No contracting out of right to register caveat

In a recent High Court decision, an attempt to contract out of the purchaser's right to register a caveat over land was regarded as contrary to public policy and invalid.

This case1 involved an agreement for the sale and purchase of land, which included a term that the purchaser would not caveat the title before the vendor had lodged plans for a proposed subdivision of the land. However, the plans were never lodged and the purchaser registered a caveat anyway. The vendor later sought to cancel the contract on the basis that it could not obtain the necessary consents, and the purchaser sought an order that its caveat would not lapse.

Justice Baragwanath stated that a "no caveat" clause was contrary to public policy and should not be given effect. Even in the event that the clause had been effective, the vendor had repudiated the contract by asserting that it was cancelled and the purchaser was entitled to protect its position.

 

1 Fu Hao Construction Limited v Landco Albany Limited [2005] 1 NZLR 541

Enquiries and information

For more information on any of the cases, articles and features in Financial Services Quarterly, please email Rachel Gowing or call on 64 9 916 8825.