THE MIDLAND BAIL WAT ARBITRATION. (From Our Own Correspondent.) Wellington, November 22.

Otago Witness, Issue 2179, 28 November 1895, Page 27

THE MIDLAND BAIL WAT ARBITRATION. (From Our Own Correspondent.) Wellington, November 22.

The Arbitration Court in connection with th« dispute between the Midland Railway Com* pnny and the Qovernment met in the L* gislativ* Council Chamber this morning. Sir Charles Li Hoy and Sir Bruce Burnside constituting tha court. Messrs G. HutohUon (Wellißgton), Theo. Coopor (Auckland), and Jones (Greyi mouth) appeared as counsel for the company/ and Messrs Gully (Wellington), Stringer [ (Christchurcb), and Dr Finlay (Wellington) on behalf of tho Government. Mr Gaily intimated that Sir Robert Stout would lead the oasa for the Crown. Tho arbitrators said that they desired that the Hon. Mr Blake, Q.C., M.P., tho umpire selected, should sit with them and hear the evidence. This course was a greed to. Tbe court then called upon counsel for the company to proceed with its case. Mr Georga Hutchison s>sked to be allowed till to-morrow to file particulars, as counsel were not award that they would be called on to-day. Thi» request was granted. After Mr Gully had raised various points touching jurisdiction for subse* quent consideration, the ccurt adjourned until 1C a.m. on Monday, the arbitrators indicating that they would sit from 10 a.m. to 5 p.m. on each day, with an interval for luncheon. It is expected that the proceedings will last thres ' months. November 23. Thejcircutnsjgmces ofl* of which the preseal proceedings have' arisen may be briefly stated as followa :— - In 1884 the- Eastj and West Coast Middle Island aud Nelson -Railway and Railways Construction Aob was passed, offering various advantages to induce tha construction of the railways rcfiiTed to. Crown lands for a distance not exceeding 15 miles on either Bide of the line were to be withdrawn from eale and surveyed into rectangular blocks, tha constructors to be allowed the choice of alternate blocks. Should there not be sufficient suitable land adjoining the line, other laTids specially affected by the construction of the railway wore to be set apart for a similar purpose. The contractors were further to be entitled to any coal found ou the laud comprised in the endowments. Certain lands described in the sohedulea of the Wtstland and Nelson Goldflelds Administration Act of 1877, and lands then naed or about to ba used for mining purposes, were not to bo affecbed by the contract. The act was passed in consequence of negotiations which had taken place between the Government and certain gentlemen interested in the construction of the line, with whom a contract was entered into on the 17th of January 1885, and subsequently rntlfied by Parliament, aud on the 30bh of April 1888 the promoters transferred their contract to the Midland Railway Company, formed for tho purpose of constructing the line. An amending act w*s passed authorising the Governor to enter into » new contracb with the company, as some of the provisions of the original c >r>tracb were found to be unworkable, and on the 3rd of Auguat 1888 the new contract was exfeuted. Ib provided that tho works wera to bj completed wibhin 10 years from the 17bh of January 1885, the date of tha original oontracb, or such further birne as might be allowed under tbo provisions of the contracb. In 1889 the company applied to the Government for pormis^ion to change the route of the line from the western to the eastern side of Lake Brunner, and this was given legislative effect to iv 1890, when other modifications 'nere also made. Disputes arose from time to timo between tho company and the Government as to the interpretation of certain sections of the ooutmct aud tho work of the lino generally. In 1892 the company, without prejudice to its legal rights, petitioned for the appointment of a committee to consider the position and report on its proposals for modification of the contracb and the numerous grievances which had developed. The committee had before it voluminous correspondence bntween the company aud bhe Government as ta theoe things, and as to extension of time for the compl tion of tha work. Ib recommended certain modifications of tho conditions. With these the company was dissatisfied, and last year a yelect committee was appointed to consider the position and the correspondence subsequent to the finding of the previous committee. Tfce result was a recommendation that a new contract should be entered into materially modifying the original scheme and its scope. A bill embodying the recommendations was brought in by the Premier and thrown out by the Plonse, and the company forthwith served the Government with notice of its desire for arbitration, under section 47 of its contract, on the points at issue. Sir Charles Lilloy, late Chief Justice of Queensland, and Sir Bruce Burnside, late Chief Justice of Ceylon, were subsequently appointed arbitrators by the Goveraraeut and company respectively, and met in Wellington last April ; but, as they were unable to agree upon an umpire, th« time for the making of their award was enlarged to the 30th of January next, a period which will, no doubt, have to be further enlarged. Meantime the Government, acting on the advice of counsel, seized the line, under the provisions of " The Railways Construction and Land Acb 1881," on the 25th May last. The sitting of the Arbitration Court in connection with the dispute between the Midland Railway Company and the Government will be resumed on Monday. STATEMENT OF CLAIM. The Midland Railway Company claims aa follows : — 1. Thab the undertaking of the company being a work to be remunerated in part by land as provided by claus*e 16, the Queen, contrary to the provisions of the contract, refuged and prevented the exercise by the company of their rights of selection over large areas of land within the authorised area. 2. That if any lands were properly reserved under subciause c of clause 16, then the company were hindered and prevented in the exercise of their rights under clause 18 by being refused a right to the timber on such ' lands. 3. That the Queen, in contravention of the contract, permitted and authorised the destruction and removal of limber on lands available for selection, thereby depreciating the value ot« such lands. 4. That tho Queen, in contravention of the contract, refused to give effect to the requests of the company under clause 33 to sell or let lands within the authorised area in the Nelson and Westland land districts on the western side of the m&ia range of mountains. 5. Tbat remuneration of the company being to the extent of £1,250,000 " Bl value " inland (<%■> the work of construction should proceed), the Quesn (by and through the Parliament of the colony) by greatly iooreassd and graduated taxation on the land imposed subsequent to the date of the contract, and without any exception in favour of the lands over which the company had the right of selection, materially reduced the consideration of the contracb and destroyed confidence in the undertaking of the company as a commercial enterprise. 6. Thab the Queen, by withholding for an unreasonable time oonient to a deviation o£ tbs

