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PUBLIC RECORD OFFICE

T། ། T「 །

C.O.

Reference :-

885/25

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

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Such guardian being in the place where the claimants reside is in a much better position to deal with the claim than an officer here, as in such cases there is nobody here who knows anything about the claim, either pro or con.

I think these moneys should be disposed of according to English law, and if foreigners have a claim they should make it to a British court or authority dealing with the matter.

22nd March, 1915.

24554

No. 149.

W. R. T.

THE SECRETARY OF STATE to THE GOVERNOR-GENERAL OF NIGERIA and THE GOVERNORS OF THE GOLD COAST and SIERRA LEONE.

SIR.

(Nigeria. No. 811.)

(Gold Coast. No. 427.)

(Sierra Leone. No. 212.)

[Answered by No. 150.]

Downing Street, 10th June, 1915. WITH reference to my predecessor's despatch [No. 420,] [No. 222,] [No. 123,] of the 26th of March,* and [your despatch No. 314, of the 9th of April,f] [Sir H. Clifford's despatch No. 265, of the same date,t] [your despatch No. 188, of the 22nd of April,§], I have the honour to inform you that the Law Officers of the Crown were duly consulted regarding the classes of debts which should be paid out of the assets of the branches of the enemy firms in liquidation in Nigeria, the Gold Coast, and Sierra Leone.

2. I understand that in West Africa, with a few exceptions, all European firms having establishments there control the business of these West African branches very closely from the head offices in Europe, that the staff of these branches consists of a local manager, who is practically never à partner in the firm, and his subordinates, In the case of and that even the manager is usually given but little discretion. trading firms he sells the goods which the head office sends him from Europe or the United Kingdom, and he consigns to the head office, or to its order, the produce which he buys from the native producers or middlemen, and the head office disposes of such produce. As a result practically all the wholesale transactions take place, not between the branch in West Africa and other firms in West Africa or Europe, but between the head office and other firms in Europe (including in this term the United Kingdom). Accordingly, in the case of German or other enemy firms estab- lished in British West Africa, most of the debts due to manufacturers in the United Kingdom, for goods which have been supplied before the war to branches in liquidation in West Africa, are due by the head offices in enemy territory in Europe, with whom alone the British manufacturers have had contractual relations; and the same is probably to a large extent the case with debts due by firms in the United Kingdom in respect of produce exported from British West Africa by the branches now in liquidation of enemy firms.

3. It has been suggested that debts due by head offices in enemy territory to British firms or to firms belonging to allied or neutral countries should be paid from the assets of branches in British West Africa of enemy firms which are in liquidation, although the creditor firm has had no direct relations with the branch in British West Africa of the enemy firm, and although the claims of British firme on the head offices of the debtor firms in enemy territory are suspended by the war. If this course were adopted the question would arise whether such debts should rank equally with debts due directly by the British West African branches to

(a) creditors in British West Africa;

(b) creditors in the United Kingdom or other British territory; (c) creditors in allied or neutral countries;

and, if not, in what way the various classes of debts should rank for payment out of the British West African assets. A firm in liquidation in British West Africa may, of course, have branches and assets in French or Belgian colonies in Africa or in colonies belonging to neutral Powers. The question would also arise as to

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the best procedure for carrying out such a course. It has been suggested that the value of the British West African assets, when rectified, should be remitted to this country either before or after local creditors had been satisfied, and that the dis- tribution of assets so remitted should be entrusted to an officer of the Supreme Court here or to the Public Trustee.

4. Even if debts due by head offices in enemy territory were not to be paid it might prove that the assets of a branch in Colony A were insufficient to pay off the debts due directly or locally by that branch, but that a branch of the same firm in Colony B has a surplus. The question would then arise, at any rate unless the assets were remitted to England for distribution, whether the assets of the two branches should be pooled or not.

5. All the above considerations were submitted to the late Law Officers, who- were also furnished with a copy of your despatch of the [9th of April,*] [26th of March,†][22nd of April]. They have advised as follows:-

They consider that there should be one and only one broad distinction drawn between the various classes of creditors, namely, between :-

(a) Those who have had transactions direct with the branch in question wherever they may be resident, and whether they be British, allied, or neutral; and

office.

(b) Those who have had transactions with other branches, or with the head

6. They state that in their opinion this distinction is justified on two grounds, one of expediency, the other of justice:-

(1) On the ground of expediency, because the debts of class (a) are those which are readily provable by the books of the branch in question.

(2) On the ground of justice, because class (a) are those who would in the ordinary course have been paid by the branch, and who looked to the branch for payment. On the other hand, a Sierra Leone creditor of a Sierra Leone branch can, they point out, have no greater claim on the assets of a branch in Nigeria than a creditor in England of the head office. In their opinion this is conclusive against any pooling arrangement of West African branches for the general benefit of West African creditors.

7. They observe that there is the further consideration that neutral creditors of the head office have still got their remedy against the head office. This would necessitate a distinction between British and neutral creditors of the head office if either were allowed to claim against the assets of a branch.

8. Having regard to these considerations they advise that the assets of each branch should be dealt with separately, and should be applied in settlement of debts incurred directly by that branch to creditors wherever resident, without any priorities other than those allowed by the bankruptcy or winding-up laws in opera- tion in the Colony. They point out that, although in the ordinary state of things a creditor of a firm may pursue his remedy against that firm wherever a branch is found, the effect of the ordinances and orders which have been enacted or made in the British West African Colonies is to give the Controller a discretion as to what debts he shall pay; and they consider that this discretion should not be exercised in the case of debts other than those directly contracted by the branch with which he is dealing. The debts which he should pay are those which would in the ordinary course have been payable by the branch. The balance (if any) should be held by the Treasurer of the Colony until the termination of the war.

9. After careful consideration I have, felt compelled to accept the advice tendered by the Law Officers of the Crown, and I have accordingly to request you to take such steps as may be necessary to carry out the policy indicated above.

I have, etc.,

A. BONAR LAW

* 20027.

No. 148.

1 22807.

* 19689.

+ 20027.

‡ No. 148.

§ 22807.

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