Samuel Lupo v. Liberty Mutual Fire Insurance Company, 1996 ONICDRG 103

Neutral Citation: 1996 ONICDRG 103

OIC A95-000361

ONTARIO INSURANCE COMMISSION

BETWEEN:

SAMUEL LUPO

Applicant

and

LIBERTY MUTUAL FIRE INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, Samuel Lupo, was injured in a motor vehicle accident on September 19, 1993. He applied for and received statutory accident benefits from the Insurer, payable under Ontario Regulation 672.¹ Weekly income benefits were terminated by the Insurer on December 28, 1994. The parties disagreed about the amount of weekly income benefit and the Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this hearing :

1. What is the correct amount of Mr. Lupo's weekly income benefits?

The Applicant also claims interest on any amounts owing, and his expenses incurred in the hearing.

Result:

1. Mr. Lupo is entitled to weekly income benefits of $185.60.

2. Mr. Lupo is not entitled to his expenses.

Hearing:

The hearing was held in North York, Ontario, on May 14, 1996, before me, Joyce Miller, arbitrator.

Present at the Hearing:

Applicant: Samuel Lupo

Applicant's Representative: Ronald W. Weinberger, Barrister and Solicitor

Insurer's Representative: Robert A. Robinson, Barrister and Solicitor

Insurer's Officer: Rosemary Grimaldi

Witnesses: Mr. Samuel Lupo, Mr. J.P. Flanagan

Exhibits: 10 Exhibits were filed, the Insurer filed a case brief

Court Reporter: Yolanda Gangadeen from Professional Court Reporters

Background:

Mr. Lupo is 63 and married. On September 19, 1993 he was injured when his Harley Davidson motorcycle was struck by a Rolls Royce. One week after the accident Mr. Lupo started receiving weekly income benefits at the rate of $584.21 based on four weeks income that he allegedly earned before the accident. This amount was paid until June 29, 1994, when Liberty reassessed the claim and reduced Mr. Lupo's benefits to the minimum of $185.60 per week.

On December 28, 1994 Liberty terminated Mr. Lupo's benefits. Liberty's position was that an overpayment existed which had to be satisfied before benefits would be reinstated.

Entitlement to accident benefits is not at issue here. The question for this arbitration is the correct amount of weekly income benefits. Mr. Lupo claims that the proper rate is $571.38 weekly. Liberty disputes this amount and claims that the amount should be the minimum of $185.60 per week.

The Evidence:

Mr. Lupo testified that he was trained both as a sign painter and a furniture refinisher. He worked as a sign painter until 1980 when he studied furniture refinishing at George Brown.

In 1983 Mr. Lupo began to work for Pascal Hardware doing furniture repairs and furniture refinishing. In 1988 he became a supervisor. At the beginning of 1992 Pascal's went out of business and Mr. Lupo collected unemployment insurance until January 1993.

In November 1992 Mr. Lupo started a business called Hi-Tech Wood Experts. He also started another business called Hi-Tech Games which operated video and pinball games.

From November 1992 until July 22, 1993 Mr. Lupo worked for Architectural Brassworks ("Brassworks") on a subcontract. Essentially Mr. Lupo's work was to replace damaged elevator panels at the Scotia Plaza. He did this work during the day and in the evening did office furniture repairs.

Mr. Lupo testified that after his contract with Brassworks was finished, he advertised in the Toronto Star for work. He stated that on August 18, 1993 (a month before the accident), he received a phone call from a Mr. Bill Grice, who said he was looking for a good furniture refinisher.

Mr. Lupo stated that he arranged to meet Mr. Grice at Country Style Donuts at Markham and Kingston Road, on August 20, 1993. After a two hour discussion, Mr. Lupo agreed to refinish a dining room set with six chairs, a hutch, a buffet and two small tables for the sum of $2,400. Mr. Lupo stated that this was a cash deal and that GST was not to be paid.

Mr. Lupo testified that he did not see the furniture to be refinished when he calculated the price for refinishing. Nor did he ever get Mr. Grice's address or phone number. He stated that the arrangement was for Mr. Grice to drop off some of the furniture on August 23, 1993 and pick it up a week later when he would bring more furniture, until all the work was done. On two occasions, after some of the work was completed, Mr. Grice paid him $600.

Mr. Lupo stated that on September 17, 1993, when Mr. Grice came to pick up the rest of the furniture that was refinished, Mr. Grice refused to pay him the remaining $1,200. Mr. Lupo testified that he then "hopped" into his car and blocked Mr. Grice's truck. They had a screaming match where Mr. Lupo threatened Mr. Grice that he would "lay him out." Mr. Grice did not reply to this threat. He quietly went over to his truck, paid Mr. Lupo the money, and left.

