CO885-(25-26) — Page 306

297

باتسييا

PUBLIC RECORD OFFICE

Reference :-

885/25

PUBLIC RECORD OFFICE, LONDON!

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

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14. The position with regard to Messrs. Gaupp & Company, so far as it is known here, is set out in the enclosed copy of a letter from the liquidators to the Attorney-General, dated the 25th May, 1916. Under the circumstances I would recommend that the assets should not be pooled.

15. You will see that a power of disclaimer has been included in the Bill. In accordance with your instructions the liability of the alien enemy firms is not preserved, and disclaimed leases and contracts are expressly excluded from the operation of Section 10 of Ordinance No. 28 of 1914. They will, therefore, form a class apart, as the liability of the alien enemy firms is preserved in the case of all other claims. I draw attention to this because I understand that the lessors who expect to be affected intend to oppose this particular provision in the Bill.

16. The obligations in the case of which it may be advisable to consider disclaimer may be classified as follows:--

(a) Leases.

(6) Exchange contracts with the Deutsch Asiatische Bank.

Import contracts

(i) With suppliers;

(ii) With the dealers here;

(d) Export contracts

(i) With the dealers here;

(ii) With the buyers.

17. Apart from the inherent difficulty of ascertaining the damage, the prin- cipal difficulty in the case of leases is that in some cases the liquidators have sublet the whole or portions of the premises affected. Disclaimer of the lease in such a case will involve the extinction of the mutual rights and liabilities under the sub- lease, and the position of the sublessee will have to be considered carefully in the light of decisions under the Bankruptcy Acts and otherwise.

18. The exchange contracts with the Deutsch Asiatische Bank are all over- due and the bank is now unable to carry them out. The liquidators generally, including the liquidators of the bank, were given to understand that mutual arrangements had been made to carry these contracts over until after the War, though in no case has any confirmation in writing of any such arrangement been found, and I think that it will be unnecessary to disclaim any of these contracts on either side.

19. In the case of import contracts, both the suppliers and the dealers appear generally to have accepted the situation, and I think that where no claim has been made it would be a mistake to disclaim such contracts. To disclaim them would invite inflated claims which would involve delay, litigation, and expense to the estate. In some cases the orders must have reached the manufacturers after the outbreak of war and were probably never put in hand, and in others the advance in prices has probably made it advantageous to the suppliers to divert the goods elsewhere. In some cases these contracts have already been cancelled, and in others the German firms are protected under the terms of the contract.

20. The same remarks apply to export contracts.

21. It would appear, therefore, unless you disapprove of the position which I have taken up with regard to import and export contracts, that it is leases which will be chiefly affected by the power of disclaimer now to be introduced.

22. Unless you think it advisable I do not propose to direct the liquidators to advertise for claims, except locally. It would be difficult to say where such advertisements should end if once they were undertaken, as the German firms had dealings with firms all over Europe, Asia, and America, and it is difficult to believe that any possible claimants have remained in ignorance of the liquidations. If any have, it is doubtful if advertisements would reach them.

23. There are a few cases in which liquidators are paying the rent of private houses in which the furniture of enemy subjects is stored. In all these cases the furniture was placed in the houses by the enemy subjects themselves, and in most, if not all, cases the furniture in each house is a collection belonging to several owners whose various articles cannot now be sorted out. With your permission I would like to direct that the houses be given up and that the furniture be sold. A careful account would be kept from which it ought to be possible hereafter to ascertain the shares of the various owners.

24. I am not directing the sale of any of the leasehold property of either the Basel Missior or the Rheinische Mission.

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25. I only wish to add that the liquidations were never delayed here in the belief that the War would be over before they could be substantially completed, or with the object of keeping business alive for the German firms, and that, with the exception of immovable property, launches, goodwill, and trade-marks, it was always intended, after the first few weeks, that all available assets should be got in and be turned into money. The only things which have prevented a more rapid winding up are the practical difficulties of the case, the interests of the creditors, the necessity of avoiding injury to the local market and to trade generally, and a certain obligation to the expelled and interned enemy subjects to realize their property to the best advantage reasonably possible.

I have, &c.,

Enclosure 2 in No. 54.

F. H. MAY,

Governor, &c.

MINUTE ON THE ALIEN ENEMIES (WINDING UP) AMENDMENT BILL. 1. THE introduction of the provisions relating to arbitrations was suggested by a case in which a Chinese firm in French Indo-China has a claim against Messrs. Siemssen & Company in respect of a machinery contract which provides for arbitration in Hong Kong. Messrs. Siemssen & Company allege that it is impossible for them to place their case adequately before arbitrators in British territory during the War, especially as their machinery expert is a German subject. It seems desirable that the question as to whether the arbitration should proceed under such circumstances should be entrusted to the decision of a judicial tribunal. Opportunity has been taken to widen the discretion of the Court under Section 4 of Ordinance No. 11 of 1915, as well as under Section 5.

2. Some of the provisions of the declaratory Clause 5 are rendered desirable by the decision to sell the leasehold property of the German firms. For example, some leasehold property belonging to Messrs. Reuter, Brockelmann, & Company is vested as to one undivided half-share in a partner and as to the other half in the same partner and another partner as administrators de bonis non with the will annexed of a deceased partner. In another case the property is vested in two partners, one of whom is said to be a British subject though he resides in Germany. Para- graph (a) is intended to clear up a doubt as to the meaning of the word "absent in Section 5 (1) of Ordinance No. 28 of 1914. Paragraph (b) is intended to cover certain cases where property was in the custody of German firms. Paragraph_(c) The is intended to meet a possible case, though one is scarcely likely to arise. reasons for paragraphs (d) and (e) have been explained above. Paragraph () is to meet the case of the Basel and Rheinische Missions.

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3. Clause 11 is intended to ensure the sale of property held by secured creditors. Sub-clause (6) is to meet the case of the Hong Kong and Shanghai Banking Corporation, which, by its deed of settlement. has a lien on all shares in the Corporation for the liabilities to the bank of the holders.

J. H. KEMP,

Attorney-General.

25th May, 1916.

SIR,

Enclosure 3 in No. 54.

Lowe, Bingham, & Matthews, Accountants and Auditors,

New Government Building, Des Voeux Road,

Hong Kong, 25th May, 1916.

Chs. J. Gaupp & Company.

WE are in receipt of your letter of the 20th instant inviting our views to the suggestion that the assets of the above firm in Hong Kong and Singapore should be pooled, and that the two liquidations should be treated as one for the purpose of distribution.

According to a rough statement of affairs dated the 31st January last, sent to us by the liquidator, the estimated deficiency at Singapore was $37,339-68, Straits currency

The liquidator, in forwarding the statement, remarked that probably the stock would not realize the estimated value at auction.