The Controller of the Clearing Office (Enemy Debts) has forwarded me the following memorandum for advice:

Forwarded herewith is one copy each of claims lodged by A.H.W. Peick and J.B. Tadsen, naturalized British subjects resident in New South Wales, against the German Australian Steamship Company Limited, Hamburg, for £3120 and £3430 respectively, under the circumstances set out in the 'Notice of Debt due by a German National' annexed to each claim.

2. The claims were made through the Clearing Office as being in respect of pecuniary obligations coming within paragraph (2), as follows, of Article 296 of the Treaty of Peace with Germany:

(2) Debts which became payable during the war to nationals of one Contracting Power residing within its territory and arose out of transactions or contracts with the nationals of an Opposing Power, resident within its territory, of which the total or partial execution was suspended on account of the declaration of war.

3. Advice has been received by cablegram through the High Commissioner's Office, London, that the claims of Messrs Peick and Tadsen have been admitted for the full amounts (£3120 and £3430 respectively) by the German creditor through the Berlin Clearing Office.
4. I am, however, in doubt as to whether, notwithstanding such admission, the Melbourne Clearing Office would be in order in paying the claims.
5. This doubt arises from the provisions of Article 299 of the Treaty of Peace with Germany and of the Enemy Contracts Annulment Act 1915.
6. Paragraph (a) of Article 299 is as follows:

(a) Any contract concluded between enemies shall be regarded as having been dissolved as from the time when any two of the parties became enemies, except in respect of any debt or other pecuniary obligation arising out of any act done or money paid thereunder, and subject to the exceptions and special rules with regard to particular contracts or classes of contracts contained herein or in the Annex hereto.

7. The exceptions and special rules with regard to particular contracts or classes of contracts contained in Article 299 and in the Annex thereto do not appear to include contracts such as those entered into by Messrs Peick and Tadsen with the German Australian Steamship Company Limited.
8. Sub-section (5) of section 3 of the Enemy Contracts Annulment Act 1915 is in these terms:

Every enemy contract made before the commencement of the present war is hereby declared to be and to have been null and void, as from the commencement of the present war, as regards all rights and obligations thereunder except such rights and obligations as relate to goods which had already been delivered or acts which had already been performed at that time or such as arise out of or in consideration for such delivery or performance.

9. 'Enemy contract' is defined in sub-section (1) of section 3 of that Act as follows:

(1) In this section, 'enemy contract' means any contract-

1. to which an enemy subject is a party, or
2. in which an enemy subject has, in the opinion of the Attorney-General, a material interest, or
3. which is or is likely to be for the benefit of enemy subjects or of enemy trade.
10. If the contracts made before the war between Messrs Peick and Tadsen and the German Australian Steamship Company Limited became dissolved and null and void, as from the outbreak of war, under either Article 299 of the Peace Treaty or the Enemy Contracts Annulment Act 1915 or both, the question arises whether, notwithstanding that the debts have been admitted through the Berlin Clearing Office, and notwithstanding the terms of paragraph (2) of the Peace Treaty, the Melbourne Clearing Office should pay the claims.
11. It is particularly desirable, during the present period of financial stress, that only such claims should be paid through the Melbourne Clearing Office as are clearly required by the terms of the Peace Treaty to be so paid.
12. During the period covered by the claims, viz. 4.8.1914 to 10.1.1920, Mr Peick, and possibly Mr Tadsen also, did a certain amount of work in the Commonwealth in pursuance of their pre-war contracts with the German Australian Steamship Company, particularly during the earlier part of the war, but of course had nothing like the work and responsibility which would have been theirs had the war not occurred.
13. The favour of advice is requested on the legal aspect as to the payment of the claims by the Melbourne Clearing Office.
14. As the claimants are pressing for payment, I should be glad if the matter may be treated as urgent.

The amounts claimed by Peick and Tadsen are in respect of arrears of salaries due for the period August 1914 to 10 January 1920 under agreements with the German Australian Steamship Co. Ltd, Hamburg.

The agreements are dated respectively March 1909 and November 1907. In order to show that the amounts claimed are covered by Article 296 (2) it is necessary to prove (inter alia) that they are debts arising out of transactions or contracts of which the total or partial execution was suspended on account of the declaration of war. I do not think this is established as regards the claims in question. Despite the fact that there was a falling off in the amount of work devolving upon them in their official positions, Messrs Peick and Tadsen remained Manager and Marine Superintendent respectively of the Shipping Company.

The fact that the Berlin Clearing Office is prepared to concede claims for full salary for the war period supports this view.

I am of opinion therefore that the claims are not covered by Article 296 (2).

[Vol. 17, p. 308]