Barclays Bank plc v Brooks (Consumer Credit Magazine July 1992)

A High Court case in 1991, Sovereign Leasing v Ali, declared that an action in respect of an agreement regulated by the Consumer Credit Act and wrongly begun in the High Court could not be struck out, but should be transferred to the County Court, as required by Section 141(2) of the Consumer Credit Act.

That finding has now been overturned by this more recent case, where the High Court ordered that proceedings brought in respect of a regulated agreement should be struck out, basing its decision on Section 2(1) of the Courts and Legal Services Act 1990, (not in force at the time of the Sovereign Leasing case).

This amends Section 40(1) of the County Courts Act 1984 to read as follows :-

        "Where the High Court is satisfied that any proceedings before it are required by any provision of a kind mentioned in subsection (8) to be brought in a County Court, it shall:-

        (a)    order the transfer of the proceedings to a County Court; or

        (b)    if the court is satisfied that the person bringing the proceedings knew or
                ought to have known of this requirement, order that they be struck out."

The debt involved was for the sum of £4976 due under an overdraft (which although not required to be documented under the Consumer Credit Act, fell within its scope over default and court proceedings).

The High Court Judge, hearing an appeal by Barclays against an order by a District Judge that the proceedings be struck out, was quite satisfied that the Court had jurisdiction under the Courts and Legal Services Act to strike out the proceedings. He then considered whether the court should exercise its discretion to strike out the proceedings or to order simply that they be transferred to the County Court.

Since the plaintiffs were a leading joint-stock bank, he had no doubt that their officers were perfectly familiar with Section 141(1) of the Consumer Credit Act and of its mandatory provision that an action should not be brought other than in the County Court. He noted that procedural advantages were available to a defendant in the County Court (eg. lay representation), and that the Bank had offered no explanation as to why the proceedings had been brought in the High Court but inferred that it was their policy to bring actions in the High Court despite Section 141(1). He therefore ordered the proceedings to be struck out and awarded costs against the Bank.