PROCEEDINGS OF THE SELECT COMMITTEE ON THE DUNEDIN DISPUTED RESERVES; TOGETHER WITH THE EVIDENCE TAKEN BY THE COMMITTEE.

Appendix to the Journals of the House of Representatives, 1868 Session I, F-04

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PROCEEDINGS OF THE SELECT COMMITTEE ON THE DUNEDIN DISPUTED RESERVES; TOGETHER WITH THE EVIDENCE TAKEN BY THE COMMITTEE.

REPORT BROUGHT UP 26th AUGUST AND 10th SEPTEMBER, 1868.

WELLINGTON.

1868.

ORDERS OF REFERENCE

Fxlracts from the Journals of the House of Representatives. Wednesday, sth August, 1868.— Ordered, " That a Select Committee be appointed to inquire into the circumstances under which, and the manner in which, the moneys which appear under the head of ' Dunedin Disputed Reserves,' in the accounts for the quarter ended 30th September, 1867, were paid to the Superintendent of Otago; with power to call for persons and papers."— {lion. Mr. Stafford.) Wednesday, 12th August, 1868. — Ordered, " That the Select Committee to be appointed to inquire into the circumstances under which, and the manner in which, moneys which appear under the item 'Dunedin Disputed Reserves,' in the accounts for the quarter ended 30th September, 1867, were paid to the Superintendent of Otago, consist of Mr. Carleton, Major Atkinson, Mr. Tancrod, Mr. Cargill, Mr. Haughton, and the Mover. Three to form a quorum. To report in ten days." — {Mr. Bolleston.) Tuesday, 25th August, 1868.-— Ordered, " That the Select Committee on the Dunedin Princes Street Reserves have leave to postpone the bringing up their Report for seven days."— {Mr. Bolleston.) Wednesday, 26th August, 1868.— Ordered, " That the Report of the Select Committee on the circumstances under which, and the manner in which, the moneys which appear under the head of ' Dunedin Disputed Reserves,' in the accounts for the quarter ended 30th September, 1867, were paid to the Superintendent of Otago, bo referred back to the Committee for further consideration." — {Major Atkinson.)

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Monday, 17th August, 1868. The Committee met pursuant to notice. Present : Major Atkinson, Mr. Rolleston, Mr. Cargill, Mr. Tancred. Mr. Haughton, Order of reference, 12th August, read. On motion of Mr. Haughton, Mr. Rolleston was appointed Chairman. Besolved, That the Chairman be requested to write the Colonial Secretary, asking him to supply the Committee with all papers relating to the Dunedin Disputed Reserves subsequent to the introduction of the Bill entitled "The Dunedin Princes Street Reserve Act, 1567." 2. That the Comptroller be requested to attend the Committee at 11 o'clock to-morrow. 3. That a Copy of the Bill entitled " The Dunedin Princes Street Reserve Act, 1867," as introduced into the Legislative Council, be obtained from the Clerk of Legislative Council.

Tuesday, 18th August, 1868. The Committee met pursuant to adjournment. Peesent: Major Atkinson, Mr. Rolleston, Mr. Haughton. In order to procure some papers relating to the Dunedin Disputed Reserves, the Committee adjourned to Wednesday, the 19th August, at IO'SO a.m.

Wednesday, 19th August, 1868. The Committee met pursuant to adjournment. Peesent: Mr. Cargill, j Mr. Rolleston, Mr. Carleton, Mr. Tancred. The minutes of the two previous meetings were read and confirmed. Mr. FilzGerald was called in and examined, and gave the following evidence : — 1. Are you Comptroller?—l am. 2. Were you Comptroller in the month of September, 1867 ? —I was. 3. Are you aware of an item that appears in the Public Accounts for the quarter ending September, 1867, under the head of Dunedin Disputed Reserves ?—I only know of it from seeing it in the accounts. 4. Was it never made a subject of requisition to you ? —I remember its being included in a requisition, which, to the best of my recollection, I returned to the Treasurer with a request that the Act might be stated appropriating the money. 5. What course did the Treasurer adopt ?—I heard nothing further about it. 6. Did you countersign the requisition ? —I did not; if I had, it would now be in my office. 7. Has any money been drawn from the Public Account for the payment of this item ?—lt has not. 8. Are you aware of whether this item of £6,031 18s. 9d. was ever paid into the Public Account ? —• I have no means of knowing whether it was or not. I know the total sums which are paid into the Public Account, but not the sources from which they arise in detail. I may state, however, that a few days previous to the close of the last financial year an account of Trust Moneys was made up by the Colonial Treasurer after conference with me. There was some discussion as to what constituted Trust I'unds. A sum of about £24,000 was withdrawn from the Public Account and placed in the Bank of New Zealand at interest. After the Public Revenues Act was passed and four separate accounts were established, I called on the Treasury to pay in this sum to the Public Trust Fund, which was done. If this item of £6,031 18s. 9d. w ras included in this amount, it was paid into the Public Account. The deposit in the Bank was not operated upon ; it was refunded in full to the Public Account, as explained in Mr. F'itzherbert's Financial Statement. On the motion of Mr. Cargill, the Committee adjourned till Thursday, the 20th August, at 10.30 o'clock a.m. Tiiuesday, 20th August, 1868. The Committee met pursuant to adjournment. Present: Major Atkinson, Mr. Rolleston, Mr. Carleton, Mr. Tancred. Mr. Haughton, The minutes of the previous meeting were read and confirmed. * For the Iteport of the Committee, see Journals of House of Representatives, pages 84 and 127.

PROCEEDINGS OF COMMITTEE.*

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Mr. Batkin, Accountant, was called in, and a list of questions handed to him, to which he was requested to reply to-morrow. Mr. Woodward, Assistant Treasurer, was then called in and gave the following evidence: —About the end of June 1867, Mr. Fitzhcrbert had a statement of balances of the Deposit Account drawn out as it stood on the 31st March. Mr. FitzGerald and he went over this account, and decided that certain amounts were to be considered as Trust Funds. The amounts are those stated in Mr. Fltzherbert's Financial Statement. This amount was placed as a fixed deposit at interest in the Bank of New Zealand. I assume that a requisition on the Comptroller was made for the amount, to transfer it from the Public Account. I cannot speak positively on this point. It was withdrawn from the Comptroller and was in the Colonial Treasurer's name and might be operated on by him. After the passing of the Public Revenues Act Mr. FitzGerald called on the Treasury to pay this deposit (£24,000) into the Public Trust Fund. There was £30,000 in the Bank. I have no doubt that the amount of £24,000 was paid back in full to the Public Account. The other sum of £6,000 w ras already bearing interest when, the deposit was made, and was paid back in the same manner. It was a round sum of £6,000. Mr. Fitzherbert omitted this sum in his Statement. There was no specific requisition to the Comptroller, when the money was paid for this sum of £6,031 18s. 9d. The amount did appear after payment in a covering requisition made for the purpose of adjusting accounts. The amount was struck out by the Comptroller. Nothing further appears on record in the matter. It was spoken of at several interviews. Instead of interfering with the Deposit Account, which was bearing interest, the Treasury paid the sum of £6,031 18s. 9d. from the Colonial Treasurer's balance, which balance had been drawn from the Comptroller for other purposes. Mr. Hill, Chief Clerk, Audit Office, was then called in, but was unable, to give evidence relating to the question referred to the Committee. On motion of Mr. Carleton, Resolved, That this Committee adjourn until Friday, the 21st August, at 1030 o'clock. Friday, 21st August, 1868. The Committee mot pursuant to adjournment. Present : Major Atkinson, . Mr. Haughton, Mr. Cargill, Mr. Rolleston, Mr. Carleton, Mr. Tancred. The Chairman notified to the Committee that he had received from Mr. Batkin, Accountant of the Treasury, his answers to the several questions that had been submitted to him, which the Chairman proceeded to read as follows : — 1. It appears that £24,000 was paid at the request of the Comptroller into the Public Trust Fund, after the Public Revenues Act was passed. How was this amount made up ?—The sum of £24,431 2s. 2d. referred to by the Committee was made up as follows : — £ s. d. Intestate Estates ... ... ... ... 15,667 15 8 Real Estates Administration ... ... ... 1,047 16 8 Supreme Court Account ... ... ... 385 10 8 Trustees Relief Act ... ... ... 225 7 7 Estates of Deceased Soldiers ... ... ... 904 10 5 Native Eeserves, Wellington ... ... ... 168 2 5 Dunedin Disputed Reserves ... ... ... 6,031 18 9 £24,431 2 0 Out of this amount the sum of £6,031 18s. 9d. was withdrawn from deposit and paid into the Public Account on the 3rd September, 1867. The Public Revenues Act was passed on the 10th October; only the balance therefore of the amount first mentioned was paid into the Public Trust Fund after the passing of the Act. This balance, amounting to £18,399 3s. 5d., was withdrawn from Deposit and paid into the Public Trust Fund on the 3rd January, 1868. 2. Has this sum or any portion been paid out; also state under what authority ? —The sum of £6,031 18s. 9d. was paid out of the Public Account on the 24th September, 1867. The authority quoted on the voucher for this payment refers to the written direction of the Colonial Treasurer; other sums comprised in the amount referred to (£24,431 2s. 2d.) have been paid out since that date, but it would take some time to prepare an exact statement of them. 3. Are you aware whether any requisition was sent from the Treasury to the Comptroller for the sum of £6,031 18s. 9d. ? —A requisition for the sum of £6,031 18s. 9d. was made on the Comptroller when the amount was originally withdrawn from the Public Account for investment. I have also seen a requisition prepared in January or February, to cover issues of money from the Public Account prior to the 3.lst December, in which this sum was included, but was disallowed by the Comptroller. lam not aware whether any other requisition for this sum was made on the Comptroller, this branch of the Treasury business not being in my charge. Mr. Woodward was recalled, and gave the following evidence : — On the 29th June the deposit was made. On the 29th September it matured. The payment of the £6,031 18s. 9s. was made on the 24th out of the Colonial Treasurer's balance, and recouped on the 29th when the deposit matured. Mr. Batkin has been misled in stating that it was withdrawn on the 3rd. Mr. FitzGerald's statement that the total of £24,000 (in round numbers) was repaid in full to the Public Account is explained by the fact to which I alluded yesterday, that there was a further sum ■of £6,000 in the Deposit Account, which had been overlooked. The deposit was for three months.

