Dhaliwall v. Hook Restaurant Ltd: earning sweaty equity in the restaurant industry

In July, 2021, following a four day trial, the Supreme Court of British Columbia released reasons for judgment in Dhaliwall v Hook Restaurant Ltd. The plaintiff Kayla Dhaliwall is a professional chef. The defendants were three restaurants in Vancouver: Hook, the Blind Sparrow and Bartholomew, where Ms. Dhaliwall acted as executive chef. The reasons for judgment can be read in full here.

At issue in Hook Restaurant was whether or not Ms. Dhaliwall and the defendants had reached a binding agreement with respect to her earning a “sweat equity” interest in the to-be-opened restaurant Bartholomew, and whether as a fall out from those negotiations (which the court found did not result in an enforceable agreement) she quit her employment with the defendants or was terminated.

Unfortunately oral agreements, never properly reduced to writing, are common in the hospitality sector. They are also notoriously difficult to enforce.

In Hook Restaurant the outcome turned largely on the court’s weighing and assessment of oral agreements and incomplete written records. The trial judge concluded that Ms. Dhaliwall and the defendants’ representative Mr. Gayman at best reached “an agreement to agree” on an ownership interest in Bartholomew which is not the same as an enforceable contract.

However, the court did find in Ms. Dhaliwall’s favour that she was wrongfully dismissed from her employment with the defendant restaurant group, who the judge found to be a common employer, and that she was entitled to damages in lieu of seven months’ reasonable notice. The court awarded Ms. Dhaliwall further compensation in the amount of $7,000 on account of contributions she made towards the eventual the opening of the Bartholomew restaurant. The facts of the dispute are summarized below.

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