THE SOUTHLAND LEASE.

Otago Daily Times, Issue 15705, 6 March 1913, Page 9

THE SOUTHLAND LEASE.

APPEAL TO SUPREME COURT. LEGAL ARGUMENT. WRITTEN JUDGMENT TO BE GIVEN. (Per United Pbess Association.) INVERCARGILL, March 5.. Tho case G. isrignton v. the Commissioner of Crown Lands was taken at the Supreme Court this morning, 'l'his was an originating summons under the .Declaratory Judgments Act, by which it was sougnt to determine the meaning of the words in subsection 1, section 31, of ''The Land Amendment Act, 191<i"— I "the land comprised in the lease." Mr W. A. Stout appeared for the plaintiff, while the Attorney-general (the Hon. A. L. Herdman), and with him Mr W. Macalister, represented the Commissioner of Crown Lands and the Minister of Lands,

Mr Stout, in opening, said that the plaintiff' was tho holder of two leases in perpetuity under the Land Apt. The lease purported to be issued under section 121 oi " The Land Act, 1892," with an endorsement reserving the right of minerals.'' Tho plaintiff -was the holder of the lease when the Land Act of 1912 was passed. Notice to purchase under that Act was given to the Commissioner of Crown Lands. The next 'step was to assess the price under section 35, the price having to be paid, within three months from the timo notice had been given. The commissioner did not ass«s the price, but an amount equal approximately to the purchase ■ price was paid by plaintiff to the Receiver of Land Kevenue. In the meantime tho application came before the Land Board, but was held over till the following meeting. The plaintiff's solicitors held that the application was not a matter .for the board, as the plaintiff was entitled to a Crown grant upon the completion of the purchase. Eventually the department replied to plaintiff's solicitors to the effect that a title would be issued giving Brighton all that ho was entitled to under tho Actr-that was, the surface of the land. Then the present action was instituted. The definition of " land" was well known. Judgment in the case Metropolitan District. Railway Co. v. Ca6h (13 ch. div,, '612) defined land as being that " in respect to which the owner had the right from the centre of the earth to the heaven above." By the Act the lessee was to get the foe simple of the tod. Stevens (vol. 1, chap. 3) defined fee simple as the most extensive inheritance and possession in land. The present case was covered by that of the Commissioner of Crown Lands v. Bennie (28 L. R., 955) and (11 Gaz. L. 1!., 739). The only difference between Brighton's and Benilie's leases was that the latter was granted subject to "The Mining Act, 190!}," Bennie's case was decided on the interpretation of the same words. The' only other distinction in the framing of the two kasfs was that the covenant reserving the minerals wa6 comprised in the bxly of Bennie's lease. In Brighton's it took the form of an endorsement, The interpretation of the words "land comprised in the lease" was given by Mr Justice Chapman as " the land with ,what it contains physically, although the contents may not in law be part of the matter of what is left." Bennie's case was decided under section '20 of the 1907 Act. This section became section 177 of the Consolidated Act of 1908, vfhich was identical in construction with section 31 of the 1912 Act, except that portion relating to the' assessment of price. He contended, therefore, that the interpretation by Mr Justice Chapman of section 20 of the 1907 Act held good for section 31 of the 1912 Act.

His Honor: Does not it depend upon the connection in ivhjch the words are used? They may have a different meaning if .the context sho\Vs a different meaning was intended, s Mr Stout said there was no difference in the context, which was identical in each case. The court having placed an •intetpretation on' the woTdc of an almost identically constructed section, that interpretation should hold gocd. ' They were not concerned with the intention of the Legislature.

His Honor : " Oh, yes, we are. If the result is an absurd one, how then?" Mr Stout said that it was open to the legislature to have given the right to purchase at any price it thought fit. His Honor We have to look at the intention of the Legislature as expressed in the Act. If there is a doubt that weald lead to a;n absurdity, of course wo must take the way that doos not lead to an absurdity." His Honor asked if there were leases in perpetuity where the minerals were not reserved, and on Mr Stout's replying in the affirmative, his Honor eaid that then there could be no doubt about the matter. IE the lease covered the minerals, then the right of purchase would cover the minerals also. If it were otherwise, then the right of purchase v/ouWnot cover the minerals.

