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PUBLIC RECORD OFFICE
Reference :--
885/25
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
COPYRIGHT PHOTOGRAPH-NOT TO
SIR,
(Confidential.)
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Enclosure in No. 160.
Government House, Sierra Leone, 25th July, 1916.
In accordance with instructions which I have received from the Secretary of State, I have the honour to address you on the subject of certain questions con- nected with the liquidation of enemy firms in West Africa.
2. The points to which the Secretary of State invites particular attention are the following:-
(a) The form of legislation (if any) and the administrative arrangements necessary to give effect to the scheme approved by the Law Officers of the Crown for dealing with the assets of enemy firms; a scheme whereby the assets of each firm should be dealt with separately and applied in payment of debts due by the branch and by the head office or other branches, and whereby the Receivers, after satisfaction of the preferen- tial claims against a branch, would keep one another informed of the payments made, and to be made, to creditors, and the amounts of the assets available to meet debts.
(b) The form of legislation to establish priorities and the exact order of
priorities to be adopted.
(c) The desirability of issuing a notice inviting further claims against
assets, and the date before which such claims should be lodged.
3. The winding-up of enemy firms in this Colony and Protectorate has been conducted under the powers given by the Trading with the Enemy Ordinance (No. 2), 1914, being No. 23 of 1914. By various orders of Court all the enemy firms established in the Colony and Protectorate have been placed under the control of the same gentleman, Mr. A. E. Munn. He is. therefore, for all practical pur- poses, in the position of universal Controller, and will be referred to hereinafter as the Controller." He has, in the case of each business, all the powers set out in Sections 6 and 7 of the ordinance. The Controller is under the supervision of the Court and not the Executive, but in practice he has acted in accordance with the requests of the Government, and where there was a doubt as to whether such requests were covered by his powers under the ordinance, he has obtained orders from the Court in the required sense.
4. No specific power to sell real property is contained in the ordinance, but the Court could give permission if required. There is some valuable real property but the trade-marks and goodwill are practically valueless and unsaleable, the good- will, at any rate, so far as the old customers are concerned, having disappeared. No real property has yet been sold, in pursuance of instructions given hitherto. Having regard to the new policy, I am advised that it will be expedient to amend the ordinance in several particulars, one of which will be the giving of specific power to sell real property, goodwill, etc., in order to give effect to the recommendation of the Interdepartmental Committee.
5. It is now intended that the assets realized by the Controller are to be avail- able for the purpose of paying debts due to a variety of creditors, such debts including liabilities incurred, either by the branch in process of liquidation, or by its head office, or by any other branch of such head office, wherever situated. Having regard to the opinion of the Law Officers of the Crown, no amendment of the Sierra Leone Ordinance is necessary to enable the Controller to make disbursements in respect of such debts (though not immediately incurred by the local branch under liquidation), provided that the creditor is a person whom the Controller is authorized to pay. The Controller is at present authorized to pay debts due to friendly, neutral, or British creditors only. In the case of enemies he is permitted to retain money belonging or due to them until the end of the War. Modifications of the ordinance are, therefore, necessary with regard to both neutrals and enemies. Neutrals are to be left to pursue their remedies against the enemy debtor in the first instance and are not to be paid by the Controller, except in the case of a deficiency, after exhausting this remedy. Secured neutrals are, however, presum- ably to be paid up to the value of the security. With regard to enemies, secured enemy creditors are, in accordance with instructions received from the Secretary of State in a Confidential despatch of the 19th May, to be paid up to the value of the security (the amount being held by the Custodian of Enemy Property), and, further- more, arrears of wages and salary due to enemy subjects interned in British territory may be paid up to £50 (to be held by the Commandant of the camp) as preferential debts, any balance to rank as non-preferential and to be payable to the Custodian.
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6. With regard to priorities, I agree to the adoption of the order suggested by the Secretary of State with the proposed addition of secured creditors in the fifth place.
This will now include secured enemy creditors. The fourth class will include arrears of wages of interned enemies up to £50, and the balance of such wages will form an eighth class at the end of the list. This will involve an amendment of the law.
7. The Controller is now to receive claims from outside the Colony. As such claims can also be made in other colonies where a branch of the firm exists, care must obviously be taken that the same debt is not claimed and paid in two or more places. But that is not a matter for express legislation. Neither does legislation appear to be necessary as to the amount of proof required. The Controller is empowered to pay debts, i.e., sums due, and unless he is satisfied that the sum is due he will not pay it. If he should be induced to pay an unjust claim he will be indemnified by the ordinance, and, so far as the firm is concerned, I think the matter is safeguarded by the fact that the liquidation is not to prevent subsequent litigation. Hitherto it has been the practice of the Controller to require an affidavit and papers in proof of a claim, and, where these are not forthcoming to his satis- faction, he leaves the claimant to bring an action in the courts. It is certainly desirable that each colony should insist on the same amount of proof, but that can doubtless be arranged by the paying officers.
8. In the Controller's opinion no further notices should be issued to creditors, and with this I agree. Nothing is to affect payments already made.
9. So far as the paper pool is concerned, it seems to be a matter for mutual arrangement between the officers. Special legislation does not appear necessary, as the debt, though first claimed in another colony, is a liability against the assets wherever found. It therefore ranks with the other local non-preferential claims. The only difficulty that may arise the possibility of the combined assets of a firm in all the colonies concerned proving insufficient to meet the claims. In that event a dividend will be payable. If the assets of a branch here are sufficient to pay its own direct claims they may yet be rendered insufficient by the demands of another branch in a worse financial position. If the assets of a branch here are insufficient they may on the other hand be rendered sufficient by excess of assets elsewhere. It may be useful to provide expressly in the ordinance that where the assets of a branch are insufficient to meet all claims (which will include claims referred by another colony) a propor- tion only of the non-preferential claims shall be paid.
10. The Controller is to have power to disclaim contracts, and is also to be indemnified. Provision for this will have to be made in the Bill.
11. Consequential amendments to the ordinance will include power to pay balances to the Custodian, instead of into court, and the repeal of certain provisions of Section 9, the order of priorities now being fixed by law.
12. I attach a memorandum by the Controller on the subject.
I have, &c.,
His Excellency
The Governor-General,
Nigeria.
2.
1.
R. J. WILKINSON,
Governor.
MEMORANDUM BY THE CONTROLLER OF ENEMY FIRMS.
THE order of priorities suggested by the Secretary of State should be adopted here as they appear to have been in the other West African colonies.
With regard to claims and proof in support, up to the present only locai claims have been paid by me, and the practice in dealing with them is as follows:- (a) In cases where there is documentary evidence supporting the claim
(ie., admitted debts) it is paid without further proof.
(b) In cases where there is no documentary evidence, and where there is no evidence to contest the claim, an affidavit in support has been taken as sufficient proof.
As after the War the enemy firms can sue or be sued, it appears that an affidavit supporting any claims from outside the Colony can be taken as sufficient proof on which to pay, and apparently this is the view held in the Gold Coast and Nigeria, as they have paid claims of this nature.
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