CCUK Finance Limited & another v Barclays Bank PLC

Commercial Court reaffirms principles applicable to summary judgment / strike out in dispute over sale of credit card portfolio

The judgment of the Commercial Court in CCUK Finance Limited v Barclays Bank PLC reaffirms the principles applicable to applications for summary judgment and/or strike out, and also considers and applies the principles relevant to orders for specific performance.

The application was brought by CompuCredit in the context of a claim for, amongst other things, reimbursement under a contractual indemnity contained in a sale and purchase agreement, pursuant to which CompuCredit acquired a portfolio of credit cards from Barclays. According to CompuCredit, approximately 40% of these cards had an optional feature known as a Payment Break Plan or PBP, which CompuCredit alleged was mis-sold by Barclays prior to the agreement.

Barclays had paid CompuCredit considerable sums over a number of years on the basis, and in the belief, that the sums related to valid complaints of PBP mis-selling and thus fell within the scope of the contractual indemnity. However, Barclays identified grounds to believe that CompuCredit had been seeking reimbursement of sums falling outside the scope of the contractual indemnity and suspended payments to CompuCredit pending the provision of information demonstrating that was not the case.

CompuCredit sought, by means of summary judgment, orders compelling Barclays either to take over the exercise conducted by CompuCredit of remediating customers in respect of PBP mis-selling, or to pay the invoices issued by CompuCredit seeking reimbursement from Barclays insofar as such invoices had been issued in accordance with an alleged practice said to have been agreed between the parties during the course of their dealings. CompuCredit also sought to strike out, alternatively, obtain summary judgment on, Barclays’ counterclaim to recover overpayments made to CompuCredit in the mistaken belief and/or on the basis that they were due under the contractual indemnity.

As regards the application for an order compelling Barclays to take over the remediation exercise being conducted by CompuCredit, the Commercial Court concluded that:

-    There was considerable force in Barclays’ submissions that the agreement did not oblige Barclays to take over CompuCredit’s remediation exercise, but the Court could not determine this issue of construction on a summary judgment basis in circumstances where it could not be satisfied that it had all the relevant evidence and argument. 

-    Even if the Court could determine the point of construction, and it did so in favour of CompuCredit, it would not be appropriate to grant the order sought for specific performance given that: (i) CompuCredit had not demonstrated that damages were an inadequate remedy, (ii) the order required constant mutual co-operation between the parties, and (iii) the terms of the order could not be drawn with sufficient precision to enable Barclays to understand what it was required to do and what it must not do. 
As regards the application for an order compelling Barclays to pay the invoices issued by CompuCredit, the Commercial Court held that:

-    Barclays had established a realistic case that CompuCredit had, over many years, made payments to customers (for which they had been reimbursed by Barclays) which did not fall within the scope of the contractual indemnity and that, if the order sought by CompuCredit was granted, the Court would be ordering Barclays to indemnify CompuCredit in respect of sums falling outside the contractual indemnity.

-    It was impossible to conclude on a summary basis that there was a course of conduct between the parties, the legal effect of which was to override or vary the rights and obligations of the parties under the contractual indemnity.

-    Even if CompuCredit were entitled to summary relief, the substance of the order was for specific performance and was subject to the same discretionary objections as the order to take over the remediation exercise.

As regards the application to strike out the counterclaim, the Commercial Court concluded that:

-    Barclays’ evidence supported (and provided further particulars of) the pleaded case of mistaken belief and/or failure of basis.

-    CompuCredit’s argument that they had not been enriched by Barclays’ payments because they were merely a conduit was (at the very lowest) very arguably unsound in light of authority that receipt of money amounts to enrichment.

-    CompuCredit’s case that any enrichment was not unjust because of the alleged agreed practice was not capable of summary determination. 
The application was accordingly dismissed.

Sonia Tolaney QC and Emma Jones appeared for Barclays (instructed by Hogan Lovells International LLP). 

The Judgment can be found here.