CO129-615-4 Harbour craft used by Hong Kong Government- financial arrangements 30-1-1948 - 12-1-1949 — Page 6

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had to be paid over to ful

A meeting with Ministry of Transport, War Office and Admiralty would be useful to clarify the position regarding these vessels. Hong Kong does not claim that the Colony is not liable in principle to pay for the craft; at least not on the basis of any principles already laid down. Therefore there is some justification for the Colonial Office assuming that Hong Kong is liable in principle but that there may be grounds on which we can dispute the amount of the claim.

would be able to 2. The only grounds on which we may dispute the claim in principle are as follows:-

(a) If the craft could be considered as coming within the category of War Office "hang-over" stores ordered by the War Office for the first six months of military administration but which did not reach the Colony until after civil Government had been restored. It seems probable that Treasury may eventually agree either that no claim shall be presented to the Colonies for these stores or at worst that a claim shall only be presented for certain capital equipment such as engines, buses, etc., retained for the use of the Colonial Government. I cannot at present see that these craft come within the same category as the above stores, but if in the light of further discussions with the other departments, it emerged that the craft could be so considered, then the incidence of charge would have to await a decision on 55397/48.

(b) If the craft could be considered as having been purchased originally for the "Military Administration" (i.e., for the civil "Military" Administration and not the combatant military administration) and handed over to the civil Government on termination of the military administration, In that event, no immediate cash adjustment was required as between the Colony and H.M.G. and H.M.G. eventually waived any clain as part of the cost of the military administration, wept

the doves

were sold to the public when the process 3. Payment was required to be made to H.M.G. by the Colony for "issues from Army (i.e. combatant) stocks to civil

or

For

a

authorities after the date of transfer to civil

Government" (para. FOUR of War Office telegram 01734 of 19.2.46 (55217/6/43/46) and it seems to me that these craft come within this category, i.e. they were purchased for combatant service and transferred to a civil Government

which wanted them after they ceased to be required for combatant service. Enclosure 1 to No.1. in this file seems to confirm this view.

4.

In discussions with the other Departments, we could as an opening gambit put forward (a) and (b) and see what the reactions of the other Departments are; but if, as I suspect, they refer to the arrangements in para. 3 above, then all we can do is to try and reduce the amount of the claim, on the grounds that the vessels were not very suitable for civilian use and it was probably to the advantage of the Ministry of Transport to dispose of them on the spot.

Leshemer

6th December, 1948.

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