Easy Legal Finance v Law Society of Alberta, 2025 ABCA 112
The Law Society of Alberta put a firm into receivership after one of the firm’s employees misappropriated more than $419,000 from the firm’s trust account. But the Law Society isn’t the only one worried about the firm’s finances. The firm also owes more than $1.4 million to its senior secured lender — Easy Legal Finance.
The Law Society tried to pause the interest on Easy Legal Finance’s debt, arguing that the 18% interest rate would drain the money available to other creditors. Alberta’s Court of King’s Bench agreed with that assessment, but the Court of Appeal said the lower court incorrectly applied the “interest stops rule”.
According to the Court of Appeal, insolvency courts sometimes pause interest to ensure fairness among creditors in the same class — but secured creditors aren’t in the same class as unsecured creditors.
That means courts can’t pause the interest on a secured debt during receivership simply because it seems like a fair thing to do.
- Even if the Law Society is the party saying it’s the fair thing to do.
“The [Law Society] has pointed to no case in which the interest stops rule has been applied to a secured creditor’s claim to avoid ‘skewing of equity’ to the secured creditor, whether in the context of an insolvency or otherwise.”
Para 39