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Mr. FitzGerald recalled, and evidence read over to him. By the Chairman^] Can you explain the discrepancy which appears between your statements and those of the Treasury Officers ?—I can state positively that the sum of £24,431 2s. 2d. was withdrawn from the Public Account under the distinct assurance that it should not be operated on, but merely for the purpose of obtaining interest. I called on the Treasury to pay the whole sum into the Public Trust Fund, and was informed generally that it was paid in as soon as the deposit matured. Mr. Woodward, who was present, stated that it was paid in as explained by him, by means of the £6,000 balance in hand; and the sum really paid in was less by £31 18s. 9d. than the original amount. On motion of Mr. Carleton, Besolved, That the Chairman be directed to make an abstract of the evidence, also of the circumstances under which the Bill of last Session introduced for the purpose of authorizing the payment of this sum was lost. On motion of Mr. Tancred, Besolved, That this Committee adjourn till Monday, the 24th August, at 10 o'clock a.m.

Monday, 24th August, 1868. The Committee met pursuant to notice. Present : Major Atkinson, Mr. Rolleston, Mr. Cargill, Mr. Tancred. Mr. Carleton, The minutes of the two previous meetings were read and confirmed. The Chairman, in accordance with the terms of the resolution proposed by Mr. Carleton at the last meeting of the Committee, submitted in the form of a draft report an abstract of the evidence, also of the circumstances under which the Bill of last Session was lost; and the same was read as followeth :— Your Committee have directed their inquiries to the circumstances under which the Bill to authorize the payment of the sum of £6,031 18s. 9d., being the rents which have accrued from the Dunedin Princes Street Reserve, to the Superintendent of Otago, was lost in two consecutive Sessions of the General Assembly, and also to the manner in which the money was finally jiaidto the Provincial Government in the month of September last. A Bill intituled " An Act to declare the Superintendent of the Province of Otago to be entitled to certain Rents received on account of a Reserve situate in Princes Street, in the City of Dunedin," was introduced into the House of Representatives by Mr. Stafford in the Session of 1866. The Bill was committed and reported without amendments on the 20th of September, 1866, and was read a third time on the same day. It is described in the Journals of the House of Representatives as having " lapsed in the Legislative Council." A reference to the Journals of the Legislative Council shows that on the 2Sth September " It was ordered to be read a second time that day six months." On the 30th July, 1867, Mr. Dillon Bell obtained leave, in the House of Representatives to bring in the same Bill that had been rejected in the previous Session in the Legislative Council. Mr. Speaker expressed his opinion that the Bill was of a private character, and on his suggestion a motion was carried that it should be referred to the Joint Committee on Private Bills to inquire into its nature. On the 6th August, on motion of Mr. Bell, it was ordered that the Bill should be laid aside; Mr Bell stating that the Government had taken the matter up. On the 7th August, the Hon. Mr. Stafford obtained leave to introduce the same Bill, stating that the Bill had no other object than to enable the moneys held by the Colonial Treasurer to be paid to the Superintendent of Otago, in trust for certain purposes. On the 23rd of August the House went into Committee on the Bill, and amendments were introduced in the preamble, and in one of the clauses of the Bill. The words " to declare the Superintendent to be entitled to the said sum of £6,031 18s. 9d. subject to the trusts expressed in the said grant and " being omitted in the preamble ; and the words "it is hereby declared that the Superintendent of the Province of Otago and his successors are entitled to the said sum of £6,031 18s. 9d. and " being struck out in section 3of the Bill. The amendments appear to have been made from the belief that the words struck out would have validated the grant. The Bill was read a third time and passed on the 10th of September, and is described in the Journals of the House of Representatives as having lapsed in the Legislative Council. The Bill was read a first time in the Legislative Council on the 12th of September, and is described in the Journals as having lapsed. The loss of the Bill appears to bo attributable to the following circumstances : — On the 22nd of August a petition from a Native chief, named John Topi Patuhi, claiming to be interested in the reserve, was presented to the Legislative Council. Its prayer, as described in the Journals, was that "the Dunedin (Princes Street) Reserve Bill be not passed, but that the whole question be dealt with by a judicial tribunal." The petition refers to the Bill as one " whose effect, if it became law, would be to deprive his tribe of the funds which have accrued from the letting of this said reserve in Dunedin;" and the words of its prayer are, " That your honorable House will refrain from passing a Bill relative to the Dunedin Princes Street Reserve or its rents." The petition was referred to the Select Committee on Public Petitions, which, on the 12th of September, brought up a report recommending that, " in as much as the question referred to them in the petition of John Topi Patuki appears to be one which can only be equitably and satisfactorily decided by the Supreme Court, in which it is shown that an action in relation to it is already pending, the prayer of the petitioner be acceded to, and that no measure in any way affecting the question should bo entertained until such decision shall have been given. On the 17th of September, on the motion of the Hon. Mr. Menzics, it was resolved that " the report of the Petitions Committee on the petition of John Topi Patuki be 2

