Malhotra v ASB Bank Limited - [2025] NZHC 2735

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-1136

[2025] NZHC 2735

BETWEEN
SHRESHTH MALHOTRA

Applicant

AND

ASB BANK LIMITED

First Respondent

AND

ANKUSH SOOD

Second Respondent

AND

SALONI SOOD

Third Respondent

Hearing: 9 September 2025

Appearances:

D Purusram and L Kaur for Applicant

D M Hughes and V Ang for First Respondent
Second and Third Respondents self-represented (via VMR)

Judgment:

19 September 2025

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 19 September 2025 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

………………………….

MALHOTRA v ASB BANK LIMITED [2025] NZHC 2735 [19 September 2025]

[1] Mr Malhotra applies to sustain caveats he has lodged over two properties in Sunny Hills, Auckland. The caveats were lodged on 4 February 2025 and in respect of each property, the interest claimed is the same, being:

By virtue of a now unconditional agreement for sale and purchase dated 10/10/2023 between the Registered Owners Ankush Sood and Saloni Sood (vendors) and the Caveator Shreshth Malhotra (purchaser) – for each property.

[2] ASB Bank Limited (ASB) on 14 May 2021, registered a mortgage against each of the two titles subject to Mr Malhotra’s caveats.

[3] ASB applied to lapse Mr Malhotra’s caveats. Mr Malhotra applied to sustain them.

[4] The second respondents, Mr and Mrs Sood, are the owners of the two properties and the vendors under the 2023 agreements for sale and purchase with Mr Malhotra.

[5] Mr and Mrs Sood have breached their obligations to ASB and ASB wishes to conduct a mortgagee sale of the two properties. There is no issue as to the breach by Mr and Mrs Sood or the steps taken by ASB to conduct a mortgagee sale.

[6] Mr Malhotra paid substantial deposits in respect of each purchase in instalments made between 11 October 2023 and 10 July 2024. In respect of Flat 1, the purchase price was $700,000 and Mr Malhotra paid a deposit of $200,000. In respect of Flat 2, the purchase price was $721,000 and Mr Malhotra paid a deposit of
$175,000.

[7] Mr and Mrs Sood are not in a position to settle their sales to Mr Malhotra as the amount they owe ASB exceeds the balance to be paid by Mr Malhotra under the agreements for sale and purchase. Mr Malhotra says that after agreeing to buy the two properties, he spent some $200,000 renovating them, with a view to selling the properties for a profit.

[8] Mr Malhotra understands Mr and Mrs Sood may have paid some or all of his deposit monies to ASB.

[9]In relation to the deposits, Mr Malhotra says in his affidavit:

… these funds were transferred by me with the clear intention of completing the purchases of the properties. ASB has no right, title, or claim to those funds, as they were paid for a specific purpose which can no longer be fulfilled. The Vendors…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Malhotra v ASB Bank Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2025] NZHC 2735
Decision Date: 19 September 2025

CaseChat Overview and Summary

The case of Malhotra v ASB Bank Limited involves Shreshth Malhotra, who applied to sustain caveats he lodged over two properties in Sunny Hills, Auckland. These caveats were in respect of agreements for sale and purchase between Malhotra and the vendors, Ankush Sood and Saloni Sood. ASB Bank Limited, which held mortgages over the properties, applied to lapse the caveats. Malhotra argued that ASB had no right to the deposit funds he had paid to the Soods, and that ASB had been aware of the sale agreements and benefitted from them. The legal issues centered on whether ASB's consent was necessary for the sale agreements to have priority over its mortgage and whether ASB could be held as a trustee of the deposit funds.

The court addressed the requirement for a mortgagee's consent to a sale agreement entered into by the mortgagor. It cited precedents that established consent requires a positive act, not mere knowledge or acquiescence. The court found that ASB was not aware of the sale agreements at the time they were entered into and had not consented to them, regardless of any subsequent awareness. Therefore, ASB's mortgage remained paramount and its right to exercise its power of sale was not affected by the sale agreements. The court also rejected Malhotra's argument that ASB could be held as a constructive or resulting trustee of the deposit funds, as there was no evidence that ASB was aware of the trust obligations or the source of the funds.

The court dismissed Malhotra's application to sustain the caveats and ordered that costs should follow the event on a 2B basis, plus disbursements as fixed by the Registrar. This decision underscores the importance of clear and unequivocal consent by a mortgagee for a sale agreement to have priority over its mortgage, and highlights the limitations of a mortgagee's knowledge or awareness in establishing such consent.

Orders