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The notices themselves are, I think, irregular, and ought to have been given under the Government Contractors Act of 1872; and in this Act is a provision that the party desiring a reference shall take proceedings under the Act within six months after the dispute has arisen, unless with consent of the other party. This is not a provision which the Government would take advantage of, unless for good cause ; hut it may be useful to us should Messrs. Brogden desire to put the Government to inconvenience by bringing on all these claims at once in different parts of the colony. I think these notices should be acknowledged, and Messrs. Brogden informed that there are several matters stated in their notices which cannot be settled in the absence of the Bngineer-in-Chief, but that on his return a final reply will be sent. The letter should state expressly that, in so acknowledging the notices, it is not intended to waive any irregularity in the terms or form thereof, nor to waive any right or privilege vested in or accorded to the Government or the Minister for Public Works under "The Government Contractors Arbitration Act, 1872.'" A suggestion might be added that in any future steps to be taken Messrs. Brogden's legal advißers should communicate directly with the Law Officers of the Government. 20th January, 1877. The letter of the 26th January, 1877, was written immediately afterwards, and was as follows: —■ The Undek-Seceetaky for Public Wokks to Messrs. Bkogden and Sons. Gentlemen, — Public Works Office, Wellington, 26th January, 1877. I am directed by the Hon. the Minister for Public Works to acknowledge the receipt of your four letters of the 21st December, severally giving notice of a dispute having arisen in respect of the contract entered into by Messrs. Brogden and Sons as regards the railways therein mentioned, the four railways being the Picton and Blenheim, the Napier and Pakipaki, the Waitara and New Plymouth, and the Invercargill and Mataura. The Minister intended to have deferred acknowledging the receipt of your letters, as above, until he was in a position to have gone fully and finally into the matter in dispute ; but, after giving them such consideration as he is able, the Minister instructs me to inform you that he finds some of the matters in dispute cannot finally be fully investigated during the absence of tlie Engineer-in-Chief. On that officer's return, now shortly expected, a definite reply shall, however, be sent to you. Meanwhile lam to state that it is not intended by this acknowledgment to waive any irregularity in the terms or form of the various notices you have given, nor to waive any right or privilege vested in or accorded to the Government or the Minister for Public Works under " The Government Contractors Arbitration Act, 1872." I have, &c, John Knowles, Messrs. Brogden and Sons. Tinder-Secretary for Public Works. Now, I submit that this memorandum of the Solicitor-General not only proves the contention which I first submitted to the Committee, viz., that Messrs. Brogden were never definitely informed that the Government intended to waive this limitation clause, but it proves that they never intended to waive it. They say themselves that the clause maybe useful to them. For what purpose? For defeating the very object of the Act, which was intended to provide for a speedy and summary settlement of the disputes. And then, besides the reservation in the memorandum itself, there are three subsequent special reservations —one in the letter of the 26th January, 1877, already referred to ; another in Mr. Orinond's letter of the 19th March, 1877, which contains these clauses:— On behalf of the Government I entirely disclaim any wish to embarrass you in taking proceedings under the Act of 1872; but that Act is now law, and lam advised that the request made by you to dispense with its provisions could not be entertained ; and I am further advised that the admissions and consents you ask for are unreasonable, and such as the Government have no power to agree to. It must be recollected that the Government is not in the position of a private person. There is a duty to the public, whose affairs the Government are called upon to administer, whicli must be considered paramount. To the course formerly proposed on your behalf and assented to on behalf of the Government by the Solicitor-General, lam prepared to adhere; but I cannot consent to such terms for conducting the references as would preclude the Government from having a thorough investigation of the matters alleged to be in dispute. Again, in Mr. Eeid's letter to Mr. Travers of the 4th June, 1877, he says,— Referring to that part of your letter which asks for an assurance that I have been correctly understood as having consented to waive any question of time under section 31,1 may remind you that no statement has been made by me as to any particular clause in the Act the provisions of which would be waived ; but, in answer to your letter of the 31st January last, in which, after detailing the course of proceedings under the Act, you expressed a hope that the Government would carry on the proceedings with as much freedom from technical difficulties as was consistent with their duty, you being prepared to do the same on behalf of your clients, I replied in general terms that the Government were prepared to adopt the course indicated in your letter. However I may say that, acting in the spirit in which these proposals were made, I should have considered that the question of time under the thirty-first section was not one of which the Government would have been advised to take advantage. It is true that a course of action had been proposed by Mr. Travers, and, in a sense, had been consented to by Mr. Reid ; but there was nothing binding in that, nor was there anything to prevent the Government from setting up this clause. There was no absolute assurance given that they did not intend to set up clause 31, and Mr. Henderson was perfectly justified in thinking that there was something behind, and in asking the Government to give him a definite assurance that clause 31 would not be made use of. I attribute all the difficulties which have arisen to the reticence of the Government on the subject of the waiver. Mr. Henderson knew very well that if he had once consented to arbitration under the Act he would have been bound by it, and he was justified, if he felt a doubt, in resorting to his other remedy. Even now the legal advisers of the G-overnment do not agree with regard to the construction to be put on clause 31. My friend has referred to the pleadings under the Waitara petition of right, and has endeavoured to adduce a very ingenious argument, namely, that Messrs. Brogden were the first parties to set up clause 31 of the Act. What was really the position ? Why, simply that Messrs. Brogden claimed to sue for an amount of money alleged to be due to them upon a contract. The Government plead, You cannot sue, because the Arbitration Act takes away the jurisdiction of the Law courts, and provides a remedy by arbitration, which is an exclusive remedy. Messrs. Brogden's reply is to this effect: True, there is an Act which provides a concurrent remedy by arbitration under certain circumstances, but our right to sue in the Courts of law is not taken away; and, as regards the remedy by arbitration, that can only be adopted within six months after the particular dispute has arisen, and, as more than six months have already elapsed since the dispute in this case arose, it is now too late to resort io arbitration. It is not fair to say that Messrs. Brogden were the first to avail themselves of clause 31. The whole Act had been pleaded by the Government, and Messrs. Brogden were perfectly justified in replying that the operation of the Act was gone by virtue of the provision in clause 31.