TORONTO, (Dec. 27, 2004) — The City of Toronto has landed the latest blow in an ongoing battle with the carrier that hauls Toronto’s garbage to Michigan.

The city is suing Wilson Logistics Inc. for breach of contract, claiming that the carrier has failed to maintain a $20,780,000 performance bond that the city could tap into if something went wrong with the contract, the Toronto Star reported.

The performance bond expired late October and was not renewed, a statement of claim filed last week in Ontario’s Superior Court of Justice stated. The city is seeking a mandatory order directing Wilson Logistics to provide the performance bond.

As Today’s Trucking has reported earlier this year, the city and the carrier have been in arbitration over Wilson’s request to renegotiate the existing contract it has with Toronto to haul trash to a landfill in Michigan. The statement of claim alleges Wilson had threatened to “fold his tent” if it didn’t get a new contract.

Wilson recently signed a 20-year contract with Toronto to haul 1.3 million tonnes of residential trash to Michigan. However, the company says mounting costs, mostly associated with U.S. hours-of-service rules, is biting severely into the company’s bottom line.

“It was evident that under the new rules, 40 per cent of the trips could not be completed in one day,” Wilson spokesperson Gord Haugh told Today’s Trucking. “Most drivers could make their first trip of the week. But if the trip takes him more than 14 hours, which, when you consider border tie-ups and wait times, it usually does, then the next day, he’d be illegal because he didn’t get the 10 consecutive hours of rest.”

In response, Wilson drivers coming from transfer stations in Toronto are now required to stop in London, transfer the load to another driver who takes it the rest of the way across the border.

But those additional 150 drivers and equipment is weighing down the company, which is losing 1 million a quarter on top of the hit it has already taken in delays and setbacks associated with the SARS, Mad Cow, and the blackout crisis of 2003. “HOS is the proverbial straw,” Haugh said.

The City lawyers say that an interim ruling Oct. 6 “denied Wilson Logistics’ essential underlying claim in the arbitration,” and they fully expect Wilson to continue its services under the existing contract.

In the statement of claim, the city alleges Wilson failed to maintain the bond to bring pressure on the city to renegotiate the contract.

Haugh told The Star the carrier will continue to haul the trash even without the bond renewal. He said that getting the bond would remain difficult as long as the company continues to experience financial difficulties.

Haugh said the matter appears to be heading toward a costly legal battle beyond arbitration — something he says the city shows no sign of wanting to avoid.

— with files from the Toronto Star