Barclays Bank UK Plc v Shaun Richard Terry

A mistaken discharge of security may be rescinded in equity where the claimant made a distinct, causative mistake as to fact or legal effect, and the mistake is sufficiently grave that it would be unconscionable for the recipient to retain the benefit.

Carelessness does not necessarily prevent relief unless the claimant deliberately ran, or must be taken to have run, the risk of being wrong. The court must assess unconscionability objectively, with intense focus on the particular facts, the centrality of the mistake and its consequences.

After rescission, the court must ordinarily alter the register under Schedule 4 to the Land Registration Act 2002, unless exceptional circumstances justify otherwise. Individual circumstances may require separate consideration in representative proceedings.

Barclays sought summary judgment against Shaun Richard Terry and Rachael Jayne Terry, who were also sued representatively for approximately 5,000 other owners. The bank claimed that mortgage charges had been discharged automatically by mistake, although the underlying loans remained outstanding, and sought rescission of the discharges and alteration of the Land Register.

The claim was brought under Part 8 of the Civil Procedure Rules. The court considered the representative procedure, the requirements for equitable rescission for mistake, and the statutory power and duty to update the register. The central issue was whether the evidence established an entitlement to relief against the named defendants and, separately, whether the same conclusion could be reached for the represented parties without individual factual assessment.

1. Representative proceedings. The court applied the guidance in Google LLC v Lloyd [2022] AC 1217. The requirement that represented parties have the same interest is interpreted purposively and is satisfied where claims raise common issues, provided there are no conflicting interests. A bifurcated process may determine common issues first and leave individual matters for later. Rule 19.9 was doubtful because the claim concerned the bank’s charges, not property subject to a trust or forming part of an estate. Rule 19.8 was therefore capable of applying.
2. Summary judgment. Under CPR rule 24.2, summary judgment was available where the defendant had no real prospect of successfully defending the claim and there was no compelling reason for a trial.
3. Equitable mistake. Following the principles summarised in Kennedy v Kennedy [2014] EWHC 4129 (Ch), drawing on Pitt v Holt [2013] UKSC 26, relief required a distinct mistake rather than mere ignorance or misprediction; causation; sufficient gravity; and an objective evaluation of whether it would be unconscionable to leave the transaction uncorrected. Carelessness did not itself defeat relief unless the claimant deliberately, or effectively, ran the risk of error.
4. The bank’s mistaken belief that no money remained outstanding was a distinct and causative mistake of fact. Its belief that it was merely removing a valueless encumbrance was also a mistake as to legal effect. The careful eleven-month project, immediate response and absence of any sensible reason to release valuable security supported rescission. Garwood v The Bank of Scotland plc [2012] EWHC 415 (Ch) and NRAM Limited v Evans [2015] EWHC 1543 (Ch) provided comparable examples.
5. For the named defendants, retaining the benefit of the mistaken discharge was unconscionable. Summary judgment was granted and the mortgage discharges were set aside. The represented parties required individual consideration of possible personal circumstances, so those issues were left to the second stage of the bifurcated procedure.
6. Under Schedule 4, paragraphs 2(1) and 3(3) of the Land Registration Act 2002, the register had to be altered to reflect the parties’ rights unless exceptional circumstances existed. No such circumstances were suggested in the named defendants’ case. The register was therefore ordered to be altered for them; the position of the represented parties was deferred.