Construction
2425 Bayview Avenue in North York is situated in the middle of one of Toronto’s most desirable neighbourhoods. A previous developer of the site obtained approvals and permits for the construction of townhomes and underground parking before selling it to a second developer, Urbancorp Inc., which performed the demolition, excavation, and foundation work before becoming insolvent in 2016.
CB Bridle Path Inc. acquired the land, sold half-ownership to Jia Development Inc., and allowed the project to remain dormant until early 2022, when Bridle Path entered into a conditional sale agreement to offload its interest to a man named Biao Liu. Before the sale actually closed, Jia Development and Liu hired Viceroy Homes and authorized it to begin construction immediately.
Unfortunately, Liu ultimately chose not to conclude the sale. Viceroy Homes sought to partner with Jia Development in Liu’s stead, but was turned down, a decision that upset Viceroy’s principal. The same day, Viceroy sent Jia ten invoices totalling an astounding $3.7 million.
Jia duly rejected the invoices and the next day Viceroy filed a lien, claiming it had performed work consisting of “demolition of existing buildings, excavation, removal of debris, repair and completion of foundation, framing materials” over the course of a mere 39 days – including work that had in some cases, such as the demolition, already been performed in 2016 by somebody else.
Litigation
Litigation proceeded refreshingly briskly. Two months after filing the lien, Viceroy commenced an action, and two months after that its principal was cross-examined. On the first day he admitted that Viceroy had not actually performed all of the work described in the ten invoices supporting the lien, and on the second day he refused to answer any questions.
Bridle Path and Jia Development each filed a motion pursuant to section 47 of the Construction Act, which in its latest form permits a lien to be discharged if it’s frivolous, vexatious, and an abuse of process (as opposed to the old wording that such an accusation would previously have fallen under, “any other proper ground”).
Analysis
While the Court determined that the old version of the Construction Act applied, it found no material difference in application to the case at bar, but did take the opportunity to clarify the process to be followed in a section 47 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, both parties must put their best foot forward in terms of evidence, with a particular onus on the lien claimant, and the court is entitled to presume that both parties have in fact presented their best evidence.
The Court also confirmed the standard definitions of the terms in question:
“Frivolous” is used to describe an action that is so highly unlikely to succeed that it is apparently devoid of practical merit.
“Vexatious” includes actions that obviously cannot succeed and that are brought for an improper purpose.
“Abuse of process” is a flexible doctrine that gives the court the inherent power to prevent the misuse of its process in a way that would be manifestly unfair to a party to the litigation before it, or would in some other way bring the administration of justice into disrepute.
In the circumstances, the Court had no trouble concluding that Viceroy’s lien claim had been made for the improper purpose of forcing an agreement to Viceroy’s joint venture proposal or functioning as an act of reprisal for not doing so, and vacated the lien on April 5, 2023.