Second firm takes legal action over Sydney's 'disastrous' light rail

A second company is suing the NSW government over its delayed Sydney light rail project, adding to the $1.2 billion in claims already demanded by the Spanish contractor building the project.

Queensland-based VAC Group has taken the government to the Federal Court for breach of contract, claiming it is owed more than $4.3 million in damages for delays and additional costs.

Sydney's light rail project has been dogged by repeated delays, cost blow outs and now legal action.Credit: Jessica Hromas

The legal action comes as the government prepares to go head-to-head with Spanish construction giant Acciona in the NSW Supreme Court on Friday.

Acciona will seek orders from the court to dismiss a motion by the state's lead transport agency to strike out the Spanish company's $1.2 billion claim for costs and damages against the state.

Opposition Leader Luke Foley said the light rail project was “becoming the most disastrous infrastructure program delivered in NSW history”.

“You now have a queue of companies at the door of the highest courts in the state, lined up in legal battles with the Berejiklian government,” he said.

But Premier Gladys Berejiklian told Parliament on Wednesday during question time that VAC had been in dispute with the government for more than a year.

Responding to Labor's attack, Ms Berejiklian said the opposition benches should "hang your heads in shame about the lack of infrastructure you built when you were in government."

In a statement of claim filed by VAC lawyers in April, the subcontractor accused Transport for NSW of misleading and deceptive conduct, and claimed the government failed to approve its variation claims and pay additional costs owed.

Among its claims, VAC alleged it was owed $122,500 in delay costs over a 2013 incident where the company's work on George Street in Sydney's CBD was impeded by the discovery of tram tracks.

A spokesman for Transport for NSW said the legal action by VAC, which was engaged as a trenching contractor, was in “no way similar or related” to the proceedings under way by Acciona.

“VAC were not involved in any relocation of utilities,” he said. “The matter is continuing and it would be inappropriate to make any further comment at this stage.”

Acciona has accused Transport for NSW of misleading or deceptive conduct over the extent of the utilities buried beneath the route of the line, prior to signing a contract in 2014. A directions hearing for that case is scheduled for the Supreme Court on Friday morning.

The 12-kilometre light rail project from Circular Quay to Randwick and Kensington in the city's south-east has already been dogged by cost blowouts and repeated delays, which has infuriated businesses and residents along the route of the line.  Construction of the line is running a year late, and is not expected to be completed until March 2020.

The legal action and continued problems with construction of the project threaten to become a political nightmare for the Berejiklian government in the lead up to the state election in March.