FO371-46252 — Page 107

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(c)

(a)

-10-

Payments made to the liquidators or to the banks in the course of liquidation in occupation currency shall not bo recognised in any degree in discharge of any obligation incurred to any bank before the occupation.

Payments made to the liquidators or to the banks in the course of liquidation in lawful currency on account of debts or obligations duc to the banks before the occupation or accruing during occupation shall not be recognised in any dogrec in discharge of such debts or obligat- ions.

Payments to the liquidator were not payments to the bank and payments in occupation currency cannot operate in discharge of obligations incurred in lawful currency except by agreement between the parties.

To par.8 (d) there might be added the words:- "Unless and except only to the extent that it can be proved that any such payment onured for the benefit of any bank in respect of any debt or oblig- ation of the debtor thereto". It is hardly likely that any bank will be found to have derived any profit from any payment made to a liquidator. Even if that were the case it would seem to be impossible in practice to segregate payments made to the liquidator from other funds and to fix the amount to be credited to any individual customer of the bank.

It is not known in what currency payments were made to the liquidators or whether they were mado volunt- arily or under compulsion. In many cases they were made with a view to redeeming cargoes hypothecated to tho banks. In Manila and probably also in Hongkong and elsewhere the pre- ponderating proportion of the pay- monts to the liquidators was made in bad faith at the end of the cccupation with a view to taking advantage of depreciated or worth- less currency. The fact remains that the payments were not mado to the banks or to anyone authorised on their behalf to receive payment and in law the debts due to the bank arc undischarged and unimpaired. Even if any payments were made in lawful currency, the money has been appropriated by the Japano so and the banks have received no benefit.

It may be deemed a hardship that dobtors who paid money to the liquid- ators on account of their obligations to the banks should not get credit therefor; it is equally a hardship that the banks' depositors and share- holders should have to suffer the loss without any fault of their own. It is submittod that in law the pos- ition taken is correct. The less suffered by the dobtors by payment to onomy agents is one that must fall on the community and should form the subject of a claim for roparation. It is always open to thc Goverment as a matter of policy to ameliorate the loss by a measure of compensation but in default of reparation from the Japanese the loss falls on the community

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