Our Ref: 54447/5/50.
Dear Mr. Smith,
COPY.
The Church House,
Great Smith Street,
London, S.W.1.
6th April, 1950.
41
I am writing to seek your assistance regarding a claim which has been made by the Hong Kong Government against the War Office, arising out of the requisitioning of certain railway materials belonging to the Kowloon-Canton Railway in 1941. The materials concerned were requisitioned by the Hong Kong Government War Supplies Board for the Director General of Transportation, Middle East and although it has been possible to arrive at satisfactory settlements of most of the claims in respect of these materials, the particular matter with which I am taking the liberty of troubling you at this very late date, has not proved possible of settlement owing to the lack of sufficient reliable evidence.
It appears that railway wagon materials held in stook by the Kowloon- Canton Railway on behalf of the Chinese Ministry of Communications were requisitioned and that as a result, 600 wagons wereéventually delivered on board ship. The Kowloon-Canton Railway (British Section) have claimed for the cost of stripping, assembling, sorting, making-good and marking these 600 wagons and subsequently delivering them on board ship. The difficulty really turns on whether or not these wagons were in fact "made good". Hong Kong maintains that considerable expenditure was incurred in having missing materials manufactured and in this connection I quote from a recent communication of the Governor's:- ........it has been possible to collect some further though indirect evidence of the type of material supplied for preparing the 600 wagons. This consists of a letter from Mr. L.C.Su, Managing Director of the South China Iron Works Ltd., to the General Manager of the Kowloon-Canton Railway. Contracts totalling approxi- mately $900,000 are believed to have been placed with this firm and with Mesars, Liu Hc Kou Iron Works Ltd. and Mr. Su indicates the type of articles which his firm was asked to manufacture. This clearly shows that the Kowloon-Canton Railway in preparing the 600 wagons for fabrication, had more to do than "sorting, marking, preparing and delivering to ship". Furthermore, it is known that the requirements of the War Supplies Foard were considered of sufficient magnitude to justify the engagement temporarily of a Chinese Engineer to supervise their supply and in particular, to ensure that the 600 railway wagons were properly completed and shipped..." I attach a copy of the letter to which the Governor refers.
The War Office on the other hand, maintains that this interpretation of the matter is not correct and that Hong Kong did not in fact inour the cost of manufacturing the missing materials to complete the fabrication of these 600 wagons. They say that the missing materials were not manufactured or obtained in Hong Kong but in India and that therefore they are not liable to Hong Kong for the cost of any materials but only for £28,650 being £3 per ton for 9,550 tons in respect of services, i.e. stripping assembling, sorting, marking and delivering.
We have been in touch with Lt. Col. Walker, who was in 1941 Manager of the Canton-Kowloon Railway and whilst he came down firmly in favour of the Governor's point of view on the question he said that the thought you would be ahle to supply fuller details on the matter than he could recall,
If you have any recollections of the matter at issue which could be of assistance to us in elucidating the true facts of the situation, we would be most grateful for any help you can give. As the matter is now somewhat urgent we would appreciate it if you could reply as soon as possible by air mail.
Yours sincerely,
(Sgd) (H.P.Hall)