With reference to the attached file⁽¹⁾, I desire to inform you that in my opinion the British Clearing Office is undoubtedly right in holding that the interest of Baroness von Frankenberg is not a debt within the meaning of Article 296 of the Treaty of Peace with Germany, and therefore that she cannot claim payment through the clearing office as an enemy creditor. The only debts to which Article 296 relates are debts payable before the war and due by a national of one of the Contracting Powers residing within its territory to a national of an Opposing Power residing within its territory, and 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.

But although the interest of the Baroness is not a debt within the meaning of Article 296, it is enemy property within the meaning of Article 297 (e) and has been charged as such under the Treaty of Peace Regulations, and under Article 297 (i) Germany is bound to compensate her for its retention. (As to Germany's fulfilment of her obligation, see Report of Committee of Board of Trade, Cmd 1687.)

In the case of Cowper v. Frankenberg 21 S.R.N.S.W. 388 the Supreme Court of New South Wales held that the interest of the Baroness von Frankenberg is included in the expression 'property, rights and interests' used in clause 4 of the Annex to Article 297. This decision is understood to be the subject of an appeal to the High Court at the next Sydney sittings.

As regards the question of exempting the property of the Baroness von Frankenberg it is pointed out that although she was by birth a British subject she was married over thirty years ago to a person of German birth, who was stated to be then naturalized in America. Since that date she has not resided in Australia.

Some twenty-three years ago she returned with her husband to Germany.

There is no doubt that both the Baroness and her husband are German nationals, and it appears that her son is an officer in the German army.

During the war she has resided in Switzerland as a condition of the payment of her allowance. She was unfavourably reported upon by the Censor owing to the tone of some of her correspondence and her efforts to evade the censorship.

The question whether her property should be exempt from the charge created under the Peace Treaty is a question of policy.

If it should be decided not to exempt her property wholly, she could, if thought fit, be granted an increased allowance.

[Vol. 19, p. 17]

(1)The facts of this case are referred to in Cowper v. Frankenberg cited herein. It concerned an estate for life of a married woman, being a German national, still under coverture subject to a restraint on anticipation.