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The Privy
Council ruled that as the law did not specifically rule out validation, then validation was possible, and given that the law was enacted to prevent undue aggregation of land, and that this was not an issue here, the court upheld the out of Appeals earlier decision to validate the sale
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2 NZLR 458 is a cited case in New
Zealand regarding illegal contracts that were later upheld that the Illegal Contracts Act 1970 had the power to validate (i.e. make legal) despite the fact that another legal enactment "deemed to be unlawful and shall have no effect".
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Unfortunately, the LTO standard declaration form, required under the law, was not designed for such a transaction, and later resulted in
Henderson to of breached the law by not registering his purchase, making the sale illegal and of no effect.
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As leases of 3 years or more are legally required to be registered with the Land
Transfer Office, Henderson duly registered the lease, which included the option to purchase.
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In 1971, Ross entered into an agreement to a 5-year lease his 345-acre dairy farm to
Henderson, with an option to purchase the farm for $ 65,000.
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In this background, in 1974 Ross's solicitor wrote to
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Henderson filed in court for relief under the
Illegal Contracts Act by having the sale agreement validated.
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This case is often cited along with the earlier Court of Appeal case of
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Chetwin, Maree; Graw, Stephen; Tiong, Raymond (2006).
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An introduction to the Law of
Contract in New Zealand
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