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PUBLIC RECORD OFFICE

Reference :-

HEPEPEC.O. 882

mmimmi

8 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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Company was likely to be expropriated at an early date, and he has been engaged in carrying out the duties of auditor for some two months, the audit of the Company's accounts being a running audit.

3. As such auditor, Mr. Derrick's first duty is to the shareholders of the Company, in whose interest he is bound to be continuously examining the accounts in order to see that they are properly kept and made up and for these services he has agreed to accept remuneration from the Company.

4. It does not appear to the Company that Mr. Derrick can properly perform his duties to the shareholders of the Company, if his firm is at the same time investi- gating the accounts of the Company with a view to assisting the Government adversely to the interests of those who have employed him.

5. The Company consider that such persons, who are placed in a peculiar posi- tion, acting for the protection of the shareholders against possible negligence or wrong doing of the Company's other servants or directors, should not be employed either by the Government or the Company, nor does it appear proper to the Company that information acquired by auditors, while in the pay of the Company, should afterwards be given to those whose interests are diametrically opposed to those of the Company.

6. I have the honour, therefore, to request that the engagement of Mr. Derrick's firm may be determined.

The Honourable

SIR,

The Colonial Secretary, Straits Settlements,

Singapore.

Enclosure 2 in No. 252.

I have, &c.,

Secretary.

Colonial Secretary's Office, Singapore, May 29, 1905.

In reply to your letter of the 25th instant, respecting the employment of. Mr. G. A. Derrick's firm to investigate the Company's accounts in connexion with the expropriation of the Company by the Government, I am directed by the Governor to state that any information possessed as to the books and accounts of the Company by the auditors or officers of the Company, who may be taken over by the Government on the appointed date, will then be at the disposal of the Government.

In the circumstances His Excellency, for reasons which he has explained verbally to the Managing Director, regrets that he cannot see his way to comply with the request that the employment of Mr. Derrick's firm may be determined.

The Secretary,

I have, &c.,

E. L. BROCKMAN,

Acting Colonial Secretary, Straits Settlements.

Tanjong Pagar Dock Company, Limited, Singapore.

30982

(No. 350.) SIR,

No. 253.

THE GOVERNOR to MR. LYTTELTON. (Received August 28, 1905.)

Government House, Singapore, August 1, 1905.

I HAVE the honour to enclose, for transmission to counsel engaged by the Government in the arbitration proceedings for the expropriation of the Tanjong Pagar Dock Company, a memorandum on the subject of the compensation likely to be awarded by the arbitrators for loss of interest pending re-investment and for cost of re-investment.

I have, &c.,

E. L. BROCKMAN,

Governor's Deputy.

253

Enclosure in No. 253.

+

EXPROPRIATION OF THE TANJONG PAGAR DOCK COMPANY.

MEMORANDUM regarding Compensation likely to be awarded by the Arbitrators for loss of interest pending re-investment and for cost of re-investment. Counsel have already advised on this matter, the question submitted (with others) being:- *

No. 9. Whether in reference to the despatch of the 29th April referred to in the case, the suggestion made by Mr. Tomlinson should be given effect to, and if not, what other course counsel would advise to be adopted with a view to limiting, as far as possible, the Company's claim in the above respect, and also so as to spread the payment of the compensation over as long a period as possible.

The opinion in answer to this question was as follows:-

"9. Having regard to Section 22 of the Ordinance, we do not think that the plan suggested is feasible and we doubt whether it would be desirable for any allowances to be made pending the arbitration."

The matter has also been alluded to in the brief which was sent home by the mail of July 6th, and the opinion of counsel was then requested as to what steps, if any, should be taken to prevent, if possible, the award of a large sum as compensa- tion under this heading. In view of the extreme importance of the subject and the likelihood that a large sum will be demanded by the Company, the writers think it advisable to forward this further memorandum on the subject for the information of the solicitors of the Government in London, with the view, if necessary, of getting a further opinion from counsel, as it is thought that any steps which counsel might advise should be taken might require some time to carry out and that, therefore, the local Government here should have early notice if any action is deemed advisable.

2. So far as they can anticipate the argument on the side of the Company, the writers think that it will be somewhat as follows:-

:-

(I.) No certainty as to the date which Government will fix for paying out the compensation money: shareholders may be kept in suspense for at least 12 months from the date of the award (Section 22), but possibly for 15 months if the three months allowed in Clause 10 for the Company to decide as to taking inscribed stock is to be taken into consideration: and the amount of money or inscribed stock (Section 22) will not be known until the Company has notified Government under Section 10 or has failed to do so within three months.

(II.) Consequently shareholders cannot make arrangements for re-invest- ing their money.

(III.) Consequently they cannot tell what prices corresponding securities will be standing at when the moment arrives for re-investing, but as, pre- sumably, that moment will be a favourable one for the Government, it will be an unfavourable one for the shareholders. Therefore, the Court should make sure that the shareholder will not be a loser by this action of the Govern- ment, and should consider the probability of rates of interest being depressed and the price of good securities being inflated by the putting of this large sum on a small market at one time.

(IV.) In any case the shareholders will have considerable difficulty in investing their money in Singapore in comparable or approximately comparable investments, owing to the limited amount of capital existing, and that, there- fore, they must either keep their money lying idle for a long period or invest in other places.

(V.) Remittance for investment in other places would involve consideration being given to the question of loss on exchange consequent on a large sum of money being remitted from Singapore and the cost of re-investing in other countries.

(VI.) The circumstances are most unusual and it may be said that there is no precedent, and that it cannot be demonstrated mathematically what loss the shareholders will sustain, and that, therefore, a just allowance cannot be less than one based on the assumption that all the contingencies and circum- stances will be against the shareholders.

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