A former chairman of Johnson Executive Search is reportedly seeking damages for over $1 million, claiming he was unfairly dismissed from his role.
Colvin was with the business until October 2013, and believes the company had no right to end his appointment abruptly, the Australian Financial Review reports.
Colvin’s barrister John Fernon SC told the court Colvin believed the termination had been driven by an “ulterior purpose” to avoid paying him entitlements under a phantom equity scheme, the AFR said.
Johnson Executive Search reportedly alleges Colvin was trying to “steal clients” to set up a similar business, that he copied electronic files, had been actively promoting his business and was trying to poach staff. Colvin is said to strongly dispute the allegations.
According to the newspaper Colvin is seeking payment for three months’ notice of termination, plus an additional growth component.
Colvin applied to the Supreme Court of NSW on March 5 to have the company’s assets frozen, the AFR reports. It was reported that the court ordered $500,000 be secured in a solicitor’s account, along with 12% of the future sales distributions from September 2014 onwards, until the balance reaches $1,143,480.
Judge Paul Brereton ordered Colvin to file a statement of claim, dismissing his request for a preliminary discovery application.
Colvin was formerly chief executive of law firm Blake Dawson Waldron and joined Johnson Executive Search in 2010.
In a statement issued to SmartCompany, Johnson Executive Search says it “refutes the allegations that Mr Colvin has made to date in connection with the termination of his employment by way of his application for preliminary discovery”.
“Mr Colvin was ordered to pay Johnson Executive Search’s legal costs when the Court dismissed Mr Colvin’s application for preliminary discovery,” the statement said.
“The orders relating to the setting aside of an amount of $500,000 and a percentage of future sales distributions were made by consent, and at the instigation of Johnson Executive Search.
“In circumstances where Mr Colvin is yet to initiate proceedings against Johnson Executive Search by way of a Statement of Claim in accordance with the Court’s orders of 19 March 2014, it is inappropriate to comment further on the matter at this time.”
The claim follows the recent sale of Johnson Executive Search to New York-based executive recruitment firm CTPartners earlier this month.
In the deal Johnson Executive Search would receive an upfront payment of $2.4 million, with the undisclosed balance paid over six or seven incentivised instalments over three years, based on revenue growth.
At the time Johnson Executive Search founder Jason Johnson told SmartCompany CTPartners first approached Johnson three years ago, but the timing was “too premature as we had latent potential to develop”.
“We were able to grow our revenue in those three years, and in October they re-engaged and we did a deal over December/January and we signed on Friday,” he said.
Johnson would become an employee of CTPartners, but remain as the managing partner of the Asia-Pacific region.
Johnson Executive Search was established in 2005 to provide executive search and leadership services across Australia and the Asia-Pacific region.
Johnson said the acquisition by CTPartners would enable the business to support the international executive search ambitions of its clients, and help it accelerate towards being a $20 million business.
SmartCompany was unable to contact Colvin this morning. A hearing date for the case has not been confirmed.