345
PUBLIC RECORD OFFICE
Reference :-
C.O.885/25
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
COPYRIGHT PHOTOGRAPH-NOT TO
(a) The head office of the enemy firm in enemy territory; or,
(b) A branch in another dependency; or,
(c) A branch in Allied territory; or,
(d) A branch in enemy territory occupied by British or Allied forces; or, (e) A branch in neutral territory,
5. Similar questions were asked in regard to the case where the creditor, instead of being the head office of a British firm, was a branch situated either (a) in a British dependency other than that in which the branch is situate of the enemy firm whose assets are being distributed, (b) in Allied territory, or (c) in occupied enemy territory, or (d) in neutral territory. Also, inquiry was made as to the position where the creditor was an allied firm instead of a British one.
6. The Law Officers were also asked to take into consideration the position of the neutral creditor who could during the war pursue his legal remedy against the head office of the debtor in enemy territory, while the British or Allied creditor could not.
7. On the points set forth in the preceding paragraphs the Law Officers have now advised that, in each case, the debt incurred is the debt of the enemy firm, whether incurred by a branch or by a head office, and that the proper course would appear to be to discharge the debts of enemy firms out of their assets wherever found. Accordingly the Law Officers are of opinion that there is nothing to prevent the payment out of assets of enemy branches of any of the classes of debts enumerated in paragraphs 4 and 5 above, and that the same rules apply where the creditor is an allied firm instead of a British one. They consider, however, that neutral creditors should be left to pursue their remedy against the enemy debtor, and should only be allowed to claim against the branches in liquidation in respect of any deficiency after they had exhausted this remedy.
8. Connected closely with the questions mentioned above is the question of pooling the assets of the several branches of the same firm. The Law Officers were accordingly asked to advise whether (a) the assets of each branch should be dealt with separately, and applied in payment of debts due by the branch and by the head office or other branches, for payment of which application is made to the Receiver: or whether (b) the assets of all the branches of any given enemy firm in the British Colonies in West Africa should be pooled. A third suggestion was (c) that the assets of each branch should first be applied to payment of debts due by that branch, and the balance, if any, be pooled with the surpluses of other branches for the satisfaction of the other creditors. The Law Officers reported against course (c) and in favour of course (a). They recommend that the Receivers, after satis- faction of the preferential claims against a branch, should arrange either to pool the surplus funds, so far as required to pay the other debts, or to keep one another informed of the payments made and to be made to creditors, and the amounts of the assets available to meet debts. If the latter procedure is adopted, which is, I gather, the course favoured by the Law Officers, there would be a kind of paper pool. If the assets of any one branch of a firm were insufficient to allow of pay. ment in full of the claims presented against it, it would be settled between the various Receivers what dividend the total available assets of the various branches would give when distributed among all the non-preferred creditors ranking. against the firm. Creditors who had originally claimed against a branch assets of which were of themselves insufficient to pay such a dividend, would then be directed to apply to the Receiver.of a more prosperous branch of the same firm in another Colony. The Law Officers.consider that the actual distribution on the above lines, of the funds available in each Colony, should be made in that Colony, and that the surplus assets remaining after distribution should be retained. locally. Should you consider any local legislation necessary to legalise the recommendations contained in this paragraph, steps should be taken to secure its passage without delay.
the
9. Having regard to the Law Officers' recommendation as to neutral claims, and to the reference to 'preferential claims" in the last preceding paragraph,
CC
* No. 198 in Vol. VII of Law Officers' Opinions.
169
the question as to the priorities which should be allowed in satisfying claims also requires consideration. If a pooling arrangement on the lines indicated above is to be introduced, it would seem to follow that the law with regard to priorities should be identical in all the West African Colonies affected.
10. In the absence of express local legislation on the subject, the question what is the law of priorities in each of the West African Colonies depends upon (1) whether the Supreme Court has, under the local Supreme Court Ordinance bankruptcy jurisdiction, and, if it has, upon (2) the extent to which the provisions of English bankruptcy law are introduced into the Colony by the section in the local Supreme Court Ordinance importing English statutes of general application in force at a certain date.
It seems evident, therefore, that for the present purpose express legislation will be required as to priorities, and that the ordinary provisions of English law as to preferential payments in bankruptcy may not be altogether suitable for the purpose.
