Murdoch to Elliot (Assistant Under-Secretary)

I have to acknowledge your letter of 5th inst, with one from the
Governor of the Hudsons Bay Co, enclosing a Memorandum prepared by
the Company's Solicitors, & concurred in by Mr Dallas, in regard to
the sale of Lot Z in Victoria, Vancouvers Island, to Mr Lowenburg
[Lowenberg].

2. The statement of the Governor of Vancouvers Island is that the
question formed part of the Government Reserve set aside by the
Company on the Offical Map of the Town of Victoria—that the Company
had thereby divested themselves of the power to make any other
disposition of it—and consequently that they had no right to sell it
to Mr Lowenburg. He added that it was of great importance that the
Lot should be recovered for the public, and that the sale of it by
the Company was regarded with great indignation by the Legislature.
The Memorandum enclosed in Sir E. Head's letter, which has of course
been prepared on information furnished by Mr Dallas, denies that Lot
Z formed part of the Land set apart as the Government Reserve—and
alleges that on the contrary it was separated from the Reserve by an
Ox fence, and that it so continued, in the possession of the Agent of
the Hudsons Bay Co, up to the time of the Sale to Mr
Lowenburg—that it was perfectly well known at the time of the
Agreement of Febry 1862 that this question existed, and it was then
understood that the claim of the Government was to be abandoned.

3. In respect to the Agreement of 1862 I must observe that the
question respecting this Lot had at that time never been raised, and
that although Mr Dallas in his interviews with us alluded cursorily
to some dispute as to the exact boundary of the Government Reserve,
we neither did, nor could, express any opinion about it. The
agreement therefore of 1862, which could of course give no validity
to any but the lawful operations of the Company cannot affect the
question now in dispute either way. That question is whether the
Company were legally entitled to sell the Land which they did sell to
Mr Lowenburg—and that question can be decided only by a Court of
Law. Some proceedings appear to have been taken by individual
purchasers which would probably raise the question, but it would not,
I think, be satisfactory or right to leave it to be decided by a
private suit. I would accordingly submit that the Governor should be
directed to take the necessary steps for bringing to trial before the
Supreme Court of the Colony the validity of the sale of Lot Z to Mr
Lowenburg—and that he should be further directed, if the decision of
the Local Tribunal should be against the Crown, to consider with his
Attorney General whether it would not be desirable to bring an appeal
from that decision to the Privy Council.