Mr. Lupo testified that he does not know how to contact Mr. Grice. He said that he attempted to contact Mr. Grice through a man that he met in Peterborough in 1994, at a motorcycle charity for abused children.

Mr. Lupo stated that this man approached him because he had seen Mr. Lupo's picture in Canadian Biker Magazine. After some conversation, Mr. Lupo told him that he was a furniture refinisher. The man then told him about a friend of his who had had some furniture refinished and this friend turned out to be Mr. Grice.

Mr. Lupo asked the man for Mr. Grice's phone number. The man told Mr. Lupo that he did not know where Mr. Grice was because he was "all over the place." However, he said that he would tell Mr. Grice to give Mr. Lupo a call if he ran into him.

Mr. Lupo testified that on April 23 or 24, 1996, a few weeks before the hearing, Mr. Grice called him. Mr. Lupo stated that before he could say anything, Mr. Grice told him he would not do anything for him, that he had burnt his bridges and then hung up.

Mr. Lupo refused to give Liberty the name of the man who knew Mr. Grice. He did not give any explanation why he refused to do so, except to say he simply would not.

The evidence regarding Mr. Lupo's financial statements, earnings and expenses prior to the accident will be discussed in the analysis and findings below.

Analysis and Findings:

Pursuant to section 12(4) of the Schedule, weekly income benefits are based on the lesser of $600 (unless a higher amount is opted for) or 80 per cent of an applicant's gross weekly income from employment.

Section 12(7) of the Schedule gives the applicant the option of choosing the most favourable of three different calculations.

(7) The following rules apply to the calculation of gross weekly income:

1. A person's gross weekly income shall be deemed to be the greatest of,

i. his or her average gross weekly income from his or her occupation or employment for the four weeks preceding the accident,

ii. his or her average gross weekly income from his or her occupation or employment for the fifty-two weeks preceding the accident,

iii. $232.

Mr. Lupo elected to have his gross weekly income calculated on the four weeks preceding the accident. Because he claimed to be self-employed at the time of the accident, pursuant to section 12(7)3, his gross weekly income is calculated net of business expenses which cease as a result of the accident.

Mr. Lupo bears the onus of proving his gross weekly income. In order to do so, he must provide some objective and reasonable evidence upon which to base his calculations. Since Mr. Lupo was newly self-employed and operated a cash business, he is not expected to produce sophisticated and perfect records. However, he must provide some credible documentation of his earnings and expenses.

Mr. Lupo relied heavily on his own evidence. That being the case, his credibility is critical. I find that Mr. Lupo has not discharged his burden of proof. I did not find Mr. Lupo a credible witness. His evidence was contradictory and self-serving.

Before discussing the Grice contract, I note the following contradictions which, in my view, refute Mr. Lupo's credibility.

On September 27, 1993, Mr. Lupo signed an application for accident benefits in which he declared that his gross income for the previous 52 weeks was $27,750.² Mr. Lupo, however, was unable to present any evidence of his gross earnings which conformed to the amount he claimed in his application for accident benefits. He explained why he had claimed such an inflated amount by saying that his wife had filled out the application.

The major source of Mr. Lupo's income between 1992 and 1993 was his subcontract with Brassworks. A memo from Brassworks, dated December 3, 1994,³ lists Mr. Lupo's bi-weekly earnings from November 27, 1992 until July 22, 1993, including GST, as totalling $16,941.21. Mr. Lupo's invoices to Brassworks for this period, which his accountant used to calculate his accident benefits, total $20,057.⁴ In his income tax return for this period, Mr. Lupo reported that he earned $13,340.⁵

Even if one were to take the highest figure mentioned above, $20,057 (based on Mr. Lupo's invoices), and include the alleged Grice contract of $2,400, the total of $22,457 does not come close to the amount Mr. Lupo claimed in his application for accident benefits. I find Mr. Lupo deliberately inflated his earnings in his application for accident benefits.

Mr. Lupo's claim for accident benefits, however, is not based on the 52 week period before the accident. It is based on the four week period when he allegedly refinished the furniture for Mr. Bill Grice. The existence of this contract, in my view, is dubious.

Mr. Lupo was unable to give any credible or reliable evidence to show that he had done this work. Mr. Lupo presented contradictory evidence regarding his alleged expenses in connection with this contract. He testified that his expenses were about $25 or $28. However, attached to an invoice for the work allegedly done for Mr. Grice, Mr. Lupo listed $214 in expenses for materials used.⁶ The list of materials included items such as lacquer thinners, sandpaper, steel wool, and stain.⁷

In May 1995, Mr. Lupo filed his 1994 income tax return where he declared his alleged income of $2,400 from the 1993 Grice contract and noted that his expenses amounted to $214. He detailed his expenses as use of motor vehicle, $100, and use of home expenses, $114.⁸

When questioned about this discrepancy, Mr. Lupo stated that his wife filled out the tax return. Mr. Lupo was asked why, if the alleged contract with Mr. Grice was an "under the table" cash deal, he decided to report these earnings in his 1994 tax return. He stated that his wife had included it in his tax return because the insurance company wanted proof of his earnings. He noted that his wife had decided that July 22, 1993 was his year end, but he did not know why.

