City sues Winnipeg towing company over $1M in alleged fraudulent courtesy tows

The City of Winnipeg has filed a lawsuit against a company over allegations it fraudulently charged more than $1 million for courtesy tows that never happened.

In March, a report said the city had reviewed all invoices from Tartan Towing, which has had a contract to do courtesy tows of vehicles during residential snow clearing parking bans since 2016.

That review found a number of invoices totalling $1.1 million were invalid. 

City officials proposed a deal with Tartan Towing to repay $446,000 for the non-existent tows, arguing that the city would avoid legal costs. Chief administrative officer Michael Jack also said at the time the city wanted to maintain a relationship with Tartan, which he said was often the only company to bid on city contracts.

Council voted to reject that deal. 

A statement of claim filed in Court of King's Bench on June 20 states that Tartan was responsible for making sure its employees and subcontractors submitted invoices accurately and honestly. 

"The city relied on those representations and made a significant overpayment of taxpayer dollars to Tartan," the statement of claim said. 

In November 2022, the city demanded Tartan repay the overpayment amounts. "No payment has been made by Tartan to the city to date," the statement said.

The allegations have not been proven in court. No statement of defence has been filed.

CBC News reached out to Tartan Towing for comment but did not receive a response.

Suit to set an example

Coun. Janice Lukes, chair of the city's public works committee, said she's happy the city has decided to take the matter to court in an effort to recover the full amount.

"Super — don't know why it took so long," Lukes said in an interview.

"I think over and above the cost of court, it's important that we make it known that we're not going to tolerate this kind of behaviour."

Tartan continues to have a contract with the Winnipeg Parking Authority's towing operations, a city spokesperson said in an email. 

Lukes said she hopes the city is closely scrutinizing all invoices submitted by Tartan. 

"What concerns me is if the city issues new contracts," she said. "I would like to see the court case finalized before any new contracts are issued to Tartan."

After the discrepancies were discovered, the city changed the way it tracks courtesy tows. Tow truck drivers must now include photos before and after a vehicle is towed.

Councillors also ordered the company to identify the sub-contractors involved to ensure they are not hired in the future. 

Mayor Scott Gillingham declined to comment because the matter is before the court.