JUDGMENT.

Dominion, Volume 6, Issue 1694, 10 March 1913, Page 5

JUDGMENT.

SOUTHLAND LEASE CASE. LESSEE'S RIGHTS. 'GOVERNMENT'S VIEW 1 UPHELD. THE LAND BUT NOT THE MINERALS. iSffi JOSHUA WILLIAMS STATES THE LAW. (By Telegraph.—Press Association,) : Tnvercargill, March 9. His Honour Sir Joshua Williams on Saturday delivered judgment, in the case of Gavin Brighton v. the Commissioner of Crown Lands, an originating summons under the Declaratory Judgments 'Act, by which it'was sought to determine the meaning of'the words in Sub-section 1, Section'3l, of the Land Amendment Act, ■> 1912, "tho land comprised in the lease." Mr. W. A. Stout, appeared for the plaintiff, while Mr. ,W. M'Alister represented'the Commissioner of Crown Lands, and the .Minister for Lands. His Konoiir said:— The plaintiff is the lessee of two leases ■In perpetuity granted under Section 121 of the Laud Act, 1832. That section is as follows:—

When anjr mineral, oil, gas, metal, or valuable stone has been, or. shall > .be, discovered\on or adjaoent to /any Crown land, whether open for selection or not, or on any Crown lands heretofore reserved or hereafter to bo reserved for coal-mining, or in case . where the" presence of such mineral," mineral oil, gas,, metal, or valuablestone is probable, the . Governor-in-X'ouncil -may withdraw such lands from sale, and may thereafter deal with such land by special regulations, . bnt always subject as follows:—(1) The . '.' eurfaco of the land may be lease in perpetuity under Part 111, or under Part V, or under Part VI of the Act. (2) No right to any mineral, mineral ' oil, gas, metal, or valuable stone under tho Surface shall pertain' to the lessee. (3) A covenant snail be inserted in every lease or license especially excepting such - minerals; _ metals, or ; valuable stone from all claims or right of the lessee, or' licensee, and limiting such right to-the surface soil of the land comprised in his lease or license, "and. reserving a right of ingress, egress, and regress to all persons lawfully en- . gaged in working any such -minerals,'' mineral oils, gases, motals, or stone. ~ A covenant to the effect of tho covenant : 'in sub-section 8 was endorsed on the leases. The leases aro for 999 years. 'At the time the leases, were executed there •was no statute giving- tlie lessees n right to purchase tho fee simple. The right of purchase was first given by Section 20 ' of tho Act' of 1907, which was' re-enacted 'as Section 177 of tho-Consolidating Land ■'Act of 1008. That section was, however, . -repealed.by Section 40 of the Land Laws Act, 1912, and the right of .purchase .which Ithe plaintiff claims to fexerciso was given by Section 30, and tho . following sections of the Act of 1912. Sic'(tion 31, Sub-section 1, of tho Act of 1912 tig as follows:— : The owner of a leiise-lii-perpetuity ■ shall a right at any time here'after during the existence of the lease to purchase the fee simple of the land ' : comprised in the lease'at a price nscer- ! tained, and determined in the manner . ■.■ grovided l: by"this' J ptirt of >this'Att. - .Section 32 provides that the prico is to 1)0 computed as follows :— (a) The difference between a rental at five per centum per annum and at four per centum per annum on the original Capital value shall be treated as having jbeen payable by the purchaser to tho .Grown in each year from the date of the lease, and accordingly a sum equal to one-half of such difference shall be deemed to. have become due by the purchaser to tho Crown on each half-yearly day appointed by the lease for the payment of ' 1 -lent from the ,'dato of the lease to tho . j<3ate of the delivery of the notice, and fto have Remained unpaid. (b) Upon each such sum interest shall I>e "computed at the . rate . of "four per centum, per annum .compounded with ' (half-yearly rents from the date when suoh sum is treated as/. having become due until tlie dato of the delivery of the ' iiotice. (c) The aggregate of the sums mentioned 1 Sn paragraph (a) hereof .and the aggregate of the interest computed as directed jby paragraph (2) hereof shall be added to ' '"tho original capital value.and the total phall be tho price. . " ■ What then is the position under the /existing legislation apart from Section [177 of-the Act of 1906, which tlie present ' jiAct has repealed, and the case of Bennie iv. the Commissioner of Crown Lands (28 N.Z.L.R., 955), ivhich wi-.s decided upon the construction of' that section? The leaso was granted under Section 121 of .the[ Act 1 of 1892, and must'be construed in .'conformity with the terms of that, section. 1 It was therefore a lease of the sur-

