Executive Summary: Key Legal and Evidentiary Issues

• Section 89(2) of The Builders' Lien Act governs whether a counterclaim must be "related to the making of the improvement" to proceed in a lien action.

• Whether the pleadings should be struck turned on the "plain and obvious" standard under Rule 7-9 of The King's Bench Rules.

• Availability of a set-off defence depended on whether the requirements for legal or equitable set-off had been pled and could be established.

• Disputing the quantum of interest — both the rate and the date of accrual — raised a question of contractual interpretation rather than mere accounting.

• Preserving the summary, expedited character of lien proceedings informed the decision to limit the action's scope.

Facts of the case

Total Oilfield Rentals Ltd. (Total) rents out oilfield equipment, and Prosper Petroleum Ltd. (Prosper) was engaged in fossil fuel extraction; both companies operate in Saskatchewan and Alberta (para 1). In December 2022, Prosper contracted with Total for equipment to service some of its Saskatchewan oil wells (para 2). Total supplied the equipment and, on December 31, 2022, sent Prosper an invoice for $71,540.84, which Prosper did not pay (paras 2, 12). Total registered a lien against Prosper's mineral interests in the Saskatchewan well sites and, in November 2024, filed a Statement of Claim under The Builders' Lien Act (BLA) seeking judgment for the invoice plus contractual interest and a declaration that it held a valid builders' lien (paras 12-13). The parties agreed that Total's provision of equipment constituted an "improvement" under s. 2(h) of the BLA (para 13). Prosper's refusal to pay rested on an unrelated Alberta matter: between 2016 and 2018, Total had picked up and stored Prosper's tubing at a Peace River lot as what Prosper called a "gratuitous bailee," with no storage contract and no payment (para 14). Of more than 400 joints of tubing, roughly 159 appeared unaccounted for in the invoices Prosper put before the Court, and Prosper alleged Total lost or converted them (paras 15, 18). Total disputed retaining any tubing after 2017 and attested that all of it was distributed per Prosper's requests; the Peace River lot closed in 2019 (para 16). On these Alberta events, Prosper raised both a set-off defence and a counterclaim seeking general damages of $73,350, while its defence also disputed the interest claimed on the Saskatchewan invoice (paras 4–5, 18, 36). Total applied to strike the counterclaim and the defence.

Contractual clauses and statutory provisions at issue

The contract's central term was Clause 2 of its terms and conditions, which provided for interest to accrue at 24% per year if payment was not made within 30 days of the invoice date (para 12). Prosper contended that interest accrued at a lower rate, that the 24% rate was penal and unenforceable, and that the parties had later agreed interest would not begin to accrue until at least August 31, 2023 (paras 4, 37, 42). The key statutory provision was s. 89(2) of the BLA, which permits a party to counterclaim, crossclaim, or claim against a third party only "in respect of a matter related to the making of the improvement" (para 23). The Court read this alongside s. 89(1) (joinder of trust, lien, and contract claims) and s. 91, which directs that lien procedure be "as far as possible of a summary character" and restricts interlocutory steps without a court order or consent (paras 23, 26). On set-off, Rule 3-47 was at issue: legal set-off under Rule 3-47(2)(a)-(b) requires mutual debts, while Rule 3-47(c) incorporates equitable set-off (paras 47-50). The striking power itself flowed from Rule 7-9, allowing pleadings to be struck where it is plain and obvious a claim or defence cannot succeed (para 19).

The court's reasoning and analysis

Davis J. held it was plain and obvious that both the counterclaim and the set-off defence must fail (para 20). On the counterclaim, the Court found it wholly unrelated to the improvement: the two matters arose in different provinces years apart and shared no transaction, contract, project, or land - a disconnection so complete that Prosper's director, Mr. Kennedy, did not appear to realise he was dealing with the same company until Total sought payment (paras 30-31). Because s. 89(2) confines counterclaims to matters related to the improvement, and because allowing the unrelated claim would complicate and prolong what the BLA intends as an expeditious process, the counterclaim was precluded; no amendment could cure the defect (paras 8, 21, 32). On set-off, the Court found no mutual debts, so legal set-off was unavailable, and the tubing allegation did not go "to the very root" of Total's claim such that enforcing payment would be "manifestly unjust," so equitable set-off also failed (paras 49-53). The Court reached a different conclusion on the interest dispute. Relying on Smith v The Toronto-Dominion Bank, it reasoned that a quantum dispute turning on contractual interpretation - here, the applicable interest rate and the alleged agreement to delay accrual until August 31, 2023 - is a matter for a judge and cannot be resolved on the pleadings alone (paras 38-41). Although the judge expressed difficulty understanding the basis for delaying accrual and noted that 24% interest, while high, was not obviously illegal or unconscionable, the Court concluded Prosper had pled a reasonable defence on that narrow point (paras 40, 43, 45).

Ruling and outcome

The application succeeded in large part. The Court struck Prosper's counterclaim and the set-off portions of its defence (paragraphs 17 and 18) without leave to amend, while permitting paragraphs 1-16 and 19 to stand so that the dispute over the nature and extent of Prosper's interest obligation could proceed (paras 53, 59). Davis J. cautioned Prosper that interest continued to accrue and that pressing the remaining defence might not improve, and could worsen, its position (paras 45-46). As the largely successful party, Total Oilfield Rentals Ltd. was awarded its costs, to be calculated in accordance with Column 2 of the tariff (para 60). No damages were awarded in this decision, which addressed only the striking application; the dollar amount of those costs is not specified in the reasons.