The Secretary, Prime Minister's Department, has forwarded the following memorandum asking for advice:

Under Articles 231 and 232 of the Peace Treaty Germany undertakes to make reparation for all loss or damage to allied nationals.

Under Article 297 it is set out that German property, rights and interests may be liquidated to meet the foregoing obligations.

The official date of the ratification of the Peace Treaty was 10 January 1920, and there appears to be an impression that German properties as they existed at that date only are liable to expropriation and liquidation.

In German New Guinea action is contemplated to take effect about the end of July or beginning of August, and by Ordinances the Administrator is to proclaim the properties of certain declared German companies expropriated and vested in himself. The question for determination is whether the whole of the properties of such companies as they existed in late German New Guinea, at the date of the Ordinances, may be expropriated, or whether complicated examinations of their books, etc. are to be made with a view to determining the extent and value of the properties as they existed on 10 January 1920.

It is submitted for the Solicitor-General's opinion that the properties as they will exist at the time of taking over are liable to expropriation, as no new money has come into any of these companies since 10 January 1920, and any increases in the business have resulted from the use of the profits arising out of the assets which were liable to expropriation on 10 January 1920.

The first paragraph of Article 297 (b) of the Treaty provides that:

Subject to any contrary stipulations which may be provided for in the present Treaty, the Allied and Associated Powers reserve the right to retain and liquidate all property, rights and interests belonging at the date of the coming into force of the present Treaty to German nationals, or companies controlled by them, within their territories, colonies, possessions and protectorates, including territories ceded to them by the present Treaty.

The Treaty came into force on 10 January 1920, and therefore the property which may be liquidated is the property belonging to German nationals or companies at that date.

If, however, in the case of any company which is to be liquidated the property of the company at the date of liquidation consists solely of property which belonged to the company on 10 January 1920, or of property which has come into the possession of the company since that date and is attributable solely to the use of the property belonging to the company on that date, the whole property belonging to the company at the time of liquidation may, in my opinion, be liquidated.

[Vol. 16, p. 499]