Mr. Dobson's Report.

On 2nd May the engineer (Mr. Dobson) reported that there still remained to be done in the tunnel, the bringing of the track to its permanent level, the replacing of damaged and short length sleepers, the arching over of the shafts, and the protection of walls and roof in certain places mentioned. In his opinion it was not practicable to bring the permanent way to its proper level, and to arch over the shafts, without closing the tunnel for eight clear days. The remainder of the work could be done without stopping the traffic. Under those conditions the work could be finished without serious risk of accident in from six to eight weeks. On the other hand, if the Government were prepared to close the line for three weeks, the whole of the work in the tunnel could be done in that time, provided proper supplies of labour and material were made available beforehand.

A copy of this report was sent to the contractors, and on 9th May they were asked to say on what date they would guarantee to deliver the Lyttelton to Christchurch railway completed to the Government:

(1) With trains running as at present.

(2) If traffic were stopped for eight days as suggested by Mr. Dobson.

Or, alternatively, what allowance they would be prepared to make if the Government took over the line in its unfinished condition, say at the end of the then current month.

On 12th May Messrs. Holmes and Co. replied that they saw no need to alter the grade in the tunnel as it was a good gradient for all practical purposes. To change it, as the engineer suggested, would take at least a month with the staff of miners available, and the traffic would require to be entirely suspended while the work was in operation. It would take eight to ten weeks to finish the other work in the engineer's list, if (1) the trains continued running, but (2) by stopping traffic for eight days the work could be finished a fortnight earlier. Messrs. Holmes and Co., however, stated that they would not be prepared to hand over the finished line while the maintenance of it remained in their hands. If the Government desired to take the works off their hands at the end of the month, they (the contractors) would expect payment in full of all moneys due to date, including the claim made on 19th December, 1865, for filling in the station ground at Lyttelton, together with interest accrued. They also expected to be paid the percentage retained by the Government in term's of the original contract, as well as payment for further extras (of which details would be furnished), and compensation for obstruction by traffic and other matters. It would take a considerable time to measure up and furnish details in works of such magnitude before adjustment could be arrived at, but they would commence to do so at once if the Government desired it, and terminate the contracts and agreements as soon as that could be done.

The Provincial Secretary replied next day, saying that the Government required a detailed statement of all money claims under contract or otherwise, and would be glad if the contractors would, as suggested, measure up and furnish details for the adjustment of contracts and agreements.