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Mr. Bell to Mr. Cate. Dear Sir, — 11th January, 1882. Messrs. Brogden's Claims, Waitara-Yew Plymouth Contract. You will remember that when I received your letter of the 19th December I informed vou that the questions asked therein could not be answered by me, but must be considered by the Government, and that it would be impossible to give a reply until after the Christmas holidays. Before such reply could be given, viz., on the 30th December, a statement of claim under the above contract was delivered by j'ou, and I assume that this is intended as a preliminary to proceedings under the Act of 1872. As the Act allows only fourteen days for the delivery of propositions in reply to a claim, I think you must have anticipated that I should set up all legal defences available to the Government. The propositions of fact and law will be delivered to you to-morrow, under protest to the jurisdiction on various grounds, including the limitation defined by section 31 of the Act. By delivering the statement without waiting for reply to your letter of the 13th December, you have practically asserted that your clients have a legal right to proceed to arbitration, whether the Government consent or not. In the course of the proceedings it will no doubt be finally ascertained and decided by the Courts of law whether you have such legal right, or whether, as we are advised, the Government have the power to prevent your proceeding at all. But so long as you deny the existence of the power, it is useless for the Government to consider how and to what extent they would choose to exercise it. Before anything in that direction is done, it is obvious the legal position should be determined. I cannot consent to accept any document previously delivered as a sufficient notice under section 7, as I am of opinion that no such notice has ever been given. I have, &c, C. W. Cave, Esq. H. D. Bell.

Mr. Cave to Mr. Bell. Dear Sir, — Wellington, 17th January, 1882. Messrs. Broqden's Claims, Waitara and New Plymouth Railway. Before filing in the Supreme Court the statement of claim under the above contract, I desire, on behalf of Messrs. Brogden, most distinctly to give notice that they do not intend, by the present proceedings under " The Government Contractors Arbitration Act, 1872," for the recovery of this particular claim, to waive their right in the course of any proceedings which have been or may be instituted by them for the recovery of their claims under any of their other railway contracts with the New Zealand Government to question and put in issue the validity of " The Government Contractors Arbitration Act, 1872," or the power of the Colonial Legislature to pass an Act dealing with Messrs. Brogden's rights under the contracts referred to in a manner repugnant to the laws of England, or otherwise prejudicially to affect those rights. I shall be obliged if you will acknowledge the receipt of this letter. Tours, &c, H. D. Bell, Esq., Crown Solicitor. Chaeles W. Cate.

The TJndeb-Seceetaey for Public Woeks to Messrs. Bbogden and Sons. Gentlemen, —■ Public Works Office, Wellington, 27th January, 1882. I have the honor, by direction of the Acting Minister for Public Works, to reply to your letter of the 10th instant. The Minister is assured by the officers engaged in the investigation of your claims that the differences between yourselves and the Government on the great majority of the items are such that no practical advantage could be derived by either party to the disputes from the preliminary discussion which you suggest. The Government, therefore, seeing that there is no probability that the adoption of such a course would result in the elimination of any considerable number of items from the list of disputed claims, feel that to enter into the proposed comparison and discussion would be a waste of time. The steps you have lately taken of filing the Waitara claim under the Act of 1872 will probably lead to an authoritative determination of the legal position of the Government as well as of yourselves under the contract. The Government are advised that they can insist upon certain legal conditions imposed by the contracts and by Parliament; but, as they are informed that you deny their right to do so, it would be premature to consider whether the Government will waive any such conditions so long as their right to rely upon them is contested. Since the letter under reply was received, the Minister has concurred in proposals made by your Mr. Alex. Brogden for reference of certain matters of fact in the Clutha claim to an arbitrator, to be agreed on by the parties. . I have, &c, John Knowles, Messrs. J. Brogden and Sons. TJnder-Secretary for Public Works.

Messrs. Beogden and Sons to the Hon. the Minister for Public Woeks. Sib,— Wellington, 30th January, 1882. "We believe that the impression prevails that we have purposely kept back the prosecution of our demands, so that the staff of the Government officers who could examine and confute them would be dispersed, and the interest at 10 per cent, on the amount due to us might accumulate. Any person familiar with these matters will easily see how unfounded is such a statement. The Government retain in their permanent service many of the staff engaged during the construction of the railways by us, while we have suffered by the death of Mr. Henderson, our principal witness, and are obliged at great expense to keep our officers together as far as we can, so as to be available when we can obtain an examination into the accounts, while many of them are now in distant s—l. 7.

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