Calgary

11 Calgarians say they lost $420K to 'nightmare' contractors with little hope to get money back

Eleven Calgarians say they've collectively lost more than $420,000 to a pair of "nightmare" contractors — and most say they have no hope of seeing their money again.

When home renovations go awry, clients left with few good options to take action

Damir Hrustanbegovic, left, and Sean Hlushak, right, of Fresh Contracting. CBC News has spoken to 9 people who say they paid the company for work that was never completed, and two subcontractors who say they are still owed for their services. (Submitted)

Eleven Calgarians say they've collectively lost more than $420,000 to a pair of "nightmare" contractors — and most say they have no hope of seeing their money again.

CBC News first reported on Nov. 21 four allegations against Damir Hrustanbegovic and Sean Hlushak, with Fresh Contracting and Construction. 

Clients say the duo lied about progress, didn't complete — or botched — work, and neglected to pay subcontractors.

CBC News reached out to Hlushak and Hrustanbegovic multiple times before the initial story was published and has continued to reach out since regarding new allegations and has yet to receive a response.

Since then, more people have reached out to CBC News to speak about their experiences with Hrustanbegovic and Hlushak: five more clients who say they were ripped off and two subcontractors who weren't paid for work.

Some have pursued legal action, others have reported the duo to the city or province, but none have recouped the money they've lost so far — other than one client, who was successfully able to convince the pair to finish a renovation in 2018 by threatening them with a lawsuit.

All expressed confusion and frustration over how they can best seek justice.

'A lot of questions'

One client, whom CBC News has agreed not to name because she would like to keep her personal health issues private, hired Fresh in September 2018 to renovate her new bungalow so it would be accessible, after a recent diagnosis of multiple sclerosis. She paid Fresh more than $110,000 and then paid other contractors $50,000 to finish the job, which is still in progress.

She hired a lawyer, who wrote up a demand letter, pushing Fresh to finish the work and challenging how the company had persuaded her to pay a deposit — something only provincially licensed companies require.

"They said, oh yeah, we have [a Service Alberta licence], we have proof of that. But what they sent us … was just the application form that goes to Service Alberta," she said. "It wasn't an actual licence and it wasn't even signed by anyone."

Were they manipulating us or were they just really bad business guys and they got themselves in trouble?- A client of Fresh Contracting

Fresh had said the work would be complete by January. When it wasn't, the client asked if they were busy with other projects. Yes, she said Hrustanbegovic and Hlushak told her. They said they were working on 16 other jobs.

Since her home was gutted, the client and her family had to move into an in-law's basement — meaning she, despite pain and mobility issues, had to navigate flights of stairs each day for months. 

"MS symptoms are often triggered by stressful situations … there's shooting pains, nerve pain, a lot of mobility issues, and then lack of sleep compounds things," she said.

She added she ended up in the hospital more than once from her symptoms while she was out of her home.

"It was just a lot of questions. The emotional upheaval of thinking, are we stupid? Were they manipulating us or were they just really bad business guys and they got themselves in trouble?"

'Theft with a smile'

A contractor's behaviour can cross over from civil to criminal, police said, if their actions meet certain criteria which can be tricky to prove.

Sgt. Matt Frederiksen of the Calgary police economic crime unit said people should always reach out to police if they feel they've been the victim of fraud.

"We look at it, if it's something we can pursue, if there's enough evidence and that substantiates, you know, that the criminal offence occurred, then it's something that we can move forward with," Frederiksen said. 

That evidence needs to show the contractor was intentionally deceitful or used falsehoods with the intent of defrauding a client — or as Frederiksen describes it, "theft with a smile."

"That's where the challenge comes in is sometimes the ability to show that's what they actually intended to do versus just poor business practices or something … it really comes down to intent," he said.

Fresh Contracting has not been charged criminally in this matter.

One client said Fresh Contracting's lawyer sent this form as proof Hlushak and Hrustanbegovic were licenced by Service Alberta to accept deposits. However, the form was simply an unsigned application form — not an actual licence. (Submitted)

Frederiksen said police get about 14 fraud reports every day but contractor or regulatory fraud reports are not very common, and many fall into regulatory or civil action.

"We're not always the answer, unfortunately, but we'll try and guide people to a more appropriate response if it's not criminal," he said.

Clients who feel ripped off can choose to go the civil claims route and sue. This client didn't, because her lawyer advised it could take years and she may not ever get her money back. But another client, Tyler Chandler, did sue.

Chandler hired Fresh in January to remodel his bathroom and install heated flooring, but after months of issues, he filed a civil claim against Fresh for $11,000 in July. 

