Willis Australia has filed legal action against a former director of Perth-based brokerage CKA, which it bought for about $95 million, following the loss of clients and employees to his new firm Unicorn Risk Solutions.

The writ filed in the WA Supreme Court, naming Edwin Pope as first defendant and Unicorn as second defendant, alleges breaches of a share sale deed, an employment contract and the Corporations Act.

Mr Pope and Unicorn will fight the allegations.

“The claims brought against me and Unicorn Risk Solutions are spurious and will be defended,” Mr Pope told insuranceNEWS.com.au. “However, as the matters are now the subject of Supreme Court proceedings, we will not be making any further comment at this time.”

Mr Pope was a CKA director from September 4 2008 until August 19 2015, when Willis Australia bought the firm. He continued as a CKA employee and Willis officer until handing in notice in October 2018 and ending his employment on March 29 2019.

Under the CKA share sale deed, Mr Pope was required “not to engage or be involved in, or interested in” any broking business until August 19 2020, either directly or indirectly and whether as a partner, joint venturer, financier, shareholder, employee or consultant.

Willis says Mr Pope’s employment contract also contained a confidentiality clause and post termination restraints. The writ alleges Mr Pope breached obligations to use confidential information solely for duties as a CKA employee and breached Section 183 of the Corporations Act due to actions that benefited Unicorn while causing a detriment to CKA and Willis.

Unicorn was incorporated on May 6 last year when Mr Pope became a director and registered shareholder, and since August 20, Unicorn has operated as a Perth-based broker in direct competition with CKA and Willis Australia, the writ says.

Willis alleges Mr Pope “participated in and caused or procured” that Unicorn take preparatory steps toward starting its broking business before the end of the restricted period on 19 August 2020.

The preliminary steps from “at least” May 6 to August 19 allowed Unicorn to start its broking business on August 20 and to approach and obtain clients and employees some 15 weeks earlier than would have been the case if Mr Pope “had complied with his obligations” under the share sale deed, it says.

Losses alleged include commissions in the15-weeks from August 19 to December 2, loss of the opportunity to embed relationships with lost clients through the renewal process and thereby retain them, and the loss of key experienced mining insurance brokers in a “shallow talent pool” in WA, thereby limiting the ability to service and grow the portfolio.

Willis and CKA also highlight costs related to procuring and training new employees at a time when Australia-wide and international recruitment had been restricted due to COVID-19, increased benefits paid to retain existing employees and recruitment fees.

The case is listed for a hearing on August 26.