No. 39

I have had under my consideration your despatch No. 23 of the 15th
of April last in which you transmit the minutes of Proceedings of a
Select Committee of the House of Assembly appointed to enquire into the
present condition of the Crown Lands, a Report of that Committee and a
series of resolutions transmitted to you by the Speaker of the Assembly
on the 29th June 1864.

I have also had under my consideration your despatch No. 10 of the
2nd February 1865, respecting Mr. Lowenburg's case, which had already
formed the subject of a letter to the Duke of Newcastle from the Hudsons
Bay Company dated 15th July 1861, and of Governor Douglas's despatch of
the 24th October of the same year.

The resolutions of the Assembly have reference to a proposal made
by the Duke of Newcastle that the Crown Lands should be placed under the
control of the Legislature in return for a Civil List.

On this proposal they express no opinion; but they recommend first
that an Indenture made on the 3rd February 1862 between the Hudsons Bay
 Company and the Emigration Commissioners on the part of the Crown should
be annulled and steps taken to recover from the Hudsons Bay Company
large sums of money which that Indenture would entitled them to keep.
Secondly that Mr. Lowenburg should not be confirmed in the possession of
a piece of land called lot Z which was sold to him by the Hudsons Bay
Company and to which your despatch of the 2nd of February refers, and
thirdly that the Governor should take steps to prevent the Church
Reserve in Victoria from being ever let out in lots or covered with
buildings, in order that it may be preserved as a public square.

The first of these recommendations is by far the most important.

I enclose an extract of a report from the Chairman of the Board of
Emigration exhibiting the grounds upon which my Predecessor thought it
advisable to sanction the compromise embodied in the Indenture of 1862.

You will observe generally that the Hudsons Bay Company had
previously to the Grant of the 13th January 1849, claimed as their
private property certain lands in Van Couver Island, and that a
correspondence had passed between the Company on one side and successive
Secretaries of State (Earl Grey and Sir J. Pakington) on the other in
the course of which the Home Government explicitly recognised the
principle of their claim and accepted without any expression of dissent
their specific description of the lands which they considered themselves
to hold as their private property.

It was considered that the Crown could not either honorably or with
any fair prospect of success attempt to dispute the Company's right to
the Lands to which their title had been thus acknowledged, that it was a
matter of paramount importance to obtain for the Government immediate
and unfettered possession of the Crown Lands then and unfortunately
still in the possession of the Company, and that it was most desirable
for the Colony to close up a source of controversy which threatened to
obstruct the management of the Crown Property and to multiply
animosities, litigation and embarrassment. It was therefore most
inexpedient to protract discussion with the Company without a clear
prospect of great ultimate advantage which did not exist.

The result was the compromise embodied in the Indenture of February
1862.

Whether under all the circumstances this compromise was wise or
improvident is a matter on which the assembly are no doubt entitled to
form their own judgment. But it is certain that the Instrument which
embodies it has been executed on the part of the Crown and no ground has
been established for concluding that the Crown has been so misled on the
Conditions of the agreement so violated by the Company as to afford
any sufficient reason either in law or in good faith for endeavoring to
set aside an engagement thus solemnly undertaken. Indeed the Committee
of enquiry (par 20) quote without any expression of dissent the
statement that without evidence of fraud the Deed must stand and do not
allege any reason for supposing that such evidence is procurable or that
such fraud exists.

Accordingly the Law Officers of the Crown in a report to which I
shall presently refer have expressed their opinion that after all that
has occurred the Crown cannot now dispute the right of the Hudsons Bay
Company to regard the land of which they came in possession before 1849
as absolutely their own.

What may be the meaning and effect of the Indenture is of course
open to question: though I hope that no material difference of opinion
will be found to exist. I expect to transmit to you shortly the draft
of a deed retransferring the Island to the Crown, which will give
precision and certainty to some of the provisions which at present are
necessarily indefinite. In considering the terms of this Deed I shall
require your careful assistance, and I shall give my best attention to
any recommendations which you may make in the interest of the Colony.
But in making these recommendations I wish you clearly to understand
that I regard the Instrument itself as binding on the Crown and
conclusive. I conceive that any attempt to deal with it otherwise will
only have the effect of protracting controversy on matters where
controversy is unavailing and delaying the consideration of questions
which are really pressing and practical.

The question of the Church Reserve is disposed of by considerations
of the same kind. It appeared in the course of a correspondence which
took place in the year 1861 that certain Land forming part of the Land
claimed as private property by the Hudsons Bay Company, had been
promised by them to the Authorities of the Church of England. The
Bishop claimed performance of that promise; the Company admitted the
claim and the result was that after communication with the Governor a
Deed has been executed by the Hudsons Bay Company with the sanction of
the Crown by which the land was conveyed to Trustees for Church
purposes.

I am not aware of any means by which that deed can be set aside.

The case of Mr. Lowenburg is one of a more complicated kind.

I caused that case to be referred to the Law Officers of the Crown,
and I received from them the Report of which I enclose a copy and to
which I have already alluded. I also enclose a copy of Sir E Head's
letter to which the Law Officers in their opinion refer. You will
collect from their Report the nature of the case which was laid before
them, which was accompanied by copies of your despatch and its
enclosures. Those papers appear to contain all that is to be said on
the case and I do not doubt they were carefully and impartially
considered by the Attorney and Solicitor General. But you will observe
that the conclusion at which they arrive is that the grant to Mr.
 Lowenburg cannot be successfully impeached. Much therefore as I regret
the inconvenience to which the Government may be exposed I am unable to
authorise you to treat it as invalid or to take any steps for setting it
aside.

Whether the suggestion of purchasing the ground for the use of the
Government should be adopted, will be, I apprehend mainly for the
consideration of the Legislature, as it does not appear that the
necessary funds could be at present supplied from the Crown Revenue.