The Secretary, Prime Minister's Department, has submitted to me for advice the following memorandum by the Technical Adviser on New Guinea:

The opinion under notice was given upon an inquiry made by the Government Auditor, Rabaul, directly to the Auditor-General, Melbourne. It is a pity that the Auditor (Mr Ling) sent this inquiry independently and without first consulting with the Administrator or the Chairman of the Expropriation Board at Rabaul (myself) as this was just before the new Ordinance, dated Melbourne 20.7.21 (No.9) was published, by which the properties were taken over as at 10 January 1920, instead of at the various dates upon which different properties were gazetted.

We had represented that German companies and persons had been prescribed at various dates, ranging from 1 September 1920 until the present moment, whilst further variations occurred in the time which necessarily elapsed between the date of prescription and the actual taking over of properties. As the Treaty provided that all these properties should be taken as they existed on 10 January 1920, we urged that an Ordinance should be prepared making 10.1.20 the date upon which the property would vest in the Custodian, and, therefore, the date upon which the value would have to be ascertained and credited to Germany.

Expenses of maintaining the properties, from 10.1.20 would be a debit to the Custodian, whilst the profits or losses would be the Custodian's risk, whether actual profits of current trading transactions, revenue from bearing plantations, or increments in value of non-bearing properties. There are accepted tables by which these latter can be computed year by year, as the trees progress towards the full bearing stage. By means of these tables it would be merely an actuarial computation to apportion the ultimate sale price between the Custodian's current venture and the value at 10 January 1920, to be credited to the Reparation Fund. Attempts were made to arrive at a valuation by mutual agreement, but these failed owing to the extravagant demands of the German representatives. It was then decided to offer the properties for sale, so that the values might be ascertained by the indisputable method of public competition.

Owing to the question of date of valuation having been submitted to the Solicitor-General on the incomplete data of the Auditor's letter, it appears that the Ordinance of 20.7.1921, which fixed the date of taking over as 10.1.1920, has not been taken into account. I submit that the question be again referred to the Solicitor-General, pointing out that either the above-mentioned Ordinance was not brought under his notice when considering his opinion, or that it has failed in the specific purpose for which it was made, and the Custodian is prejudiced owing to the Board having settled accounts with departed Germans on the assumption that it was in order.

The effect of the Expropriation Ordinance 1921 (No.2) referred to by the Technical Adviser was considered at the time my opinion⁽¹⁾ was given. That Ordinance relates to the date on which expropriated properties in New Guinea shall be deemed to have vested in the Custodian. It does not, however, fix the date or method of valuation. Valuation of properties must, in my opinion, be effected in the manner indicated in the Treaty of Peace. Paragraphs (b) and (c) of Article 297 and paragraph 4 of the Annex to Section IV contemplate the ascertaining of 'the net proceeds of their sale, liquidation or other dealing' with properties. This is a different matter from the vesting of properties in the Custodian, and, as far as I am aware,there is no provision in the Treaty of Peace prescribing that property retained pursuant to the rights conferred by Article 297 shall be valued as at the date of the coming into force of the Treaty.

I do not, therefore, see any reason for departing from the views expressed in the advising previously given by me on this subject-matter.

[Vol. 18, p. 276]

(1)Opinion No. 1126. See also Opinion No. 1172.