High Court Upholds Possession Order: Brocklesby Principle and Overriding Interests
Important guidance on mortgage enforcement where beneficial owners claim priority over lenders
In Ashrafi v Belmont Green Finance, the High Court provided guidance on the Brocklesby principle and overriding interests, dismissing an appeal by beneficial owners against a possession order granted to the lender.
The case considers the application of the Brocklesby estoppel principle to beneficial owners who authorise third parties to raise mortgages on their behalf, the doctrine of merger, the interpretation of "mortgagor" under section 36 of the Administration of Justice Act 1970, and the scope of unconscionability as a defence to possession proceedings.
TLT LLP acted for the successful respondent, Belmont Green Finance Limited (now trading as Vida Bank Limited).
High Court Upholds Possession Order: Important Guidance on Overriding Interests and the Brocklesby Principle
Ashrafi v Belmont Green Finance Limited [2025] EWHC 3247 (Ch)
In a judgment handed down on 15 December 2025, Mr Justice Adam Johnson dismissed an appeal by Mr and Mrs Ashrafi against a possession order granted to Belmont Green Finance Limited (now trading as Vida Bank Limited) ("the Bank").
The judgment provides important clarification on the application of the Brocklesby estoppel principle to beneficial owners who authorise third parties to raise mortgages on their behalf and confirms that such beneficial owners cannot assert an overriding interest against an innocent lender where they have knowingly put the third party in a position to represent themselves as the owner.
The judgment also provides helpful guidance on the interpretation of "mortgagor" under section 36 of the Administration of Justice Act 1970, confirming that beneficial owners who are precluded by the Brocklesby principle from asserting priority over a lender's security interest do not fall within the definition of "mortgagor" and therefore cannot rely on the court's powers to adjourn or suspend possession proceedings.
The Ashrafis have since filed an application for permission to appeal to the Court of Appeal.
Background
Mr and Mrs Ashrafi were the beneficial owners of a property in Barking. Unable to raise a mortgage themselves, they asked Mrs Ashrafi's brother, Mr Shabir, to raise a mortgage on the property instead, representing himself as the owner. The Bank advanced funds in March 2019 on the basis of an interest-only, buy-to-let mortgage. However, payment fell into default and the Ashrafis occupied the property in breach of the mortgage terms prohibiting occupation by family members.
In separate proceedings between the Ashrafis and Mr Shabir (to which the Bank was not a party), Recorder Jones held in November 2022 that Mr Shabir was a bare trustee and that the Ashrafis held the entire beneficial interest in the property.
In April 2024, the Bank applied for a money judgment against Mr Shabir and an order for possession. HHJ Holmes granted both. The Ashrafis appealed.
The High Court's Decision
The Ashrafis argued they had an overriding interest in the property that took priority over the Bank's security.
The High Court rejected this argument, applying the Brocklesby principle. This principle operates as an estoppel where an owner gives authority to a third party to deal with property and furnishes them with the means to represent themselves as the owner, without communicating any limitation on their authority to the lender.
The judge held that the Ashrafis knowingly put Mr Shabir in a position where he was able to represent himself as the owner and left him to make the arrangements without any limitation being communicated to the Bank. They were therefore precluded from asserting a beneficial interest with priority over the Bank's security, even though Mr Shabir may have exceeded his authority.
The High Court rejected the Ashrafi’s argument that by entering judgment for the principal sum and interest against Mr Shabir, the mortgage contract had merged in the judgment, extinguishing the security.
The Court held that a mortgagee is entitled to exercise all remedies concurrently ad that requiring a lender to elect between suing for money or enforcing security would defeat the purpose of a mortgage being a form of security. In any event, the mortgage deed charged the property with "all monies at any time payable", which was wide enough to capture amounts due under a judgment as well as under the mortgage contract itself.
The Ashrafis unsuccessfully argued they were "mortgagors" entitled to rely on section 36 of the Administration of Justice Act 1970, and so the court could not adjourn or suspend possession proceedings even if they were likely to be able to pay outstanding sums or remedy defaults.
Accordingly, although they were beneficial owners, they were precluded by the Brocklesby principle from asserting priority over the Bank's security interest and therefore had no relevant "title" they could assert against the Bank. Even if section 36 had applied, their occupation itself constituted a breach of the mortgage terms that could not be remedied save by them moving out.
The Court rejected the assertion that the Bank had acted unconscionably by refusing to accept mortgage payments directly from them and by moving from a fixed to variable rate in March 2024.
The Bank had only ever dealt with Mr Shabir and was not obliged to deal with the Ashrafis as, in effect, new mortgagors. The Ashrafis were given almost two years to obtain a new mortgage but failed to do so. The change to a variable rate was consistent with the mortgage terms entered into by Mr Shabir, and there is nothing unconscionable about a mortgagee enforcing the terms the mortgagor has agreed to.
Key takeaways for lenders
• Beneficial owners who knowingly authorise third parties to raise mortgages on their behalf will be precluded from asserting an overriding interest against the lender under the Brocklesby principle, even if the third party exceeds their authority or commits fraud.
• A mortgagee is entitled to exercise all remedies concurrently, and obtaining a money judgment does not extinguish the security interest through merger.
• Beneficial owners precluded by the Brocklesby principle from asserting priority over a lender's security interest are not "mortgagors" within the meaning of section 36 of the Administration of Justice Act 1970.
• A lender is not obliged to accept payments from, or enter into a direct relationship with, beneficial owners who are not parties to the mortgage contract, and refusing to do so does not amount to unconscionable conduct.
This judgment is a significant win for lenders and provides welcome clarity on the limits of beneficial owners' ability to assert overriding interests against innocent lenders. The High Court's robust application of the Brocklesby principle demonstrates that beneficial owners who choose to use third parties to raise finance cannot later claim priority over the lender when things go wrong. The judgment also confirms that lenders are entitled to exercise all remedies concurrently and are not obliged to accept payments from or negotiate with non-parties to the mortgage contract. This provides lenders with greater certainty when enforcing security in complex ownership situations.
Roisin Bell, Partner in TLT's Financial Services Disputes & Investigations team, said:
'This is an important judgment for lenders dealing with complex ownership structures. The High Court has confirmed that beneficial owners who knowingly authorise third parties to raise mortgages on their behalf cannot later assert priority over the lender's security interest. The robust application of the Brocklesby principle provides lenders with greater certainty when enforcing security and confirms that lenders are not obliged to accept payments from or negotiate with beneficial owners who are not parties to the mortgage contract. We are delighted to have secured this outcome for our client.”
TLT has extensive experience in complex mortgage enforcement cases involving trust structures, beneficial ownership issues, and novel legal arguments. Our FSDI team has a track record of securing successful outcomes for our lender clients, and we provide strategic, commercial advice on enforcement options and risk management.
Get in touch with us to discuss how we can assist with mortgage enforcement, possession proceedings, or security enforcement matters.
Contributors: Roisin Bell, Oksana Hudson, Thomas Lillie and Amy Earlam
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2026. Specific advice should be sought for specific cases. For more information see our terms & conditions.
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