Scarborough Building Society is suing Tomlinson and Maynard for £350,000 after a £22 million takeover deal for Mortgage Next failed to go through. The two founders eventually sold the broker network to Freedom Finance back in February.
Scarborough’s solicitors Addleshaw Goddard has issued a writ claiming the building society spent £243,000 on external advisers and £102,000 internally as it prepared to buy Mortgage Next.
But one source close to the case said: “The lawyers on both sides are discussing the matter with one another. But this type of legal action happens all the time. The outcome will probably be that the issue gets settled out of court.”
Nigel Gardner, business development director at Genesis Home Loans which sold its business to Mortgages plc earlier this year, said: “It’s difficult to assess the case as you don’t know exactly how far Scarborough got in its plan to buy Mortgage Next but the indications are that they got quite a long way down the line. However, external advisers are expensive and the fees can be racked up fairly quickly. And the business being sold can pull out of a deal right up to the last minute.”
And Mike Fitzgerald, sales director at Brentchase Financial Services, commented: “If a lender is interested in a network it can spend quite a lot even if the deal eventually comes to nothing. But Scarborough is justified in taking action. It is a mutual society and has to look after the welfare of its owners.”
Scarborough Building Society, Maynard, Tomlinson and Freedom Finance declined to comment.