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adopted." It would seem that the passing of this resolution was practically a rejection of the Bill, w rhich does not appear to have been again brought under the consideration of the Council. On the 24th of September, 1867, the accrued rents, amounting to £6,031 18s. 9d., w rerc paid to the Superintendent of Otago, on his giving an undertaking in his official capacity, and on behalf of the Province, that in the event of the grant of the reserve as to the whole or any part of the land being declared invalid in any Court of competent jurisdiction or by the Legislature, ho would repay such amount as was decided to bo payable to the Colonial Treasurer. His letter further guarantees the Government against all claims which may bo made against the Crown or Government of New Zealand, in consequence of the rents being paid Over to the Province. Your Committee has not been able to satisfy itself that this undertaking would be a good security in the absence of an appropriation for the purpose by the Provincial Council of Otago. It is noteworthy that " The Provincial Lawsuits Amendment Act, 1867," was not in force at tho time the undertaking was given. On the manner in which the money in question was paid out of the Treasury, your Committee has taken the evidence of tho Comptroller, the Assistant Treasurer, and the Accountant of the Treasury. Their statements differ in some particulars, but the facts of the case appear to be as follows :— On the 29th of June, 1867, an account of moneys determined to be Trust funds was made up by the Colonial Treasurer after conference with the Comptroller. The total sum, amounting to £24,431 2s. 2d., which included the item of £6,031 18s. 9d., was by requisition on the Comptroller withdrawn from the Public Account, for the purpose of being placed as a fixed deposit bearing interest in the Bank of New Zealand. In the Comptroller's words, " this sum was withdrawn from the Public Account under the distinct assurance that it should not be operated upon, but merely for tho purpose of obtaining interest." This assurance was required because the Comptroller considered the requisition not strictly in accordance with the provisions of the Act; but he gave way from a desire that interest might not be lost on the deposit. After the passing of the Public Revenues Act, the Comptroller called upon the Treasury to pay the whole amount into the Public Trust Fund, as constituted by that Act, and was informed generally that it was paid in on the deposit maturing. The Comptroller, at the time of giving his evidence, entertained the belief that it had been paid in in accordance with the assurance which was given to him. What actually happened, however, appears from the statement of the Assistant Treasurer. The deposit was originally made for three months, maturing on the 29th of September. On the 24th of September, the sum of £6,031 18s. 9d. had been paid to the Superintendent of Otago out of the Colonial Treasurer's balance, and this amount was recouped out of the deposit when it matured on tho 29th of September, leaving a balance of £18,399 3s. sd. for deposit at that date. This sum remained in deposit till the 3rd of January, 1868, together with a sum of £6000 of the existence of which the Comptroller was unaware, and which was omitted from the account given by the Colonial Treasurer of the sums placed in deposit in his financial statement of August, 1867. It will be seen, therefore, that this round sum of £6000 apparently restored the original £24,431 2s. 2d., less £31 18s. 9d., but did not do so in reality, being a sum derived, as already stated, from a different source. It appears from the evidence that a requisition was made on the Comptroller for this in common with other items at the time the sum of £24,431 2s. 2d. was invested in the Bank of New Zealand, and that the item apjwared subsequently in a covering requisition made for the purpose of adjusting accounts, which had necessarily been in an unsettled state since the coming into operation of the Public Revenues Act. This item was disallowed by the Comptroller in his requisition, but nothing further appears on record in respect of the payment. Moved by Mr. Tancred and agreed to by the Committee, That the following paragraph be added and incorporated with the draft report submitted by the Chairman : — That, with regard to the manner of the payment of the sum of £6,031 18s. 9d. to the Superintendent of Otago, the technical irregularity which attended it might not have required special notice in the transition state of the law affecting the Public Account had the assurance of the Treasury to the Comptroller, that the Deposit Account would not be operated upon, been adhered to —a point to which prominence is given by the fact of the Comptroller having declined to countersign the covering requisition which contained the item ; and that, under all the circumstances of the case, special reference being had to the loss of the Bill which was introduced for the purpose of authorizing the payment, the money ought not to have been paid. On motion of Mr. Carleton, the Chairman was directed to report accordingly. The Committee adjourned sine die.

Wednesday, 26th August, 1868. The Committee met in compliance with special requisition. Present: Major Atkinson, Mr. Haughton, Mr. Cargill, Mr. Rolleston, Mr. Carleton, Mr. Tancred. Minutes of previous meeting read and confirmed. Mr. Haughton put in the following memorandum : —■ Under all the circumstances of the case, I cannot agree with the decision of the Committee that the sum of £6,031 18s. 9d. should not have been paid to the Superintendent of Otago in September, 1867, as I consider as a matter of right it should have been paid before. C. E. Haughton, 26th August, 1868. Member of Committee.

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The Chairman then stated that subsequent to tho adoption of the Report a Memorandum by the Comptroller had been received by him, and he had accordingly convened a special meeting of the Committee. The Comptroller's Memorandum was then read. On motion of Mr. Carleton, Besolved, That the Committee coincide in opinion with the Comptroller that the Treasurer is still a debtor to the Crown by the amount of £6,031 l£s. 9d., and that as soon as the year's accounts are placed in the Auditor's hands it will be that officer's duty to require the money to bo repaid, in accordance with clause 70 of the Public Revenues Act. On motion of Major Atkinson, Besolved, That tho Comptroller's Memorandum be appended to the Report of the Committee. On motion of Mr. Tancred, Besolved, That tho Chairman be directed to report accordingly. On motion of Mr. Carleton, Besolved, That the Chairman be directed to lay tho minutes of the proceedings of the Committee on the Table of the House. The Committee then adjourned sine die. Fbidat, 28th August, 1868. The Committee met pursuant to notice. Present: Major Atkinson, Mr. Haughton, Mr. Cargill, Mr. Rolleston, Mr. Carleton, Mr. Tancred. Order of reference of 26th August read. The Attorney-General was then called in, and the following questions put to him : — 1. By the Chairman.'] Your opinion, in August, 1866, was as follows: —" The grant itself has no such retrospective effect. I think, however, that the money ought to be paid to those who are now deemed entitled to the land. Clearly the Crown ought not to retain it as part of its revenue. lam disposed to think, as the Commissioner of Waste Lands has recovered it and paid it into the Treasury, the money ought not to bo taken out of the Treasury without the Governor's warrant, and that his warrant should not bo given without the sanction of the Legislature. I do not think that the mere separation and name of the account under which the money has been paid makes any difference. This is not a case where a statute permits money to be kept at a separate account, and to be dealt with without specific appropriation." Are you aware of any circumstances which would after your opinion at the time of the payment of the money in 1867 ? —I cannot say that I recollect any other facts than those that appear on the Papers. My opinion in 1866 is an intimation of what would appear to be proper, seeing that those moneys had been mixed up with public moneys. I believe there is an opinion about a year afterwards. lam told that I had a conversation with Mr. Fitzherbert before giving tho second opinion. I have an indistinct recollection that such is the fact. If I wras told by him that this £6,031 18s. 9d. was not confused with the public moneys, then I have no doubt I should have said that the £6,031 18s. 9d. might be paid without the sanction of the Comptroller or appropriation by the Legislature. I also think that, even if ho had not stated that the moneys were not confused, but had informed me that they were rents received under the circumstances under which they had undoubtedly been received, the fact of paying them by mistake into the public account would not make them revenue, or render it necessary to obtain the sanction of the Comptroller or appropriation by the Legislature in order to obtain their withdrawal from the Public Account. I believe that I should have given this opinion, because it is now my opinion, and I have given a similar opinion on another matter. I may state as a matter of fact that certain moneys were paid into the Public A.ccount by the Registrar of the Supreme Court in Dunedin in 1868 by mistake, after the Public Revenues Act was in force. A difficulty arose about the withdrawal of those moneys from the Public Account. On that occasion I gave advice, as appears in the opinion I now lay before tho Committee. Much correspondence took place on the subject, the Comptroller declining to sanction the removal of the money. There is a telegram by Judge Chapman among the papers as follows : —" Tho money, of which the Government has full particulars, was not paid into the Public Account by order of any Judge. It got into the Public Account, instead of the Deposit Account, by the accidental mistake of a clerk. It is now out of the reach of a Judge's order, and should be transferred at once. The rules of 1845 are repealed by the Supreme Court Act of 1860. (Signed) H. S. Chapman." 2. Does the Bill, as introduced in 1867, validate the grant, having in view the words " the Superintendent is entitled," &c. ?—lt is difficult to say. Tho Bill no doubt assumes that the Superintendent is entitled to the land. 3. What effect in law has the guarantee of the Superintendent of Otago, as given in his letter of the 24th of September ?—I don't think it has any effect in law. It was considered desirable that there should be a record of the terms on which the money was paid out. It was understood that the Legislature could always enforce the arrangement. 4. By Mr. Carleton."} Money having been paid into the Public Account, no matter from what source, is there any means of legally expending it without the knowledge or sanction of the Comptroller ? —lf any has been paid in by error, I am of opinion that, if the Bank permits it, it may be drawn. I should not wish this to be taken as a deliberate opinion. 5. Was the Comptroller legally justified under the circumstances in lotting the money, £24,431 2s. 2d., go into deposit? —I don't know anything about the facts of this £24,431 2s. 2d. 6. On the assumption that the Comptroller w-as not justified, can the money be considered as being legally out of the Public Account ?—Undoubtedly the Bank is responsible for this amount, on the assumption that the moneys ought not to have been taken out. The money may still, in law, be dscmed to be in the Public Account. 7. Is the introduction of an empowering Bill, enabling the Treasurer to pay over to the Superintendent of Otago tho £6,031 18s. 9d., consistent with the assumption that the Treasury was already in

