City defends itself against Emterra lawsuit

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This article was published 21/08/2023 (751 days ago), so information in it may no longer be current.

The City of Winnipeg has denied the allegations in a multimillion-dollar lawsuit, which was launched by its former garbage and recycling collector, and is seeking damages in a counterclaim.

The city filed a statement of defence to respond to a lawsuit Emterra Environmental raised last year.

Emterra, also known as Halton Recycling, alleged the city unfairly deducted some payments to the company, failed to provide compensation for extra work and failed to provide applicable bonuses, among other issues. It is seeking about $6 million in damages for those claims, which are separate from a $67-million legal challenge the company filed against the city in 2018.

In the second, smaller lawsuit, the city’s statement of defence denies it caused the company financial losses.

“The defendant denies the plaintiff has suffered any losses or damage as a result of anything done or failed to have been done by the defendant… If the plaintiff has suffered any losses or damage, they were caused by the plaintiff’s own actions and its failures to meet the requirements of the contract and thereby mitigate its damages,” the document states.

The city alleges Emterra improperly stored material outside its material recovery facility, failed to promptly address safety hazards, failed to monitor contamination of material during collection, failed to provide sufficient and properly qualified or trained staff, failed to properly or adequately supervise staff, and produced recycled material of inferior quality (resulting in decreased revenue), among other issues.

The city document asks the court to dismiss the lawsuit.

The municipal government also filed a counterclaim, which seeks unspecified general damages, special damages, interest and legal costs from Emterra, which alleges the contractor’s actions led the civic government to lose revenue.

“The plaintiff failed to generate as much revenue for the defendant as it should have, resulting in significant losses for the defendant,” the document alleges.

The city also claims it devoted “substantially more time, manpower and other resources to address the plaintiff’s numerous shortcomings… resulting in further loss and damage.”

By contrast, Emterra’s legal challenge alleges the city triggered the company’s losses.

“The defendant had no regard for the interest of the plaintiff or the effect the money it was unlawfully withholding had on the plaintiff and its ability to conduct business. In so doing, the defendant caused the plaintiff significant damages,” its statement of claim alleges.

The alleged damages relate to contracts Emterra was awarded to collect, process and market Winnipeg recyclables.

When the city switched from blue-box collection to automated carts in the fall of 2012, Emterra claims the recycling contamination rate got much higher, which required extra time, money and resources to sort. The company claims it told civic officials about the problem, but the city didn’t start compensating the company for the extra work until September 2017, which cost Emterra $3.3 million in lost revenue.

The contractor also alleges the city incorrectly audited its work, leading it to “wrongfully” withhold more than $2.4 million in payments from the company.

“The defendant was not entitled and thus acted in a high-handed manner when it withheld money that was properly due and owing to the plaintiff,” the statement claims.

The city’s statement of defence rejects those allegations.

“The (city) denies that it improperly deducted or wrongfully withheld amounts from payments that may otherwise have been due to the plaintiff, as alleged or at all,” it states.

A court date has not yet been set to hear the legal challenge.

On Friday, Emterra’s legal team and City of Winnipeg officials declined to comment.

Emterra filed a previous, separate $67-million lawsuit against the city in 2018, which alleges the city failed to supply the company with correct data for route and resource planning, bought substandard garbage and recycling carts, changed the scope of work midway through the contract and unfairly charged financial penalties.

An eight-week trial for that larger lawsuit is expected to begin in mid-January.

In a 2018 counterclaim, the city denied causing Emterra any financial loss, alleging the company suffered from its own “managerial incompetence” and poor planning, as well as a lack of proper equipment and staff.

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga