Weilers LLP

Bad Faith, Illegality And By-Laws

Bad Faith, Illegality And By-Laws

May 2, 2023

By Mark Mikulasik


You might think that a by-law which is passed with procedural illegalities would be routinely quashed in court.

The law is not that simple.


In Larabie Estate v. Moonbeam (Township) the Ontario Court of Appeal upholds a Superior Court judgment dismissing an application to have a zoning by-law quashed alleging that the Township had acted in bad faith. The illegality was a failure to give proper notice of the hearing, resulting in the applicant, the owner of an adjoining property, not receiving notice of the hearing.

Section 273(1) of the Municipal Act, 2001 states that: ”Upon the application of any person, the Superior Court of Justice may quash a by-law of a municipality in whole or in part for illegality”.

The word “may” in a statute is permissive, not mandatory. The section does not use the alternative word “shall”, which would require the judge, upon finding illegality, to quash the by-law. “May” means that the judge has discretion.

A judge’s discretion is seldom absolute, and there are precedent cases which guide how this discretion ought to be applied.

When it comes to quashing by-laws, the key issue is not procedural illegalities, but whether there was bad faith involved in the passing of the by-law. Bad faith requires a lack of candour, frankness or impartiality on the part of the municipality, especially arbitrary or unfair conduct.

This may seem strange. Illegality is always a serious matter, much more so than a mere irregularity. Irregularities are frequently forgiven.

So why forgive this illegality?

The application judge gave three reasons:

  • The attempt to provide notice to the appellant by regular mail reduced the significance of the municipality’s breach of the statutory notice process.
  • There was no evidence of bad faith in the municipality’s lack of rigour in pursuing notice, adding, “While perhaps careless, that conduct cannot be qualified as high-handed or callous.”
  • While he acknowledged the importance of the breach to the appellant, he found the consequences of the illegality more broadly were “negligible.” He noted that the concerns the appellant wished to raise in relation to the by-law were in fact before council based on the concerns of others who participated in the public meeting.

The Court of Appeal was satisfied that the judge properly applied the test for bad faith. The exercise of discretion to quash a by-law is entitled to deference on appeal, so will only be interfered with in obvious cases of error. The Court did not do so in this case.


If you are a municipal official:

  • This decision should give you comfort and encouragement that judges will quash your by-laws only in the most extreme situations.
  • The description of what constitutes bad faith tells you what to avoid.
  • The reference to bad faith in situations of illegality is especially welcome.
  • Ultimately, the public interest is the most important factor.

On the other hand, if you are a landowner, you need to be aware that:

  • A court is not likely to be sympathetic to any effort to quash a by-law.
  • Your private interests will be less important than the public interest.
  • In most cases, you will need to prove “bad faith”.
  • However, you too now have a roadmap of what constitutes “bad faith”.
  • As with most cases, this depends upon proving and presenting the facts in the most persuasive manner.


At Weilers LLP:

  • We have recent experience in advising clients about municipal by-laws;
  • We know how to prove and present favourable facts, and attack unfavourable facts, in a persuasive manner; and
  • We are also experienced in appeals, if your case is important and may help clarify the law.

Whether you represent a municipality, are a concerned taxpayer, or the victim of bad faith, Weilers LLP may be the right law firm for you.