BMS Risk Solutions is involved in a Federal Court dispute over an “earnout” payment of more than $1 million related to its Gard Insurance acquisition two years ago.

Gard Insurance, including Ale Underwriting, was acquired through a share purchase deed completed in April 2023 that provided for later payments following fiscal 2023 and 2025 results.

A court document filed for Hairy Heifer – a company owned by two former Ale Underwriting executives – says broker BMS has failed to pay $1,058,457. The figure includes a $1,042,099 earnout for a stake held in Hairy Heifer’s own right, which represented 5% of Gard shares, and a $16,358 adjustment.

Hairy Heifer joint shareholders Dean Fiddes and Janelle Cox have also sought damages, as their statement of claim says they were “summarily dismissed” in breach of the Fair Work Act.

Mr Fiddes, who was Ale Underwriting MD and reported to Gard executive chairman Craig Patterson, had suffered a depressive mental illness from at least October 2023 and had requested assistance with his workload, the claim says. On November 27, Mr Fiddes provided BMS with a medical certificate stating he was unfit to work until January 8 2024 because of an exacerbation of his disability.

Ms Cox, who was Ale Underwriting executive director and in a de facto relationship with Mr Fiddes, said she had a family and carer’s responsibility to look after him.

The statement says BMS stood both down indefinitely on November 30 2023 and they were dismissed without notice on April 16 2024 for alleged serious misconduct, which is denied.

Mr Fiddes and Ms Cox each had a cash salary of $250,000 and were entitled to 12 months’ written notice of termination or to be paid in lieu of notice, according to employment agreements cited.

BMS, in a cross-claim, says in agreeing the share purchase deed Mr Fiddes and Ms Cox had represented that they would remain employed in the business for at least 12 months after transaction completion and would not take steps to compete with the business for three years.

The company says the representations were misleading or deceptive, as neither intended to keep the commitments, and it suffered loss and damage.

The cross-claim says that before entering the deed Mr Fiddes emailed law firm Eastern Bridge, saying: “This is all about Janelle and I now. Don’t care about Gard or Patto [Mr Patterson] ... Janelle and I need to understand our restraints and what holes there are to get out. We won’t be able to leave until the shares are revalued which will be 3-4 years”.

BMS says had it known at the time of agreeing the share purchase deed that neither intended to keep their representations, it would not have “been induced” to agree to terms including paying earnouts to Hairy Heifer in its own right, either at all or based on the calculation formula.

Hairy Heifer and Mr Fiddes had not met deed requirements on disclosing material circumstances relating to the shares, the company or the business, failing to notify BMS before completion that he and Ms Cox intended to end employment within 12 months, or Ms Cox’s intention not to perform “her substantive role as executive director”, the cross-claim says.

A Federal Court mediation scheduled for March 28 was “adjourned – continuing”.