Kelly and Cairns to Lytton

We were favored with Lord Stanley's Commands signified in Mr Merivale's letter of the 22nd April ultimo in which he stated that he was directed by Lord Stanley to request that we would peruse and settle the annexed Draft of a Warrant for appointing a Lieutenant Governor over a portion of Her Majesty's Territories and Possessions in North America to the West of the Rocky Mountains, and
That the territory in question is not a portion of the land claimed by the Hudson's Bay Company under their Charter but is included in the Crown Grant to the Hudson's Bay Company of exclusive Trade with the Indians of the year 1838 of which a Copy was annexed.
That the power reserved to the Crown at the close of this grant to form new Colonies revoking as to such Colonies the concession of exclusive Trade, has not been exercised, nor is it proposed at present to exercise it, the grant itself being about to expire on the 30th May 1859.
That the object of the present Commission is (if practicable) to establish a temporary authority until the Crown shall be at liberty by the expiration of that grant to take more general measures, that this step was rendered desirable by the circumstance that the recent discovery of Gold on and near the Columbia and Fraser's River may probably attract settlers to the territory in question.

Mr Merivale was pleased also to refer us to the Acts of Parliament 1 & 2 Geo. 4 c. 66 "for regulating the Fur Trade &c" and 43 Geo. 3 c. 138. "for extending the jurisdiction of the Courts of Justice in the provinces of Lower & Upper Canada &c" and to the 12 & 13 Vic. c. 48, amending the same as regards Vancouver's Island; and to request that we would advise Lord Stanley generally as to the legal steps which might in our opinion be advisable for carrying into execution the temporary purpose above stated.
In Obedience to his Lordship's Commands we have perused the papers forwarded to us and have the honor to Report

That we have perused and settled the Draft Warrant referred to in Mr Merivale's letter and have appended our initials to the same.
That we think it right to submit to you that inasmuch as the Act 1st & 2 Geo. 4 c. 66 places the territory in question under the jurisdiction of the Courts of Judicature of Upper Canada for certain judicial purposes some difficulty may hereafter arise in consequence of the Jurisdiction for Judicial purposes being derived from a source different from that which confers the executive power.
It would therefore appear to us to be desirable that An Act of Parliament should be passed at some fitting opportunity which may remove the obstacles we have mentioned as arising out of the provisions of the Act of 1 & 2 Geo. 4.
This course appears to have been thought necessary in 1849 when the Act 12 & 13 Vic. c 48 "to provide for the administration of Justice in Vancouver's Island" was passed, and the territory in question is, as we understand in the same position with respect to Canada as Vancouver's Island was before 1849.
There is nothing however to prevent the appointment of a Lieutenant Governor of the district being made, and it may well be that during the temporary arrangement now contemplated none of the inconveniences to which we have referred may actually occur.