MINING ON FREEHOLD LANDS.

Otago Witness, Issue 2253, 6 May 1897, Page 18

MINING ON FREEHOLD LANDS.

AN IMPORTANT JUDGMENT.

At the Wardea'B Court, Roxburgh, on Thursday, Mr Warden M'Carthy gave his reserved decision in re an application under " The Mining Act, 1896," by John Wells, for a prospecting license over freehold lands situate in the Mount Benger Survey District, and vested in the executors of Joseph Clarke, deceased.

The application was objected to by 'the executors before mentioned, the Colonial Bank of Australasia, a1!a 1 ! mortgagees of the freehold, nnd the Island Block Gold Mining Company (Limited). Mr I?. B. Chapman (with him Mr Finlayson) appeared for the executors and the bank, Mr Malcolm Macdonald (of Alexandra) for the company, and Mr Dalzell (of Litwronce) for the applicant.

In this previously-heard application hia Worship now delivered judgment; as under :—: —

This is an application pursuant to "The Mining Act, 1898" for a license to prospeob for gold on certain freehold lands, being part of tbe Moa Flsrt block, vested in the executors of the late- Joaeph Clarke, deceased. The lands iv respect of which the application is made were alienated on the 21st December, 1869, and comprise an area of about 950 acrei. On the 7bh November, 1888, the deceased, by indenture of lease of that date, leased these lands to the Hob. William Irving Winter, for the purpoaa of mining for gold and other precious metals for a term of 40 years, calculated from tbe date of the lease. The leaae makes provision for the payment to Ihe lessor of a dead rent of £5 per year ; and of the sum of £20 for every acce, or fractional part of an »ere, in respect of agricul-, tural land ; aud a less anm to be ascertained by arbitration in respect of grazing landc. The payment of these two latter sums does not in any sense confer any right on the lessee to acquire the freehold. They are paid merely in respect of surface damage. Tlie lessee is furfcher fco pay ts the lessor a royaily of £8 for every £100 worth of the gross yield of all gold and other precious metnls and minerals tak?n from the land. A power of entry and defcerminatiou is reserved to tbe leasor if this lessee suspends mining optrationa or fails to work the ground for raining purposes for a period of fix months during any one year. It is expressly provided that the loasa is made subject to the rights of the Crown. The lessee, by virtue of a liceu.Be iv writing, sigued by the les.'or, and dated the 16th July, 1889, assigned all hiß interest in the l».a«e to fine objecting company (the Island Block Gold Mining Company, Limited) — a cotnpany incorporated in London, and rpgvsbered iv New Zealand. This company pajd £56 000, in fully paid-up shares, tor tha lessee's rights uuder the lease. These shares the vendor to the company disposed of in the London market for £35,000. The company spent £2000 in prospecting operation*, anil subsequently, about the 6ob March, 1889, started to briug in a water race. This race was completed on the 7th July, 1889. The bringing in of the race and the erection of plant cost £21,000. SiDCO the race has been completed the gronnd — the subject; of the present applioatioD, — together with certain adjacent Geovra land?, acquired by the conipiuy for miniDg purposes, has been almost continuously worked. Altogether about 12 acres of the freehold, have been worked away. The expenditure in labour from tbe 7th July, 1889 (when the company started operations), to the pressnb time has been at least £34,000. No doubt some of this is included in the items of capital expenditure before alluded to. Against this large expenditure for labour must be placed the yield of gold daring; the same period— £4o,ooo. The company pays away in wages alone about £4000 by the year. The expenditure ot the company, whether on permanent improvements and planfe or in respect of annually recurriug items of expenditure, has besn paid partly on accoußt of the freehold lands affected by the lease and partly on account of the adjoining Crown landa. No evidence was led to enable the warden to decide how much of the expenditure had been in respect of the freehold lands or of the Crown lands ; bub there can be no doubt, viewing all the circumstances, that unless the company had obtained the concessions provided for in the lease it would nob have taken up the Crown lands. "" It was given in evidence on behalf of the company that its main object in acquiring the rights under the lease was to form subsidiary companies to work particular portions of the lands affected by the lease, according to methods best adapted to each such portion. There is no reason to doubt this testimony. There was no evidence tendered with a view of showing tbafe the facb of the execution of the lease, or of gold having been won pursuant to the provisions thereof, was ever brought to the notice of any responsible officer of the Crown, whose duty it was to assert the right of the Crown to such gold, It is, however, matter of. common history that the Grown in New Zealand had never until the acb of 1896 asserted its right to any gold extracted from freeholds. Two questions would, at the outset, seem to present themselves for solution. In the first place, it will be our duty to inquire what rights, if any, became vested in the company under the lease; aud, secondly, how have those lights been affected by the mining legislation of 1896. Now there can be no doubt (particularly since the decision of Mr Justice Conolly in Aitken v. Swindley) that the Crown has, and always has had, an abgolute right to the gold and silver contained within the lands the subject of the present application. It is, however, equally clear that until the mining legislation of 1896 no one had a right either to prospect or mine for gold therton without the consent of tbe owner. (See sections 98 of " The Goldfields Act, 1866," 173 of "The Mines Act. 1877," 138 oE " The Mining Act, 1886," and 98 of " The Mining Act;, 1891.") By sectioa 100 ot the latter acb power was given to the warden, subject to certain conditions, to grant licensed to prospect for gold in respect of certain lands therein mentioned. Bub the provisions of that: section cannot affect; the lands the subject ot the present application. The whole of the legis-

