Handshake agreement in Greek restaurant doesn’t hold up in court

Leong & Associates Actuaries and Consultants Inc. v. Watt, 2003 CarwellBC 3135, (B.C. S.C.)

Julian Leong, an actuary, decided to hire William Watt, a financial planner. They decided Watt would fold his company into Leong’s business and Watt would receive shares in Leong’s business.

But Watt said no agreement was ever reached, even though he joined Leong’s Vancouver firm and the two assumed they would eventually come to an agreement. After dinner at a Greek restaurant, Leong said the two shook hands and said “it’s a deal.”

He said the agreement included Watt starting on Aug. 1, 1995, at $65,000 a year and a decision to swap shares. Watt says no deal was finalized, and that he always shakes hands with friends when he leaves them.

Watt began working for Leong and the two businesses merged. There was no paperwork outlining the transaction.

Over four years the subject of the “agreement” came up a number of times in casual conversation. The relationship between the two partners began to sour in 1999. Watt began to back his company out of Leong’s company, removing Leong as a director of his firm and removing his financial records from the premises.

In May 1999, Leong outlined to Watt exactly what his shareholding interest was. Later that day, Watt became ill and ended up in the hospital.

When Watt’s wife tried to pick up his paycheque, she was put off by Leong who said his wife had the cheque and wasn’t around. Watt informed Leong that by not paying him, “in effect you have fired me.”

Leong said it was clear he owned Watt’s business and no bonus money was due because Watt was not employed at the time of the bonus payout.

The court decided that although nothing was in writing there was a common expectation that Watt’s business would be folded into Leong’s.

But the court said because important details, such as share calculations, had never been finalized there was no binding agreement. The court dismissed Leong’s claim for damages based on breach of contract.

Leong and Watt each claimed they had spent time and money on the other’s business. The court used Watt’s time sheets to determine he spent 85 per cent of his time on Leong’s business, and awarded him $45,000 in salary and bonuses.

The court said Leong had spent about $25,000 a year for three-and-a-half years on Watt’s business, as well as other money, for which Leong was entitled to be reimbursed. The court ordered Watt to pay Leong $74,093.26 plus reimbursement for some legal expenses.

The court found Watt had been wrongfully dismissed and Leong should have paid him when his wife asked for the cheque. Watt was awarded outstanding wages of $2,708.33, as well as $10,833 salary in lieu of two months’ notice, plus bonus money of $10,000.

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