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a position legally to make such payment ? —Assuming that there was a political reason, such as a desire to avoid responsibility, then it would bo advisable to have authority by an empowering Act. It should be borne in mind, also, that the Government had no intention of deciding the question, and, moreover, a grant had been inadvertently issued for the land. A further reason would be that the matter seemed likely to be deferred indefinitely, and it was desirable that the money should be paid to one party' or other, without prejudice to the opposing claimants. 8. By Mr. Tancred.] Would the Public Revenues Act prevent the payment of these rents without the Comptroller's sanction ? —Yes ; but at the time of the payment the Public Revenues Act had not been passed. 9. Was the Bill prepared by you ? —I don't recollect; but I have no doubt if it was introduced by the Government, it was prepared by me. On motion of Mr. Carleton, the Attorney-General was thanked for his attendance. On motion of Major Atkinson, the Committee adjourned until Tuesday, the Ist day of September, at 10 o'clock a.m.

Tuesday, Ist September, 1868. The Committee met pursuant to adjournment. Present : Major Atkinson, Mr. Rolleston, Mr. Cargill, Mr. Tancred. Mr. Carleton, Minutes of previous meeting read and confirmed. Mr. Fitzgerald was recalled, and the following questions were submitted to him: — 1. By the Chairman."] It has been asserted that the Treasury has no knowledge of tho undertaking alluded to by you as having been come to between yourself and the Colonial Treasurer as to the repayment into the Public Account of the sum of £24,431 18s. 2d., which was allowed by you to be placed in deposit: is there any record on this subject, and can you give the Committee any corroborative evidence of the statement you made? —If there were no such understanding, lam not aware why any part of the money was repaid. Secondly, if that money was intended to be operated upon, I cannot understand why the Treasury sent in a second requisition. Thirdly, I consider that the undertaking with mo was accurately described by Mr. Fitzherbert in his Financial Statement in the following words : —" Outside, however, these figures, there have been transactions to which I must refer, and which indeed are of a character deserving special explanation. I need, perhaps, scarcely inform tho Committee (for the question has been raised in various forms from time to time), that the use of money in deposit with the Government has insensibly grown up into a habit in New Zealand, and, however the exigencies of the public service may have induced the custom, it is one which I shall not pretend to uphold, and the Government has accordingly decided to propose its discontinuance. There are, indeed, certain deposits of a current character wdiich may, I think, be fairly employed as a working balance, whilst there are others of such a character as to require that they should be held aloof in trust. The practice, however, has not hitherto been in accordance with this opinion, and considerable sums belonging to Intestate Estates and other funds have been, from time to time, employed for the purposes of revenue. As an instalment of reform of this abuse, and in anticipation of legislative action being taken, I have to state that I have caused the following refunds to be made from the Treasury, viz.: — £ s. d. Intestate Estates ... ... ... ... 15,667 15 8 Real Estates Administration... ... ... ... 1,047 16 6 Supremo Court Account ... ... ... ... 385 10 8 Justices' Relief Act ... ... ... ... 225 7 9 Estates of Deceased Soldiers... ... ... ... 904 10 5 Native Reserves, Wellington ... ... ... 168 2 5 Dunedin Disputed Reserves ... ... ... ... 6,031 18 9 £24,431 2 2 " This sum has been placed at deposit at interest with tho Bank of New Zealand. When, therefore, I am thus enabled to inform the Committee that not only have the funds belonging to intestate estates and certain other trusts been refunded by the Treasury during the past financial year, and placed ad interim in deposit at interest with the Bank of New Zealand, awaiting their final disposal by the Legislature, but also that the overdrawn account of the Government with the Bank of New Zealand, which in 1864 culminated to £818,000, and in July, 1866, stood at £26,361 15s. 4<J., has on the Ist July, 1867, wholly disappeared, and that the Government is now in the course of receiving instead of paying interest on its balances, I think the Committee will concur that it is a satisfactory announcement, and affords a practical illustration of tho prudence with which our finance must necessarily have been conducted. Still, an exchequer system which permits such transactions as the indiscriminate use of trust funds and the indulgence of unlimited overdrafts, is not, it must be confessed, a sound one, and if any argument were necessary in addition to those which I hope to adduce in support of an amendment in our revenue laws (to which subject I shall presently recur as one of tho proposals of the Government), the present instances certainly afford such argument." With regard to this understanding, I should wish to state that Mr. Woodward would recollect, and Major Richardson would also recollect, that the question of how the large deficiency in the Public Trust Fund was to be made up was a matter of constant discussion between the Officers of the Treasury and the Comptroller for many weeks, and that in all those discussions this deposit in the Bank (£24,431 2s. 2d.) was invariably spoken of as one of the assets making up that deficiency. I should be within the mark if I said it was so spoken of at least twenty times, and during the whole of that

