Constructive trusts and the potential interplay of foreign and religious laws

10 July 2014

Constructive trusts are a flexible remedy imposed by courts to correct perceived injustices in relation to the beneficial ownership of property. The recent case of Bal Mohinder Singh v Jasminder Singh & Herinder Singh ([2014] EWHC 1060 (Ch)), which involved a dispute over family property, is interesting as it looked at constructive trusts in the context of religion and foreign law.

The issue that the Judge, Sir William Blackburne, had to consider was whether property that was separately acquired and legally owned by sons could be beneficially held by the father according to a common intention constructive trust. The father argued that such a trust had arisen because of the religious term ‘mitakshara’. Mitakshara is a legal code by which a Hindu family (and by extension a Sikh family) living and eating together as a composite household may hold its property; the beneficial ownership of the property belongs jointly to the male members of the family and continues down to the third generation.

The property in question included Tetworth Hall, which Jasminder purchased and had registered in his sole name, and the shares that Jasminder held in the hotel group Edwardian Group Limited (he owned 5.28% of the shares which was valued at several millions of pounds). Bal Mohinder Singh, the father, brought a claim against his sons contending that the property they each owned in their own right was subject to a common intention constructive trust because it was joint property under mitakshara. He claimed that he had raised his sons to understand this religious concept.

Sir William Blackburne considered evidence relating to the properties, expert evidence about mitakshara and how it is applied, and listened to witness evidence. In order for mitakshara to be applicable, the father had to show there was a common understanding between him and his sons that any property acquired and legally owned by them would be joint family property. The father had to displace the presumption that Jasminder was the beneficial owner of Tetworth Hall and of the Edwardian Group Limited shares.

The father’s claim for a constructive trust was dismissed for the following reasons:

  • There was a lack of documentary evidence that showed that the property in question had been acquired as a joint family asset, which was meant to be owned collectively by the father and his male descendants;
  • The parties had not conducted their affairs in accordance with mitakshara; the Father and the two sons had Wills that dealt with the property they individually owned and did not mention joint family assets; and
  • Neither Jasminder nor Herinder had heard of the term mitakshara; they did not know what it meant nor had the Father explained its meaning to them.

From an objective perspective, there was no evidence that the sons had bought their property on the understanding that it would be beneficially owned by the male family members.

The interesting part is that although Sir William Blackburne dismissed the father’s claim, his judgment does not state that the English courts would not apply mitakshara to property owned in this country. In the future, it may be that a common intention constructive trust can be established if the family in question can show that mitakshara is applicable to their property. Regardless of whether foreign or English law is applied, the judgment emphasises the importance that there must be some kind of ‘common intention’ amongst the parties for there to be a constructive trust.

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