THE FLAXBOURNE ESTATE.

A niSTORY OF THE CASE. THE GOVERNMENT SIDE OF TIIE QUESTION. Somo interest ing remiirks on the rc-ccntly-heard cluim by tho Compensation Court in respect to tho Flaxboume Estate wcro niado by tho lion. T. K. Miicdouald, who was tho C4ovorniuent Assessor in tho case, in conversation with a Post reporter. It, may bo convenient for me, said Mr. Macdonald, to recapitulato briefly tho position of tho property. Tho Flaxbourno Estate stands practically alono in tho history of tho largo estates of the colony from the fact that it is tho ono estate taken up in 1816 (almost sixty yeats ago) by Sir Chas. Clifford, and held by the. iaanily over since. It consisted of 57,199 acres. Under tho Land for Scltlomont Claim Consolidation Act, 1900, when land is tnken by tho Crown tho owners have tho right to take for their own purposes a certain area of land, and tho .settlement of this area, involved a vory considerable amount of discussion. Tho claim, made by the owners in 1903, when the Government pub the proclamation on the land, was for a bum of £110,000. Tho claimants woro Sir Goorgo Clifford, W. L. Clifford (Marlborough), F. C. Clifford, and Chas. Wm. Clifford (England), tho aharcs hold by each of tho claimants being — Sir Chas. Clifford Uiitleen-fortioths, and tho other claimants nine-foitieths each. Tho Court first sal on 11th December, 1903. - v A largo number of legal points were argued. After sitting for about a fortnight, visiting the property, and hearing a number of legal arguments, it adjourned until Ist December, 1904. On re-assembling on that date the Court mado a second inspection of tho estate, lasting about a week, and on 17th Decembor, after healing a considerable amount of evidence as to tho classification of tho land and iho area which tho claimants were desirous of selecting for themsolvcs, tho Court made an award to tho claimants of a block of 11,688 acres in the northeast corner of the eslalo, both tho Crown find the claimants having como to an agreement on tho matter. Tho claim wuh then amended, Iho area no reserved being excluded from tho discussion as to tho vnluo, and tho bnlnnoo of 06,811 acres was arrangud to be tho subject for investigation and settlement. Tho amount claimed for thin area wa.i £320,000, and £15,000, afterwards increased to £20,000, for depreciation and loss in connection with the forced salo of livo stock, etc. Tho caso was resumed on Wednesday, Ist Fcbiuary, and lusted until Thursday, 23id Febiuary. During tho investigation from tho Ist to tho 13th February 33 witnesses woro called for tho claimants. In the afternoon of tho 13th tho Crown submitted its case, tho first witness called being Mr. Jan. M'Kerrow, formerly Sur-veyor-General of tho Colony, and now acting as Chairman of the Land Commission. Nineteen other witnesses wcro also called for tho Crown. The chief featuro of tho caso lay in tho unkiuo character of tho claim. Usually in Compensation Court cast's the claimants nro content to load evidence showing tho va-luo of tho property, looking at it from the mot>l optimistic stand point. In tho Flaxbounio cane a <lcpnrturo was made for ttio flist time in tho history of such cases in this colony, nnd, to far as 1 am aware, in the history of such case* us presented to any Compensation Court in the world. Tho claimants hefd that they w«ro ontithd not only to tho value of tho property a* based on its profit-earning poucr in 191XJ, whoniho Goxernmont under its proclamation was supposed to cntor into possession, but were entitled to nny additional vnluo which the properly might havt in conscqucneo of it not having been utilised to ita full capacity. In other words, that if tho property was earning a net ' I 'Ji'MKW ht annum, and tho owners by an expenditure of, say, £30,000, could liavo raised I lua income to JJ'2U 000 pci annum, i hoy could claim from tho Compensation Court tho capitalised valuo not only of the actual income rarncd, but also of tho income that might havo been earned by such cxpendituio. Thercforo witnoss after witness was put into the box to prove that position, their first witness, W. T. Rubins-on, of Cheviot, goiug so far as to declaro that the net earning powor of the run when canying tho estimiitod cjuuiiltty of stock shown by a return submitted was £24,621, representing an actual vnluo at 5 per cont. of £492,300 This, commented Mr. Mncdonnld, in face of the fact that tho valuation by tho Land and Income Tax Department of t li » property at the samo period was £112,000. The fiauies varied, ono witness going as high as £560,000, while Iho Crown valuations ranged from £130,000 to £146-,000. Tho difforonco between tno two sets of values being practically a quarter of a million. Somo oxtromely interesting ovidrnco was given as to how tho huge values wero armed at, and in ono caso ono of tho witnesses electrified tho Court by n graphic illustration of what bo termed tho "bumping up" process, of which moro will possibly bo heard on boiuo future occasion. Mr. Macdonald went on to suy that the position of tho two assessors, acting with a Judgo of the Supremo Court; is at all times an extremely difficult one. Naturally tho assessor for the claimants looks at the case from tho point of view most favourable to tho claimants' interests, and is very desirous that tuoso for whom ho is acting shall receive