A messy business sale, a fired adviser, and a six-figure dispute over client retention and compliance - that is what played out in a New South Wales courtroom on Aug. 27.
The Hamilton Family Trust, trading as Hamilton Insurance & Investments Services, took Infinity Wealth & Financial Services to court, chasing $103,162 it claimed was still owed after selling its financial planning business. The deal, signed on September 11, 2018, and commencing October 8, 2018, called for an upfront payment of $200,000 and a job for Ian Hamilton, the face of the business, as an authorised representative at Infinity. But the real sticking point was the two “earnout” payments - each capped at $51,581 - meant to land in Hamilton’s pocket if he stayed on and at least 80% of the clients on a specified list remained with the business on each of two future dates.
Things quickly unraveled. By March 2019, Hamilton was out, terminated after a series of incidents that raised concerns at Infinity. The company pointed to small cash payments Hamilton accepted from people he gave advice to, fees directed into his personal account, and transactions on client accounts without the proper authority or documentation. There was also the matter of assisting clients with tax matters for which he wasn’t licensed. Infinity, concerned about compliance and its obligations to regulators, decided to end the relationship.
Hamilton didn’t go quietly. He argued that Infinity had an obligation to act reasonably and keep him on, at least long enough for him to qualify for those extra payouts. He said the company’s decision to fire him was unreasonable and cost him the chance to collect the full earnout. But the court wasn’t convinced.
The judge examined the contract and the facts. The agreement was clear: no extra payments unless Hamilton was still employed and at least 80% of the original clients were still with the business on the relevant dates. There was no evidence provided to show that the client retention target was met. And as for keeping Hamilton on just to trigger the payout? The court found Infinity wasn’t required to do so if there were genuine concerns about his conduct.
The court found that Infinity acted for legitimate business reasons and did not breach any implied duty of reasonableness or good faith. The contract spelled out what needed to happen for those earnout payments to be made, and those conditions simply weren’t satisfied. The judge also noted that any dispute over the calculation of the earnout should have gone to an expert, as the contract required, but that never happened.
No insurance policy clauses were at the centre of this dispute. Instead, it all boiled down to the details of a business sale, the importance of compliance, and the risks that come with adviser conduct and integration.
In the end, the court sided with Infinity, leaving Hamilton Insurance & Investments Services without the earnout and ordered to pay costs. For insurance businesses, this case is a reminder: when selling or buying a book, make sure your contracts are clear, your compliance is in order, and your advisers follow the rules. The fine print matters - and so does sticking to it.