11. Subject to any variation which may be considered necessary in view of local circumstances, I consider that the following priorities should be laid down :— First, remuneration of the Receiver, and expenses of liquidation, including rent falling due during the liquidation. Secondly, claims of the Crown. Thirdly, rates payable to local authorities. Fourthly, wages or salary of any clerk, servant, or labourer. Debts of these classes should be treated as preferential claims " within the meaning of paragraph 8 of this despatch. Next in order of priority should be placed, fifthly, other debts due by the firm to British, Allied, or neutral creditors who do not fall under the sixth category mentioned immediately below; and last in priority, sixthly, debts due to a neutral creditor who can claim against the assets of the debtor elsewhere, e.g., in enemy territory. Provision should, more- over, be made that debts of the last-mentioned class should only be allowed to rank for dividend after proof that the creditor has completely exhausted every legal remedy which he may have against the enemy debtor.
In making the above suggestion as to the priorities to be laid down by legisla- tion, I have assumed that the position of the secured creditor will be the same as it is in the English law of bankruptcy. If, however, it should be thought desirable to simplify the law in this respect, a provision might be inserted giving priority in the fifth place, and as preferential claims to secured debts of non-enemy creditors up to the value of the security in each case.
No attempt should be made to recover any payments already made by the Receiver.
12. I do not anticipate that great practical difficulty will arise in carrying into effect a policy based upon the Law Officers' opinion as set forth above. The information furnished already shows that the branches of enemy firms are nearly all solvent, at any rate, as regards local debts, with the exception of the Woermann Linie, whose branches in Sierra Leone and Nigeria would seem to be insolvent. It is, of course, possible that more claims against the head offices might be presented to the liquidators if further notices were issued inviting. the presentation of claims, with special reference to the head offices. I am not, however, clear that this would be the case, and, as at present advised, I do not propose to issue any further notice, although steps will be taken to inform the Chambers of Commerce principally interested of the change. Should claims within the scope of the new decision, and not. within that of the previous scheme of liquidation, already have been presented to the liquidators and refused, the claimants should now be allowed to prove in the liquidations and informed accordingly. Any addition to the list of approved creditors may, of course, affect the solvency of the branches, but in the event of the branches in each Colony proving solvent, it would not be necessary to refer creditors to other Colonies. With regard to the neutral creditors, it appears that the only neutral claim of any importance is one of £8,990 19s. 11d., advanced by the United Export Company of Copenhagen against the West African Mahogany Syndicate in the Gold Coast. This claim is, however, so large, that if permitted to rank with British and Allied claims against the available assets, it would only recover a very small proportion of the total debt.
[Nigeria only:-I am causing further inquiry to be made with regard to the claim of £20,000 lodged by Emil Lowitz, of London, against the assets in Nigeria of Pagenstecher & Company, which is stated to be the subject of litigation in the King's Bench Division.]
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PUBLIC RECORD OFFICE, LONDON
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13. In regard to the general question of the liquidation of enemy firms in the Colonies, I have for some time past been coming to the conclusion that it would be well, on grounds of general policy, to introduce a more complete system of liquida- tion of the enemy firms in British West African territory. I recently appointed an Inter-Departmental Committee to consider the question, and I enclose a copy of their report, with which I am in full agreement. I am not aware of the amount of real property held by German firms in British Colonies in West Africa, but I consider that steps should be taken to act upon the Committee's recommendation and to include permanent assets of every kind among the assets to be liquidated.
14. In order to expedite so far as possible the completion of the liquidations
I shall be glad
you will on the above lines, [Gold Coast and Sierra Leone only :- communicate to the Governor-General of Nigeria as soon as possible, your views on the questions arising out of this despatch. In particular I would invite your attention to] [Nigeria only :-I have invited the Governors of the Gold Coast and Sierra Leone to communicate to you as soon as possible their views on the questions arising out of this despatch, with special reference to] the following, viz. :
(a) The form of the legislation (if any) to be introduced in accordance with paragraph 8 of this despatch, and the administrative arrange- ments to be made for carrying out the pooling scheme recommended in that paragraph.
(b) The form of the legislation to be introduced in accordance with para- graph 9 of this despatch, and the exact order of the priorities to be provided for.
(c) Whether further claims should be invited against the assets of the liquidated firms having regard to the proposed extension of the scope of the liquidation, and, if further claims are to be invited, the date before which they should be lodged.
