Disputes heighten rail link delay fear

Court cases involving firms helping to build the HK$67 billion Express Rail Link have increased worries the project will overrun its deadline

PUBLISHED : Wednesday, 29 May, 2013, 12:00am
UPDATED : Wednesday, 29 May, 2013, 5:19am

Legal disputes over Hong Kong's high-speed rail project, the Express Rail Link, have heightened fears that the HK$67 billion spur line will exceed its budget and will not be completed by 2015 as scheduled.

The two linked cases involve allegations of non-payment and delayed work over pile removal works to enable tunnelling for the link, managed by MTR Corp.

One case, in which a ruling was made last Thursday, pitted SNE Engineering, a subcontractor of Hsin Chong Construction, against Chim Kee Machinery, which supplied SNE with heavy machinery.

Hsin Chong Construction is a subsidiary of the Hong Kong-listed construction and property firm Hsin Chong Construction Group.

On August 23 last year, Chim Kee petitioned for the winding-up of SNE for allegedly failing to pay debts of HK$12.5 million.

SNE launched counterclaims alleging that Chim Kee deliberately slowed down work last year and terminated service on July 3, which caused SNE to lose profits.

On Thursday, Recorder Ambrose Ho ruled in the Court of First Instance that SNE's counterclaims against Chim Kee exceeded its debt to the machinery firm. He accordingly struck out Chim Kee's winding-up petition against SNE.

In the other case, SNE sued Hsin Chong Construction and Chim Kee for infringing SNE's patent for a construction method for removing piles.

"Difficulties were encountered by SNE in carrying out the pile removal work, because of the unexpected presence of huge boulders around the piles," Recorder Patrick Fung Pak-tung said in his judgment in the Court of First Instance.

Difficulties were encountered by SNE in carrying out the pile removal work, because of the unexpected presence of huge boulders around the piles

"SNE was forced to use its own resources to pay its subcontractors, which resulted in delayed payments to [them]."

In late July last year, Hsin Chong Construction took over most of SNE's work, using the pile removal method in SNE's patent.

On October 17, Fung dismissed Hsin Chong Construction's application to strike out SNE's lawsuit.

Ho said in his judgment on Thursday that he had "no doubt" that the two legal cases would be taken to the High Court.

An engineer who declined to be named said: "With these incidents, I'm more convinced than before the Express Rail Link project will overrun in time and costs. It wouldn't surprise me if the Express Rail Link were to be opened a year late."

The piling work has been much more difficult than expected, the engineer said. "That has caused significant delays for the project. The Hong Kong government is going to have to pay more for the Express Rail Link. How MTR will justify the need for extra money from Legco is going to be interesting."

An MTR spokeswoman insisted that MTR would complete the Express Rail Link by the 2015 deadline and within the HK$67 billion budget. Over 70 per cent of the soil excavation work for the tunnels and terminus had been completed as of March, she said.

Hsin Chong Construction Group said: "We are removing the remaining piles and the works are [being carried] out smoothly. It is expected that it will be completed [on schedule]."