Claim by Contractors.

On 18th May the contractors submitted a list showing a total claim of £22,300, exclusive of the £10,000 percentage retained under contract. If required to hand over the railway in its present state they were prepared to allow £500 for completion and maintenance for six months.

There the matter rested till 17th June, when the Provincial Secretary wrote that the Provincial Council would meet on 3rd July and the session was expected to be of short duration. As a vote of the Council had to be taken before any sums could be paid, the Government required details of the claims mentioned in the letter of 18th May. Fail-considered by the Council there was liable to be delay in reaching a settlement. The Provincial Secretary further intimated that as the existing working agreement expired on 31st July the Government proposed to take over the line on that date. On 19th June page 48 the contractors replied that they would not give up possession of the line while they remained responsible for the maintenance of it, but would offer no obstruction to the Government working it. They further stated that the list given in their letter of 18th May was drawn up hurriedly in order to meet the Government's wishes, and they now withdrew that letter as they found that important items had been omitted.

On 27th June the Provincial Secretary gave formal notice that on the expiry of one month from 30th June the Government would terminate the contract and take possession of the line on the grounds that the stipulated progress in accordance with the contract had not been made.

On 2nd July Messrs. Holmes and Co. notified that the line between Ferrymead Junction and Lyttelton would be closed against traffic from that date until the work was finished. They offered, however, to run a service between Christchurch and Ferrymead in the meantime if the Government so desired. This offer was accepted.

Mr. H. Smith and his staff from Heath-cote Valley then took charge of Ferrymead station. The tunnel remained closed from 3rd to 27th July.

(Continued.)