In 2018, the Construction Lien Act (the CLA) (as it was then called) underwent significant legislative reform that resulted in a number of revisions (including its name being changed to the Construction Act – referred to herein as the “Act”)[1] intended to, among other things, improve the function of and modernize the legislation. Among the revisions and upgrades, and relevant to this case and article, was the codification of the Court’s jurisdiction to discharge a lien on the ground that it is frivolous, vexatious, or an abuse of process.[2]

To date, there has been minimal case law on when a lien meets this threshold. However, and fortunately, 2708320 Ontario Ltd cob Viceroy Homes v Jia Development Inc[3] (“Viceroy Homes”) has provided guidance in the context of Section 47(1) of the Act on what qualifies as frivolous, vexatious, or abuse of process, as well as the consequences for registering such a lien.

Below, we review the case and provide its key takeaways.

Factual Background

In 2016, CB Bridle Path Inc. (“Bridle Path”) purchased lands that were previously being developed for the construction of townhomes (the “Project”) – which development was incomplete at the time of purchase, due to the insolvency of the previous owner. Specifically, the previous owners had acquired certain permits and performed preliminary work (including demolition, excavation and foundation work), but construction of the townhomes had not commenced. Upon purchasing the land, it appears that Bridle Path took no steps of its own to continue developing the project. In 2017 and 2018, Bridle Path transferred half of its ownership in the lands to Jia Development Inc (“Jia”, with Bridle Path and Jia collectively referred to as the “Owners”). Despite several changes in ownership, the Project remained dormant between 2016 and 2022, with the exception of setting up a small modular sales office at the site, as well as some minor cleaning, testing, and winterization work.[4]

In 2022, Bridle Path began efforts to sell its remaining ownership stake in the lands and entered into a conditional sales agreement (the “CSA”) with a prospective purchaser. The CSA provided the purchaser with thirty (30) days to satisfy himself of the feasibility of the Project and to secure financing. During the thirty (30) day due diligence period, Jia (as co-owner of lands) and the prospective purchaser of Bridle Path’s ownership stake, entered into a Letter of Intent (“LOI”) with 2708320 Ontario Ltd cob Viceroy Homes (“Viceroy”)  whereby the purchaser and Jia agreed to contract with Viceroy to construct the Project in the event that the sale was completed. Viceroy then appears to have performed what was described as limited “excavator” work, totaling $13,560.00.

Importantly, however, the purchaser could not close the sale (for reasons unexplained by the Court).[5] Despite the failure to close by the purchaser, Viceroy’s agent, Mr. Sun, contacted Jia and proposed that Viceroy be the contractor for the Project and that Viceroy instead become co-owner of the land (the “Proposal”). For reasons unknown, it appears Jia did not take Viceroy up on this Proposal.

After Jia failed to accept the Proposal, Viceroy sent invoices for work that it alleged it performed over 39 days, including demolition, foundation, and repair work, which purportedly cost $3.74 million (the “Alleged Work”). Jia rejected the invoices, at which point Mr. Sun threatened to lien the property and notify the Owners’ lender of the claim of lien. Following this threat, Viceroy registered a claim of lien in the amount of $3,740,300 for the Alleged Work. Shortly thereafter, Viceroy perfected its lien by issuing its Statement of Claim.[6]

Subsequently in the lien proceeding, Mr. Sun was cross-examined pursuant to Section 40 of the Act, which entitles a party with an interest in the liened property to cross-examine the lien claimant or their agent in order to scrutinize the validity and quantum of claim for lien. During his cross examination, Mr. Sun admitted that $2.2 million worth of the alleged Work was not performed.

