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The two points which require decision are :-
(a). Whether the Admiralty have the right to erect piers on
the fundus within Colonial waters at Hong Kong without
payment to the Colonial Government;
(b). Whether, where land is owned by Admiralty or War Office
for defence purposes, and where one Department desires to transfer it to the other, this can only be done by the surrender of the land to the Colonial Government by one Department and by its re-sale to the other Department at whatever price the Colonial Government chooses to put
upon it.
With regard to (a) the Admiralty have constantly erected piers in Colonial waters, and so far as our records show, we can trace no payment for fundus. No payment for fundus has been made in connection with the Breakwaters at Malta, Gibraltar, Bermuda, or The Cape. At Halifax, Simons Town, and Jamaica
and various whart extensions have been made without payment, numerous other instances could be cited. Payments have been and are made for land and foreshores, but not for fundus.
In most cases vessels of II. M.Navy have used the waters in Colonial harbours long before the Colonies themselves came into existence as separate Governments, and the Admiralty are unaware of any grants by the Crown adverse to their continued use of such waters without payment, whether for ships, or for fixtures required by the ships.
This does not imply a contention on the part of the Admiralty that they are at liberty to erect what structures they please in any part of Colonial waters without reference
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