Rectification of an internal process error which discharged more than 5,000 registered legal charges required the mortgagee to undertake complex and costly legal proceedings.
The court considered such an application in Barclays Bank UK plc v Terry and another [2023] EWHC 3113 (Ch). The defendants were selected as representatives of the parties affected by the claimant’s error and summary judgment was granted on 18 October 2023.
The court declared that the discharge of the charges had occurred by mistake and should be rescinded and the Land Registry title corrected to show that the charge was still subsisting in relation to the property constituting the security for that charge.
Directions were then given for the other affected owners and interested parties to be notified and given an opportunity to argue why the same order should not be made in respect of the charges on their properties.
The properties were split into various different categories on a schedule of properties:
- Parts 1 and 2 of the schedule comprised 3,898 properties where the titles were straightforward with no third-party interests needing to be addressed. A similar order to that of 18 October 2023 was made in respect of them on 14 November 2023.
- Part 3 concerned 936 properties where priority issues needed to be addressed.
- Part 4 consisted of cases which could not be addressed at this hearing and were postponed to a hearing on 20 December 2023.
- Part 5 involved a small number of problem titles where discussions between the parties were required.
Most of the Part 3 cases were the same as those in Parts 1 and 2 but where the claimant did not seek priority over restrictions benefiting third parties.
Of the remaining 80 properties, the claimant sought priority over some but not all interests on the register. The court was satisfied with service and that there had been a comprehensive and diligent examination of the claimant’s claims to priority in most cases.
The orders also provided that the setting aside of the discharge was not a disposition requiring the chief land registrar to apply any restriction registered against the titles to address the potential problem that some titles were subject to restrictions which would prevent registration unless specific conditions were complied with.
The claimant had paid for the defendant to obtain independent legal advice and agreed to pay the defendants’ costs of the proceedings as well as any losses sustained that could be proved. It also undertook not to add its costs of the proceedings or rectifying the mistaken discharge to the borrowers’ mortgage accounts.
Louise Clark is a property law consultant and mediator