I give no weight to the 1994 tax return as proof that Mr. Lupo earned $2,400 from Mr. Grice in 1993. I note that in December 1994, Liberty had terminated Mr. Lupo's benefits because it was not satisfied that he had earned the money he claimed.

The tax return, filed in May 1995, is a self-generated and self-serving document.

Mr. Lupo was unable to provide any objective evidence to show that he received $2,400 from Mr. Grice, i.e. bank deposits or receipts with respect to purchases. Mr. Lupo testified that he kept the money he earned from the Grice contract in a safe at home and gave it to his wife when she needed to pay bills.

Mr. Lupo pointed to a deposit of $340 into his bank account on September 9, 1993⁹ as one that was made with money from the Grice contract. The evidence, however, shows that deposits were made into Mr. Grice's account once a month before and after September 9, 1993, to cover his monthly car payments. Nothing distinguishes the September 9, 1993 deposit from any of the other deposits regularly made.

When faced with contradictions and discrepancies in his evidence, Mr. Lupo shifted responsibility to his wife who apparently handled the finances.

I find it significant that although Mr. Lupo's wife handled all of his finances, including his earnings, tax returns and application for accident benefits, she was not called as a witness to answer questions regarding the money allegedly earned from the Grice contract. I draw an adverse inference from the fact that she was not called as a witness.

Mr. Lupo presented a page torn from a book¹⁰ which described the work he allegedly did for Mr. Grice as proof that he did this work. I give no weight to this evidence. I find it significant that he did not bring the book from which the page is torn. I also give little weight to the invoice regarding the alleged work as it is also a self-generated document.

Mr. Lupo has not been able to provide any objective proof of the existence of either Mr. Grice or the contract. In my view, Mr. Lupo fabricated this contract with Mr. Grice to inflate his accident benefits.

I find it neither reasonable or plausible that a furniture refinisher, who must expend his own time, labour and money, would quote a price to refinish furniture without inspecting the furniture to be repaired. Moreover, I find it implausible that he would not get the customer's phone number so he could at least let him know when the work was finished as opposed to waiting for the customer to come by on the chance that it may be finished.

I find Mr. Lupo's story of coincidentally meeting a friend of Mr. Grice to be untrue. If in fact he did meet this friend of Mr. Grice who knew where Mr. Grice could be reached, it is significant that Mr. Lupo, without a reasonable explanation, would refuse to identify this man. I find this especially significant, since giving the name of the man could lead to the one person, Mr. Grice, who could allegedly verify the contract.

For all of the above reasons, it is my view that Mr. Lupo has not discharged his burden of proof. He has not presented any objective, reasonable or reliable evidence to show that he had a contract with Mr. Grice to refurnish his furniture in the four week prior to the accident and that he received $2,400 for this work.

Accordingly, I find the amount of Mr. Lupo's weekly income benefit is $185.60.

Expenses:

Having determined that Mr. Lupo was not credible on the material elements of his claim, I exercise my discretion¹¹ not to award Mr. Lupo his expenses.

Order:

1. Mr. Lupo is entitled to weekly income benefits of $185.60.

2. The Applicant is not entitled to his expenses.

June 21, 1996

Joyce Miller Arbitrator

Date

Footnotes

1. 1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule —Accidents Before January 1, 1994. In this decision, the term "Schedule' will be used to refer to Regulation 672.
2. 2Exhibit 10, Ontario Automobile Insurance Application for Accident Benefits, at p. 3
3. 3Exhibit 9
4. 4Exhibit 1, Tabs 5 - 10, Invoices to Brassworks; Exhibit 2, Financial Report of J.P. Flanagan & Associates, at p. 3
5. 5Exhibit 1, Tab 2 at p. 25, income tax return for 1993; Exhibit 2, Financial Report of J.P. Flanagan & Associates at p.3.
6. 6Exhibit 6, Hi-Tech Wood Experts invoice August 23 to September 17, 1993
7. 7Ibid.
8. 8Exhibit 7, Statement of Income and Expenses from a Business
9. 9Exhibit 1, Tab 13, Bank statements of deposits and withdrawals from June 4, 1993 to March 9, 1994, at p.97
10. 10Exhibit 5
11. 11Section 282(11) of the Insurance Act. See also MMcCormick and Economical Mutual Insurance Company (October 2, 1991), OIC A-000139.