Bad Faith1. General
2. Municipal Bad Faith
3. Crown Liability
1. General'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, whereby an government entity is protected from liability unless they meet the standard of 'bad faith'.
What precisely 'bad faith' is, is not so clear.
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:
 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:
 In Finney v. Barreau du Québec, 2004 SCC 36 (CanLII),  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”.-----------------------
 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).