Calgary cafe owner faces bankruptcy, shop closure after $100K contractor nightmare

A Calgary cafe owner is facing personal bankruptcy and has been forced to close her newly opened dream business due to what she describes as a nightmare experience with her general contractors — she and three other clients are speaking out to warn others to steer clear.

Sarah Byers hired two contractors, Sean Hlushak and Damir Hrustanbegovic of Fresh Contracting and Construction, to complete $100,000 of work at her new business, Dilish Bites 'N Brews, in northeast Calgary.

That was in February and the work was slated to be complete by the end of March. After months of delays, the shop opened just eight weeks ago. It closed on Wednesday and she's looking for a potential buyer.

"We're literally at the point of claiming bankruptcy because these guys put us in such a bad position to start a business … we don't have money to pay our employees. We had money saved in the bank to run the business for six months," Byers said.

"We're just in the worst position we could ever imagine being in."

I had lots of savings. A good plan in place … and obviously that was ripped away. - Sarah Byers, owner of Dilish Bites 'N Brews

Byers said the two contractors completed only 30 per cent of the work (some of which was done so poorly it had to be redone), were uncommunicative or lied about progress, and did not pay subcontractors or buy the majority of promised equipment and supplies.

"We really don't know what they did with any of the money … in terms of the work done, nobody was paid," Byers said.

CBC News has reached out multiple times to Hlushak and Hrustanbegovic by phone, email and social media and has yet to receive a response. Emails sent to addresses registered to the business bounce back, and the company's Facebook page, website and Hlushak's LinkedIn page were deleted after CBC News first reached out.

Byers has filed a legal claim against the pair.

Hala Ghonaim/CBC

"The parties have been noted in default. They've filed no defence to the allegations … essentially the allegations against them are undisputed at this time," said Byers's lawyer, Faizan Butt. 

Byers had planned her life around starting her new business — even scheduling the shop's opening for four months before her pregnancy's due date, with the hope at that stage she could take a step back from the business and let employees take over so she could spend time with her newborn.

But the baby came early — due to stress and the hard labour working to open the shop herself, said Byers — and the opening date was repeatedly pushed back because work on the building wasn't done.

That left Byers scrambling to purchase and install materials for the shop that the contractors had told her were already purchased, get approvals for work that she had been told was already approved, and pursue legal action, all while caring for her newborn.

Submitted

Some subcontractors pitched in free work so she could open.

She's suing for $100,000 for work that was never completed, not to mention four months of lost profits and costs like the shop's rent, staff wages and a storage locker for equipment.

She lost wages from her engineering job she left early to open the business. Her 68-year-old mother also quit her job to help open the shop. 

"This is my dream, I still want the business to start," Byers said, fighting back tears. "I had lots of savings. A good plan in place … and obviously that was ripped away."

Other clients share horror stories

Byers posted about her predicament on social media and learned she wasn't alone.

Others said they lost tens of thousands of dollars they're not sure they'll ever get back — and one family said their lives were put at risk.

Elizaveta Smirnova and her mother, Svetlana Smirnova, hired Fresh Contracting in August 2018 to redevelop their deck and backyard, and create a walk-out basement. 

They paid Fresh Contracting $28,000 initially, but after a year's delay on a job that was quoted as taking three months, they paid another $6,500 to speed up the process to avoid legal action from their home owners' association due to the unfinished work.

Hala Ghonaim/CBC

The last time the Smirnovas heard from Fresh Contracting was in September this year. Their backyard was left a mess of torn-up dirt and piles of supplies.

What the Smirnovas didn't know was that the contractors had left a propane tank in a pile of tools, materials, cigarette butts and coffee cups, in their attached garage.

Elizaveta said one night, after putting her two young children to bed, she woke up feeling off. 

"I just smelled something really weird … I opened the garage door and I got this, I don't know if it was a smell or if the air was just weird, but I felt something. And then I started digging and saw the propane tank," she said.

She called 911 to report a propane leak and carried her one-year-old and five-year-old outside.

Elizaveta Smirnova

"Firefighters went down to the basement where my son and I would have been sleeping, and when they measured the levels … they said 'if you guys would have gone to bed that night … you wouldn't have woken up the next morning,'" Elizaveta said.

The Smirnovas had to pay another $12,000 to hire new contractors to fix the mess, bringing the total spent on the project to roughly $46,000. The new contractors finished the majority of the job in four days. 

"Our biggest issue is they're still out there. They're probably still going to do this to more people," Elizaveta said.

Absolutely horrible, a nightmare. - Frank Ventura, another client of Fresh Contracting

Another client, Yvonne Burtniak, has filed a $12,000 claim in small claims court after paying Fresh Contracting $17,000 since April to renovate a bathroom in her basement. She was able to recoup roughly $5,000 through her credit card provider.

She said initially things were going great. But over the summer, communication with the two men lapsed for more than a month. They eventually stopped by to apologize for the lack of communication in September, she said, and completed about three hours of small tasks like painting — but left two-thirds of promised work uncompleted. And she hasn't heard from them since.

"A mess. Debris, refuse of the stuff just left in a pile. They never cleaned up, pails of mud and grout just left," Burtniak said. 

Frank Ventura is in a similar position. He said he paid the pair $27,000 in May to develop a basement but only about 25 per cent of the work was completed. He's speaking to lawyers to determine a course of action going forward.

"Absolutely horrible, a nightmare to deal with … they said they used my money to do other jobs," he said.

Ventura, Burtniak and the Smirnovas all expressed qualms about the chances of getting their money back.

Byers has filed a police report but was told it was a civil matter.

Complaints can be filed with Service Alberta

Her lawyer said a common problem with cases like these is that contractors can use the civil litigation system to shield themselves from criminal liability.

"When clients are advised to get in touch with police, a lot of the time police don't get involved and they say it's a civil matter or contractual issue … it becomes kind of a significant problem because as lawyers we often do see matters beyond the civil scope. But unfortunately we're unable to threaten criminal proceedings or anything along those lines," he said.

Byers said that while she's hoping for justice, she's also hoping others can learn from what happened to her.

"Make sure you're doing your homework. Don't pay deposits unless they have a licence through the province. You don't have to pay a deposit," she said.

"We're in a hole we don't know if we'll ever come out of."

A Service Alberta spokesperson said the government does not comment on individual cases but urged anyone with concerns to file a complaint with its consumer investigations unit, either 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.