An Ontario Superior Court judge has found Bruce County in breach of trust through its purchase of a property at 254 High Street in Southampton, while also asserting the property in question to be a trust asset and not under county ownership.
Justice G.D. Lemon’s 36-page decision was released on Jan. 31 from a case heard in the Superior Court of Justice in Walkerton on Nov. 12, 2021.
Bruce Arthur Krug, a late local heritage advocate, drafted his will in 2006 and included $500,000 in it to be left to Bruce County solely for the archives building for the storage and display of the archives of the county, Lemon’s judgement explains. Krug died in 2013.
Laura Robinson and the Southampton Cultural Heritage Conservancy had applied to the court seeking a declaration, among other orders, that Bruce County is in breach of terms of the Bruce A. Krug Trust by not abiding by its restricted purpose.
Bruce County, the Town of Saugeen Shores and the Public Guardian and Trustee are named as respondents in court documents. Bruce County also made an application to the court, primarily seeking dismissal of the application by Robinson and the conservancy.
In his judgement, Justice Lemon says the county authorized the use of Bruce Krug reserve funds to finance an accommodation plan for the Bruce County Museum and part of the cost of a feasibility study in 2016. A study commissioned by the county recommended a new archives facility be built, as the existing one would “reach capacity in less than three years.”
In October 2017, the county signed an agreement of purchase and sale to buy the archive’s neighbouring property at 254 High Street for $550,000. The property housed a 129-year-old former Anglican church rectory. The land and rectory house were included in the sale, which closed in March 2018.
Bruce County also approved the use of funds from the Krug reserve for the High Street property purchase.
The county had planned to demolish the rectory building in order to develop a Nuclear Innovation Institute in partnership with Bruce Power, while including archives and other museum uses at the re-developed site.
A request for proposals was issued by the county after the property sale closed to have the rectory removed or demolished to allow the county to develop the land in accordance with studies it commissioned.
The county argued in court the phrase in Krug’s will “the archives building” should not be limited to the current building, but reviewed to consider a “general intention with respect to the storage and housing of archives.”
Lemon agreed with Robinson and the Southampton Cultural Heritage Conservancy that Bruce County has “essentially taken the Krug trust and converted it into a property in the county’s name without documented restrictions.”
The judgement says if Bruce County wanted a joint-use building, it should have purchased and developed the property with its own money.
“The county should not have used the Krug trust for that purpose,” Lemon writes.
Lemon ruled the county in breach of the Krug trust not only for the property purchase, but also to pay for disbursements related to the development of the property.
“That said, I do accept that the funds spent on feasibility studies are an appropriate use of the trust funds,” says Lemon. “(The applicant) does not seriously dispute that the present archive building is about to be outgrown; studies to determine how best to deal with that reality are appropriate.”
In his decision, Justice Lemon dismissed the county’s application and found it is in breach of the Krug trust by its use of funds to purchase the 254 High Street property.
Lemon also asserts in his ruling that the property is in fact a “trust asset” pending the completion of the proceedings, and not property the county owns.
“The question of whether the county eventually ends up owning the land and the rectory is for another day,” Lemon explains.
Lemon requested the Public Guardian and Estate Trustee to make submissions to what should occur next. He also ordered all counsel to arrange a conference call within 30 days to determine a timetable for next steps.
In a prepared statement distributed to media outlets Friday, Bruce County Warden Janice Jackson says: “We (Bruce County Council) accept his honour’s decision that we made mistakes in the purchase of 254 High Street. We are eager to work towards a resolution with the Public Guardian and Trustee, and Estate Trustee, in this litigation.”
Justice Lemon’s judgement also includes commentary about the “county’s conduct” throughout the process. Robinson and the Southampton Cultural Heritage Conservancy raised concerns about what they saw as a significant lack of disclosure by the county.
Lemon notes the county’s use of closed meetings was investigated under authority of the Municipal Act, and Bruce County was found to have “unlawfully closed to the public at least 18 meetings” relating to the purchase and use of the property for an “improper purpose” in violation of the Act.
“The county did not disclose records relating to the decision to purchase the property, or any record relating to the use of Krug funds to pay for the property, in its materials filed for these applications,” Lemon’s judgement reads. “Then it repeatedly refused to produce records and took the position that they are not relevant.”
Lemon says instead of applying to the court before “unilaterally electing to alter the terms of the Krug trust” or when an issue was raised about the improper use of funds, Bruce County “dismissed those concerns and proceeded with a request for proposals to demolish the rectory building.”
Robinson and the Southampton Cultural Heritage Conservancy had to file several Freedom of Information applications and motions in order to obtain information and documents from the county. Lemon says as a result, there was no way for any member of the public to know if the Krug trust funds were used to purchase the property and by withholding this record of the use of funds, the county prevented any oversight of its action as trustee.
“I need not make the findings that (the applicant) seeks relating to the conduct of the county except to find that, on the admitted record, the county’s behaviour has been atrocious throughout,” Lemon says in his judgement.