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time, extending over some months, no hint was ever dropped as to the existence of any second fund. The Treasurer therefore always spoke as if it was a settled thing that this sum would be repaid into the Public A.ccount. 2. Is there a written memorandum referring to that understanding?— There is a note on the requisition made at the time that the money was drawn for the purpose of being placed in deposit. I speak from recollection, and should wish to bo allowed to verify this statement. 3. By Mr. Tancred?^ Is there any correspondence with the Government on this subject?— There is not, other than the remarks in writing on the requisition. 4. By the Chairman^] When did the conversations ypu mention take place ? —They occurred at different times during the whole year, both before and after Mr. Fitzherbert left. Mr. Woodward, Assistant Treasurer, was then recalled, and the Comptroller's evidence being read to him, the following questions were submitted to him: — 5. Does your recollection confirm the statement of the Comptroller as to the frequent conversations which took place in respect of this deposit (£24,431 2s. 2d.), and the understanding which prevailed between the Treasurer and the Comptroller on the subject? —I have simply to say that such conversations did take place in which a sum of £24,000, spoken of in round numbers, was treated as an asset of the Trust Funds, and those conversations of which I speak were held about the month of January, 1868, and often subsequently. I cannot say from memory whether any such occurred previous to Mr. Rtzherbert's departure. In June, 1867, a sum of money was deposited, of which it is said that there was then an understanding that it should be repaid ; of this understanding I know nothing. My conversations with Mr. Fitzherbert led me to believe that tho money w ras placed in deposit that it might bo available when required for the purposes of the several deposits —in other words, that it should not be spent as deposits had previously been spent. 6. By Mr. Carleton.] Under wdiat denomination were these funds, which were in reality Trust funds, charged ? —As a deposit account. 7. By the Chairman.] Can you give the Committee any account of the sum of £6,000 which was omitted from the Colonial Treasurer's Statement ? For what purposes was it deposited, and, when it matured, to what account was it paid ? —I wish to correct my statement that it was first deposited in January, 1867. It had been deposited in January, 1866, and was intended to secure the moneys belonging to Intestate Estates. When this deposit matured in January, 1867, the money was again deposited at interest in tho Bank of New Zealand in three sums of £2,000 each. There was more money due to the Intestate Estates. At the time of Mr. l^itzherbert's Statement, the money had been out of the Treasury upwards of a year and a half. When it finally matured, it was paid in to the Public Trust Funds, and was part of the sum of £24,000 to which I have referred. This was in March, 1868. It was deposited for the period of a year from January, 1867. I cannot at this moment explain why it appears as maturing in March. The sum of £6,000 appears in the Public Account as Bank deposit in the year 1865-6, and I believe in 1866-7 when it appears in the sum of £30,431 2s. 2d. 8. By Major Atlcinson.] Will you explain how the accounts of 1866-67 show the sum of £6,000 on either side of the account if this sum had not passed into the Treasury as stated above?—lt passed through the account by a cheque being given on the special deposit, which cheque was immediately redeposited to the same account. 9. By the Chairman.} (To Mr. FitzGerald.) Have you any remark to make after hearing Mr. Woodward's statement? —Mr. Woodward has stated that in the conversations mentioned by me, a sum of £24,000 generally was spoken of. That sum could have had only one meaning in my mind, because I was aware of only one sum deposited, and the Treasury know that I had no knowledge of any other deposit. A question was raised during Mr. Woodward's evidence as to Trust moneys not being payable to the Public Account under the Comptroller's Act. I wish to state that such moneys were not so payable by law, and were paid in against my protest, so strongly expressed that 1 at last informed the Treasury by letter that I would only allow this style to continue to the next Session of Parliament, and if Parliament should make no alterations in the law, I must recur to its strict interpretation. I could not prevent the Treasury paying in money if they wished it, but I could prevent the moneys being drawn out. I consider, therefore, that whatever the strict interpretation of the law may have been at that time, the Treasury were bound in honour and good faith by an arrangement which they or their actions induced the Comptroller to acquiesce in. As to the policy of the step so taken by Mr. F'itzherbert, it had my cordial concurrence, and it was adopted with a view to the legislative action which ultimately legalized it. I interpret, therefore, the words in Mr. Fitzherbert's Financial Statement, " in anticipation of legislative action," to mean the passing of tho Public Revenues Act, which was then in type, and one clause of which made its action retrospective to the Ist of July, and by which all Trust funds in the Treasurer's hand became part of the Public Trust Fund. Mr. F'itzherbert, therefore, was then proposing to the House to read a Bill for the first time which was to enact that these moneys should have become a part of the Trust Funds two months before tho time he was then speaking ; but, had that Bill never passed, I should still consider that the Treasury were bound in good faith, by their own interpretation of the Comptroller's Act, that it should be considered to extend to the Trust moneys. 10. By Mr. Carleton.} Is there any correspondence on the subject going on at the present time? —There is. On motion of Mr. Carleton, Mr. FitzGerald was thanked for his attendance. The following questions were then submitted to Mr. Woodward. 11. By Mr. Carleton.} On referring back to your evidence (20th August), I find the words " after the passing of the Public Revenues Act, Mr. FitzGerald called on the Treasury to pay this deposit (£24,000), into the Public Trust Fund. There was £30,000 in the Bank. I have no doubt that the amount of £24,000 was paid back in full to the Public Account:" I presume you mean £24,000 in round numbers ? —I do. The exact sum paid in was £24,399 3s. 5d.. composed of two sums of £18,399 3s. sd. and £6,000 respectively. 3

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12. In other words, you paid back the whole sum of £24,431 2s. 2d. less £31 18s. 9d. ?—That is tho case; both the similarity of the sums and the difference are accidental. 13. Will you explain what you mean by saying that the difference is accidental ? —I mean that wo did not intentionally pay back £31 18s. 9d. less than the given sum. 14. Do you desire to send in a written statement for the information of the Committee ?—I have already furnished Mr. Stafford with a written statement, my history of the transaction. On motion of Mr. Carleton, Mr. Woodward was thanked for his attendance. On motion of Mr. Carleton, Besolved, That the Chairman be directed to call for the papers furnished to the Hon. Mr. Stafford by Mr. Woodward, bearing upon tho question referred to the Committee. On motion of Mr. Carleton, Besolved, That the Chairman be directed to call for Mr. FitzGerald's present correspondence with the Government. On motion of Mr. Carleton, Resolved, That the Committee adjourn till Wednesday, the 2nd day of September, at 10 o'clock a.m.

Wednesday, 2nd September, 1868. There being no quorum, the Chairman summoned the Committee for the following day at 10--o'clock a.m. Thursday, 3rd September, IS6B. The Committee met pursuant to notice. Present : Major Atkinson, Mr. Rolleston, Mr. Cargill, Mr. Tancred. Mr. Carleton, Minutes of previous meeting read and confirmed. The Chairman notified to the Committee that he had received from Mr. FitzGerald, tho Comptroller, a letter, which the Chairman proceeded to read as follows : — Sib, — Comptroller's Office, Ist September, 1868. I beg to correct a statement in my evidence given to the Committee to-day. There is nonote upon the requisition of the 27th June. But I appear to have entered the contents of that requisition in my accounts separately from all others, under a special heading, " Permanent Charges issued under doubtful sanction of law," and to have appended to the entry the following note: — " N.B.—These sums were issued under a special requisition, in compliance with the wish of tho Colonial Treasurer, in order that tho money might bo lodged at interest at the Bank." I have, &c, To the Chairman of the James EDW rAED FitzGerald, Committee on the Dunedin Reserve. Comptroller. The Chairman also submitted to the Committee tho Assistant Treasurer's history of the transaction, as forwarded from the Colonial Secretary's Office, and read as follows : — Tho history of this transaction, as far as I am personally aware of it, is as follows:—A little before the termination of the Financial Year 1866-7, Mr. Fitzherbert determined, as far as practicable, to secure the sums deposited with the Government from being used for current expenditure by taking them out of the ordinary bank balance, and placing them where they would be available whenever they might be required. A list was accordingly prepared of the balances of tho Deposit Accounts as they stood on or about the 31st of March, which was the latest date to which they could be made up. After several conversations between Mr. Fitzherbert and tho Comptroller, this list -was reduced to tho items afterwards mentioned by Mr. Fitzherbert in his Financial Statement, the total of which amounted to £24,431 2s. 2d., and that sum was withdrawn from the Public Account 29th June, and placed in the Bank of New Zealand as a fixed deposit, in the name of the Colonial Treasurer, for three monthsThere are two things important to bo noticed here: Ist. For several years a sum of £6,000 had been placed as a fixed deposit in the Bank, to represent (especially) the Intestate Estates Account. In 1864 this " dropt out " and got absorbed with all other funds; but in January, 1866, Mr. Fitzherbert determined to replace it, and as the account was larger than it had previously been, £6,000 was placed in deposit for a year, which deposit was renewed when it fell due in January, 1867. 2nd. Under " The Comptroller's Act, 1865," it was, to say the least, exceedingly doubtful whether the= control then established had any operation except in respect of revenue (clause 8) and proceeds of loans (clause 9). The inference I draw from this circumstance is, that Mr. Fitzherbert desired to make these Deposit Accounts safe by the deposit which he made, an inference that is entirely consistent with my remembrance of what took place. The first-mentioned sum of £6,000, having been really withdrawn from the Treasurer's balance for nearly eighteen months, escaped his memory (and mine) at the time the £24,431 2s. 2d. was deposited, otherwise I am perfectly satisfied that the amount would have been reduced, and only £18,000 deposited. I know nothing whatever of the " understanding " referred to by Mr. FitzGerald, but I am quite clear that Mr. Fitzherbert considered that he was only carrying out the object with which the depositof £24,000 was made. It is undeniable that the £6,031 18s. 9d. formed part of the sum deposited; and while I would not for a moment impugn the correctness of Mr. F'itzGcrald's statement as to what he considered the " object " of that deposit to have been, I repeat that my understanding (and I think I am justified in saying Mr. I'itzhcrbert's also, as I gathered my impressions from conversations with him) was, as I have stated above, that the money should be available when required for its. original purpose, which in the case under discussion was the repayment of the rents of the Dunedin Disputed Reserves.

