Sarah Crawford at her home in Eastbourne. In the distance is the Miramar Peninsula, home to the proposed Shelly Bay development.

The $500 million development of Wellington's Shelly Bay could be derailed by a 131-year-old land transaction.

Large areas of the land Wellington City Council wants to sell or lease to developers were owned by James Coutts Crawford until the Crown acquired it in 1886.

Now his great-great-granddaughter, Sarah Crawford, has set out to reclaim the family land, stop development and any possible foreign ownership, and use it for recreation for all.

STUFF A painting of James Coutts Crawford (1817-89) at the NZ Portrait Gallery.

"It's the jewel in the crown of Wellington. It's like Bastion Point in Auckland," she said.

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"My dream is my children, and my family's children, and friends' children and all New Zealand's children and great-grandchildren are able to enjoy a natural green area and have the pleasure of being able to use it till infinity."

SUPPLIED Shelly Bay, on Miramar Peninsula land once owned by James Crawford, could be developed to include 350 homes. But the plans depend upon Wellington City Council being deemed the owner of the land.

Under current plans, the Port Nicholson Block Settlement Trust and The Wellington Company – under the banner Shelly Bay Ltd – have been granted non-notified resource consent by the council to develop 350 new properties beside Wellington Harbour and a boutique hotel.

But Crawford believes that, under the Public Works Act, the council has to offer the land for sale to her and her relatives before it can agree to sell it to developers.

According to lawyer Jamie Nunns, a partner at law firm Morrison Kent, she has an arguable case. The council, however, says she does not.

SUPPLIED An impression of the proposed development by the Port Nicholson Block Settlement Trust and The Wellington Company.

The arguments hang on whether Crawford is deemed a "successor" to her great-great-grandfather under the Public Works Act.

The act decrees that, subject to certain exceptions, land should be offered back to the person it was taken from, or their "successor".

The council argues that James Crawford, who died in 1889, named five successors in his will, and all of them had died by 1940.

MONIQUE FORD/STUFF If the development goes ahead, Shelly Bay Rd is likely to need widening, and infrastructure will have to be provided.

In March the council received a report looking at its obligations under the Public Works Act, spokesman Richard MacLean said.

Sarah Crawford might be a descendant, but that was irrelevant. "The legislation only goes as far as to refer to successors. Ms Crawford is not a successor.

"Successor means the person who would have been entitled to the land under the will or intestacy of that person had he owned the land at the date of his death."

But Nunns said: "The short answer is that she might well be [a successor], and she has an arguable case.

"More work would need to be done, and there would need to be an application to the court to determine the issue. But my conclusion is that [the council] cannot afford to discount that an offer may have been required to be made."

Wellington Company director Ian Cassels said, if Crawford did get the land, she would be faced with the problem of getting the council to fix ageing infrastructure – just as he was at present.

"She may end up getting it, but what a poisoned chalice that would be."

Settlement trust chairman Wayne Mulligan was unaware of Crawford's claim, but said he would watch what happened "with interest".

﻿The Shelly Bay case has a Wellington precedent of sorts. Gwyneth Edmonds, owner of Hotel Cecil near the Wellington railway station, had it taken off her under emergency regulations in 1942 to accommodate United States marines during World War II. She got £79,000 compensation under the Public Works Act.

In 2005, her descendants went to court and successfully proved they should have been offered the property back to buy at the same value it had when the Crown no longer needed it.