Town hall chiefs faced a £70,000 bill following the bump in slow-moving traffic.
The driver, James Stubbs of Bolton, and two passengers in the lorry, Thomas and Gareth Gemmell, claimed they suffered whiplash, and launched personal injury claims for £3,700.
Their bosses also submitted a £6,430 claim for damage to the vehicle and 'loss of use'.
Workmen from S&S Scaffolding Ltd tried to claim thousands in compensation after a council van collided with their lorry at 1mph. The company, from Atherton, near Wigan, had previously done work for the council
The council accepted blame for the collision - but refuted both compensation claims and challenged the £50,000 legal costs.
Now a judge has thrown out the action after hearing from two expert witnesses.
One, an independent engineer, said that the damage sustained by the lorry would have cost no more than £300 to repair.
And an eyewitness said both vehicles were travelling at between one and two miles per hour.
District Judge Shaw ruled at Bolton County Court that no injuries or any significant damage was caused and described the claim for the van's damage and its loss of use as 'wholly wrong'.
Paul McKevitt from Wigan council says local authorities are facing an increasing amount of claims
It was also revealed that the van's owners, S&S Scaffolding Ltd from Atherton, near Wigan, had carried out work on behalf of the council in the past.
The collision took place in Tyldesley, near Wigan, in 2008.
The lorry's driver Mr Stubbs, of Henley Grove, Bolton, and passengers Thomas Gemmell and his son Gareth, of Hinkler Avenue, Bolton, brought the claim alongside the company.
Paul McKevitt from Wigan council said: 'Local authorities across the country are facing an increasing number of claims from people who say they were injured in low-speed impacts but this council is determined to scrutinise all allegations in order to protect public funds.
'It's particularly disappointing, as this company has done work for the council in the past, and grossly exaggerated claims such as this are damaging to trust and future working relationships.
'The facts just didn't stack up and by putting a coherent and persuasive defence before the court we have saved the council tax payers of this borough more than £70,000 of public money.
'We hope this verdict sends a clear message that we will do all we can to protect public money and any claims that appear exaggerated will simply not succeed.'
The company refused to comment. Mr Stubbs and Gareth Gemmell couldn't be reached for comment. Thomas Gemmell declined to comment.
