Murdoch to Elliot (Assistant Under-Secretary)

I have to acknowledge your letter of 8th inst, with the copy of a
letter addressed to Mr Secretary Cardwell by the Governor of the
Hudsons Bay Company, complaining of an information filed against the
Company in the Local Courts—and also a report on the case from the
Governor, to whom the letter of Sir E. Head was transmitted by Mr
Cardwell.

2. It appears from the report of the Attorney General enclosed in Mr
Kennedy's despatch that the information in question was originally
filed against the Company by the Attorney General in 1861, at the
instance of the Surveyor General, to set aside all sales made by the
Company subsequent to 1858, which were in contravention of the plan
of the Town of Victoria as laid down and sanctioned by the Company in
that year. This suit became untenable, so far as the Crown was
concerned, by the Indenture made at this office in February 1862,
whereby all Sales made by the Company before January 1862 are
declared to be valid as against the Crown. It might, however, have
been continued by the Surveyor General in his private capacity, as
the purchaser of certain lots in Victoria, but as he declined to
accept the responsibility of that course the proceedings have been
discontinued. This took place some time before the receipt in the
Colony of Mr Cardwells despatch enclosing the letter from Sir E.
Head.

3. So far therefore as Sir E. Head's letter of 24 Octr last is
concerned, the correspondence might be allowed to drop here. But in
announcing his intention not to proceed with the suit in his private
capacity, the Surveyor General pointed out several particulars in
regard to the dealings of the Company with the Land in Victoria, in
respect to which he considered that fuller information is required.
His letter having been referred to the Attorney General and the
Executive Council, they suggested that the Company should be called
on for a formal account of the Sales made by the Company previous to
January 1862, with such proof as they could give of the accuracy of
the account. The Agent of the Company declined to furnish any such
account, and the Executive Council in consequence recommend, that
legal steps should, if necessary, be taken to compel the disclosure
of the information sought. The Governor announces his intention of
bringing the whole question before Mr Cardwell on an early occasion,
and proposes in the meantime not to press the suit against the
Company to compel them to disclose their Sales until he receives
further instructions.

4. It would be premature, pending the receipt of the promised
report, to express any decided opinion on the points in dispute
between the Local Government and the Agents of the Company. But the
refusal of the Company's Agent to furnish the information without
which the Deed for the reconveyance of the Island to the Crown cannot
be prepared—information which is exclusively in the possession of
the Company—appears unreasonable and obstructive. The Governor of
the Company has repeatedly applied to the Secretary of State to get
their reconveyance completed—and we have had several interviews at
this Office with him and with the Solicitor to the Company on the
subject, and have even prepared at their request and communicated to
them unofficially a Draft of the instrument necessary to reconvey the
Island. But so long as the Agents of the Company in the Colony
refuse to produce the information required for the purpose of setting
out the Lots to be retained by the Company, no effectual progress can
be made in the matter. The Governor remarks that nothing but a Court
of Law—a special Commission—or Arbitration can now disentangle the
complications in the matter arising from the bitter spirit in which
it was formerly dealt with by the Governor and the Company's Agent.
For the interests of all parties he would recommend, he says,
arbitration—but he does not say whether impartial Arbitrators could
be found on the spot, and the disapproval with which the Indenture of
February 1862 has been viewed in the Colony is sufficient evidence of
the risk of dealing with such a matter in this Country. Probably Mr
Kennedy will develope

more fully in his promised report his scheme for the settlement of
the questions in dispute. In the meantime I would submit that the
Governors report should be communicated to Sir E. Head and the
Directors of the Company, and that their attention should be
especially drawn to the letter of Messrs Pearkes and Green of the
3rd of December and the answer of Mr Drake of 17th of December.