CO129-605-3 Chinese charitable funds and other deposit accounts 13-5-1948 - 3-9-1948 — Page 18

(9) on '47 file.

26/2524/45.

Confidential

No 104

Sir,

2 1 MAY 1948

C.

uY.

Arad (5)

GOVERNMENT HOUSE,

HONG KONG.

13th May 1948.

54126/2/0.

18

I have the honour to refer to your savingram No. 195 dated the 12th. March, 1947, regarding sums in the custody of this Government before the war which were confiscated by the Japanese during the enemy occupation.

2.

The question of this Government's liability to replace these funds has been the subject of much anxious consideration, and I feel it might be desirable to set forth in this despatch the position as it appears to me at present.

3. Broadly speaking the sums in question, which I shall generally describe as deposits, fall into 3 separate classes.

TRUST FUNDS.

1.

4. These deposits were in effect trust funds administered by the Secretary for Chinese Affairs, as trustee on behalf of certain beneficiaries. They included for example the General Chinese Charities Fund, the District Watchmen's Fund, the Chinese Public Dispensaries Fund and so on. The monies were paid into the general Government Account with the Hong Kong and Shanghai Bank and, as you are aware, the whole of this account was confiscated by the Japanese.

if

5. Liability to replace these deposits appear to depend upon the law governing the duties of a frustee in such circumstances. The legal principles have been set forth by Lord Hardwicke in Jones v. Lewis 2 Ves. Sen. 240, as follows" If a trustee is robbed that robbery properly proved shall be a discharge, provided he keep them (the goods) so as he would keep his own...

If, therefore, a man lodged trust money with a banker, lost...

the Court hes discharged the trustee, especially if lost out of the banker's hand by robbery. It would be too hard to charge him with these things lost". It appears that there is no distinction in principle between trust monies lost by robbery and trust funds lost by confiscation by the King's enemies and, if this is the case, it follows that the Secretary for Chinese Affairs is under no legal liability to replace the Trust Funds in question.

SECURITY DEPOSITS.

6. These monies included deposits made in accordance with Colonial Regulation 301, Newspaper Registration Deposits, deposits made by contractors as security for As with the performance of their contract, and so on. the Trust Funds, these deposits were paid into the general Government Account and were confiscated in full.

7. Here Government appears to have been in the position of a pledgee holding money as security for fulfilment of an engagement. Liability for refund, therefore, appears to depend upon the degree of diligence imposed upon a pledgee in respect of the preservation of the

THE RIGHT HONOURABLE

AG.

ARTHUE CREECH JONES, M.P.