Edmonton homeowner who spent $77K to fix sinking porch suing builder, warranty providers

An Edmonton woman is hoping to recover the tens of thousands of dollars she spent fixing a sinking front porch and balcony of the home she had built less than a decade ago.

Sheila O'Kelly, 72, says the more-than-two-year battle has affected her health and she has had to take money out of her retirement savings to pay nearly $77,000 for repairs and hire professionals. 

As new residential construction projects soar in Alberta, O'Kelly's story illustrates some of the potential challenges homeowners can face and the long roads to resolution. O'Kelly said navigating the new home warranty process was challenging, requiring many phone calls and requests for reports. 

"It's not something I need at this stage of my life or anything that I would have even imagined could happen, but at the same time, I know that I have to take it on because if something's not right, you simply have to fight for what is right," she said.

O'Kelly alleged in a statement of claim filed with the Edmonton Court of King's Bench that the builder breached their agreement and was negligent in performing the patio work. A separate claim against the warranty providers accuses them of breaching the building warranty policy.

O'Kelly's claim against the builder said she hired Paramount Home Builders in 2015 to build a two-storey home in Garneau with a porch and second-floor balcony and she moved into the home in 2016.

She launched the lawsuits against the companies in 2023. 

Her claims have not been proven in court and the companies are denying the allegations.

She is seeking damages for $100,000 in each case.

Reporting concerns

According to her statement of claim against the builder, O'Kelly reported her concerns about the porch and balcony pulling away from the house to her builder in the spring of 2022.

The claim said the builder visited the property, "acknowledged the defective patio" and offered to find a contractor to repair it at her expense. 

O'Kelly told CBC News she submitted a claim to her home insurance company, which retained a forensic engineering company, CEP Forensic, to provide an opinion about the cause of the porch movement. 

O'Kelly shared the engineering report with CBC News.

The September 2022 report said the exact mechanism of the foundation settlement could not be determined but the movement was "likely due to construction-related deficiencies, such as inadequate foundation depth or installation."

A claims adviser from TD Insurance told O'Kelly it does not insure the cost of correcting faulty design, material or workmanship or damage caused by ground movement. 

"This would be classified as a structural component, so it should fall under new home warranty," the adviser wrote in the Oct. 11, 2022 email.

New home warranty claim

Under the New Home Buyer Protection Act, all new homes built in Alberta must have minimum warranty coverage. It covers defects in materials and labour for one year, defects related to delivery and distribution systems for two years, building envelope protection for five years and problems with major structural components for 10 years. 

In September 2022, O'Kelly submitted a claim for structural defect coverage to Progressive Home Warranty Ltd., the administrator of her new home warranty policy with Echelon Insurance.

She said an engineer from Read Jones Christoffersen (RJC) visited the house that fall.

The engineer speculated in a report prepared for Progressive Home Warranty that the porch moving down "may be due to either the piles settling a larger amount than the house itself" or "vertical crushing or deterioration of the wood posts or built-up beam supporting the north edge of the porch."

After a follow-up review, the same engineer said further observations did not change the initial assessment.

O'Kelly shared the RJC reports with CBC News and her statement of claim against the warranty providers mentions the two reports. 

O'Kelly said Progressive Home Warranty Ltd. told her the claim would not be covered by warranty.

A closing report she received in February 2023 said there was no identified failure of a load-bearing part that "materially and adversely" affected the residential use of the new home. 

The report also said ground settling and subsiding underneath deck pilings was a coverage exclusion under the policy.

O'Kelly filed a statement of claim on July 6, 2023 in the Edmonton Court of King's Bench against Paramount Builders Inc. She also filed a statement of claim on the same day against Echelon Insurance and Hub Warranty Ltd., the company that acquired Progressive Home Warranty Solutions Inc.

Last year, O'Kelly paid for repairs herself — work that included, according to her statement of claim against the builder, removal and replacement of the steps, reconstruction of the lower porch and upper patio, and repairs of the path, stucco and landscaping.

The work began in June and lasted until early September 2024, she said.

During that period, O'Kelly hired Banack Engineering to review design plans and inspect the front entry during demolition of the stairs and main floor landing.

In an August 2024 report, which she shared with CBC News, the company concluded the primary reason for the settlement of the front landing and balcony was improperly installed helical screw piles.

The engineer wrote in the report that the installed piles' locations were significantly different from the design locations and were providing very little direct vertical support to the concrete landing structure. 

O'Kelly said RJC visited the home again, in the summer, but she did not receive a report on that visit.

Companies deny allegations

Paramount Builders Inc. and Echelon Insurance and Hub Warranty Ltd, the warranty providers, filed statements of defence in the lawsuit in August 2023. 

Paramount Builders Inc. said in its statement of defence that the company denies all of the allegations.

The company denies it was negligent or in breach of contract. The company denies the patio was defective, but if it was, said the loss and damage was caused by the structural engineer retained to design it and the subcontractor hired to install the screw piles.

The warranty providers have also denied the allegations in O'Kelly's statement of claim against them, saying her claim for structural defect coverage was denied pursuant to the terms of the policy. 

The warranty providers, according to their statement of defence, reviewed the engineering report O'Kelly provided and concluded her claim did not constitute a structural defect under the terms of the policy.

CBC News requested comment from the builder and the warranty providers, as well as their lawyers. 

A spokesperson for Echelon Insurance said the company could not discuss details of a matter in litigation for privacy reasons.

The province's public registry of builder and property information shows the person in control of Paramount Home Builders Inc. is director Dan Daly. He did not reply to requests for comment.

Common problems

Michael Bokhaut, a construction lawyer and partner with Carbert Waite in Calgary, who is not involved with O'Kelly's case, said stories like hers are very common.

He said structural issues are among the disputes he sees the most often, along with problems with wall siding, roofs and attic rain. 

Bohkaut said homeowners may think that since they have insurance, problems will be covered, but the new home warranty coverage covers only specific parts of the home.

He said new homebuyers who discover problems should document them thoroughly and show their logs of problems, with photographs, to their builders and warranty providers. 

"The best way to deal with both parties is to be really specific and really well-documented," he said. 

Since the cost of a lawsuit can easily exceed $30,000, Bokhaut said, homeowners should weigh the costs and benefits before going that route and be mindful of time limits. 

Most lawsuits end in a settlement, he said.