Mr Stout said that, then, the meaning of tne word "land" would be different for different classes of leases. If it were construed as having two different meanings, surely that would lead to an absurdity. His Honor: Land means the land let. The question is, What was the' land let? Bennie's case .is decided upon section 177 of/the 1908 Act, which compares with the corresponding section of the ISO 7 Act. That compares with section 31 of the 1912 Act, the words of which you contend have the same meaning.

Mr Stout submitted that the Act of 1912, as well as that of 1907, was concession to the lessee. The provisions of thoso Acts should not be construed as to be strictly in the benefit of the Crown. On the other hand, the court should construe them liberallv.

His Honor: Your contention is that it was the intention of these Acts to give the lessees something for nothing. That is a somewliat super-liberal construction; yet you ask me to construe it liberally. Mr Stout said that the objects and effects of the 1912 were piteed upon lessees by the department in the form of a- circular wliich containod no hint that the price would be computed upon any basis other than that mentioned in the Act. The Legislature had several ways out of the difficulty. It might have permitted the lessee to obtain the minerals as an extra and by extra payment, and it might have provided against the right ofpurchase applying to leases of this class. It was not for the court to say that the Legislature had been too liberal.

His Honor 1 : You contend that the intention of Parliament is' to be found by the construction of the language of tne Act? Mi- Stout contended that it would have been a very easy matter for the Legislature to have inserted the reservation of minerals clause of the 1907 Act in the 1912 Act. But the policy of the Legislature was not to have valuation, otherwise what, was simpler than to have inserted this or a similar reserving clause? It. could have been done so simply. It was nut the duty of the court to repair tha mistakes of the Legislature. Thp Attorney-general opened by stating that, he would be prepared to accede to the contention of Mr Stout had the law not been altered, as otherwise his learned friend would be entitled to all ho asked for. He hoped to bo able to convince the court that the intention of the Legisla turc, as expressed in "The Land Laws Amendment Act/ 1912," was perfectly clear, and if the court were to adopt the construction asked bv Mr Stout it would lead to an absurdity. The present controversy had arisen because of two reasons, the first being the failure to comprehend the true meaning and intent ol the Court of Appeal in Bwinie's case, and the second the failu.ro of his learned friend and his client to' realise the true effect and meaning of the words " Comprised in the lease." There oould be no question about this, that tho Court of Appeal decided Bcnliio's caso against tho Commissioner of Crown Land 3 because the Legislature had declared that the owner of a lease-in-per-petuity was compelled to pay for the minerals. The Legislature had expressly declared that the holder of a lease-in-pei-petuity was bound when paying the capital value to include tho minorals; therefore tho man was entitled to -tho minerals, having to pay for them. The whole thing had, however, been altered by the legislation of 1912. Counsel then traced the history of land legislation from the pass-