lation from the act of 1866 down to and includ- - ing the act of. 1891 recognises tho right of the ownsr of freehold lands to authorise mining for gold thereat in favour of particular persons to the exclusion of all others ; though it will bo - observed there is nothing suggestive of any abrogation by the Crown of its right to any gold won under such circumstances. Now, in the colony of Victoria, where legislation as to mining very similar to our own has for many years been in force, it has been held that, though a license given by the owner of a freehold to mine for gold thereon was in & sense illegal, the tights of tbe landowner were respected, and mining for gold en private property with the tacit aesent of the owner was held to be not illegal to such an - extent as to avoid contraetn (Binshaw Freehold G-.M. Company v. Prince of Wales Company, 5 W.W., and A'B. [B.], 140), though sub-

ject at all times to ths assertion of its right by the Crown (Ah- Wye v. Locke, 3 V.R. [E.], 112 ; Clark v. Pitcher, 9 V.L.R. [L J, 128). The conclusion then follows that aparc from the act of

1896, the rights of the company under the

lease to its predecessors in title are, subject, of course, to the rights of the Crown to the gold, absolute and un-

questionable. By virtue of that lease not only has it purged itself of any liability to penalties, but it has become entitled to an exclusive right to mine for gold, and to hold all gold -won under the terms of the lease against all the world except the Crown. It had, notwithstanding the existence of the lease, still to make its peace with the Crown with reference to the gold. Now, in the colony of Victoria it has been held that even although tho Attorneygeneral was the proper officer to enforce the right of the Crown to the gold, yet he bad no formal authority to sanction the taking of gold from freehold lands. Such gold belonged to the Crown' (Attorney-general v. Boyd, 3 A.J.R. 18). The light, then, whic'a became vested in the company by virtue of the lease was an exclusive right to mine, which license carried with it an immunity from the penalties set out in the various goldfields acts with reference to mining on freahold lands withoutthe consent of the owner. It cannot be held that the mere failure of the Crown to assert its right to the gold was in auy sense an abandonment thereof, because it nowhere appears, even assuming that the Cr"own is affected by the doctrine of notice, that it ever hsd any notice, actual or constructive, of the execution of the lease, or of the fact of money having been expended or gold won from time to time thereunder. Up, then, to tbe passing of the act of

1896 the rights of the Crown to the gold con-

tamed in these lands was un&ffectsd either by legislation or by any acts or conduct. What, then, are the terms of the act of 1896 ? It "was first of all contended that the lands the subject of this application came

within the exception prdvided for in sub-

section 4of seotion 8. That subsection enacts "that " Dothing contained in the act or in any prospecting license shall authorise the holder of

such license to enter upon any land the owner

or occupier whereof satisfies the warden of the ' district wherein such land is situate that the ' same is being prospected for gold or silver with reasonable" diligence, and that an average sum of not lets than £1 p-r acre is being expended 'in so doing." It was argued that the company was prospecting the land with reasonable diligence, and were expending in prospecting operations the sum prescribed per acre. Now, it is material to note that a distinction is

observed in the act of 1896 between " prospect-

ing for gold " on the one band and '• mining for gold "on the other. (See subsections 4 and 5 of section 8, and subsections 5 and 6 of section 18.) Although perhaps it may be difficult to lay down any hard and fast line of demarcation between the two terms, yet it is comparatively easy in particular cases to say when prospecting has ended and mining has begun. For

example, it we were shown a piece of virgin ground on which the only work done had been the sinking of two shafts, in neither of which any gold had been struck, we should at once say that the operations had not passed the prospecting Btage. On the other hand, if we were shown ground on which £2000 had been expended in prospecting operations, a large additional sum'in constructing races and erecting plant, in connection with which there was a yearly expenditure of £4000 in wages, and from which there had been extracted £40,000 of gold during a period of eight years of almost continuous work, we should have very little difficulty in determining that the prospecting stage bad passed and that of mining for gold had begun.. The operations of the company

