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bear the burden of its own rehabilitation following the very heavy bombing. The fact that part of the cost of meeting the rehabilitation of the damage in the United Kingdom was met by an insurance scheme, does not alter the fact that the cost falls upon the community as a whole, and the insurance scheme is merely a particular method of meeting the cost. Hong Kong before the war would not agree to any contributary insurance scheme. One must also bear in mind the contrast between the extraordinary prosperity which Hong Kong has enjoyed since the liberation and the austerity conditions existing in this country. This argument of the respective parts borne in the war by the two countries, and the respective liabilities which both countries now have to face, is not a very pleasant form of argument, but one is forced to examine it in order to decide whether there is any case for the Service Departments contributing towards any expenditure on moral grounds. So far as there is any case for H.M.G. assisting Hong Kong in meeting liabilities arising out of the war this has already been done as part of the general financial settlement.
5.
If the Admiralty are able after their examination of this problem to accept any of the individual claims as a liability of the Admiralty, this would be extremely satisfactory from Hong Kong's point of view and would certainly go some way to meet their general sharing of
Contention. Jell the liability on the basis of para. 2 of the Governor's
despatch at No.83. It would certainly be a waste Lowever, Pettle
time to ask the War Office or the Air Ministry to accept the percentages referred to in that paragraph.
6.
Prospect
of rung
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of
Perhaps we could discuss between ourselves before I raise the matter again with Mr. Severs. The difficulty as I see it is that we have very little ground on which to press the Admiralty to go outside the procedure under which they may admit legal liability in the case of individual claims where Admiralty are directly responsible, f.e., where the requisitioning was done for their use. As regards the remaining legal claims I fear that in the end there will be no alternative but to point out to Hong Kong that the liability will have to fall on Hong Kong Government funds.
7. We do not hear anything of this problem from the Malayan Governments and it may be that this is due to the fact that any claims which are not admitted as a legal liability can be transferred to the War Damage Claims Commission for such action as that Commission may eventually be able to take. This, to some extent, hides the problem which exists in Hong Kong, where once a claim is not admitted as a legal liability that is the end of the matter.
8.
I pass this file through Mr.B.D. Edmonds as these claims either fall to be dealt with under the local compensation defence regulations or else they must be treated as "scorched earth" claims in respect of which no legal liability has so far been admitted by the Colonial Governments although when the case was submitted to the Law Officers of the Crown
by/