This article is part of the series from the Higgerty Law statement of claim. You can read what a statement of claim and a Quistclose Trust is in the first article in this series.
This portion of the statement details / alleges –
- the history of the POP Village development,
- that CEF funded the project after the banks would not fund it,
- that this project was reckless because the lands in question had no water service and had no prospect of getting water service in the future,
- various people were in conflict of interest during this time frame,
- POP Village opened and ran at a deficit and ABC District financed that deficit by increasing the promotion of CEF in order to increase deposits that could be used to service POP deficits,
- District failed to return any part of the proceeds of the life-lease sales to CEF,
- that this project was not in keeping with CEF’s mandate or policies,
- LCC /LCCFM knew of and approved of these things or were wilfully blind to it,
Please note that these are allegations only and this case has not been adjudicated in a court of law. As always, if you have any legal questions or need legal advice please consult appropriate legal counsel.
From Higgerty Law Statement of Claim
E. The Prince of Peace Village Loans
43. In or about 1993, the ABC District and its Officers and Directors, and/or the POP Congregation, on the advice and with the assistance of Chowne and/or Taman acting as counsel to ABC District and/or the POP Congregation, purchased 156 acres of real property near Calgary, Alberta for $1,007,700 for the purpose of building a church and a school.
44. The ABC District and/or the POP Congregation set aside certain lands within the POP Village Lands for the location and construction of a church and school for the Prince of Peace Congregation (the “POP Congregation”).
45. In or about June 1997, the POP Congregation established a $26.6 million budget for the construction of a 174 duplex and fourplex unit seniors’ housing project called the Prince of Peace Village (“POP Village”) to be constructed on a portion of the 156 acres (“the POP Village Lands”).
46. The POP Congregation proposed the POP Village development to the ABC District, which approved it on the understanding that the monies for the POP Village would be borrowed from the bank.
47. When sufficient construction loans were not obtainable from the bank, ABC District advanced monies from the CEF Trust or alternatively the CEF Quistclose Trust to develop the POP Village. The ABC District developed the POP Village on its own behalf or alternatively in partnership with the POP Congregation.
48. The POP Village was expanded to include a seniors’ assisted living residence (“The Manor”), and an Alzheimer’s care centre (“The Harbour”).
49. The decision of the ABC District to embark upon the speculative real estate development of the Prince of Peace Village on its own behalf, funded by the CEF, was contrary to the purposes of the ABC District Church Extension Program, which was to provide mortgage financing for congregations to build churches and schools in which to carry out the ministry of the Lutheran faith.
50. The decision of the ABC District and its Officers and Directors to embark upon the speculative real estate development of the POP Village Lands was particularly reckless because the ABC District and its Officers and Directors knew that the POP Village Lands were not supplied with municipal water pipeline services and that the POP Village Lands had no immediate or near-term prospect of being so serviced. As of December 16, 2016, the POP Village Lands are still not serviced with municipal water pipeline services and there is no immediate prospect of such services being available.
51. LCC and/or LCCFM were aware of and approved the ABC District’s decision to utilize the CEF monies for the purpose of developing the POP Village. Alternatively, they were willfully blind to the use of the CEF monies as aforesaid.
52. The POP Village development commenced in 1993 and was carried on by the ABC District from 1993 through 2006.
53. At all times material to these proceedings Taman was the Chairman of the POP Congregation’s Housing Committee, and was responsible for advancing the POP Village development on behalf of the POP Congregation.
54. At times material hereto, the Defendants Keith Haberstock and Kurtis Robinson were members of, and held leadership positons in, the POP Congregation. At the same time, Haberstock was an Officer and Director of the ABC District and Robinson was an Officer of the ABC District. As a result, their duties to the ABC District and the CEF depositors were in conflict with their duties and responsibilities to the POP Congregation.
55. The POP Village opened in or about 1998. However, at that time the development was operating at a financial deficit, and continued to do so. The ABC District financed those deficits through additional input of funds from the CEF, and increased its promotion of the CEF to its congregations and their members for the purpose of increasing deposits with which to fund the POP Village deficits.
56. Between 1993 and 2006, the ABC District utilized $71,800,000.00 of funds on deposit in the CEF for the purchase and construction of the Prince of Peace Village and the lands upon which it was built, including subsidies for high-cost hauled water services provided to the POP Village (the “CEF POP Village Advances”).
57. LCC and/or LCCFM were aware of and approved the extension of the CEF POP Village Advances. Alternatively, they were willfully blind to the CEF POP Village Advances.
58. ABC District began selling life leases in the POP Village in 1998. However, it failed to return any part of the proceeds of those sales to the CEF in payment of the CEF POP Village Advances.
59. The CEF POP Village Advances contravened the ABC District’s Church Extension Program Loan Eligibility Policies, Loan Criteria and Loan Conditions in respect of the CEF Trust in that:
a. The POP Village development was not for the purpose of building churches or schools;
b. The POP Village development was a highly speculative real estate adventure;
c. The POP Village development was commenced and continued in the absence of any, or any reliable, financial projections;
d. The ABC District lacked the experience and qualifications to bring the POP Village to successful completion; and
e. The CEF POP Village Advances were used in part to fund operating deficits.
60. Further, or in the alternative, the CEF POP Village Advances contravened the terms of the CEF Quistclose Trust in that the POP Village development:
a. Was not for the purpose of providing assistance to a mission or ministry of a congregation or agency of the LCC;
b. The POP Village development was a highly speculative real estate adventure;
c. The POP Village development was commenced and continued in the absence of any, or any reliable, financial projections; and
d. The ABC District lacked the experience and qualifications to bring the POP Village to successful completion.
ANO / Lutheran Watch 