Barclays Bank UK v Terry And The Previously Hypothetical "Bifurcated Process"

• Published date: 17 January 2024
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Charges, Mortgages, Indemnities, Financial Services, Class Actions
• Law Firm: Herrington Carmichael
• Author: James Musallam

A recent High Court decision in favour of Barclays Bank (Barclays Bank UK Plc v Terry [2023] EWHC 2726 (Ch)) has sparked intrigue in the field of representative actions. As the first judgment to adopt a 'bifurcated process', it represents a move towards split decision-making on 'common' and 'individual' issues of the class of litigants.

What was the case about?

The factual background involved Barclays accidentally discharging over 5,000 mortgages from the Land Registry in error despite those mortgages still having outstanding balances. This mistake occurred while undertaking an audit of their security at the Land Registry.

Applying the law of rescission of a non-contractual voluntary disposition on grounds of mistake, summarised in Kennedy v Kennedy [2014] EWHC 4129, the Court found that Barclays had made an honest and serious mistake of fact having legal consequences and was thus theoretically entitled to rescind the discharges. However, the practicality of doing so was more complicated. Paul Matthews HHJ ruled as follows (para 29):

"In my judgment the jurisdiction of the court to reverse this mistaken transaction is engaged. However, and as set out in the extract from Kennedy v Kennedy, the law requires that the mistake be sufficiently serious or sufficiently grave so as to make it...