"They were only supposed to do the tile and the drywall. Instead, they ripped out the entire bathroom … it was just headache after headache because they kept doing everything wrong," Chandler said. "We requested all of our money back and they didn't respond."

Kurt Wulff is in a similar spot. He's preparing to sue for $27,000 after Fresh was hired by his company to renovate water-damaged apartments. He said the quality of the work was "horrific," and the contractors left units unlocked, windows wide open in –5 C weather and floors coated in half a metre of blown-in insulation.

Kurtt Wulff said Fresh Contracting left apartments they were hired to renovate unlocked, with windows open and the floors covered in piles of blown-in insulation. (Submitted)

Suing can be a lengthy process that doesn't always end with a tidy resolution even if an applicant receives a judgment in their favour.

That's where Chandler is at. On Oct. 7, a default judgment was made in his favour as Fresh didn't appear, but he said he's still waiting to be paid what he's owed. His bathroom is still gutted and bathtub cracked by the contractors' shoddy work, he said.

At 'a standstill'

"Now we're kind of at a standstill. The Canadian justice system … they haven't really done anything for us," Chandler said. 

If a person found to be owing doesn't pay up, it's on the person who filed the claim to collect that debt — either through applying for their money to be garnisheed or their property seized.

"We've kind of come to terms that we're not going to get any money back. The problem is the company isn't tied to their house and I don't think they have any other assets," Chandler said.

"We went to police headquarters the other day and they basically said it's a civil matter. I kind of questioned them, how you can scam people out of [hundreds of thousands of dollars] … and it's considered a civil case?" Chandler said.

He also raised concerns about one family's allegation that Fresh Contracting put lives at risk by leaving a propane tank that later leaked in a pile of tools in their attached garage.

Frederiksen, with Calgary police, said he can't comment on specific cases. But he said penalties for unsafe contracting work can range from regulatory service violations to fraud charges for representing skills under false pretences.

Tyler Chandler shared these photos of the mess he said Fresh Contracting left in his bathroom. (Submitted)

Both the province and city say clients should report bad contractor experiences so they can be investigated by the relevant government authorities.

Hrustanbegovic and Hlushak are now facing charges from the city for allegedly operating while unlicensed and not meeting bylaw standards. According to the city, they were licensed from 2015 to mid-2019 but they failed to renew.

City investigators began to look into the matter after reading CBC's story, and are in the process of investigating at least seven complaints. The city has urged others with similar experiences to contact 311. 

The corporation and both directors have each been charged under municipal bylaws with operating without a licence and failing to meet standards. None of the allegations as of yet have been proven in court. The court will determine fines for each charge, if they are found guilty, which can range from $1,000 to $10,000.

Service Alberta has said it can't speak to any investigations currently underway but urged those with bad experiences to contact the province's Consumer Investigations Unit.

Information on how to file a report can be found online or by calling 1-877-427-4088. A list of enforcement actions against contractors who have been investigated and found to have breached legislation is available on the agency's website.

While the Consumer Investigations Unit has a variety of enforcement actions available, from warning letters to fines, it's not responsible for recovering financial losses or enforcing court orders.

How to protect yourself?

Nancy Peterson said she can relate to some extent to what Fresh's clients have been through. The founder and CEO of renovation review site HomeStars has dedicated her career to helping others avoid bad experiences.

Peterson said the first step should be doing research — even asking the contractor to connect you with past clients — before getting multiple quotes to compare.

"If you're not feeling comfortable and they're not making you comfortable, you should just stop in your tracks right then and there," she said. "When it comes to hiring anybody … go through a test, you know, 30 to 60 days, and see how you're working together. And if it's not working out, it's a good time to cut bait quickly, before you run into deeper problems."

Peterson also suggested brushing up on local regulations.

For example, clients don't need to provide a deposit or prepay for work unless their contractor is licensed through Service Alberta. Albertans can search online to check if a contractor is licensed.

Contractors are also required to hold a valid business licence with the City of Calgary, which can be verified on the city's website.

The provincial government recommends taking the following steps when hiring a contractor:

  • Get a written estimate, including a complete description of work and materials, the project start and end dates, itemized costs, a statement of any guarantees and method of payment.
  • Make sure contractors and tradespeople are qualified and have Workers' Compensation Board coverage. 
  • Check if permits and inspections are needed, and if so, at what stages.
  • Insist on a written contract, and consider having the contract reviewed by a lawyer.

Once the work is completed, the city suggests before you make your final payment to your contractor, check the title on your home for a builder's lien to make sure suppliers and subcontractors have been paid as promised. 

About the Author

Sarah Rieger

Reporter

Sarah Rieger joined CBC Calgary as an online journalist in 2017. You can reach her by email at sarah.rieger@cbc.ca.

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