Mortgage House owner ordered by Court to buy out former business partner

A long-running legal dispute between two former owners of mortgage broking chain Mortgage House has ended with the NSW Supreme Court of Appeal ordering current owner Ken Sayer to buy out the interests of his former business partner, Zoltan Tomanovic.

The long-running dispute between the two parties started in 2006, two years after Sayer and Tomanovic decided to split up their business partnership.

According to the judgement handed down this week by NSW Supreme Court Justices Joseph Campbell, Robert Macfarlan and Peter Young, Sayer paid Tomanovic $1.3 million in the form of a loan, between 2004 and 2006, but in December 2008 Sayer demanded this amount be repaid.

Tomanovic then launched legal action against Sayer, asking the Court to order Sayer to buy out Tomanovic’s 45% interest in Mortgage House’s parent company Global Mortgage Equity Corporation, or wind the company up.

In March last year, Tomanovic lost his case, and was instead ordered to repay the $1.3 million Sayer had loaned to him, and found that two agreements signed by the men were not binding.

But Justices Campbell, Macfarlan and Young upheld Tomanovic’s appeal and made preliminary orders that Sayer buy out Tomanovic’s 45% interest in Global Mortgage Equity Corporation at the company’s net value at June 30, 2010.

The judges found that an order to wind the company up would not be in the interests of either party.

The amount to be paid (which is still to be agreed by the parties) will take into accounts amounts previously transferred to Tomanovic for another business.

Costs were also awarded against Sayer.

Sayer was not available for comment this morning when contacted by SmartCompany.

Simon Gallant, partner at ERA Legal, says the parties will now work towards agreeing on a process by which the amount to be paid by Sayer to Tomanovic can be determined.

“It’s not over until the fat lady sings…We would hope from our side that commonsense could available that the considerable amount of money that would be spent on legal fees would frankly be better in the parties’ pockets.”

The parties have seven days to agree on the process, or if they cannot agree, 28 days to outline how they think the process should run.

Gallant says that if agreement cannot be reached after a month, there is still a chance the company could be wound up, although this is not preferable.

“If we are not going to get anything, we’d take what we could get from a winding up. [But] we would very much hope that it not necessary and the commonsense could prevail.”

Mortgage House, which was founded by Sayer in the 1980s, has more than 50 branches around Australia.