railway line from the western to the eastern sid c of Lake Brunner, and to the substitution of an incline for a tunnel line at Arthur's Pass, delayed and prevented the company proceeding with the works under the contraeb. 7. That the Queeu, by farther withholdiDg Cor an unreasonable firce consideration of the spplication of tho rompiny for an extension of time nnder clause 4-2 cf rhc contract, prevented the company from raising the capital necessary to complete ihc railway and perform its ether obligations and to realise the benefits and tights conferred on it; by tbe contract. 8. That the Queen, in derogation of the contract, by and through the Executive of the colony, and particularly by the false and defamatory statements of the Minister for Public Works in October 1692 before a select committee of the Hvjuse of Representatives (which statements became part of the public records of the colony), made it impossible for the company to raise the capital necessary to complete the railway and perform its other obligations and to realise the benefits and rights conferred on it by the contract. 9. That the company being formed for the purpose of constructing a railway on a system of land grants as provided by " The East and West Coast Middle Island and Nelson Railway and Railways Contraction Act 1884," and as expressed in the contract between the parties, and being thus known to tbe Queen as a company which would have to raise money from ' time to time by share or debenture capital, or both, to enable it to carry out the contract, tofts by reason of the premises prejudiced and prevented from raising the capital necessary to complete the railway and to perfotm its other obligations, and from realising the benefits trad tights conferred on it by the contract. • 10. That by arid in relation to the foregoing matters the credit of the company has been destroyed, and consequently the company has been prevented from completing the railway, and that thereby it has lo^t the whole of the share capital subscribed together with tha profits reasonably expected tbereon, and bas lost the whole of the debenture capital raised and expended with interest thereon, and also other moneys and credits amounting to the sum of £1,584.900, which sum the company accordingly claims to recover from the Queen. 11. Theise particulars are in respect only of the (natter in dispute and the difference existing prior to and on the 14-th January 1895, and do not include the claim of the company arising out of the seizure of the railway on the 25tb May 1895. Including the company's olaim for the seizure of the railway, the company have under clause 4-7 of tbe contract submitted to arbitration finder notice dated 13th July 1895. THB CASE FOB THE CROWN. The statement of the case for the Crown begins by setting out the coarse of legislation Mid particulars of the contract with the Midland Company. Under this 10 years were allowed for the completion of the line, and the fcerm expired on January 17, 1895, when the eompauy had only built 75 miles cut of some <235. Further, the company had notified their Intention *o abandon the line from Reefton ot Motueka, about 94 miles. Respondent alleges that the true reason why the company failed to carry out the contract was that the company were nnaHle or unwilling to provide the funds required. It is pointed oat that the effect of modifications and concessions made, one of which was the substitution of an incline at Aithar > 6 Pass for a tnnnel, were e.