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(xvi.) Government Guarantee. —Under paragraph' (b) of Article 296 and paragraph 4 of the annex to Section 111 of Part X of the Treaty of Versailles the German Government and the New Zealand Government are respectively responsible for the payment of debts due by their nationals, except in a case where at the date of the outbreak of war the debt was barred by the laws of prescription in force in the country of the debtor, or where the debtor was at that time in a state of bankruptcy or failure or had given formal indication of insolvency, or where the debt was due by a company whose business had been liquidated under emergency legislation during the war. (xvii.) Debts automatically admitted. —Paragraph 7 of the annex to Article 296 provides that debts shall be deemed to be admitted in full and shall be credited forthwith to the creditor Clearing Office, unless within three months from the receipt of the notification, or such longer time as may be agreed to by the creditor Clearing Office, notice has been given by the debtor Clearing Office that it is not admitted. This period has been extended to six months in the case of claims forwarded from the German Clearing Office to the New Zealand Clearing Office. The Central Clearing Office provisionally contests all claims to which replies are not received within the time specified. (xviii.) Direct Settlement of Debts forbidden. —Section 10 of the Order provides that it shall not be lawful for any person to pay or accept payment of any enemy debts (except in cases where recovery thereof in a Court of law is allowed as thereinafter provided) otherwise than through the Clearing Office, and no person interested in any such debt as debtor or creditor shall have any communications with any other person interested therein as debtor or creditor except through or by leave of the Clearing Office. Contravention of this provision renders a person guilty of an offence, and liable to be prosecuted and punished as if he had been guilty of the offence of trading with the enemy contrary to the Trading with the Enemy Act, 1914. This penalty is provided in accordance with paragraph (a) of Article 296 of the Treaty and paragraph 3 of the annex to Article 296 of the Treaty. The London Gazette of the 29th June, 1920, contained a license issued by the Controller of the Central Clearing Office enabling British creditors and debtors to communicate in writing with their German debtors and creditors direct: Provided that no proposal or suggestion is made for the payment or settlement of such debts except through the Clearing Offices, and that the party so communicating shall retain true copies of such communications and the original replies thereto, and hand the same to the Controller on demand at any time., A similar license has not been gazetted in New Zealand, but any person desiring to communicate with a German national with a view to ascertaining particulars of the indebtedness between the parties is granted permission on similar terms if application is made to the Controller of the New Zealand Clearing Office. (xix.) Penalties. —Section 14 provides that any creditor who refuses or fails to give notice, or to furnish such documents or information as required by the Treaty, shall be liable on summary conviction to a fine not exceeding £20. Section 15 provides that if any person collusively gives notice of or admits any debt which is not owing, or furnishes any false information with respect to any debt, he shall be liable on summary conviction to a fine not exceeding £100 or imprisonment for a term not exceeding two months. (xx.) Power of Public Trustee to sue for Recovery of Debts and Interest. —Sections 12 and 13 of the Order empower the Public Trustee, as Controller of the New Zealand Clearing Office, to sue for and recover in his own name, in any Court of New Zealand, any enemy debt owing by a New Zealand national, together with such interest and any fine payable in accordance with the terms of the Treaty. At the date of writing it has not been necessary to institute proceedings for the recovery of any Clearing Office debt. In several cases debtors have been notified that if payment was not made the Public Trustee would be compelled to sue. (xxi.) Time-limit for lodging Claims. —The Treaty of Versailles provides that creditors are to communicate their claims to the Clearing Office of the country in which they are resident within six months from the date of the establishment of such Clearing Office. No provision was made, however, for inflicting any penalty in the event of creditors failing to make their declarations within the stipulated period. The fixing of a time-limit for the lodgment of these claims is therefore a question to be settled by each Government. ' An announcement was published in the Gazette and in the principal papers in the Dominion advising New Zealand nationals that the last day for lodging the prescribed Clearing House forms in regard to debts due by German nationals was the 31st March, 1921. It was further stated that no claim in respect of any pre-war debt would be accepted for transmission to the German Clearing Office after that date, unless it was proved that the omission to lodge the claim by the date mentioned arose from circumstances for which the claimant could not justly be held responsible. (xxii.) Duties of Controller of the New Zealand Clearing Office. —The chief duties of the Public Trustee as Controller of the New Zealand Clearing Office may be summarized as follows :—'- (l.) Debts due to New Zealand Nationals. — (a.) The majority of debts due by German nationals to British nationals in New Zealand had been registered with the Public Trustee as Custodian of Enemy Property in pursuance of the War Regulations dated the 28th February, 1918. As the declaration made under the War Regulations was not suitable for the transmission of the claim to the German Clearing Office, it was necessary to draft another form and to have five copies completed in regard to each debt. On receipt of completed statements of claims they were examined by the Clearing Office, and, if in order, were forwarded to the High Commissioner for New Zealand, London, for transmission to the German Clearing Office through the Central Clearing Office, London. While the New Zealand Clearing Office will assist creditors in the preparation of claims as far as lies in its power, the responsibility of forwarding such claims must be accepted by the claimant. (6.) If the amount of the debt or portion thereof is admitted by the German debtor through the German Clearing Office the Public Trustee, on receipt of the schedule of admission, arranges payment of the amount admitted, together with Treaty interest thereon. (c.) If the claim or portion thereof is disputed the claimant is advised of the grounds on which the German debtor does not admit liability. If the New Zealand claimant decides to withdraw his claim