WARDEN'S COURT, INVERCARGILL

Otago Witness, Issue 2429, 3 October 1900, Page 20

WARDEN'S COURT, INVERCARGILL

' Thursday, SiPiEasE?, 27. (Before Mr Warden M'Carthy.)

James Giffen v. James J-zeggatt and £L A. Mem. — Suit for forfeiture of a special claim.

In this previously-heard case the Warden now delivered judgment as follows: —

The plaintiff alleges that the title to the special claim referred to in the statement of claim was obtained as a result of a collusive suit ivhich one William Pearsey (a former licensee of the claim) procured ' to be brought again-st himself by the defendant, Mem, who subsequently transferred it to the defendant Leggatt. The plaintiff, therefore, prays — (a) That all proceedings between Mem, Pearsey, and Leggatt, or any of them in respect of the special claim, be set. aside as fraudulent and contrary 'to law and public policy ; and (2) that Leggatt be ordered to deliver up the license for cancellation. It appears the claim was originally granted to one William Pearsey on the 20th September, 1898, and remained unworked and unprotected until the 7th June, 1893, when Mem brought his suit for forfeiture in the Warden's Court at Waikaia. Pearsey was a trustee for a partnership known as the Middome Syndicate, of which he was a member. After the commencement of the suit, but before the hearing, the syndicate made an agreement with Mem to transfer to him some shares in certain mining companies, in consideration whereof, Mem agreed to hold the claim, the subject of the suit (which was subsequently granted to him pursuant thereto), in trust for the syndicate. The suit was heard on the sth September, 1899, when Pearsey's claim was forfeited, and Mem declared the first applicant, judgment being allowed to go by default. The latter filed his application on the 10th September, which was granted on the 6th February of the present year, the claim being protected for three months, and six n onths was fixed as the period during which a dredge was to ijTe constructed. Mem transferred to the defendant Leggatt on the 27fch February, and Leggatt in his turn transferred to the Milestone Gold "Dredging Company (Limited), the purchasers from .the syndicate, on the 9th May. The first transfer was registered on the 24th March, 1900. The latter has never been registered. The present suit was commenced on the 22nd May. Neither at the hearing of the suit, Mem v. Pearsey, nor at that of the application by Mem, was the fact of the entering into the agreement between Mem and the syndicate xna.de known to the Warden, and of this non-disclosure all the members of the syndicate had, at least, constructive notice through Pearsey and Haymond, the latter having been solicitor for both vendor and purchaser in carrying out the transfers from Mem to Leggatt and from the latter to the Milestone Company. No evidence was adduced to show whether, if the fact of the agreement having been entered into had been disclosed to the Warden, it would have affected his decision either in respect of the suit or of the application. The present suit, although commenced at Waikaia, was by consent of Mr Warden Stratford and all the parties heard at Invercargill. At the close of the argument the allegations with respect to the suit Mem v. Pearsey having been collusive were abandoned by counsel for the plaintiff, but by consent I was to 'decide whether the before-mentioned non-disclosure to the Warden was a fraudulent misrepresentation within the meaning of subsection 1 of section 147 of " The Mining Act, 1898." Now, it is to be observed that where forfeiture suits are .commenced, or where applications for mining privileges are made, the plaintiff or applicant as a general rule has either directly or indirectly an intimate knowledge of the land, the subject of the proceedings, whereas the Warden may never even have seen it, and Yin dealing therewith there are often-, public and private interests to be conserved. It is, therefore, important for, and, indeed, incumbent on, all concerned, whether as party, counsel, or agent, to observe the highest faitli towards the warden by .disclosing to him every fact within, their knowledge which might reasonably be considered to weigh with him in arriving at a decision. This point has already been decided in Taylor v v O'Connell, heard at Ciomwell, and it has elsewhere been held that where there is an obligatioa to reveal factor*

mere silence will be considered as a means of deception. Further, there are cases in which a non-disclosure of a material fact may be equivalent to acttial misrepresentation, of the withholding of that which is not stated may make that which is stated absolutely false; or again, it may be that from the nature of the transaction, the ifact not disclosed is such that it is impliedly represented not to exist (see " Pollock on Contracts," " Anson on Contracts," third edition, 152, second edition, 464 "Benjamin on Sales," third edition, 387), and the cases there cited. Ought then the fact of the making of the agreement between Mem and the syndicate to have had any weight with the warden? Now, the effect of that agreement was that, notwithstanding the suit, the claim, the subject thereof, was to continue in the ownership of those "who, for nine months had allowed it to lemain unworked, and it ia not unreasonable that the warden, if he had knowledge of the agreement, would carefully weigh the fact of its having been made before coming to a conclusion, but its non-disclosure, of course, prevented him from giving it due weight, and a decision was wrested from him in ignorance of a material fact, carefully concealed by the parties The non-disclosure v/as therefore a means of deception within the meaning of Smith v. Hughes (L.R., 6 Q. 8., 597), and a fraudulent misrepresentation within the meaning of subsection lof section 147. But further, as the facts appeared to the warden when granting Mem's application the claim theretofore held by Pearsey was to be "wiested from the syndicate, but the fact not disclosed made it plainly appear that the claim, notwithstanding it was being nominally granted to Mem, was in reality the property of the syndicate, and this brings the present case within the principle laid down by Lord Cairns in Peek v. Gurney (L.R, 6 H.L., at p. 403). Whether,therefore, there is or is not a duty of full disclosure laid on those obtaining grants of mining privileges, or whether we treat that which was not disclosed as lending an absolvitely false complexion to that which was disclosed, the result will be the s?.me — namely, that the nondisclosure will be treated as a fraudulent misrepresentation. There is the less difficulty "in arriving at this conclusion when it is borne in mind that the discretion reposed in the warden to gra.nt or refuse an application for a mining privilege is a judicial discretion which may be judicially reviewed on appeal to a competent tribunal. Claim forfeited and license ordered to be cancelled. Plaintiff decreed the first applicant therefor, provided he duly files his application within seven days froni this date, but seeing the plaintiff will become the licensee of the defendant's claim each party will be ordered to pay its own costs.