tnuafc be classed under the latter head. I have ' < the less difficulty in arriving at this conclusion seeing the managing director of the company, Mr llawlings, is able to point out which of the lands included in the lease will pay for dredging and which for aluicing. Does, then, subsection 5 of section 8 afford any measure of relief to the company ? That subsection incorporates subsection 5 of section 18, which enacts that tbe exemption contained in section B shall extend to "any land being mined for gold or silver by the owner or occupier thereof, or some person duly authorised by him, in claims that in no caee r exceed the maximum area prescribed by the principal act lor a special claim. Provided that' in every ease the mining operations shall be conducted s abject to the principal act and •the regulations thereunder in the manner. . mutatis mutandis, as if the cla : m were granted by the warden on Crown lands." Now, although neither by legislation nor by acts or coaduob has the Grown abandoned itß right to the gold contained in these lands, yet it must be borne in mind that up to the act of 1896 there was by implication a right resting in tbe owners of freehold auriferous lands to authorise gold

mining operations thereon ; that where such

authority had been granted by owners (and many such had been granted) the Crown

had not . asserted any right to the gold ;

and that th« dredging company, during an occupancy of tbe lands lasting eight years bad spent several thousand pounds, which has not up to the present time been recouped. Further, we mußt keep in view the wsll-known rule of statutory interpretation that there is a ' strong presumption agaiDst any intention to Interfere with vested "rights ; and it becomes material to inquire whether the granting of the present application would in any way clash with tfce rights which the objecting company prior to the act of 1896 possessed under ths ' lease. Now that right was an exclusive right to mine for gold on the lands the subject of the present application. Would, then, the issue to the applicant of a prospecting license over part of the lands contained in the lease in any way clash with the Tights which the lease affects to create ? There can be no question that operations under the lease and the licence would clash ; and, further, there is the inference suggested by a perusal of section 11 and succeeding sections of the act of • 1896 that this application for a prospecting license is a step preliminary to the ultimate resumption by the State of the lands the subject of the lease ; and if these lands are resumed, it will only be for the purpose of creating titles Authorising the conduct of mining operations with the view of extracting the gold therefrom, and such titles would give rise to rights in conflict; with those affected to ba created under

