BRUCE COUNTY – Justice G. D. Lemon has given his decision regarding the appropriate “remedy” in the matter of the Krug estate. It is not favourable to the county. Bruce County has been removed as trustee of the Krug trust.
A press release from Bruce County stated the decision follows a hearing on Aug. 26. The matter will be discussed further during the Oct. 20 meeting of Bruce County council.
Lemon had previously ruled that the County of Bruce was in breach of the Krug trust in the purchase of land on High Street, Southampton.
The Southampton Cultural Heritage Conservancy asked that the county restore the manse property (it had removed the furnace and utilities in preparation for demolition), and be removed as a trustee for the trust, and further, that the court appoint new trustees and order the sale of the property.
For now, the county is responsible for maintaining the property – that includes heat, since winter is coming.
The county’s position was that it should keep the property but pay restitution in the amount of $806,666.67 to the trust. The county further asked that BMO Trust Co. be appointed the new trustee.
As stated in the report, “In its application, the county asked: if its use of the funds were not allowed by the terms of the last will and testament of Bruce Arthur Krug, ‘what are the appropriate steps to be taken by the county with respect to the estate of Bruce Arthur Krug?’”
Lemon gave the answer.
First, the county will be removed as trustee “for the premises at 254 High St., Southampton, and the Krug trust.” BMO Trust Co. is the interim trustee, “subject to further orders of this court.” As part of its duties, BMO Trust Co. will determine if the county has “properly reimbursed the trust for disbursements related to development of the property.”
The second major requirement is that BMO Trust Co. sell the property in its entirely to a purchaser “other than the county or any individual or entity not in a non-arm’s length capacity from the county.” Net proceeds from the sale shall be included in the Krug trust. The determination was that “the county cannot be trusted to act appropriately with this property.”
The language used in the judge’s statement left no doubt about this particular measure. As stated in clause 35, “A sale to a purchaser other than the county will serve the… purpose of teaching ‘faithless fiduciaries that conflicts of interest do not pay.” The county should be “divested of its ‘wrongful acquisition’ in order that the ‘trust and fiduciary obligations be taken seriously, and wrongdoers be deterred from breaching these obligations.’”
A statement issued by the Southampton Cultural Heritage Conservancy (SCHC) to the Walkerton Herald-Times stated, “After four years of challenging Bruce County and its secret, unlawful use of a restricted trust bequeathed by Bruce A. Krug for the county archives, the SCHC is pleased that Justice G. D. Lemon of the Ontario Superior Court has removed the county as trustees in his Oct. 12 decision.”
The SCHC press release went on to comment on Lemon’s view that “it is a case of the county ignoring its duties and doing something entirely in breach of the terms of the will.” He further said if the county were “allowed to do as it has, no testator would ever leave trust funds to a municipality.”
The county’s plan, stated the SCHC press release, was to demolish the historic Anglican manse and build a nuclear innovation institute with Bruce Power. The county went into “closed meetings unlawfully on 21 occasions” to discuss plans.
Brockton Mayor Chris Peabody commented that he finds the matter “extremely unfortunate.”
He noted that, for four years, he’s voted against the county’s course of action and favoured negotiating with the conservancy group.
“Had we pursued negotiation, we could have had land for expansion (of the archives). We have now lost complete control of the property. A negotiated settlement could have had a better result for the county,” he said.
Peabody said he’d comment further at the upcoming meeting of county council.
History
As stated in the county press release, on March 21, 2019, Bruce County received an Ontario Superior Court of Justice application from Blaney McMurtry LLP, the solicitor representing Laura Robinson and the Southampton Cultural Heritage Conservancy. The application included an injunction restraining Bruce County from continuing any demolition or removal activities at 254 High St. in Southampton, cancelling any demolition permits, and declaring that the county breached the restricted purpose of the charitable trust created by the estate gift from Bruce A. Krug. Lemon issued his order regarding the matter on Oct. 12 of this year.
The last will and testament of Bruce A. Krug bequeathed $500,000 and a portion of the residual of his estate for “the County Archives building for the storage and display of the archives of the county, in memory of Bruce and Howard Krug.”
