A complaint was initially made against Cllr Hugill, who also serves on Etherley Parish Council, last December.
It resulted from a query made by Windmill resident, Janet Sewell, who was involved in a long-running dispute over plans for three barns on her farm in the hamlet which involved a council inquiry.
The committee found that Cllr Hugill had breached the councillor code of conduct by failing to fully declare his disclosable pecuniary interests, namely that he owned a farm himself.
He also made representations about council officers to the planning inquiry into Mill House Farm which were “discourteous and disrespectful and also capable of bringing the authority into disrepute”.
The panel agreed to publish a censure, recommend an apology be made in writing to the council’s chief executive Terry Collins and recommended he undertake training on the code of conduct, specifically in relation to the protocol on councillor/officer relations.
A spokesman for the council confirmed Cllr Hugill updated his interests on July 30, 2018.
An independent report stated that the council had also referred the matter to Durham Constabulary as failure to register a disclosable pecuniary interest if a criminal offence.
However, it said: “The police subsequently determined that it would not be appropriate to pursue this complaint, without expressing a final view in terms of whether or not an offence had been committed.”
Mrs Sewell said: “Whilst it is regrettable that Cllr Hugill has health issues, even after the issue was brought to his attention on numerous occasions it took him over 14 months to correct his paperwork.
"During this time frame he chose to attend and speak at the planning inquiry and showed no sign of any health issues.
“Cllr Hugill should do the only honourable option available to him and resign from elected office.”
Cllr Hugill said he did not wish to comment.