The council owns 3.5ha of land at Shelly Bay but voted in November to sell 0.36ha and lease a further 0.58ha to Shelly Bay Limited - an organisation linked to The Wellington Company.
The sale and lease of the land is crucial for the $500 million housing development to go ahead.
As such, the council has lodged an application with LINZ to get the caveat lapsed.
"This is on the basis that there is no valid caveatable interest," chief city planner Liam Hodgetts said.
The caveat was established in 2019 by Sarah Crawford, a direct descendant of James Coutts Crawford whose name was given to the mount sitting above the bay.
James Crawford also used to own the now council-owned land before it was taken off him through the Public Works Act, which is how Sarah Crawford came to register the caveat.
"The reason for me putting a caveat down was, I am very passionate about protecting the land for New Zealanders and [giving] the population of the Greater Wellington region an area or a sanctuary which they could use as a playground, or a place of reflection," Sarah Crawford said.
"Once an area like this is gone, we won't be able to use it in the way it is used now."
Now the council has requested the caveat to be lapsed, there is not an easily accessible course of action for Crawford to take to be able to keep the caveat in place.
Hodgetts explains: "As part of this process, LINZ notifies the caveator that an application has been made and provides them with an opportunity to seek a court order or interim court order if they have a valid interest which should cause the caveat to remain."
Crawford said this would just be impossible to put together.
"The sadness and reality of it is I cannot afford to do it by myself, and unfortunately all of the people who have been fantastic in supporting and backing me as well, are unable to continue that fight financially in the courts.
"It's unrealistic. It illustrates it's very difficult for the individual to override an institution which is funded by many people, which is in this case, the Wellington City Council."
But she hoped the land would be given greater protection through the Māori Land Court.
Groups involved with the protest against the development have confirmed they have found the funds and representation to be able to take their case forward.
- RNZ