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reason which is not now clear but may be connected with the fact that ships, at any rate large ships, were normally insured against war risks in the United Kingdom whose legislation was being copied, vessels were not included in this provision. Thus, so far as loss or damage goes, shipowners, including owners of anything which is classed as, a vessel for the purpose of the Merchant Shipping Ordinance, 1899, who had their vessels requisitioned are privileged, as compared with (i) owners of requisitioned cars and aircraft and (ii) shipowners whose vessels were not requisitioned but were sunk or damaged by denial action or during subsequent Japanese capture. value of a bona-fide legal claim against the Hong Kong Government is immense compared with a nebulous Reparations claim against the Japanese, which may be settled in part years hence. It can be argued on moral grounds that, apart from the law, thereis little reason why the owners of requisitioned ships should benefit in comparison with their neighbours, especially the owners of ships sunk by denial action, unless the requisition deprived the owners of a real chance to escape (for instance in the case of shallow craft ships to Macao) or of retaining their property under the Japanese. No similar exception was made from liabilities arising in respect of use.
(b) Although the legal liability of the Hong Kong Government as requisitioning authority is not questioned in regard to requisitioned ships, the action was taken in pursuit of a common Defence Plan, which was of as much interest to the Armed Forces; provided and paid for by the U.K. Government, as it was to the Hong Kong Government itself. The Hong Kong Government had in fact subscribed 20 of its gross income for many years before the war towards the cost of Imperial Defence, and somewhere about 1938 this sum was stabliised for five years at a figure of H.K. $6,000,000 p.a. During the war the Hong Kong Government virtually doubled its revenue and from this made further contributions to the cost of fighting the war. Under these Circumstances the Hong Kong Government feel that part at least of any liabilities for requisition of vessels, whether for use or for sinking as blook ships under the Defence Plan, should be accepted by the Service Departments, especially the Navy. They have been reluctant to make a clear public acceptance of liability under the requisitions or to set up machinery forsettling claims until they know the extend to which the Service Departments might be ready to back them financially in this action and accept their settlements, as the liability is one for which no budgetary provision has been made in Hong Kong. They have further been reluctant to act until they were sure that action taken here would not embarrass the Singapore Government (and perhaps other Colonial Governments) in relation to similar claims elsewhere,
The points therefore which have to be decided as regards moral responsibility are (i) whether the Hong Kong Government will accept or repudiate (by ex post facto legislation) its legal obilgations in respect of requisitioned ships on the ground that this produces an unfairly privileged class as compared with owners of vehicles, aircraft and even other ships, and (ii) whether, if liability is admitted inrequisitioning cases, a measure of liability should also be admitted on moral grounds in some or all denial cases, and (iii) whether, if liability under (i) or (ii) above is admitted, the Hong Kong Government should proceed with assessing and settling claims, irrespective of the extent to which any or all of those claims may be wholely or partly underwritten by the Service Departments.
RESPECTIVE LIABILITIES.
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(a) The Hong Kong Government have been careful in all their correspondence with claiments, which I have seen, to avoid committing themselves to liability in particular requisitioning cases, but in reply to a question on 26th May, 1948, about
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