ing of the Act of 1892, and said, it had, been admitted by Mr Stout that the leases 1 before the court were issued under section 121 of "The Land Act, 1892," which provided that when any mineral oil, gas, metal, or valuable stone'had been, or should be, discovered on any Crown Land, whether open for selection or not, or any Crown'land reserved, or to bo reserved for coal mining, such hud might be withdrawn. It was clear the Governor-in-Council might withdraw such land,s from sale and deal with them by specjal legislation limiting the rights to the surface of the soil and authorising tho issue of separate rights to the minerals, eto, : When Mr Brighton got his lease the pro? visions of section 121 made it perfectly clcar that the minerals did not form part of the lands comprised in his lease, and it was also quite clear that the minerals could be severed from the land, and ono man be entitled to tho surface rights and another to the minerals. It was clear that Mr Brighton got his lease under that section, which, gave him thef right to the surface only, the minerals being excepted both by the statute and by the covenant* in tlie lease. Passing from " The Laiid Act, 1892," there was tho Act of 1907, and the clause known as Mr M'Nab's clause. Section 177, re-enacted in the Act of 1908, section 20, provided that every owner of a lease-in-perpetuity had tie right during the existence of the 'leased to purchaso the fee simple at a price equal to the capital value at the time of the purchase, the capital value to be determined by valuation or arbitration and: to include all minerals other than coal and silver. That section for the first time gave to the ownej of a lease-in-perpetiiity the xight .to acquire the freehold. The whole of section 177 had to be taken into consideration, and. it was clear that though a man had a lease undef that section .it was a lease of the surface with minerds excluded. With the Act of last session the circumstances had altered. When tho Legislature passed the Act of 1912 the sub-section was not re-enacted. His friends had suggested to the court section 31 was identical with section 177 of sub-section 2, but the position was entirely different-. Under the previous section a man was compelled to pay for the minerals and under the Act of 1912 there was no reference to payment for minerals, the law going back to the position before Mr M'Nab's Act of 1907 came into opera-\ tion. Tile real position was that they had a man holding a lease-in-perpetuity expressly excluding the minerals. Then they had an amendment of the Act in 1912, which gave that man permission to purchase the freehold, no reference being made to the minerals. Mr Stout submitted that Mr Brighton was entitled to purchase not only tho land comprised in his • lead's but the land expressly excluded from his lease. There wa3 no fundamental difference between the Act of 1912 and the law as it stood in the 1908 Act, though, tho conditions of purchasing the land were entirely different. The owner of a lease-in-perpetuity under the Act of 1908 was entitled to purchase at a price equal to tl)o capital value at the time of the purchase, and it was provided that' in order tb estimate what the lessee had to pay.a valuation should be made to include the minerals. In the Act of 1902 they 'foun'd that the.owner of a lease-in-perpetuity had the right to purchase the fee simple at a price ascertainable and determined, the price to be the original capital value, the reason for the insertion of 4 and s'; per cent, being that, there were two kinds, of titles—optional right of purchase at 5 per cent, rental on the original capital value, and lease-in-perpetuity at 4 per cent, rental on .the original capital, value. Thia was provided for in the Land Act, 1892.. His Honor: What is the original capita* value? . ,

The Attorney-general replied that it was the cash value that was provided, fo.r' ill tlie Land Act, 1892. Dealing with the question of cash prices section 112 of (he Land Act, 1892, provided that rural lands might be classified by the board as first and second class. There was a fundamental difference, between the rights'conferred in the case' of leases-in-perpetuity by the Act of 1908 and by that of 1912, and' it was obvious that when the cash price was 'originally fixed minerals wero excluded. To his mind it was impossible to argue that when My Brighton's lease was granted minerals were included. They were excluded by statute and by a covenant in the lease, and did not form any part of the capital value on which the lessee bound himself to pay his rental of 4 per cent. Now they came into court and suggested that the Legislature intended to perpetuate an ultra-radical doctrine that a man should not only be permitted to purchase the land comprised in his lease but that lie should be made a present of something which was expressly excluded from the'lease.

His Honor : There are lands apt sup posed to contain minerals.

The Attorney-general replied in the affirmative, and referring to the Bennie case, said the whole of the judgment of his Honor Mr Justice Chapman proceeded on tho assumption that subsection 2 of section 177 Was the basis on which a holder of a lease-in-perpetuity rested' his claim for not only the land, but tho minerals included in its boundaries. , He submitted that, the Minister of Lands andthe Commissioner of Lands were entitled to judgment. The Crown Solicitor briefly addressed his Honor, and after Mr Stout had replied his Honor said he would give 'a written judgment. ' His Honor asked if the Crown intended to pay the costs whichever way the case went.

The Attorney-general did not feel disposed to accept this course, stating that the position they had taken up was that they had always been willing and ready to give Mr Brighton what he was entitled to nndeT the Act of 1912. : ' His Honor asked if the judgment iii this case would not affect other cases, Mr Stout said that the present case was in the nature of a test case. The Attorney-general: I will agree to whatever your Honor thinks right. It is a matter of considerable importance,'and I do not think (if the Crown is going (0 succeed) that I will ask the court to' r£ quire Mr Brighton to pay the costs'