Arieh Zupnik v. State Farm Mutual Automobile Insurance Company, 2017 ONFSCDRS 189

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 189

FSCO A12-001968

BETWEEN:

ARIEH ZUPNIK

Applicant

and

STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: Jessica Kowalski

Heard: Written submissions received to February 24, 2017

Appearances: Veronica S. Marson for Mr. Zupnik

Paul Omeziri for State Farm Mutual Automobile Insurance Company

Issues:

The applicant, Arieh Zupnik, was involved in a motor vehicle accident on March 1, 2008. He claimed income replacement benefits from State Farm Mutual Insurance Automobile Insurance Company (“State Farm”). In a decision dated May 4, 2015, I dismissed his application for arbitration. Mr. Zupnik appealed. In a decision dated September 16, 2016, Director’s Delegate Evans dismissed Mr. Zupnik’s appeal and awarded State Farm its legal expenses relating to the appeal. State Farm now seeks an order for its expenses of the arbitration.

In making an award of expenses, an arbitrator shall consider only the criteria set out in the Expense Regulation.¹

Those criteria are:

(a) each party’s degree of success in the outcome of the proceeding;

(b) any written offers to settle made in accordance with Rule 76;

(d) the conduct of a party or party’s representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders;

(e) whether any aspect of the proceeding was improper, vexatious or unnecessary;

(f) whether the insured person refused or failed to submit to an examination as required under section 42 of the Schedule or refused or failed to provide any material required to be provided by subsection 42(10); and,

(g) whether the insured person refused or failed to submit to an examination as required under section 44 of the Schedule, or refused or failed to provide any material required to be provided under subsection 44(9).

The only criteria relevant to this arbitration are the insurer’s degree of success and conduct of the applicant and his representative that tended to prolong, obstruct or hinder the proceeding, including the failure to comply with undertakings and interim production orders.

Insurer’s Degree of Success

State Farm was wholly successful. I dismissed Mr. Zupnik’s claim for income replacement benefits (IRBs) because I found that he continued to work after the accident and earned post-accident income that reduced his payable IRBs to zero.

Applicant’s Conduct

Throughout the arbitration proceedings, State Farm requested a number of productions from Mr. Zupnik, including production of the general ledger for Mr. Zupnik’s company, Littlebrook Investments Inc. (“Littlebrook”).

Despite production orders by FSCO, including at least two in which the pre-hearing arbitrator specifically ordered Mr. Zupnik to produce Littlebrook’s general ledger, by the time of the hearing before me, Mr. Zupnik still had not complied with her orders.

Satisfied that Mr. Zupnik was well aware that the general ledger would disclose all transactions for Littlebrook for the relevant times and that it would have been used by Littlebrook’s accountants as the foundation for the company’s financial statements, I drew an adverse inference against Mr. Zupnik for his failure to produce it. I found that the only reasonable conclusion for withholding the ledger was that it would disclose that Mr. Zupnik continued to operate his business without interruption and continued to earn income after the accident by engaging in all of his ordinary business transactions, which I found was supported by the evidence as a whole.

Moreover, despite continued insistence during the hearing itself, by Mr. Zupnik and his counsel that the ledger had been produced and that all production orders had been fully satisfied, Mr. Zupnik’s counsel eventually conceded at the hearing, and not before repeated questioning, that: 1) not only had the ledger not been produced, but that 2) neither had it been requested from Littlebrook’s accountants in the first place.

This disregard for production undertakings and interim arbitration orders and which necessitated motions was but part of a pattern of pre-hearing conduct by both Mr. Zupnik and his counsel that I find served to prolong and obfuscate the entire arbitration process. For example, the pre-hearing itself was twice adjourned, once because Mr. Zupnik failed to participate, and a second time, because his counsel did not attend.

State Farm seeks expenses totaling $15,073.22. This amount is reduced from $41,342.49 taking into account legal aid rates pursuant to the Expense Regulation. State Farm has also submitted a list of disbursements totaling $2.816.88 (reduced from $14,994.28, again in keeping with legal aid rates and allowable disbursements according to the Expense Regulation).

In the circumstances, I find State Farm’s reduced bill of costs and disbursements reasonable and find no reason to reduce them further. Accordingly, for the reasons set out above, I find that State Farm is entitled to its expenses in the amount of $15,073.22 and disbursements in the amount of $2,816.88, plus applicable taxes.

June 30, 2017

Jessica Kowalski

Arbitrator

Date