This is a first instance claim under the Trusts of Land and Appointment of Trustees Act 1996 arising from ownership of 38 Maitland Close, Hounslow. The court determined issues of service on an overseas defendant, jurisdiction and applicable law, and the existence and extent of an equitable interest.

Key legal principles and grounds of decision:

• Service: although the method of service abroad was imperfect, the defendant had received the proceedings and there was good reason to authorise retrospective alternative service under the Civil Procedure Rules.
• Jurisdiction and applicable law: the English court held that England has jurisdiction and that English law governs disputes over land in England (the lex situs/immovables rule), so the English court was the appropriate forum.
• Constructive trust: on the facts the court found a common intention constructive trust. The property was purchased in the defendant's name because the two claimants could not obtain a mortgage; the claimants provided the deposit and managed the property and derived its profits. The legal owner was therefore a bare trustee for the two claimants in equal shares.
• Account of profits: an account of profits was ordered in favour of Mr Shetty for his 50% share of profits received by the defendant since she began receiving rent; the court declined to order an account for Mr Surana because doing so risked interfering with pending Indian proceedings.

Background and parties: The claimants are former co-residents in England (now residing in India) who say that 38 Maitland Close was bought in the defendant's name in 2007 only because the claimants could not obtain a mortgage. The defendant was the registered owner and mortgagor. The claimants alleged a common intention constructive trust and sought a declaration that the defendant holds the property on bare trust for them in equal shares and an account of profits from rental income.

Procedural posture: Proceedings were issued in the Business and Property Courts, Birmingham, in March 2023. Permission to serve the defendant in India was granted. The defendant did not attend trial and submitted written representations; receivers were appointed over the property in December 2023 because mortgage payments were underpaid. There are parallel matrimonial and property proceedings in India mentioned in the Indian petitions.

Relief sought: A declaration that the defendant holds 38 Maitland Close on bare trust for the two claimants in equal 50% shares and an account of profits arising from rental income since the defendant began receiving it.

Issues framed by the court:

1. Whether service on the defendant in India was effective and whether the English court should proceed.
2. Whether the English court has jurisdiction and whether English or Indian law governs the dispute.
3. Whether the claimants established a common intention constructive trust and, if so, the extent of their beneficial interests.
4. Whether an account of profits should be ordered and, if so, in what terms.

Court’s reasoning and disposition: The court found, on the balance of probabilities, that the defendant had been effectively served and had participated earlier in the proceedings so retrospective authorisation of service was appropriate. Applying the immovables rule, the court concluded that England had jurisdiction over the dispute concerning English land and that English law governs rights in the English property. The court accepted the claimants’ evidence and contemporaneous documentation showing the arrangement: the property and mortgage were put in the defendant’s name because the claimants could not obtain a mortgage; the claimants provided deposits, managed the tenancy and received the profits. On that basis the court found a common intention constructive trust and declared that the defendant holds the property on bare trust for the two claimants in equal shares. The court ordered an account of profits in respect of Mr Shetty’s 50% share of profits received by the defendant since June 2022 but declined to order an account in favour of Mr Surana because such an order risked interfering with pending Indian matrimonial/property proceedings.

Wider context: The court explained its reasoning on private international law and compared English and Indian law (including issues raised by the Prohibition of Benami Transactions Act and Indian procedural rules on recognition of foreign judgments) so that the judgment may be of assistance in related Indian proceedings.

This first instance claim was allowed in part. The court (1) authorised retrospective service as effectively effected, (2) held that the English courts have jurisdiction and that English law governs the ownership of 38 Maitland Close, (3) declared that the defendant holds the property on bare trust for the two claimants in equal 50% shares, and (4) ordered an account of profits in favour of Mr Shetty only, declining an account in favour of Mr Surana to avoid interfering with related Indian proceedings. The court’s rationale rested on effective service, the immovables/lex situs rule, findings of fact establishing a common intention constructive trust and discretionary considerations about international comity and preventing interference with pending foreign proceedings.