j'face, only. The lessee has no right to ;any minerals, - and they nro expressly excepted from the demise. The right of .purchase given to tho lessee is the fee pimple of the laud comprised in the lease. ,The price to be paid is based upon the ; capital value , upon which the rent was inssessed. that is, tho capital valne of tho land, with the minerals excepted. If the purchaser is entitled to a conveyance' of the, whole fee simple of the land, including the minerals, he would be entitled to something which was not included in his lease, and which he had not paid for. Apart therefore from Section 177 and Bennie'a case, Section 31 of the Act of 1912,,d0es not appear to me to give the lessee tho right to, purchase more than tho fco simple of tho land demised, that is, the land without the minerals, and the fee simple of the minerals would remain in tho Crown. It was contended,, however, that the 1 first sub-section of Section 177 of the Act of 1008 was to tho same effect as sub-sec-tion 1 of Section 30 of the Act of 1902, and that as the case, of Bennie v; the Commissioner of Crown Lands '•as decided that the words "the fee simple or the land comprised in the leaso in Section 177 meant the whole of the land, deluding the minerals," tho words must have the same meaning in Section 31 of the prese'nt Act.. The meaning of , the words, however," must depend upon their context, and there was a contest in the Act of 1908 which does not appear in the pro-

sent Act. Tho two first snbseiuentions of Section 177 aro as TSflow (1) Tho owner of a lease-in-perpetu-ity shall havo a right at any timo hereafter, during the existenco of tho lease, to purchase the fee simple of tho land comprised in the lease at a price ei|ual to the capital value of tho said land at tho time of tho purchase thereof. (2) The said capital value shall be determined by valuation or arbitration. in the manner provided in this , section, and shall include thp value of all minerals other than gold .md silver, but shall not include tho valuo of any 1 improvements.placed oil tho land during the continuance of ttu> lease. By sub-section 2, therefore, the minerals in the land had'to be valued, and tho purchaser had to pay for them. It is no wonder that the Court of Appeal held that the words "the land comprised in tho lease" meanti "The land with what it contains physically, although the contents may not in law be part of the subject matter of what .is let." If tho Court had not placed that construction upon these worefs tho effect would have been that the purchaser, although he paid for minerals, would not have become entitled to thorn. The minerals, as the Court of Appeal said, were not in law part of the subject matter of was let. Although this was so, the Court, in order to avoid a palpable absurdity, was constrained by.sub-section 2 to put n meaning on the words "the land comprised in tho lease," which were beyond their legal meaning, and covered .■>ometlmig that was not included in the lease. I t was only by reason of sub-sectnn 2 that this meaning is attributed to them. Now that sub-section 2 no longer exists there is no need- to extend the legal find natural meaning' of the words, or to hold that they include any more than the subject raatter of what was included in the leise. Section 11 of. the Act of 1908 has been wiped qut of the Statute Book. 1' or the purposes of this case the section miy he treated as if it had never existed. Bennie's cuse had no bearing ui>ou the' present except so far as It shows that the decision in it, was based on bubsection 2, and that the inference therefore is that had, it not been for* bubsectioii 2 the decision would have been the other way. A case which decides that if the Legislature says that a man was to pay for a thing the Legislature intended he should get what he paid ior is not an' authority for the proposition, that tue Legislature, by another statute, intended the man to get . the same thing without paying for it. . tt was contended that the right of purchase given :by the statute should be construed liberally in favour of the lessee. I think tho true rule of construction' is • the other way. The right was an act ol grnce on the part of the Legislature, and of tire Crown as forming part of ' the Legislature. In such' a case tile rule of construction of Crown grants would, in my opinion, apply. That is that they are construed most favourably for the Crown. The.Crown would not be held to have granted anything mora than the express words of the grant cover, and in the event of a doubtful construction the Crown would have the -benefit of the doubt. I do hot think, however, that it is necessary 'to invoke this principle in the present case. ;; The answer, therefore, to the first question in the summons is that the words "the land comprised in the lease" mean tho land demised by the lease-that is the land without the minerals.

The answer to tlio second question, is that the plaintiff is. entitled to a Crown grant of the land, exclusive of the minerals.

'i. Costs 1 are not asked for by the Attor-ney-General.

The judgment delivered by his Honour, Sir Joshua Williams, it will be seen, bears out the opinion expressed by tho Prime Minister when the controversy over the Southland lease case first arose. Interviewed on tho subject on January 31, the Primo Minister remarked that ' he ccnld not speak as a lawyer, but only as a layman, with ordinary common sense. "These leases," he continued, "ara in express. terms, leases of the surface rights only. There is a covenant ,in ttye leases to that effect!'. 'wal .'ls .tech- : niciilly not' a' mineral within the meaning of tho present Mining Act, but that is a result of a definition made since these leases were entered, into as between the and the Crown, and they are in no way affected by what hns happened since then. I am quite satisfied that the Crown has' a right to resume at surface value."