the lease. To what extent, then, if any, does subsection 5 of section 18 conserve the rights of the company under the lease ? Now, it must be b?rne in miud that the whole scope and intention of sections 2 and 3 of the act of 1896 is to alter, retrospectively, the pre-existing law as to the prospecting and resumption of freehold landß, whilst sections 8 and 18 engraft on the two former sections certain exemptions in aid of particular classes of freeholds ; aud it is in the light of these considerations, as well as of the previous legislation and any rights that may have been created thereunder, that sections 8 and 18 ought to be consttued. If, then, by any reasonable construction of subsection 5 of section 18 it is possible to preserve to the company itß rights under the lease that construction ought to be adopted. That ! subsection p"e3uppcses that prior to the act | coming into operation freehold lands have been ' ! mined for both gold and silver. Ib has besn I contended by counsel for the applicant that tb.3 ! area granted uudcr the lease to Mr Winter bsing greater than that which the company could hold under the principal act, subsection 5 of section 18 cannot be construed sa as to preserve to the company its rights uuder the lease. Thib subsection uses the word "claims." Now, by interpretation in the principal aci; that word is defined to mean "a parcel or any number of parcels of Crown lands lawfully taken up and oicupied under or by virtue of the provisions of that act, or any regulations made thereunder, for the purpose of mining for gold, but shall not include any land comprised in any license " granted under the act." In the firs s place, the granting of a special claim is always evidenced by the issua of a license in contradistinction to a certificate of registration (see sections 66 and 70 of the principal act). But, further, '"claims" under the principal act can only be token up in respecb of Ccown lands (see sections 2 and 42, " Mining 'Act, 1891 "), and if a person had, prior to the act of 1896, been mining for gold on freehold lands, with the license of the owner, there would have been no obligation on him to mark out; certain areas as claims, nor would he have been confined to any limited area. Subject to the consent of the owner, he could have roamed at will over the latter's freehold lands for the purpose of mining orprospecing for gold. As a matter of practice, persons mining for gold on freeholds never did mark out claimt thereon ; and it is material ta notice that the miner's right, which in New Zealand has always been the root of all gold mining titles, confers no rights in respect o' freehold lands. A furbher question now arises — namely, are the claims mentioned in subsection 5 to be so limited that the whole of them taken together must not exceed the area allowed under the principal act for one special c'aim, or may there be a number of such claims, each of which shall be of the araa of 100 acres? The subection is by no means explicit, and keeping in mind the previous legislation aud the relation that sections 8 and 18 bear to sections 2 and 3 tbe larger interpretation should be adopted. Coming now to the proviso to aub-seelion 5, I am of the opinion that the mining operations therein referred to are operations subsequent to the com'ng*into operation of the act. Before i the act mining operations on freehold landß j would naturally be conducted without reference to fcbe goldfields legislat ; on of the colony with its liability to forfeiture and to the operation of tbe law of abandonment. That legislation never before the act of 189S affected to control tho conduct of mining operations on , freehold lands, and this omission constituted j one of the peculiar advantages of purchasing or | leasing freehold lands with a view to mining for gold thereon. Unless, therefore, the proviso ( refers to mining operations in the fulure, it is i meaningless. If, therefore, subsection 5 oE section 18 receives a narrow or strained interpretation, ifc will be powerless to conserve the interests of those whom it was designed to protect. That subsection must be construed in a general way, so that the persons thereby protected are not to acquire for goldmining pur- ' poses any greater area of freehold lands than they could have acquired under the principal act in respect of Crown lands, and as to thab area it must in the future be mined in accordance with the mining legislation now in force in the colony. That is the only reasonable construction to be put ou the subsection, and, iv my opinion, the words of t the subsection will bear that construction. What < area then could the company hold as special j claims under the principal act. The section of > thab acb which provides for the granting of special claims is 66. Under that section no limit is placed on the number of special -claims which any one person may acquire. Section 64, which deals with amalgamation of claims, clearly does not refer to special claims, although special claims are mentioned in Fection 8 of the | amending act of 1892 — a provision effecting i some amendments in section 64. Under the amending net the total area amalgamated is not to exceed 60 acres. Bab a special claim may itself contain 100 acres. Sections 64 of the principal act and 8 of the act; of 1892 clearly only refer to the amalgamation of licensed holdings with wxtended and other claims not bsing special claims. Section 31 of the amending ace of 1895 is a clear statutory reeognitioa ' of the right of one person to take up more than one special claim, and it lays down no limitation -as to the actual numbsr which may ba so taken up. Tlt may therefore be safely conceded that the whole area held by the company under the lease could before the act of 1892, if it had been Crown land?, have been taken up by it as special claims ; and the ! conclusion follows that that area comprises ■ lands which at the coming into operation of tho acb of 1896 were being mined for gold within the meaning: of subsection 5 of section 8 of the act of 1898, and consequently exempted from tbe operation of prospecting licenses or the principle of recumption provided for ia that act. But, further, the application is for a prospecting license. Now when dealing with the ! point whether the lands held by the objecting company under the lease came within the exemption set out in subsection 4 of section 8 of | the act of 1896 we were forced to the conclusion that the operations of tbe company in respect of these lands bad passed the stage of prospecting and reached thab of mining for gold. Of what nse, then, would it bs to issue a prospsefcintr license over a part of these very lands ? Why, the proceeding would be futile ! The only object of issuing a prospecting license under the ach of 1896 is to ascertain whether the land 3 over which the license is sought are ' worth resuming. But the operations of the company have proved that the lands are worth resuming. To make those lands piy is only a i question of the expenditure of more capital and of the method of working. Certainly it never could, in the face of the evidence elicited at tbe I hearing, be successfully contended, evea if this application were granted, that the applicant had hona fide discovered gold on any part of these lands within the meaning of section 1 of the first schedule to the acb of 1896. But it is proposed to base the decision on broader grounds. The company has parted with £56 000 of its paid-up capital in acquiring the lights of its predecessor in titlp under the instrument of lease, ifc has spent £2000 in prospecting the ground, and a further sum

of £21,000 in constructing water ,races ] and . erecting machinery and plant, and is .' at the present time, and has bsen for some years past, expending the sura of £4000 a year iv wages in developing the lands subject i to the lease and certain adjoining Crown j lands. Now, it is to be borne in 1 mind that there is no absolute right ; vested in any applicant for a gold-mining j privilege to obtain a grant of such application, oven it it is not objected to. (See section 129 of the principal act, and regulations 9 to 12, inclusive, of the regu'ations made under the J acb of 1896 ) A discretion is vested in the warden. No doubt that discretion is a judicin.l one, and mqsb be judicially exercised ; and, look- . ing at all the circumstances of this particular cage, to the legislation in existence at the time of the execution of the lease, and to tha fact that the rights of the Crown in New Zealand to gold contained in freeholds had never prior to the legislation oE 1896 been asserted, I am of opinion it would nob be sound public policy to grant this application. We are, however, once more brought facs to face with the act of 1896. For the first time in the history oE the colony the Crown has, under the provisions of that act, asserted its right to gold contained in freeholds. The probability is that the only recognised method for the Crown in this colony to give authority to mine on freehold lands is by legislation. Legislation having that object in view has now been passed ; and, moreover, that legislation applies to past transactions such as the lease before referred to, and if the company wishes to pursue the right to mine under the terms of the lease it must not only comply with those terms but also conform to the conditions imposed by that legislation, and it is to be observed that the lease is expressly made subject to the rights of the Crown. For the foregoing reasons the application for the prospeciing license will be refused.