CO129-338 - Public Offices & Others - 1906 — Page 696

The Under Secretary of State,

Sir,

Colonial Office.

7, Castle Terrace,

Cowes,

Isle of Wight,

zoth November, 1905.

With further reference to your letter No. 27223/1904, dated 9th August, 1904, informing me that Mr. Secretary Lyttelton, as a matter of grace, and without prejudice to the strict legal rights in this matter as defined by the Ordinance and the Courts of Law, has decided to refer to Governor Sir Mat- thew Nathan, for enquiry, the question whether further compensation can justly be paid to us, having regard to all the circumstances of the case, but the matter being one which under the terms of the Ordinance is within the abso- lute discretion of the Governor, Mr. Lyttelton will be unable to entertain any proposal for modification of the decision at which the Governor may arrive, and that such decision must be taken to be a final settlement of the matter.

2. I have now the honour to inform you that the enquiry has been made and a further sum of money has been paid to us, but it is in no way commen- surate with the injury sustained, and I take it that Mr. Secretary Lyttelton meant the further compensation to be just in the true sense of the word.

3.

Doubtless the Award and Appendices thereto have been sent to the Colonial Office, and if they be perused in connection with my remarks on the Award, copy

of which I enclose herewith, it will be seen that the Award is not based upon the facts in evidence, nor upon any principle recognised by Arbi- trators, but is arrived at from conjecture only.

5. It is true the words of the Ordinance state that the Governor if

may, he thinks fit, award such a sum of money as he may in his absolute discretion think sufficient as compensation for any injury sustained by the Reclamation; but according to Mr. C. A. Cripps, K.C., the Award being under the Ordinance, the Governor is bound to decide upon proper and legal grounds, and not in an arbitrary manner; and yet, as against this, Lord Macnaughten in the Privy Council, said that under the Ordinance, no Court of Law could interfere with the discretion of the Governor, which leads to the startling revelation that a Hongkong Ordinance can override the Statute Law of England, under which the Courts can interfere with the mistake or misconduct of an arbitrator, and Mr. Secretary Lyttelton has admitted that the Governor is an arbitrator.

5. Fortunately, however, under the Charter of the Colony, the Secretary of State for the Colonies is vested with power to interfere, and Mr. Secretary Lyttelton has twice exercised that power because he was not satisfied that substantial justice had been done. In this charter the Governor is commanded to do and execute all things according to the laws of the Colony, and he may make new laws, but they must be for the peace, order and good government of the Colony; and it will not be contended that to pass an Ordinance contain- ing a clause which could not find a place in an Act of Parliament, empowering himself to take away the rights granted in a Crown Lease without paying any compensation, if he thinks fit, is in accordance with the laws or for the good government of the Colony.

6. The Courts of Law have also said that when legal rights have been taken

away, the greatest care should be excercised that no injury be inflicted without adequate compensation, and that it cannot but be a point of honour with the Governor to pay full regard to the moral right, and this moral right is

emphasised by Governor des Voeux, who, in his message to the Legislative Council, while stating that the frontage Lot Holders are strictly entitled to compensation only in respect of the actual depreciation of their property by the Reclamation in front of it, also said that by the provision in question there can be taken into account the moral claim, so that instead of being a hardship to the dissentient Lot Holder, the clause in reality will operate for his protection. Aud, too, Her Late Majesty's Ministers in a former Reclamation, recog- nised the equitable claim of the Holder of the Marine Lot, and stated that a sense of justice requires that it should be liberally considered.

:

7. Our claim is based upon the admitted obligation of the Crown to compensate for the difference between the value of our Marine Lot No. 184, and its value when converted into an Inland Lot by the Reclamation in front of it and that this difference be ascertaind from the incontrovertible fact of net rentals $15,406, in the year 18,5, before the rentals began to decrease, capitalised at 16 years' purchase for a Crown Lease of 999 years, with the customary 10% added; and deducting therefrom the $110,000 for which the property was sold as an Inland Lot on 10th October, 1899, when the rentals had decreased to $4,308 for the 283 days in that year; and also $25,142 for the loss of rents caused by the obstruction of access by the Works of the Reclamation before the Reclamation was actually commenced in front of our Lot, recognised by Attorney General Goodman as a proper subject of claim.

8. Three Awards have now been made;

The first, by Acting Governor Major General Black was $15,000 as com pensation for injury sustained by the Reclamation Works; but whether for depreciation, loss of rents, or both is not stated.

The second, by Acting Governor May, is $24,367 for depreciation, “as in Musso's case." The claim sent in by Madame Musso was on behalf of the Sub-Lessee for loss of rents, and how that became converted into one for the depreciation of the property of the Crown Lessee is not apparent.

The third, by Governor Sir Matthew Nathan, is $32,481 for depreciation on land only, and 10% thereon, "by reason of the alteration in its status" making a total of $35,729.

9. The process by which this last Award is arrived at is, to say the least, obscure.

if

Sir Matthew Nathan ignored the net rentals from which alone the true value of the property can be found, paid no attention to the value of the build- ings as given by all the Experts, and took the land alone, as distinct from the land with the buildings thereon, as the only subject for compensation, knowing, as he must have done, that the land without the buildings could have but little, any, earning power; repudiates the rate of $5 per foot paid to us by his predecessor, Governor des Voeux as the market value of the land in 1887, when the net rentals were $11,017; passes the year 1895, when net rentals were $15,406; and, unsupported by his Experts, takes the year 1898, when net rentals had decreased to $8,845, as the time for valuation, both as a Marine Lot and an Inland Lot, and is of opinion that the value of the land was then probably about $3 per foot as a Marine Lot and $2 per foot as an inland Lot; and states that $1 per foot appears to be the rate of depreciation, giving $32,481 only, as against $172,000 claimed by us, deduced from Messrs. Leigh & Orange's valuation of $282,000 based upon net rentals in 1895, less $110,000, the amount for which the property was sold in 1899.

690