Any legislation which it may be decided to introduce may be passed without prior reference to me, but [you should] [the Governor-General of Nigeria is being directed to] communicate to me by telegram any recommendations with regard to the advertisement for further claims, and any important variation of the scheme set out in this despatch which [you or the Governors of the Gold Coast and Sierra Leone] [you] may desire to propose. Should it be possible for you to agree with [the Governors of the Gold Coast and Sierra Leone] [the Governor-General of Nigeria and the Governor of Sierra Leone] [the Governor-General of Nigeria and the Governor of the Gold Coast] upon all points of importance before any com- munication is made to me, much time will be saved.
[To Gold Coast only:-15. As regards the enemy firms in Togoland, the position is peculiar. If, as suggested by you, they are liquidated on grounds of military necessity, I do not think it would be justifiable to realize their assets in the shape of real property, etc., so long as the final disposal of Togoland remains to be decided. This question forms the subject of separate correspondence, but it will be convenient to record in this despatch my opinion that any scheme which may be evolved for the pooling of assets should extend to the assets of liquidated firms in Togoland.]
[To Nigeria and Sierra Leone only:-15. Finally, I have to inform you that I have decided, after correspondence with the Governor of the Gold Coast, that the enemy firms in Togoland shall be liquidated in a manner similar to that in which the liquidations of enemy firms in the Gold Coast have hitherto been conducted, and I consider that any scheme which may be evolved for the pooling of assets should extend to the assets of liquidated firms in Togoland.]
*No. 2.
I have, &c.,
A. BONAR LAW.
17901
No. 155.
GOLD COAST.
THE SECRETARY OF STATE to THE GOVERNOR. (No. 239.)
SIR,
Downing Street, 14th April, 1916. In consequence of the decision to deport all European enemy subjects from Togoland it becomes necessary to consider what is to be done with plantations worked by Europeans which are situated within the British sphere in Togoland. At present I am not aware whether any such plantations exist in the sphere which is administered by you, and would be glad of information on the subject.
2. In the Cameroons, as you are no doubt aware, there were numerous large plantations, and the question of their administration during the military occupa- tion of the territory has received consideration. The conclusion reached was that the plantations should not be allowed to fall into decay, but should, if possible, be worked and the maximum production possible in present conditions reached, a reasonable percentage being retained out of the proceeds of working to cover the cost of Government administration, including the cost of any additional staff which might be found necessary. If you consider it necessary to adopt a similar course in regard to any plantations in Togoland the Agricultural Department could no doubt be deputed to supervise their working. Should you consider Government administration impracticable the plantations might be leased to a non-enemy tenant until the signature of peace, power being reserved to the Government in the lease to determine this date, the rent being accumulated in the hands of the Government pending the decision of His Majesty's Government as to its ultimate disposal.
3. I enclose, for your information, a copy of a despatch* which has been addressed to the Governor-General of Nigeria on the subject of the winding-up of enemy firms in the Cameroons.
I have, &c.,
29121
No. 156.
SIERRA LEONE.
A. BONAR LAW.
THE GOVERNOR to THE SECRETARY OF STATE. (Received 21st June, 1916.)
(No. 214.)
SIR,
Government House, Sierra Leone, 7th June, 1916. IN compliance with the request contained in paragraph 3 of your despatch No. 88, of the 4th April,t I have the honour to transmit herewith a detailed report on the winding-up of the enemy firms in Sierra Leone.
I have, &c.,
SIR,
1.
Enclosure in No. 156.
R. J. WILKINSON,
Governor.
Freetown, 15th May, 1916.
In reply to your letter of the 4th instant, I have the honour to report as follows:-
The enemy firms under my control are:-
(a) Deutsche Kamarun Gesellschaft, Freetown, with branches at Blama,
Kennema, and Pendembu.
(b) Deutsche Kamarun Gesellschaft, Bonthe, with branches at Sumbuyah,
Mopalma, Deah, and Jamaica (Sherbro Island).
(c) West African Trading Company, Freetown.
(d) E. Nehse, Freetown.
(e) Woermann Linie, Freetown.
(J. W. Jackel & Company, Freetown.
(g) A. Woermann, Mano Salija, with branches at Sulima and Whedaro.
J. W. West, Mano Salija, with branches at Dibia and British Gene.