A contractor took cash for renovation work it never completed on homes in western Labrador this summer, while facing a raft of lawsuits linked to a failed subdivision plan in central Newfoundland.
ADDAHome Development Inc. acknowledges there were problems with its entry into Labrador, but insists many projects "were completed to the satisfaction of the clients."
The company says it has ceased operations "and exists only to liquidate its assets," according to an e-mailed statement from ADDAHome’s Bill Dormody and Rick Anstey.
They say the company is "striving" to do that now.
But for people in Labrador West who hired the company — and paid tens of thousands of dollars, up front, for work that was never finished — those comments are cold comfort.
Michelle Sheaves and her husband Chris Vallis were excited to see a new home renovator arrive in Labrador City this spring.
The mining boom in the region has resulted in a big demand for contractors, making it tough to get work done.
The couple decided to hire a contractor to build an apartment for Vallis’s elderly parents onto the side of their house. His parents are now in their 80s, and his mother recently became ill.
But the excitement of finding someone to do the work quickly wore off.
There was a catch — the contractor required money up front.
Sheaves and Vallis paid — in two installments, a total of $40,000 — and got a promise the job would be finished by November.
By late fall, ADDAHome had packed up and left town. Sheaves and Vallis were left with only a concrete foundation to show for that cash outlay.
And their problems didn’t end there — someone else came knocking a few days later.
"[ADDA] left Monday and then on Wednesday we had the concrete company come to our door looking for the money," Sheaves said.
"Because they said we owed them money for the job."
She says they gave the cash for the concrete to ADDAHome.
"It was paid for in the very beginning."
New contractor in town
Word of mouth about a new contractor accepting customers spread quickly in the mining boom town.
Kris Brown and Candace Goulding also signed a contract with ADDAHome to renovate their house.
Brown had been seriously ill, and in a wheelchair. His medical condition forced the couple to cancel a dream vacation to Hawaii. So they instead decided to pursue a dream-house reno project.
But that idea quickly turned into a nightmare.
ADDAHome started the extension and promised in July that it would be completed within four weeks.
Not only is the work not finished, another contractor told them much of it has to be fixed.
The couple has already paid about $30,000.
ADDAHome workers left the job one day, and simply never came back.
"One of the men said he was going to pick up a coffee, and get some boxes to put the gyproc in, and they left and that was the last that we heard from them," Goulding said.
They tracked the contractor down the day he left town, and heard more promises.
"He basically said, there's nothing to be worried about, I'll be down this evening, I promise at the end of the day, I'll finish this work with my own two hands if I’ve got to," Brown told CBC News.
"The evening came, and the person who showed up was my dad who had gotten a phone call from other people who knew that they had left town, and they weren’t going to finish our work."
'One of the men said he was going to pick up a coffee, and get some boxes to put the gyproc in, and they left and that was the last that we heard from them.'—Candace Goulding
Brown and Goulding are both teachers. They’re not cashing in on the big boom — and big money — in Labrador West.
But they've had to hire another contractor to finish the job.
They don’t know where the money will come from.
"Our labour costs right now have added up to over $50,000, and that's just labour alone," Goulding said.
Customers in Labrador City, Wabush
ADDAHome signed up to do big renos — and small ones — for customers in Labrador City and Wabush.
Joella Hynes also hired the company. She paid a big deposit up front. The work was never finished.
She fired ADDAHome and hired another contractor, and believes she’s out $25,000.
Warrick George retained the company to redo his driveway. He paid the full cost of $7,000 in advance. His existing driveway was torn up, but no further work was done.
The company has since sent him a letter promising a 50-per-cent refund, but George is not optimistic.
"Sometimes you're too honest and naive, too, I guess," George said.
"But I've learned a valuable lesson out of this. I just hope that other people learn a lesson, maybe."
Brown and Goulding also received a letter from the company, saying all of its workers have quit and ADDAHome can’t finish the job.
But the firm insists 70 per cent of the reno is finished, so there's no need to refund the tens of thousands of dollars they already paid.
Sheaves and Vallis got a letter too. ADDAHome says it owes them $25,000 and is trying to sell assets to raise the cash.
And CBC News has obtained a letter sent by ADDAHome to its own workers. It says the company has no money to pay them.
Company response to complaints
Bill Dormody is the ADDAHome contractor who made all the promises in western Labrador.
Dormody didn't want to do an interview, but provided written statements to CBC News.
He acknowledges the problems in Labrador, but says there was "nothing sinister" about it.
He says the business failed.
Dormody told CBC News he took out a start-up loan of $100,000 to expand his business.
He says he then spent more than $250,000 on flights and accommodations for his workers in Labrador City.
But he says he couldn't keep qualified staff. The cost of doing business in Labrador West became too high, and within six months, he admits, the quality of work slipped.
Dormody maintains his company has a lot of equipment and assets, and those will be sold to raise the cash to pay back customers and suppliers who are owed money.
Previous problems in central Newfoundland
But a CBC News investigation has found that ADDAHome’s problems began long before the company went to western Labrador.
The company is facing lawsuits in Newfoundland seeking more than $400,000 in connection with a subdivision plan for Grand Falls-Windsor that never materialized.
The development — an adult-living community called Parkview Village — was announced in early 2011.
ADDAHome planned to build 20 four-unit buildings. At the time, the company said people were lining up to buy.
"We're pretty much just getting started, but we've found over the last while, everything that we're doing, it’s that way," Dormody told CBC News last year.
"As soon as we start, we have names coming at us right away for occupancy."
But there were problems getting the project off the ground.
Only three houses have been built, and at least five lawsuits have been filed against ADDAHome related to Parkview Village.
One company, Max's C-Stores Ltd., is suing for $39,000 for flooring and related construction materials.
Another, K.D.J. Enterprises, is seeking $216,000. In court documents, that company says it was never paid for the site excavation and water and sewer hookups.
K.D.J. Enterprises has also named ADDAHome as a third-party in a suit from a concrete company for not paying its bill. That one's worth $37,000. K.D.J. says ADDAHome should be on the hook for payment.
The Grand Falls-Windsor council is also suing ADDAHome and its owners for $27,000 for not paying the town for expenses incurred for the new subdivision.
The town alleges that an irrevocable letter of credit provided by the company was "not valid."
Those claims, totalling more than $300,000, have not been proven in court.
But a judgment has been entered against ADDAHome in another lawsuit linked to the subdivision development. A judge has ordered the company to pay $98,000 to P.K. Kennedy Investments for building materials.
Meanwhile, ADDAHome's lawyer has quit; the company says it couldn't pay the fees.
With more than $400,000 in lawsuits wending their way through the courts in Newfoundland, ADDAHome customers in Labrador aren't confident they'll ever see any of their money.
Kris Brown and Candace Goulding have filed a claim in court against the company. So has another customer from Wabush.
Meanwhile, ADDAHome is insisting that everyone who is owed money will get it back, when the company can sell its assets.
Dormody says Parkview Village is valued at close to $600,000. In addition, he says, the company has other land in Grand Falls-Windsor that is valued at close to $1 million. "Both properties are for sale," he wrote in an e-mail to CBC News.
According to real estate listings, land at Parkview Village is on the market for $449,900. ADDAHome has another 28-1/2 acres in Grenfell Heights up for sale for $749,000.
Both parcels of property have been listed for nearly a year.
CBC News asked ADDAHome officials why they expanded to Labrador while they faced a series of lawsuits related to their flagship project back in Newfoundland.
Dormody indicated that the company "went to Labrador to earn some operating capital to assist with further development of Parkview Village."