a most liberal compensation. Tho assessor for tho Crown has to guard against giving any amount that represent*! more than tho legitimate valuo of tho property. Section 23 of tho Land for Settlements Consolidation Act lays down the principles which shall guido Iho Court as to vuluos. It says: — "In determining what sum is to bo paid by way of compensation in respect of land taken, or thereby injuriously affected, tho Court shall have regard only to the valuo of tho land, and also the loss, if any, caused to tho claimant's business by tho taking of the land. " I was extremely anxious that there should bo an agreement, and that tho many weeks of labour which had been spent upon tho case should not be thrown away. I therefore asked that a. plan should bo prepared showing the subdivisions a« laid off by the Government— a, plan which they wero going to publish with a view to submitting the sections for rentn.l, and that tho rental values which woro going to be placod against them should bo submitted to me. Those rentals, a.t the public are aware, are based at tho rat© of 5 per cent, upon tho capltrtl valuo of the land. I found that the Government officials who have control of these matters, who nro possessed of very special cxperionce and knowledge, and whoso impartiality is beyond question, had fixed the

rental values of theso subdivisions at from 25 to 50 per cent, higher than the rate at whirl) tho adjoining properties of Starborough and Blind River had been leased a few years ago, that excess representing lo their mind tlic reasonable increase in value whii'h had occurred in consequence of the ndvnncc in tho price of stock and land. I examined the plan and the accompanying schedule veiy carefully, and had tho capital valuo of tho kind taken out on that I. dais. I discovered that the capital valuo was £141,000. Tho position, therefore, wns this : Tho Crown felt that it was unable to get a higher rental for tho land than 5 per cent, on £141,000, and if it had to pay £200,000 for the land thero would be a loss of nearly £60,000, which shortage would havo to be borne by the taxpayers of the colony. So fur as my judgment wont, Mr. Macdonnid went on to say, any sum between £130,000 and £150,000 represented tho real value of the property, and any excess over thai meant a special burden on tho taxpayer, and would have necessitated a voto from Parliament to balance the account, and, further, veiy gravo discredit on the whole working of tho Land for Settlements Act. The claimants, through their assessor, could not see their way clear to reduce below tho sum of £208,000. The Judge halted about midway, and them was nothing for it but a disagreement, the rule being that if both assessors agree, even if tho Judge does not agroo, or if the Judge and ono assessor agree, tho majority of tho Court binds the disagreeing member. In this caso an agreement was impossible, and the long weeks of labour and tho expense of somo fifty witnesses, with an army of officials, amounting to many thousands of pounds, was apparently thrown away. This was not roally so, however, because tho Court had sottled bhe vory important quostion of the area which should be rosurvod for the claimants and the question of tho classification of the remainder, so that the issue lo bo pub before the new Compensation Court will be merely Iho bare question of the valuo of tho 45,011 acres. Tlio caso for the claimants, Mr. Macdonald remarked, was very ably conducted by Messrs. C. P. Skerrctt, H. Johnston (Wellington), and Connolly (Blenheim), and Mossrs. Sim (Dunedin), D. M. Findloy (Wellington), and M'Callum (Blonhoim), argued the case with conspicuous ability for tho Crown. It is difficult to conceivo that a cuse could bo presented for tho consideration of any Court with a greater attention to detail, and with greater industry and ingenuity. It was a monument to tho skill and ability of both sides. The impression loft upon my mind at. tho conclusion of the caso (and this impression is tho outcome of very wide oxporienco in such matters) was that the whole system of Compensation Courts, with thoir array of witnesses and exaggerated views as to value, is~n. mistake. Some simpler and moro effective means ought to bo discovered for dealing with such important questions of public policy. Tho root of tho difficulty lies in the fact that tho valuation of proporlics is considered by every landowner too high when he has to pay taxes ; it is absurdly low when hid property is required for public purposes. If there was somo automatio menus by which tho owner could be compelled to face tho position of valuing his property at a fair price, with the risk of having it at any momont taken by the State at that valuation, with a 10 per ctnt. addition for compulsory taking, ho would take cßre that an honost v*luo was placed upon it, nnd theso expensive procMdings in connec tion with tho Compensation Courts would be a thing of the past. There is another point which should not bo lost sight of, they aro too great a tax upon the Judges of the Supremo Court. Possibly no other Judqo but Mr. Justice Cooper would havo been itblo to have slood the fatigue of over a week's sovere horseback exr roine suoh as ho had tn undertake, nnd I was greatly struck with the pnticnt attention which ho gave to the «holo of tho case from its inception to the end.