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Mortgages – Mistaken Discharge

Article contributed by Nigel Clayton


Mistaken discharge – application for summary judgment to rescind and for alteration of the register


Case Name, Reference and BAILII link

Barclays Bank UK Plc v Terry

[2023] EWHC 2726 (Ch)



The High Court granted summary judgment (in part) on the bank’s application to rescind the mistaken discharge of numerous mortgages, and for consequential alteration of the register to restore them.



Barclays Bank issued a Part 8 Claim against representative defendants on behalf of 5,141 parties for alteration of their respective charges register on the basis that the bank had mistakenly discharged their charges. The bank also issued an application notice for summary judgment.

The background to the application was that Barclays had instituted a serious long-term project, to identify cases where a mortgage had been redeemed but for some reason, it had not actually been discharged. It was an effort to tidy up the mortgage book and indeed tidy up the titles of those borrowers who had redeemed their mortgages.

The bank relied on a computer programme, devised, and tested over 11 months, which identified some 38,313 charges which it was satisfied represented mortgages which had been redeemed, but without the charges being discharged. When the bank met to decide whether to authorise the automatic discharge of the charges, it produced a further list of 2,730 cases which it mistakenly thought fell into the same category. After 29,505 charges had been discharged, both Land Registry and the bank began to receive enquiries from borrowers who thought they still owed something. Land Registry concluded it had not made a mistake; it had done what it had been asked to do by the bank. When the bank re-checked its list, it came up with 5,141 charges which had been mistakenly discharged and on which money was still owing.



How should the court approach a large-scale application to rectify a mistake and for consequential alteration of the register?



(HHJ Paul Matthews sitting as a judge of the High Court): As to the law of mistake, applying Pitt v Holt [2013] 2 AC 108; Kennedy v Kennedy [2014] EWHC 4129 (Ch) and Garwood v The Bank of Scotland plc [2012] EWHC 415 (Ch) and considering the mistake made in NRAM Limited v Evans [2015] EWHC 1543 (Ch) (at first instance – the case went on appeal to the Court of Appeal [2017] EWCA Civ 1013) the judge concluded that the law allowed for a transaction of this kind to be rescinded for mistake:

(1) the bank did not intend to make a gift of its security to its customer.

(2) the mistake in the present case was a distinct mistake.

(3) the bank took some care to produce an accurate list – one could not say the bank was not being careful.

(4) it was a mistake of two kinds (i) a fundamental mistake of fact, and (ii) a mistake as to legal effect.

The jurisdiction of the court was engaged, and the mistake was also sufficiently serious to make it unconscionable for the customers to retain the benefit of it.

As to the statutory power of alteration of the register in Schedule 4, Para 2, Land Registration Act 2002, the court had power to order the alteration of the register for the purposes of bringing it up to date under Para 2(1) and under Para 3(3) where the court has power to make an order under Para 2, it must do so, unless there are exceptional circumstances which justify its not doing so.

The court was satisfied there were no exceptional circumstances which would take the matter outside the usual default rule in respect of some of the represented parties, and would make the order, but was not satisfied in respect of the other parties, with those cases being left over to the ‘bifurcated procedure.’



There is something of the “Thunderbirds are go” about this case with the judge recording that the bank had set up a “Go/No Go” meeting to decide what to do and had then “pressed the button.” One can envisage a select group of highly trained Barclays black ops technicians holed up in a nuclear bunker deep in the bowels of Barclays Towers, working through their mortgage manuals next to a large red button emblazoned with a warning sign “Mortgage Discharge – Do Not Press This.”

Rather more seriously, this sort of problem occurs from time to time. It used to cause real problems, but less so these days. It raises two, distinct, issues (1) whether the bank has a cause of action to, effectively, rescind the discharge, and (2) whether the court (or HMLR) has the power to alter the register in consequence which, significantly in this case, involved consideration of whether there were exceptional circumstances which justified the court in not making the alteration. If the court is minded to rescind the discharge, it is difficult to envisage any circumstances in which it will not be appropriate to make the alteration.

Incidentally, the transcript contains a couple of other observations:

The judge expressed the view that CPR PD57AC (trial witness statements in the business and property courts) only applies to witness statements for use at trial; not on summary judgment applications.

The judge also expressed the view that for the purposes of CPR 19.8 (representative parties with same interest) the expression ‘same interest’ is to be interpreted purposively in light of the overriding objective and requires that the claims should raise a common issue or issues. Even though they may be divergent, provided they are not conflicting, the rule applies (following Google LLC v Lloyd [2022] AC 1217).