160 subcontractors owed payments for building of Hong Kong’s M+ museum, with one seeking HK$27 million, court documents reveal

Hong Kong’s West Kowloon Cultural District Authority has yet to settle the accounts of more than 160 subcontractors involved in building the M+ museum, with one company seeking a payment of about HK$27 million (US$3.5 million), court documents have revealed.

The details, which shed a light on the financing of the one-year-old museum, emerged after one of the subcontractors on Friday was temporarily barred from taking legal action against Blue Poles Limited, a subsidiary of the authority, over fees it claimed it was owed.

Blue Poles told the court it was solvent and won an interim injunction to temporarily halt the winding-up petition proceedings, which it said would cause “irreparable harm” to the art hub’s reputation.

Bord, the subcontractor that initiated the legal proceedings against Blue Poles, was paid more than HK$10 million for the construction of the French oak flooring in the museum’s basement, but it claimed it was owed several times that amount. The museum has yet to reveal its construction cost.

On November 9, Bord served a statutory demand to Blue Poles seeking a settlement with an initial sum of HK$27.86 million. If the debt is not paid within three weeks, the statutory demand would allow for the court to find Blue Poles insolvent and initiate its dissolution.

Blue Poles, which took over the unfinished construction from the insolvent main contractor Hsin Chong in 2018, applied last week for a temporary court order to prevent an imminent winding-up petition.

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In the court filing, Blue Poles lawyers stated Bord’s demand was “disingenuous and improper”, and that it amounted to an abuse of the court’s process to circumvent arbitration procedures and force settlement of “unsubstantiated” claims.

The lawyers were from King & Wood Mallesons, where former authority board member Ronald Arculli serves as senior partner.

They said Blue Poles was solvent as its expenses would be fully covered by the statutory body.

“Irreparable harm would be caused to the reputation of both Blue Poles and the West Kowloon Cultural District Authority by the presentation of a winding up petition for an iconic public project, M+ Museum,” the applicant’s counsel argued in a written submission seen by the Post.

“The [publicity] might even be called scandalous, instead of seeing the enjoyment and pride the M+ Museum should bring to Hong Kong and its people. Future projects for West Kowloon will also be prejudiced,” the submission said.

It would also lead to prejudice against more than 160 subcontractors involved in the project who were still having their final accounts assessed, the court heard.

A winding-up petition, if filed, would prevent Blue Poles from repaying creditors or using any money in its bank account until the conclusion of the proceedings, according to company rules.

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In Friday’s court hearing, Madam Justice Linda Chan Ching-fan granted an interim injunction in favour of Blue Poles, while urging the parties to resolve their differences through arbitration.

Phillip Georgiou, a lawyer for Bord, said his client was forced to make the request as the museum’s management contractor, Gammon Construction, had made no further assessments on the amount the company deserved.

But the judge stressed any contractual disputes should go through arbitration.

“Your client may feel successful in being able to use the threat of a winding-up petition to force the plaintiff to pay up, but this is irrelevant to the present purpose,” Chan told the defence.

Georgiou said Bord would need time to consider the judge’s advice.

The original budget for the museum was HK$5.9 billion but the authority has acknowledged that costs exceeded that amount.

In August 2021, former authority chief project officer Jeremy Stowe told the Legislative Council that the final bill for M+, which was designed by the Swiss architecture firm Herzog & de Meuron, would be presented that year.

Shortly afterwards, Stowe left his position, closely followed by Kitty Fung Kit-yi, the chief financial officer. In 2020, Duncan Pescod was ousted as chief executive officer, and replaced by Betty Fung Ching Suk-yee.

Fung, Ronald Arculli, Fan Hung-ling, Lo Chung-wing and Wan Man-yee are listed as Blue Poles’ directors.

The authority said it had no comment on the case.