ASB Bank mortgagee sale standard terms have the effect of potentially reducing the sale price and in one case allowed a debtor to refinance and recover their property even after a forced sale, but before settlement.
This High Court ruling centred on time-honoured rules governing a debtor’s ‘equity of redemption:’ the right to recover property before completion of a mortgagee sale.
Jivan Jyoti Rahal sued to block ASB’s mortgagee sale of a 2.4 hectare site in Auckland suburb of Penrose owned by her family trust, currently leased for use as a restaurant. She is guarantor of her family trust’s bank loan, with $1.3 million currently due.
ASB’s mortgagee sale procedures were triggered following failure to pay on a June 2024 demand for the amount then due.
In November 2025, ASB accepted a tender offer of $3.2 million from a company called Tara Homes AKL Ltd, an entity linked to the business currently running a restaurant on site.
Terms of sale to Tara Homes permit ASB to back out of the contract ‘for any reason whatsoever,’ with Tara Homes entitled to return of its deposit.
In the High Court, Justice Johnstone pointed out this clause has the effect of depressing tender offer prices.
A potential buyer will factor in the potential inconvenience and opportunity cost of devoting resources to a bid which, even if successful, may later be binned.
The Bank’s discretion to withdraw from a mortgagee sale at any time for any reason has a direct effect on the debtor’s equity of redemption, Justice Johnston ruled.
Courts have always allowed debtors a final chance to make good their secured debt, recovering their property. The general rule is that once a sale is concluded, the right to redeem has vanished.
In its forced sale of the Penrose property, ASB contract wording meant there was no concluded sale until settlement, with payment then of the full sale price and transfer of ownership.
Justice Johnstone ordered ASB’s settlement of the Penrose sale to Tara Homes be delayed three weeks, giving Ms Rahal one final chance to clear the debt.
She produced a letter in court with details of another financier offering funding.
Rahal v. ASB Bank Ltd – High Court (30.06.26)
26.196