A Due Diligence Reminder: Cost Implications for Frivolous, Vexatious and Abusive Liens.

Author: Rapti Ratnayake |

A Due Diligence Reminder Cost Implications for Frivolous, Vexatious and Abusive Liens..jpg

2708320 Ontario Ltd. cob Viceroy Homes v Jia Development Inc.,1 provides helpful guidance on the interpretation of frivolous, vexatious and abusive liens under the Construction Act. It also examines the cost implications for stakeholders in construction lien proceedings who register liens that are baseless or grossly excessive.2


In a separate proceeding heard in 2023, the court discharged the claim for lien of the plaintiff, 2708423 Ontario Ltd. cob Viceroy Homes (“Viceroy”), on the grounds that the lien was frivolous, vexatious and an abuse of process.3

CB Bridle Path Inc. (“Bridal Path”) purchased lands in Toronto to develop townhomes and later transferred half of its ownership to Jia Development (“Jia”). In 2022, Bridal Path decided to sell its remaining ownership in the land and entered into a conditional sales agreement with a prospective purchaser, Biao Liu (“Liu”). Before the sale closed, Liu and Jia hired Viceroy to begin construction. Viceroy appeared to have completed about $13,560.00 worth of excavation work.

Liu ultimately chose not to conclude the sale. Viceroy’s agent, Mr. Sun, contacted Jia and proposed that it become the co-owner of the land and the contractor for the project. Jia rejected this proposal. Viceroy later sent Jia ten invoices for alleged work on the project, totalling $3,74 million. Jia rejected the invoices and Viceroy responded by registering a claim for lien in the amount of $3,74 million.

In the lien proceedings, Mr. Sun was cross-examined under the Construction Act and admitted that he did not complete $2.2 million worth of work on the project. Bridal Path and Jia brought a motion to discharge the lien on the basis that it was frivolous, vexatious and/or an abuse of process under section 47 of the Construction Act.4 The court ordered that the claim for lien be discharged and vacated.

In this proceeding, Bridal Path and Jia brought a motion directly against the law firm that represented Viceroy to pay the costs under the Construction Act for participating in the preservation and perfection of a lien that was baseless and without foundation. They argued that the lawyers should have investigated the lien further and should have demanded more documents and timely disclosure.


Section 86(1)(b)(i) of the Construction Act states that the court may order costs against a person who represented a party where the person knowingly participated in the preservation or perfection of a lien and the claim for lien is without foundation, or is for a grossly excessive amount, or that the lien has expired.5

The court stated that liability for costs under section 86(1)(b)(i) requires a finding that the lawyers subjectively knew of the baselessness of the claim for lien when it was registered and perfected. In this instance, there was no evidence that the lawyers knew that the claim for lien were grossly exaggerated when it was preserved and perfected. The lawyers were also not reckless or willfully blind in failing to investigate the process any further. The court dismissed the motion.

While the court did not find the lawyers liable for costs in this case, it is an important reminder that lawyers and representatives for lien claimants have a “gatekeeping” function in ensuring that the lien remedy is not abused.

Key Takeaways

This case provides important reminders for stakeholders in construction lien proceedings, including:

  • Liens should only be registered in strict compliance with the Construction Act
  • Stakeholders should be cautious when reviewing the amounts to include in a lien. Amounts being claimed should reflect a legitimate supply of services and/or material.

If you have any questions about construction disputes, including adjudication and liens, please contact a member of Construct Legal.

The information contained in this article is not legal advice.

2708320 Ontario Ltd. cob Viceroy Homes v Jia Development Inc, 2023 ONSC 1608 [“Viceroy Homes”]
Construction Act, RSO 1990, c C 30, s 86(1)(b)(i) [“Construction Act”]
2708320 Ontario Ltd. cob Viceroy Homes v Jia Development Inc, 2023 ONSC 2301
Construction Act, s 47(1)(a)
Viceroy Homes at para. 37