Berens to Newcastle

I have the honor to acknowledge the receipt of a letter under date
the 1st instant from Mr C. Fortescue on the subject of the claims
of this Company against Her Majesty's Government in respect of
expenditure in Vancouver's Island and especially as to the Expenditure
on the Fort Rupert Coal Mine.

It is necessary that I should call your Grace's attention to what has
already passed upon the subject of this expenditure.

By the Terms of the Grant of the Island of Vancouver to this Company
of the date of the 13th January 1849 the Crown reserved to itself
the right to repurchase from this Company the Island and other
premises the subject of the Grant in consideration of payment being
made to the company of the sums laid out and expended by them upon
the Island and premises and of the value of their establishments,
property and effects then being thereon.

Under date the 20th January 1858 Mr Under Secretary Merivale
addressed a letter to the late Chairman of this Company informing him
that in pursuance of a recommendation of the Committee of the House
of Commons it was the intention of Her Majesty's Government to advise
the exercise of the power reserved to the Crown by the existing Grant
of Vancouver's Island to repurchase and take that Island from the
Hudson's Bay Company at the approaching expiration of the Company's
present trading license—namely on the 30th May 1859; and requesting
that the Directors of this Company would at their earliest
convenience furnish Her Majesty's Government with a statement of the
sums for which they might claim repayment as laid out and expended by
them in and upon the said Island and premises and as the value of
their establishments property and effects therein according to the
terms of the Grant.

In compliance with this request this Company on the 24th February
1858 transmitted to Mr Labouchere the then Colonial Secretary
certain accounts shewing the amount which they claimed to be
reimbursed to the Company on the intended resumption of Vancouver's
Island amounting in the whole to £112,810.1.9
*
and which embraced all the disbursements made by the Company
subsequently to the acquisition by them of the Island under the Grant
from Her Majesty as well as the value of the property held by them
prior to the Grant. This latter however probably should not have been
included. Under date the 28th July Lord Carnarvon in acknowledging,
by direction of the then Colonial Secretary Sir Bulwer Lytton, the
receipt of this account stated that Her Majesty's Government were of
opinion, and were legally advised, that according to the proper and
fair construction of the Grant of 13th January 1849 the obligation
of Her Majetsy's Government to compensate the Company in the event of
repurchase extended only to sums expended by the Company upon the
Island and premises as owners thereof and to the value of the
establishments property and effects of the Company being thereon and
connected with such Ownership but that they did not recognize any
obligation to compensate the Company for such of their establishments
and property as had been erected and got together in consequence of
and in relation to their commercial operations as a Company carrying
on trade with the Indians; and intimating that the Government
therefore could not hold themselves responsible as regarded the
inventories of the Goods, Stock, and Vessels referred to at the end
of the accounts which had been sent.

In reply to this communication I had the honor of addressing a letter
to Sir Bulwer Lytton under date the 9th August 1858 in which after
adverting to the previous communications above referred to I stated
that there was no wish on the part of this Company to call upon the
Government to assume any responsibility which did not fall strictly
within the terms of the Grant and stating therefore that as the
Government was legally advised that it was not under any obligation
to assume any of the establishments or other property connected with
our trading operations, the Company would raise no objection to the
principle laid down by Lord Carnarvon with respect to any property of
that class which might remain in the Island.

In reply to this letter under date September 4th 1858 Mr Under
Secretary Merivale requested us to furnish an amended account of the
sums which we considered due to this Company on the basis laid down
in the letter above referred to and accordingly on the 2nd November
1858 the account now under discussion was forwarded to Sir Bulwer
Lytton shewing a claim on the part of the Company amounting to
£46,524.12.6.

One of the items in this Account was that for the loss incurred in
searching for Coal at Fort Rupert, being the item to which Mr
Fortescue's letter of the 1st instant has immediate reference.

In now considering the question whether this Company are entitled to
be indemnified by Her Majesty's Government for this portion of their
outlay it becomes necessary to advert to the terms upon which the
repurchase was to be made, because when the Company agreed to adopt
the construction put upon the terms of the Grant by the Law Officers
of the Crown they did so under the full impression that the claim
they had sent in would be admitted except in respect of those items
which they agreed to take out of it, namely the cost of any
establishments or other property connected with their trading
operations then remaining in the Island. But if the question is now
to be determined whether they are entitled to the particular head of
expenditure now under discussion they claim the right to refer to the
construction to be put upon the provision for the repurchase of the
Island and they are quite ready to submit this question to the
decision of Sir John Coleridge as suggested by your Grace in Mr
Fortescue's letter of the 1st instant.

This Company contends that under the terms of the Grant the
repurchase could only be made upon repayment to the Company of all
sums of money which they might have laid out upon the Island and
premises as well as of the value of their establishments property and
effects then being thereon.

They contend that these terms make it incumbent on the Government to
place them exactly in the position in which they were before they
took possession of the Island under the Grant and therefore if it is
now proposed to except any portion of their expenditure as having
been unproductive
**
they rely upon the terms of the Grant as entitling them to call upon
the Government to take back all the possessions they have acquired
since the Grant was made reimbursing them for their whole
expenditure without reference to whether any portion of that
expenditure may have been productive or otherwise. They were willing
as far as their existing establishments for the purposes of their
trade were concerned to have excluded them from the valuation
and to have retained them in their own possession but as there
appears to be a difficulty in coming to any arrangement upon that
footing they consider that they have now a right to revert back to
the terms of the Grant and as I have already observed they will be
satisfied to leave it to Sir John Coleridge to decide what are their
rights under its provisions.

You will therefore be so good as to consider that this Company now
claims to be reimbursed all the outlay embraced in the accounts
forwarded to Mr Secretary Labouchere under date the 24th February
1858 except the three sums of £12,384.-.- £3,000.-.- and £12,575.-
making together £27,959.- put down as the value of the property
possessed by them before the date of the Grant and also except the
sum of £66,285.9.3

***

the value of Inventories of Goods &c
employed in the Fur Trade which will have to be modified according to
the actual circumstances when the Island is taken over.

While upon the subject of the repurchase of this Island by Her
Majesty's Government I take leave to suggest that presuming it is
clearly the intention of the Government to repurchase the Island on
the terms specified in the Grant it will be necessary for this
Company to re-convey the Island to the Crown excepting of course such
land as has been sold by them under the powers given to them by the
Grant and excepting also of course the land which this Company
previously held and which formed a part of their property
irrespective of the Grant itself for in the absence of any
reconveyance and the termination of the Grant to this Company neither
the Company as still possessing the legal Title or the Crown in
right of their repurchase will be in a position to make any Grants of
Land.

It is however to be observed that Mr Under Secretary Merivale's
letter of the 20th January 1858 is in its terms only an intimation
of the intention of Her Majesty's Government to advise the exercise
of the power to repurchase the Island, and not an express notice that
such power would be exercised and no subsequent notice has been
received by the Company of the intention so to exercise it.