City sues towing company for $1.1M in alleged overcharges

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This article was published 22/06/2023 (847 days ago), so information in it may no longer be current.

The City of Winnipeg is suing a local tow truck company it alleges bilked taxpayers of more than $1.1 million by billing for tows it either did not perform or recorded improperly.

On Tuesday, the city’s legal department filed a statement of claim seeking $1,115,626, plus costs and special damages, in the Court of King’s Bench, naming Tartan Towing as defendant.

Tartan Towing has not yet filed a statement of defence. The Winnipeg-based civil litigation lawyer listed as the company’s counsel in the court papers did not immediately return requests for comment Thursday.

The court documents reveal some details of the alleged overcharges that were not previously made public.

The lawsuit comes after city council’s executive policy committee rejected a proposed settlement in March that would have had Tartan pay back less than half the disputed amount ($446,000).

The allegations relate to three contracts for courtesy towing during city snow removal, street cleaning and standalone operations. “Courtesy tows” involve moving vehicles to nearby locations without charge to the owners, such as during a residential parking ban.

The contracts dictated the city pay the company on a per-tow basis and the company to track each tow on an app.

The city paid up based on those reports between 2016 and 2022, until a January 2022 civic review of courtesy tows during a December 2021 residential parking ban reported a large discrepancy between the number of parking tickets issued (about 3,200) and the number of courtesy tows the tow company reported (about 13,000).

The city then further reviewed its data and discovered a “significant number of reported tows” paid for were either invalid or not reported in accordance with the contracts, the court papers say.

“Tartan and/or its subcontractors and/or its employees used the TowMobile App to report tows which, in fact, did not actually occur and/or which were not performed in compliance with the requirements of the contract,” the court documents claim.

“The city relied on those representations and made a significant overpayment of taxpayer dollars to Tartan.”

The court papers say the City of Winnipeg demanded repayment from the tow company in November 2022 — but has received no cash back to date.

According to the lawsuit, Tartan had a duty to train and oversee its employees and subcontractors on the use of the reporting app, particularly on the importance of reporting the services honestly, correctly and aligning with the terms of the contract, and ensure tows reported for payment were done so completely, accurately and truthfully.

The city further claims Tartan had a duty to identify improperly reported tows and not accept payment for them.

In the documents, city lawyers say the towing company unjustly enriched itself by taking the overpayments.

In March, a public service report containing the proposed settlement said the company dismissed some drivers and warned others to carefully report each tow. The city now regularly reviews reported tows and payments, the report said.

The city currently has active contracts with Tartan Towing. A municipal spokesman previously said the public service wished to maintain the working relationship.

The rejected settlement proposal had been billed as a way of avoiding legal action.

Ahead of the executive policy committee vote in March, Mayor Scott Gillingham said the proposal triggered plenty of feedback from taxpayers urging the city to pursue greater compensation for its claims.

— with files from Joyanne Pursaga

erik.pindera@freepress.mb.ca

Twitter: @erik_pindera