Accordingly, and on the basis of the evidence obtained from Mr. Sun, the Owners brought a motion to discharge the lien on the basis of it being frivolous, vexatious and/or an abuse of process pursuant to Section 47 of the Act.[7]

The Superior Court’s Decision

The Court began its analysis by determining which version of the Act was applicable in this case, as Bridle Path and Jia alleged that the Viceroy Homes lien was “frivolous, vexatious, and an abuse of process,” which is a ground under the current version of the Act. However, the evidence indicated that the previous iteration of the Act, the CLA applied, as the procurement and contracts for work performed on the Project pre-dated July 1, 2018. Regardless, the Court ultimately determined that it was irrelevant whether the Act or the CLA applied, as previous case law[8] indicated that although Section 47 of the CLA provided that a lien could only be discharged “upon any proper ground,” the CLA allowed for motions to discharge liens on the ground that they were frivolous, vexatious, or an abuse of process.[9]

The Court then outlined the process to be followed on a Section 47 motion to discharge. Specifically, when bringing such a motion, “the moving party must prove that there is no triable issue as to the basis on which the lien is sought to be discharged”[10], meaning that the parties must “put their best foot forward” when tendering evidence.[11]

The Court then considered the specific ground under which the Owners sought to discharge the lien, being that Viceroy had allegedly not performed any of the work alleged in its claim for lien (let alone work in the amount of almost $3.8 million, or even the reduced amount of $1.6 million when considering Mr. Sun’s admission that $2.2 million worth of work had not been performed).

In that regard, the Court addressed what constitutes frivolousness, vexatiousness, and/or an abuse of process under the Act, noting that the case law has provided the following guidance:

  1. Frivolous: An action that is so highly unlikely to succeed that it is apparently devoid of practical merit.
  1. Vexatious: An action that obviously cannot succeed and is brought for an improper purpose.
  1. Abuse of Process: A flexible doctrine that gives the court inherent power to prevent the misuse of its process.[12]

The Court agreed with the guidance noted above and applied it in this case. Based on this guidance and the evidence before it, the Court concluded that the Owners had established that there was no triable issue as to the basis on which the lien was being discharged. In this case, there was no triable issue as to whether the lien was frivolous, vexatious, or an abuse of process, as a result of which the Court discharged the lien and vacated the certificate of pending litigation.[13]

Interestingly, despite the power to do so[14], and while the Court discharged the lien pursuant to Section 47 the Court elected not to dismiss the action pursuant to the same Section. Rather, the Court dismissed Viceroy’s action pursuant to Rules 15.04(6) and (7) of the Rules of Civil Procedure as a result of Viceroy’s failure to appoint a lawyer or obtain an order granting it leave to be represented by a non-lawyer, as per an earlier order issued by the Court after Viceroy’s former lawyer obtained an order removing them from the record. [15]


Viceroy Homes provides several important reminders for stakeholders in construction lien proceedings.

First is the fact-specific nature of Section 47 motions brought on the basis that a lien is frivolous, vexatious, or an abuse of process. In the recent case of 1936230 Ontario Inc v Hari Kaush Developments Ltd[16] and XPL Construction Solutions Inc v North Bay Capital Investments Ltd [17] (the case from which the Court in Viceroy Homes adopted guidance in respect of the concepts of frivolous, vexatious and abuse of process), the Court found in both cases that there was in fact a triable issue as to whether the lien was frivolous, vexatious, or an abuse of process as a result of deficiencies in their evidence.[18]

This is a stark contrast to the case of Viceroy Homes, wherein the Owners tendered significant evidence to establish that there was no triable issue with respect to whether the lien was frivolous, vexatious, or an abuse of process including photographs of the Project site, the cross-examination transcript of Mr. Sun, as well as affidavits from the Owner’s winter contractor, their principals, and officers. [19] As noted by the Court in Viceroy Homes, it is incumbent on parties to put their best foot forward on such a motion[20]; accordingly, both lien claimants and defendants in a lien action would be well-served by ensuring that they provide a fulsome record when preparing for such a motion. Although this places an additional burden on lien claimants as a respondent to such a motion, the Court has previously explained this burden of proof is premised on the fact that lien claimants are in the best position to provide the evidence required to make a determination (i.e. to justify the quantum of their lien).[21]

