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Bad Faith

'Bad faith' is used in a number of different legal contexts, related but not always identical. Generally though it is a heightened standard of liability, akin to malice. It is used commonly in Ontario law with respect to a government entity, where they must be shown to have acted in 'bad faith' otherwise they are immune from liability.

1. General
2. Municipal Bad Faith
3. Crown Liability

1. General

. Wise Elephant Family Health Team v. Ontario (Minister of Health)

In (Div Ct, 2021) the Divisional Court considered an issue of bad faith:
Bad Faith/Improper Purpose

[82] Wise Elephant submits that Ontario made the decision to terminate the Agreement on the basis of bad faith, or for an improper purpose. While Wise Elephant took the court to several cases defining bad faith, the decision of Emery J. in Seelster Farms et al. v. Her Majesty the Queen and OLG, 2020 ONSC 4013, at para. 120, broadly summarizes some of the main aspects of bad faith:
Bad faith has been defined as conduct that covers “acts committed deliberately with intent to harm.” It also has been used to characterize acts that are “so markedly inconsistent” with the events in which they are carried out that a court “cannot reasonably conclude that they were performed in good faith.” Descriptions of such conduct found in the jurisprudence include “reckless behavior;” conduct that “implies a fundamental breakdown in the orderly exercise of authority;” conduct that implies a “lack of candour, frankness and impartiality;” and irrational decision-making that is arbitrary, or plainly unreasonable because it fails to consider the appropriate information on which to decide. See Enterprises Sibeca Inc. c. Frelighsburg (Municipalite), 2004 SCC 61 and Grosvenor v. East Luther Grand Valley (Township), 2007 ONCA 55.
[83] In Entreprises Sibeca Inc. v. Frelighsburg (Municipality), 2004 SCC 61, [2004] 3 S.C.R. 304, at para. 26, the Supreme Court described bad faith as “acts that are so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that they were performed in good faith” (emphasis added). Wise Elephant also relied extensively on Roncarelli v. Duplessis, 1959 CanLII 50 (SCC), [1959] S.C.R. 121 in oral argument. Roncarelli had his liquor licence cancelled by the Quebec Liquor Commission because he had posted bond for Jehovah’s Witnesses arrested for proselytizing. Premier Duplessis recommended the licence be cancelled forever. Roncarelli is the seminal Canadian case involving judicial review for the abuse of discretion. Rand J. stated at pp. 140-141:
In public regulation of this sort there is no such thing as absolute and untrammelled “discretion”, that is that action can be taken on any ground or for any reason that can be suggested to the mind of the administrator; no legislative Act can, without express language, be taken to contemplate an unlimited arbitrary power exercisable for any purpose, however capricious or irrelevant, regardless of the nature or purpose of the statute. Fraud and corruption in the Commission may not be mentioned in such statutes but they are always implied as exceptions. “Discretion” necessarily implies good faith in discharging public duty; there is always a perspective within which a statute is intended to operate; and any clear departure from its lines or objects is just as objectionable as fraud or corruption. Could an applicant be refused a permit because he had been born in another province, or because of the colour of his hair? The ordinary language of the legislature cannot be so distorted.

To deny or revoke a permit because a citizen exercises an unchallengeable right totally irrelevant to the sale of liquor in a restaurant is equally beyond the scope of the discretion conferred. There was here not only revocation of the existing permit but a declaration of a future, definitive disqualification of the appellant to obtain one: it was to be “forever”.
[84] Bad faith is a serious allegation. In dealing with acts of public administration, the burden is on the party challenging the acts to establish bad faith on a balance of probabilities. Moreover, innuendo and speculation are not evidence.


[100] In this case there are no acts that are “so markedly inconsistent with the relevant legislative context”, or so arbitrary or reckless that the only reasonable conclusion that this court can draw is that they were performed in bad faith. This is a far cry from the “unlimited arbitrary power exercisable for any purpose, however capricious or irrelevant, regardless of the nature or purpose of the statute” set out in Roncarelli v. Duplessis, upon which Wise Elephant relied. There is no factual basis for the serious allegations of bad faith and improper purpose made against Ministry personnel. The Ministry showed remarkable forbearance, attempting to remedy governance failures on the part of Wise Elephant. After the 2018 Audit, it continued to fund and work with Wise Elephant. The remarkable litany of problems presented here does not give any basis for inferring bad faith or improper purpose in terminating Wise Elephant as a transfer payment recipient, and there is no evidence that would support such an inference: only innuendo and speculation.
. 1582235 Ontario Limited v. Ontario

In 1582235 Ontario Limited v. Ontario (Ont CA, 2020) the Divisional Court cited this characterization of bad faith:
[27] In Enterprise Sibeca Inc. v. Frelighsburg (Municipality),[11] the Supreme Court described bad faith as “acts that are so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that they were performed in good faith.”

2. Municipal Bad Faith

. Seguin (Township) v Hamer

In Seguin (Township) v Hamer (Ont CA, 2014) the court briefly discusses what constitutes 'bad faith' by a municipality sufficient to invalidate a by-law:
[8] As Laskin J.A. explained in Equity Waste Management of Canada v. Halton Hills (Town) (1997), 1997 CanLII 2742 (ON CA), 35 O.R. (3d) 321 (C.A.), at p. 340:
Bad faith by a municipality connotes a lack of candour, frankness and impartiality. It includes arbitrary or unfair conduct and the exercise of power to serve private purposes at the expense of the public interest…

3. Crown Liability

. Salehi v. Association of Professional Engineers of Ontario

Here in Salehi v. Association of Professional Engineers of Ontario (Ont CA, 2016) the Court of Appeal briefly characterized the intention requirement of 'bad faith' as it sometimes occurs in provisions limiting the liability of the Crown, Crown agents, and other statutory entities:
[8] In Finney v. Barreau du Québec, 2004 SCC 36 (CanLII), [2004] 2 S.C.R. 17, at para. 39, the Supreme Court held that bad faith conduct includes not only intentional fault, but also serious carelessness or recklessness amounting to a “fundamental breakdown of the orderly exercise of authority” or “an actual abuse of power”.

[9] The party claiming bad faith must provide specific allegations of it. For example, he or she must allege conduct founded upon fraud or oppression, or an improper purpose or motive, such as an intention to mislead or deceive or to deliberately cause harm: see e.g. Sampogna v. Smithies, 2012 ONSC 610 (CanLII), 94 M.P.L.R. (4th) 320, at para. 16; and Burns v. Johnston, 2003 CanLII 44408 (ON SC), 2003 CanLII 44408 (Ont. S.C.), at paras. 29-34. A mere error or omission is not evidence of bad faith: Burns v. Johnston, at para. 32. See also Toronto Sun Wah Trading Inc. v. Canada (Canadian Food Inspection Agency), 2014 ONCA 803 (CanLII); and Deep v. Massel, 2007 CanLII 27969 (ON SC), 2007 CanLII 27969 (Ont S.C.), aff’d 2008 ONCA 4 (CanLII).


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