-tiroated by the company to save them £549,881. Respondent contends that the company, by their own behaviour, are stopped from claiming that there has been any breach of agreement excusing them from carrying out tbe obligations. With respect to the complaint about excessive reserve* and delay in acceding j to certain applications under clause 33 of the contract, respondent denies that there has been any breach, and that up to Ihe last day the. company continued to select land. The respondent having notified the company that the contract time had expired and so debarred them from any right or privilege under it, arbitration was only submitted to without prejudice to the contention that the company are barred from it by their own fault. Failure to perform tho contract has involved a loss of benefit from the construction of the line, locking up for 10 years t^.Ta6 five million acres of Crown lands, and the loss of grants selected by the company of an aggregate area of 373,688 acres. _The respondent submits that the company not having performed the contract cannot m law maintain any claim thereunder, and the arbitrators have no jurisdiction. Part 2of the statement is devoted to the taking of the railway by the Government and objections to including the seizure among the subjects for arbitration. The respondent submits that, the line being taken ander statutory authority, the company cannot maintain any claim and the arbitrators have no jurisdiction. Counsel for the Crown will move on Monday to strike out five counts of the Midland Compuny's claim on the ground that they, do not disclose^ any legal claim. They are tbe complaint as to the graduated taxation on land ; delay in consenting to the deviation of L»ke Branner, and abolition of the tunnel at Arthur's Pass ; delay in consenting to an extension of time ; statements made by the Minister for Public Works before ths Parliamentary Committee ; and hindrance to the company's financial operations by reason of the above. As to the other counts a motion will be made for more explicit particulars on the ground that the Crown had never had reasonable particulars of the claim under arbitration. Objection will alao be made to the jurisdiction of the arbitrators on the following grounds :—(1): — (1) That the contract had been brcken, the company only having performed a quarter of their work. (2) The company have expressly abandoned a large portion of the line^ — viz., between Stillwater and Foxhill. (3) That the Government having taken the line under statutory authority, and the statute txprtsaly prov.diag an appeal to the Supreme Court, the company are, therefore, debarred from appealing to arbitration. It is not yet known whether the proceedings will be open to the press. November 25. The formal proceedings in tbe Arbitration . Court adjudicating on the d'spute between the Midlmd Railway Company and the New Zealand Government began at 10 a.m. Sir R. Stout at once raised the point that only by virtue of the contract could arbitration be entered into and not under any statute. The contract having come to an end by breach on the part of the company the power to arbitrate had also come to an end. After further argument the arbitrators intimated thtt they would withhold thtic decision on these points till they had heard counsel's address. On the court resuming at 2 p.m., Mr George HutcH^on bfg-ui hi« opt-niuy; Address on behalf of (ho coniimny, and gnve a general cunline of the transactions between the company and successive Governments, quoting expensively from parliaments ry and other official papers, aliO frcm the set of Parliam<nt afTe t'->g tbe company. Mr Hutcfci ou ha-i net Oi.Jrhedhis tdtlrcss when the curt rose for the day. * The Premier wm present throughout tha whole

day's sitting. Four shorthand reporters — Messrs Gore and Ru33ell (of the Hansard staff) Lo Grove and M'Alister — are engaged taking notes of the proceedings. They were sworn ia before work began. In addition to counsel already Darned Mr G. Harris (of Christchurch) appears as solicitor for tbe company, and Mr Burcbill (the English solicitor to the company) is also watching the case. For the Crown Dr Findlay is among the counsel and Mr Gully also as solicitor.