COURT OF APPEAL FOR ONTARIO
IN THE MATTER OF THE PROPOSAL OF EUGENIO AND JULIANA CICORIA OF THE CITY OF BRANTFORD, IN THE COUNTY OF BRANT, IN THE PROVINCE OF ONTARIO
RE: CANADIAN IMPERIAL BANK OF COMMERCE (Appellant)
–and– EUGENIO CICORIA and JULIANA CICORIA (Respondents)
BEFORE: ABELLA, LASKIN and ROSENBERG JJ.A.
COUNSEL: Michael J. Valente, for the appellant
James Steven Cimba, for the respondent
HEARD: December 5, 2000
On appeal from the order of Justice George Yates dated March 28, 2000.
E N D O R S E M E N T
1The proposal put forward by the respondents and approved by the court compromised the bank’s secured claim. The approved proposal treated part of the bank’s claim as unsecured. The bank did not apply to revise the proposed assessment of its security. Therefore the proposal approved by the court was binding on all unsecured claims under s.62(2)(a) of the Bankruptcy and Insolvency Act.
2Equality among creditors is a basic principle of insolvency law. A side agreement that violates that equality is unenforceable. Such an agreement amounts to a fraud on the other creditors. This secret side agreement does violate the principle of equality. Therefore Yates J. was correct in concluding that the side agreement between the bank and the Cicorias was unenforceable.
3It follows that since Mr. Farmer negotiated the side agreement, he should be removed as an inspector.
4The parties agree that no allegations of misconduct were made against the trustee before Yates J. and that no evidence was put before him to justify a finding of misconduct. Therefore, having regard to the consent of the parties, paragraph 2 of the order of Yates J. is amended to delete any reference to the trustee.
5The appeal is dismissed with costs on a solicitor-and-client basis. In accordance with the order of McMurtry C.J.O., there shall be no costs to the trustee.
Signed: “R.S. Abella J.A.”
“John Laskin J.A.”
“M. Rosenberg J.A.”