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As a matter of fact tho money was temporarily paid out of tho Colonial Treasurer's balance because the deposit did not mature until the 29th of September, and tho money was paid in on the 24th of that month. If therefore it be technically true that tho Treasury used money that had been issued for " other votes," it was only for five days, with the certainty of the money being replaced at the end of that time. I must respectfully differ also from tho impression conveyed by Mr. FitzGerald's Memorandum, that the Treasury led him to believe that this precise sum of £24,431 2s. 2d. was repaid to the Public Account. I have a very distinct impression that it w ras several times mentioned that there was £24,000 in deposit in the Bank. It is highly probable that Mr. FitzGerald did understand that to mean £24,431 2s. 2d., but I meant two sums that together amounted to £24,399 3s. sd. The amounts, by an accidental coincidence, are so very similar that it need not excite surprise that one should be taken for the other. I venture to add that the £24,399 3s. sd.—this eventually (in January and March, 1868) paid to the Public Account —was not money improperly diverted from other uses, but money that had been set apart for this particular purpose. 29th August, 1868. J. Woodwaed. - Mr. Woodward, Assistant Treasurer, was recalled, and the following questions submitted to him :—■ By the CJiairman.] —In your evidence on Tuesday last you made the following statement: — " I wish to correct my statement that it (tho sum of £6,000) was first deposited in January, 1867. It had been deposited in January, 1866, and was intended to secure the moneys belonging to Intestate Estates. When this deposit matured, in January, 1867, the money was again deposited at interest in the Bank of New Zealand, in three sums of £2,000 each. There was more money due to tho Intestate Estates. At the time of Mr. Fitzherbert's Statement the money had been out of the Treasury upwards of a year and a half. When it finally matured it w ras paid into the Public Trust Fund, and was part of the sum of £24,000 to wd.ich I have referred. This was in March, 1808. It was deposited for the period of a year from January, 1867. I cannot at this moment explain why it appears as maturing in March." Can you now explain how this happened ?—I find it was simply an accident. The entry in our book on the 23rd of March is for £300, stated as interest on deposit to the 29th January. It lay at the Bank inadvertently not bearing interest till March. It was overlooked. I cannot state why the whole round sum of £24,000 was not repaid in January, 1868." 2. By Mr. Carleton.] If, as the Committee understand you, the £6,031 18s. 9d. paid to the Superintendent of Otago on the 24th of September, 1867, out of tho £24,431 2s. 2d. withdrawn from the Public Account on the 29th June, was legally paid out, how is it that £24,399 3s. 5d., being the original sum of £24,431 2s. 2d. minus £31 18s. 9d., was repaid to the Public Account, instead of £18,399 3s. 6d., which, on the foregoing assumption, seems all that was required ?—lt was simply to place a sum of £24,000 to the credit of the Public Trust Fund as a working balance, which, together with £80,000 directed to be invested in England, made up about the amount belonging to the Trust Fund. Whatever the sum had been, whether more or less than £6,000, it would have been paid in for tho purpose already stated. 3. How do you reconcile this statement, namely, " that it was simply to pay this sum of £24,000 to the credit of tho Public Trust Fund as a working balance," with tho manifest intention to repay the exact sum withdrawn, as shown by your reply to yesterday's question, as follows : —" By Mr. Carleton.] On referring back to your evidence, I find the words 'After the passing of the Public Revenues Act Mr. Fitzgerald called on the Treasury to pay this deposit (£24,000) into the Public Trust Fund. There wras £30,000 in the bank. I have no doubt that the amount of £24,000 was paid back in full to the Public Account.' I presume you mean £24,000 in round numbers ?— Mr. Woodward.] I do. Tho exact sum paid in was £24,399 3s. 5d., composed of two sums of £18,399 3s. sd. and £6,000 respectively. By Mr. Carleton.} In other words, you paid back the whole sum of £24,431 2s. 2d., less £31 18s. 9d. ? — Mr. Woodward.] That is the case. Both the similarity of the sums and the difference are accidental. By Mr. Carleton.] Will you explain wdiat you mean by saying that the difference is accidental ? — Mr. Woodward.] I mean that we did not intentionally pay back £31 18s. 9d. less than the given sum." Is there not apparently a discrepancy between these two statements ? —ln September, 1867, a certain amount in deposit (£24,431 2s. 2d.) matured. The sum of £6,031 18s. 9d., which had been paid on the 24th to tho Superintendent of Otago, was deducted from that amount, and the balance re-deposited. This balance, with the £6,000 previously deposited, makes the sum which I speak of as paid in in full. What I meant to say in my evidence on Tuesday was, that the Treasury did not intentionally repay less than any particular sum. 4. It appears from your evidence to-day that tho sum of £24,000 was placed to the credit of the Public Trust Fund simply as a working balance ; but from your evidence yesterday, as just now quoted, that the money was repaid to tho Public Account in order to replace the sum withdrawn, which, but for the accidental omission of £31 18s. 9d., would have been exact? —The necessity for providing a working balance in the Trust Fund branch of the Public Account having been recognized (in January, 1868), that w rorking balance was provided by paying in the moneys previously placed in deposit, namely, £18,399 3s. sd. and £6,000. These amounts were paid in "in full " —that is, such amount as there happened to be ; and the fact that, taken together, the sum is so similar to the sum of £24,431 2s. 2d., has alreadjr been stated to have been purely accidental. It was not paid in, and I never intended to convey the impression that it was to replace any sum whatever, but to provide the necessary balance, as already stated. Of course lam only stating the Treasury view of the matter, or, more strictly, my own. Mr. Fitzherbert was absent, and there was therefore no opportunity to refer to him ; and Ido not remember that Major Richardson (then acting as Colonial Treasurer) took any different view to that which I did. 5. You have informed the Committee that the £24,431 2s. 2d. was placed in fixed deposit to secure it. It appears that a requisition by the Treasury was made on the Comptroller for a part of that sum, namely, for £6,031 18s. 9d., which requisition was rejected by the Comptroller. The money was,

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nevertheless, paid to the Superintendent of Otago. Allow7 me to ask, In what did the said security consist, if the money could bo spent by the Treasurer without the sanction of the Comptroller ? —The only requisition in which the money appears, subsequent to Juno, 1867, is the covering requisition made after the money was paid in January, 1868. There was a whole sum of £710,000 to be accounted for on 31st December, 1867. Requisitions called " Covering Requisitions " were made out to account for this sum. These were necessarily to a great extent hypothetical; but 'where actual payment could be defined they were so. Among those appeared the sum of £6,031 18s. 9d., under heading "Dunedin Disputed Reserves." The Comptroller called for the Act to be stated under which the money was paid, and as no such Act could be quoted he struck out the item, and the covering requisition was altered and made up without it, other sums being substituted, the actual adjustment being made of tho 30th of June now r last past. The security consisted in having the money apart from ordinary Treasury balances. The Treasurer could actually do as ho pleased with it. 6. By Major Atkinson.] What do you consider was the object in placing in fixed deposit the sum of £24,431 2s. 2d.? —To secure to the extent of tho means then at the disposal of the Colonial Treasurer the amounts due for Trust Funds, particularly those due to Intestate Estates. In June, Mr. F'itzhcrbert arranged to spare the sum of £24,431 2s. 2d. 7. How do you reconcile this with the statement given to Mr. Stafford " that the first-mentioned sum of £6,000, having been really withdrawn from the Treasurer's balance for nearly eighteen months, escaped his memory (and mine) at the time the £24,431 2s. 2d. was deposited. Otherwise I am perfectly satisfied that the amount would have been reduced, and only £18,000 deposited " ?—Certain balances had been ascertained, which, together, amounted to tho sum of £24,431 2s. 2d.; and as I understood Mr. Fitzherbert's object was to show to the House that Trust Funds had been provided for, I therefore think, that if the sum of £6,000, then in deposit, had boon remembered, he would have reduced the amount he deposited by that sum. 8. It would appear then, from your last answer, that the object of the Treasurer was to place the exact sum of £24,431 2s. 2d. in deposit, and not an amount to the extent at the command of the Treasurer, as previously stated by you ? —My only answer is, that the sum of £24,431 2s. 2d. having been arrived at as certain balances due at a given date, the Colonial Treasurer went fully to the extent of his means in depositing that sum. 9. Do you mean his actual means or the means of which he was aware, not including tho £6,000? I mean the means known to himself, not including the £6,000. 10. By the Chairman.] Do you then consider that there was irregularity in the transaction, paying this £0,031 18s. 9d. ? —Departmentally I consider there was no. irregularity. 11. You state in January, 1866, Mr. Fitzherbert determined to replace the £24,000 fixed deposit on account of Intestate Estates. Was not this Mr. Stafford? —I think it was. I believe I was in error, but it was Mr. Fitzherbert's view. I cannot identify Mr. Stafford, so far as I remember, with this matter. Besolved, on tho motion of Mr. Tancred, That the Committee adjourn until the 4th of September, at 10.30 a.m.

