Lifting of the Moratorium.
The year 1948 saw the passage of the Debtor and Creditor (Occupation Period) Ordinance and the lifting of the Moratorium on pre-war and occupation period debts which had been enforced immediately after the liberation of the Colony.
The problems dealt with in the Debtor and Creditor (Occupation Period) Ordinance arose from the fact that the Japanese, during their period of occupation of the Colony, introduced an occupation currency and endeavoured to liquidate banks of the Allied Powers. The process of liquidation necessarily involved collection of pre-war debts owing to these banks and in many cases these debts were re-paid in occupation currency. It became necessary firstly to decide how far these payments to liquidators constituted valid discharges of the debts and secondly what value should be placed on occupation currency in relation to the pre-war Hong Kong dollar currency. Pending solution of these problems it was not possible to lift the
Moratorium.
The solution adopted in the Debtor and Creditor (Occupa- tion Period) Ordinance was briefly as follows:
First, where a debtor re-paid his debt during the occupation period in Hong Kong currency he was
was regarded as having validly discharged his obligation in full regardless of the fact that his creditor might not have received the money.
Second, where a debt incurred before the occupation fell due for re-payment either before or during the occupation period, and payment was
payment was demanded and received by the creditor himself or by his agent, the debt was deemed to have been validly discharged unless payment was made in occupation currency and was accepted under duress.
Third, where a debt incurred before the occupation was re-paid to the liquidator during the occupation in occupation currency, such re-payment was regarded as a partial discharge of the debt.
The extent to which a payment in occupation period currency of a pre-war obligation should be regarded as valid pro- vided the chief difficulty. After much research a revaluation scale was drawn up and adopted in the Schedule to the Ordinance. The amount in occupation currency which the debtor paid over to the liquidator is converted into Hong Kong dollars in accordance with this revaluation scale, and the debtor is then regarded as having discharged his debt to the extent of this He is then liable for the difference between his original
sum.
4