The NDP wants to know how Dawson City can pay for its latest lawsuit if it is flat broke as the premier and Community Services minister claim.

'To me, if they're insolvent then they don't have the money to pay for it,' New Democrat MLA Steve Cardiff said this morning about the latest legal action launched by the territory's second-largest community.

The town recently launched a suit against TSL Contractor's Ltd. for being awarded too much money in a recent arbitrator's ruling. The town wants $352,030 removed from the final award total of $970,000 because it feels the arbitrator made a mistake.

The petition to the court was launched by lawyer Chuck Willms of the Vancouver-based law firm Fasken Martineau DuMoulin.

Cabinet spokesman Peter Carr confirmed this morning Dawson City is paying Willms tab, not the new sheriff in town, the territorial government.

Since Community Services Minister Glenn Hart fired the Dawson City mayor and council on Apr. 13, the minister has repeatedly said the council was canned because the town is broke. Over and over again, the legislature has heard Premier Dennis Fentie say Dawson City is 'insolvent'.

'Either Dawson's solvent or it's insolvent and someone needs to come clean on what the reality is,' said Cardiff.

He feels it is the Yukon government's responsibility to pay the legal fees for the Vancouver lawyer.

'The government's the one that's leading the charge on the lawsuit.'

Now that the Yukon government is in charge of the Klondike town, Cardiff believes the new management is hurting Dawson City's already troubled bottom line.

'It appears to me the government is doing more to contribute to Dawson City's insolvency every day,' said the NDP member for Mount Lorne.

'They're spending Dawson's money fast and loose.'

Besides the lawsuit, Cardiff listed other examples of how he believes the Yukon government is wasting the town's cash.

Cardiff's other examples of spending the town's money include:

• firing the mayor and council causing extra money to be paid out;

• hiring the new town manager David Skid and putting him up in Health Minister Peter Jenkins' hotel while a house specifically for the manager sits empty;

• and keeping former town supervisor Andre Carrel around for an extra $15,000 to help the town's new trustee for the next six months.

'They're just making things worse,' the New Democrat said.

The lawsuit filed on Apr. 21, comes after the arbitrator's ruling on the the dispute between Dawson City and TSL Contractors, who the town hired to build its new recreation centre. The contractor argued it wasn't paid for everything it did.

The town didn't feel it had to pay for services it didn't ask for.

The arbitrator ordered Dawson City pay TSL $970,000 for what it did.

However, Dawson City's lawsuit argues 'that the arbitrator erred in law in interpreting the construction contract between the parties.'

The town believes the $329,600 plus GST it wanted to charge, and was awarded, for excavation and backfill on the construction site did not fit within the contract the two sides signed.

The lawsuit filed by the town argues the contract says TSL would be paid more for excavation which exceeded the average depth.

However, the document then states TSL argued it charged the $329,600 because it dug below a certain depth, not for exceeding the average depth. The town charges there was nothing in the contract to pay for excavation below a certain depth.

The town was ordered to pay for 824 cu. m of excavation at $200 per cubic metre and for 824 cu. m of backfill for another $200 per cubic metre.

The petition to the court argues that TSL charged $200 per cu. m despite the fact it cost $5.50 per cubic yard for excavation and $6.50 per cubic yard for fill.