Friday, 4th Sepember, 1868. The Committee met pursuant to adjournment. Present : Major Atkinson, Mr. Rolleston, Mr. Cargill, Mr. Tancred. Mr. Carleton, Tho Chairman then submitted to the Committee the correspondence between tho Colonial Secretary and the Comptroller in reference to the question referred to them, and read as follows: — Mr. FitzGerald to Mr. Stafford. Sir, — Comptroller's Office, 28th August, 1868. I perceive by the reports in the newspapers that you arc represented as having stated in the House of Representatives that a memorandum of mine cast, or seemed to cast, some imputation upon Mr. Fitzherbert. I shall deem it a favour if you will point out to me any words used by me which are capable of such a construction, in order that I may at once remove an impression wffiolly contrary to my intention. I have, &c, James Edward FitzGerald, The Hon. the Colonial Secretary. Comptroller.

Mr. Stafford to Mr. FitzGerald. Sir,— Wellington, 28th August, 1808. I have to acknowledge tho receipt of your letter of this day's date, and to request you to inform me to what newspapers you refer, as I have not read in any of the newspapers a report -of statements made by me on the subject to which you allude. 1 have, &o, J. E. FitzGerald, Esq., Wellington. E. W. Stafford.

Mr. FitzGerald to Mr. Stafford. Sib, — Comptroller's Office, 28th August, 1868. In reply to your letter of this day's date, I beg to state that the report to which I referred appears in the Wellington Independent of yesterday morning, to which my attention was •called only last night. I have, &c, James Edward FitzGerald, Tho Hon. the Colonial Secretary. Comptroller.

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Mr. Stafford to Mr. FitzGerald. Sir,— Wellington, 29th August, 1868. In reply to your letter of yesterday's date, I have to state that the substance of the objection made by me with respect to your Memorandum attached to the Report of the Select Committee on theDunedin Disputed Reserves was, that it accused Mr. Fitzherbert of a distinct breach of an. understanding come to between that gentleman and yourself, as Comptroller, by which breach of understanding it is implied that Mr. Fitzherbert irregularly paid away a sum of £6,031 18s. 9d. As there is not, as far as I am aware, any record of such understanding, I assume that it was a verbal one, and "knowing from experience how frequently verbal understandings are interpreted differently by theparties to them (in good faith on both sides), I was unwilling that so grave an accusation should be made against a colleague who, being absent, is unable to state what interpretation he put on the understanding alleged to have been come to with him, as to which there is no record, and which the Assistant Treasurer not only does not corroborate, as referring to the £6,031 18s. 9d. in question, but believes that, so far as it existed, it referred to other moneys. I further complained of the inference which might be drawn from the Report and your Memorandum, that the money in question was public revenue and had been paid away without the authority of law, both of which positions I am not prepared to admit, knowing that in the action taken by Mr. Fitzherbert in the matter he was guided by the opinion of the Attorney-General. I have, &c, J. E. Fitzgerald, Esq., Wellington. E. AY. Stafford.

Mr. FitzGerald to Mr. Stafford. Sir, — Comptroller's Office, 31st August, 1868. I beg to thank you for your letter of the 29th instant, which enables me to remove from your mind a serious misapprehension of the moaning of my Memorandum to the Committee. Perhaps it would be better if I wore to state fully the circumstances of the case, upon which you are not probably in complete possession. When I first became Comptroller I tools: exception to the issue of money held in trust by the Government, because the Comptroller's Act did not authorize the payment into or out of the Public Account of any money, except money legally payable for or on account of the revenue. Mr. Fitzherbert, however, strongly urged the interpretation of the Act to include all moneys held by the Government. I gave way to this view, recording my opinion in writing (see letter to the Treasurer of July sth, 1867) that I would continue these issues only until the next Session of the Assembly, when (should no alteration of the law be made) I should be compelled to recur to a rigid interpretation of the Act. I submit, therefore, that the Government having elected to pay these moneys into the Public Account, and having so paid them in, and drawn them out by requisition on the Comptroller, from the first constitution of the latter office, are deterred, in good faith, from taking advantage of the state of the law at any moment they might find it convenient. The rents of the Dunedin Reserves were, as a matter of fact, paid into the Public Account, as is proved by their being included in the requisition of the 27th June, which, had the money not been so paid in, would have been clearly a fraud on the Comptroller. With regard to tho requisition of the 27th June, by which these moneys were withdrawn from tho Public Account, you are somewhat in error in supposing that the understanding was a verbal one of which no record remains. Mr. F'itzhcrbert distinctly stated that understanding in his Financial Statement, recurring to it twice. He stated that those moneys were placed at interest in tho Bank ad interim, awaiting legislative enactment, by which he meant awaiting the passing of the Public Revenues Act, which he then introduced, and which created the Public Trust Fund for their special deposit, and which, by being given retrospective action to the Ist July, made them " Trust Fund " for two months prior to the time when he was speaking. That Mr. Woodward distinctly understood that the requisition of the 27th June was entirely exceptional, and was not intended to be operated on except for the purpose of placing those moneys in the Bank, is proved beyond dispute by his presenting another requisition for drawing the same sum. Flad ho believed that the first requisition was sufficient, it would have been a fraud to attempt to draw the money for the same service twice over. It is therefore obvious that at that time Mr. Woodward did understand that the issue of the money under the Comptroller's order was still necessary ; in other words, that the money was still considered to be in the Public Account, notwithstanding the requisition of the 27th June. You will therefore perceive that my statement of the understanding which existed as regards that money is fully corroborated both by Mr. Fitzherbert and Mr. Woodward. But further, it is not possible that Mr. Woodward can forget that during several, months ho was in tho habit of discussing with me the question of how the large deficiency in the Trust Fund was to be made up, and that upon every occasion the sum then lying in deposit in the Bank, drawn under the requisition of the 27th June, was spoken of by him as an available asset to cover the deficiency. It was invariably so assumed upon every occasion on which the deficiency 7 in the Trust Fund was discussed. I was repeatedly informed that this money in deposit would bo paid into the Trust Fund as soon as it matured; and I have been repeatedly informed since that it had been so paid in, and never upon any occasion has it ever been hinted that it was not paid in in full. I only learned in the Committee Room that this deposit was deemed to have been operated on by the withdrawal of the rents for the Dunedin Reserves. It now appears that the Treasury claim to have so reduced it, and that a sum of £6,000, the existence of which had throughout the whole transaction been carefully concealed from the Comptroller, was used to make up the deficiency. While, then, I absolutely disclaim the slightest intention to cast any imputation upon Mr. Fitzherbert, who fully carried out his understanding with me by his statement to the House, I feel it my duty to say that I am wholly unable to reconcile the action of the Assistant Treasurer with good faith 4

