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3.
With regard to the observations made in the second paragraph of Your Lordship's Despatch of the 18th December, I concur in the contention of the Army Council that when a lease is purchased by them and the Colonial Government has received credit for the capitalized value of the rent, then when the lease is sold the Colonial Government should accept a corresponding debit.
The Council cite the case of the Bowen Road Hospital Approach Road, but a closer parallel is to be found in the case of Mr. Findley Smith's land referred to in the Colonial Office Despatch No.196 of the 8th August, 1895, where it was definitely laid down that, when a lease is purchased by the Military Authorities from a private person, the Colony has the right to take credit for the rent which it foregoes. In both these cases this Government has been credited with the capitalized value of the rent, and when the properties are given up by the War Department a corresponding value will be entered in the debit side of the Colony's account.
In the case of Spring Gardens the Colony was not credited with the capitalized value of the rent, and if this case and the cases cited above are to be brought into line the Army Council should now credit this Government