Hong Kong's and that just because more money was advanced than was necessary it is not reasonable that Hong Kong should hold this against H.M. G. and attempt to claim the amount of the over-issue (see also paragraph 3 of (9) on 55387/48, in this connection, which however, as noted above, does not make the Governor's attitude on the matter clear).
(ii) That since the financial settlement excepted from treatment as free grants money used to purchase stores for resale which has resulted in cash receipts by Hong Kong, it is only reasonable that the over-issue of funds to the B.R.C.S., which otherwise would also result in cash receipts by Hong Kong, should be similarly excepted (these two points are linked and are covered at 'X' of Mr. Palmer's minute of 30/4/49).
(iii) That the financial settlement does not purport to have legal force but is merely an equitable settlement and that therefore any issue, cropping up after it, is open to discussion and cannot properly be excluded merely because of the form of words used in the financial settlement.
At all events, it seems to me that no further useful purpose can be served for the present by correspondence on this matter as an impasse has new been reached. It is just the sort of issue which is clearly best thrashed out over a conference table and in view of the Hong Kong financial conference which, subject to Mr. Followes' ability to attend, will shortly take place, I suggest that this question should be included amongst those to be discussed then and that in the mean time no further attempt should be made to argue the matter with the Governor.
AJ. Fandough
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