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or candour. I cannot understand how he can have been in daily communication with me upon the subject of making up the deficiency in the Public Trust Fund and can have carefully abstained from any allusion to tins £6,000, which really belonged to that Fund, nor do I understand how the Treasurycan have led me to suppose that they were paying in one sum of money to the Public Account when they were really paying in another. I have no official knowledge how or when the rents of the Dunedin Reserves were paid, but if Mr. Fitzherbert was a party to the transaction I have no doubt that he intended to pay it out of tho Treasury balances, with the disposal of which it is no part of my duty to interfere, and doing which would have involved no breach of his honorable engagement to myself. Tho repayment of the money drawn by the requisition of the 27th Juno was due in the fulfilment of an engagement; and had no such engagement existed, it is totally inexplicable to me why any part of that money was repaid into the Public Account at all. But the payment of the other £6,000 into the Public Account was incumbent on the Treasurer by law, so that he was a debtor to the Crown to that amount until the money was paid. I have, &c, James Edward FitzGerald, The Hon the Colonial Secretary. Comptroller. On motion of Mr. Carleton, Besolved, That the Chairman be directed to ask the Colonial Secretary if he wish to make a statement before the Committee close their inquiries. On motion of Mr. Tancred, Besolved, That the Committee adjourn until Monday, the 7th September, ■at 11 o'clock a.m.

September 7tii, 1868. The Committee met pursuant to notice. Present : Major Atkinson, Mr. Rolleston, Mr. Cargill, Mr. Tancred. Mr. Carleton, The Hon. Mr. Stafford attended, and was asked the following questions : — By the Chairman.} You have, I believe, read the report of the Committee, which was referred back to them on tho suggestion made by one of the Committee, in consequence of your remarks in the House upon the subject: Have you any statement you would wish to make to the Committee on the subject?—l merely wished to guard tho reputation of an absent colleague from a charge of deceit, which I considered was implied by the Comptroller's Memorandum. I objected to Mr. Woodward's evidence not being taken in writing, as the Comptroller's written statement had been attached to the report, and because the evidence given by the Treasury was not submitted to the House in connection with the report. If that evidence is now submitted to the House, I have no further objection to raise on that point. The Committee then adjourned till Wednesday, 9th September, at 11 o'clock, to consider resolutions.

September 9th, 1868. The Committee mot pursuant to adjournment. Present: Major Atkinson, Mr. Carle! on, Mr'. Cargill, | Mr. Haughton. Mr. Rolleston in the Chair. Tho Committee adjourned to Thursday, 10th September, at 11 o'clock.

Thursday, 10th September, 1868. The Committee met pursuant to notice. Present : Major Atkinson, Mr. Haughton, Mr. Cargill, Mr. Rolleston, Mr. Carleton, Mr. Tancred. Minutes of previous meeting read and confirmed. On motion of Mr. Carleton, Besolved, That tho Attorney-General's opinion of 30th August, 1806, ■and also that of 24th July, 1867, be appended to the evidence. These opinions are as follows: — 1. " As to the general question, I can only refer to my general opinion given on 17th January, 1866, which is with the papers. I may add, that the opinion was given before the grant was issued. I have conversed with Mr. Domett on the subject, and have referred him to his minute on Mr. Mantel!'s letter dated 24th November, 1852. In this minute he says, ' The Otago scheme was to end •on the 22nd of November last.' If no charter has been given to the Association, the Governor can grant the land, I sivppose. " The Governor's note, .ordering the reserve to be made is on a letter of Mr. Mantell's, date April 1853 ; the note is dated June (and was, I presume, made in the same year). This was three or four months after the commencement of the Constitution Act hero. By that Act, section 78 recites the fact that (there had been) certain terms of purchase, &c, had been issued by New Zealand Company,

ON THE DUNEDIN DISPUTED RESERVES.

15

F.—No. _

in Settlement of Otago, and such terms were in force, as contract, on 4th July, 1850. The section then recites the 10 and ll Vict., and the notice given thereunder, by which the Company's land was transferred to Crown subject to contract, and recites that provision should be made to make Her Majesty to perform such contract. The section then enacts that the Queen may make regulations for disposal of Waste Lands to be contained in a charter to be granted to Association of Lay Ministers of the Fret Church. No charters now granted, nor regulations made. " Sir George Grey, under delegation, did make land regulations as to all Provinces but Canterbury and Otago. The Proclamation says, ' These regulations shall come into force in relation to all demesne lands in New Zealand, not reserved to Canterbury Association or Otago Association, fifteen days after receipt of a copy.' " It appears to have been thought, and I am disposed to think (so far as I can learn) properly so, that the Crown could not delegate to Governor power to make regulations. If this be so, under what power did the Governor act ? I cannot learn. But assuming, as I think must be assumed, that on 4th July, 1850, the land was set aside for sale, with intention of keeping it open for quay and other purposes, I think the Governor, even if he had the power to make reserves, was bound, I am disposed to think, in law, as a matter of contract; and if not in law, he ought certainly not to have been induced to affect this land by ordering it to be reserved for Native purposes. 2. " As to second point, the Crown can take legal proceedings, by writ of scire facias to set aside its patent when granted inadvertently. If any private interest is affected, the Crown is bound of right to permit him to use the Royal name in repealing the patent. If the Crown alleges that this grant ought not to have been made, it may proceed to set it aside. If the Natives interested, or any other person for them, conceive that it ought not to have been, then such persons may, on petition, be permitted to proceed in the name of the Crown; but such persons must proceed on a legal claim —not a mere equitable claim, for the Crown cannot be compelled to execute afresh. I think, however, that the claim of the Natives is a legal claim, or nothing. " 30th August, 1866. J. Prendkrgasx." 3. " The grant itself has no such retrospective effect. I think, however, that the money ought to be paid to those who are now deemed entitled to the land. Clearly the Crown ought not to retain it as part of its revenue. lam disposed to think, as the Commissioner of Crown Lands has received it, and paid it into the Treasury, the money ought not to be taken out of the Treasury without the Governor's warrant, and that his warrant should not be given without the sanction of the Legislature. " 1 do not think that the mere separation and name of the account under which tho money has been paid makes any difference. This is not a case where a statute permits money to be kept al a separate account, and to be dealt with without specific appropriation. " 30th August, 1806. J. Pbkndkkgast." " The land in Princes Street, commonly known as the Princes Street Reserve, is now vested fey Crown Grant in the Superintendent of Otago {ex-qfiicio), in trust for quays or other public buildings or public purposes. Certain moneys, as rent of the land received by the Commissioner of Crown Lands before the execution of the grant, but subsequent to date at which the right of the present holders of the grant accrued (if such right ever accrued), are now in the Treasury. lam asked whether these moneys can be legally claimed by or be paid to the Superintendent or the Corporation of Dunedin. "I am of opinion that if the reserve for quays, &c, was sufficiently made; if, in fact, that right which the Governor recognized by executing the grant existed, nor to the executor of the grant, and at the time of the receipts of the rents, these rents ought to follow the grant of the land. " However, there are doubts whether the present holders were entitled to the grant, and that doubt affects their title to these rents. Proceedings are threatened by certain Natives, with a view to obtaining cancellation of the grant. Under the circumstances, I think the Treasurer would not be justified in paying over these rents to the Superintendent of Otago, the present holder of the property, unless he, with the advice and consent of his responsible advisers, will undertake, on the part of the Province, to refund the moneys paid to the Colonial Treasurer, if and upon the invalidity of the grant being declared by a Court of Law. "The Corporation of Dunedin has no claim whatever to these rents; the money can be paid only to the Province. "24th July, 1867. James Prendeegast;" On motion of Mr. Carleton, Besolved, That the Committee, having taken further evidence, including that of the Attorney-General, on the Report referred back to them by the House, are unable to see reason for departing from the conclusion at which they had previously arrived. On motion of Mr. Carleton, Besolved, That the Chairman bo directed to report accordingly. On motion of Mr. Carleton, Besolved, That the Chairman be directed to lay the evidence on the Table of the House. On motion of Major Atkinson, Besolved, That the Committee adjourn sine die.