Second is the serious cost implications that can arise from registering a lien that is frivolous, vexatious, or an abuse of process. In a subsequent cost endorsement to Viceroy Homes[22], the Court awarded significant costs to the Owners. Specifically, the Court took the extraordinary step of awarding Bridle Path its actual costs of the motion and the action. Although uncommon, the Court concluded that the fabrication of a significant claim for lien (essentially the entirety of the lien except for the $13,560 in “excavator work”) in order to interfere in the sale of land warranted severe sanctions. In addition to the costs awarded to Bridle Path, and perhaps somewhat surprisingly, the Court awarded Jia substantial indemnity costs (that is, not its actual costs) for the costs of the motion and the action.[23] It appears that the Court’s differentiation between Bridle Path and Jia was based on the finding that Jia had performed some “duplicative work by the two senior lawyers” on the file, as well as some “excessive research”.[24]

Interestingly, the Court also pierced the corporate veil to make Mr. Sun personally liable for the substantial indemnity costs awarded to Jia, on several grounds. First, in relying on previous case law[25], the Court determined that Mr. Sun controlled Viceroy at the relevant times and caused it to register the claim of lien to extort the Owners, and therefore, the corporate veil should be pierced to trigger personal liability.[26] Second, the Court noted its powers pursuant to Section 86(1)(b) of the Act which justifies potential cost consequences[27] against a person who represents a party who knowingly participated in the preservation or perfection of a lien that is frivolous, vexatious, and an abuse of process. The Court found that Mr. Sun had represented Viceroy, and that he knowingly participated in preserving and perfecting the impugned lien.[28]

To conclude, it is important that construction industry participants take care in dealing with construction liens and steps taken under the Act. Liens should only be registered strictly pursuant to the Act, and liening parties should be conservative in reviewing what is included in the amount liened – not only to ensure that the lien is not frivolous, vexatious or an abuse of process, but also to be sure that what is being liened for represents a legitimate supply of services and/or materials under the Act. When in doubt, consult experienced construction counsel.

[1] Bill 142, An Act to amend the Construction Lien Act, 2nd Sess, 41st Leg, Ontario, 2017 (assented to December 12, 2017).

[2] Construction Act, RSO 1990, c C 30, s 47 (1)(a) [Construction Act].

[3] 2023 ONSC 2301 [Viceroy Homes].

[4] Ibid at paras 11-13.

[5] Ibid at paras 14-15,18.

[6] Ibid at paras 18-22.

[7] Ibid at paras 2, 23.

[8] Franco Property Development Ltd v Heritage Glen North Ltd, [1993] OJ no 2396, 43 ACWS (3d) 348

[9]  Viceroy Homes, supra note 3 at paras 24-26.

[10] Viceroy Homes, supra note 3 at para 27, citing Maplequest (Vaughan) Developments Inc v 2603774 Ontario Inc, 2020 ONSC 4308 at para 25.

[11] Viceroy Homes, supra note 3 at para 28, citing GTA Restoration Group Inc v Baillie, 2020 ONSC 5190 at para 56 [GTA Restoration].

[12] XPL Construction Solutions Inc v North Bay Capital Investments Ltd, 2023 ONSC 238 at paras 34-39 [XPL Construction].

[13] Viceroy Homes, supra note 3 at paras 30-31.

[14] Construction Lien Act, RSO 1990, c C 30, s 47(1)(c) as it read 30 June 2018; Construction Act, s. 47.

[15] Viceroy Homes, supra note 3 at paras 2-8, 32-37.

[16] 2023 ONSC 4718 [Hari Kush].

[17] XPL Construction, supra note 12.

[18] Hari Kush at para 35; XPL Construction at para 68-79

[19] Viceroy Homes, supra note 2 at para 10.

[20] GTA Restoration, supra note 13.

[21] Ibid at para 55.

[22] 2708320 Ontario Ltd. cob Viceroy Homes v Jia Development Inc, 2023 ONSC 3361.

[23] Ibid at paras 12-13,18-19.

[24] Ibid at para 17.

[25]  642947 Ontario Ltd. v. Fletcher, [2001] OJ No 4771, 152 OAC 313.

[26] Viceroy Homes Costs, supra note 22 at para 20.

[27] Costs on a substantial indemnity basis.

[28] Viceroy Homes Costs, supra note 22 at para 21.

Learn More About Construction and Infrastructure Law

We are a preeminent Canadian construction and infrastructure law firm. Our peers and clients recognize our lawyers as the best in the construction industry.