A South Lakeland hotel group is celebrating after successfully taking court action against a leading high street bank.

Lakeside Inns Limited was awarded more than a quarter of a million pounds plus legal costs at Liverpool County Court following the legal action against Yorkshire Bank.

The company, which owns the Newby Bridge Hotel, and the Riverside in Kendal, claimed it had been mis-sold a loan by the bank when it bought the Damson Dene at Crosthwaite in 2000.

Lakeside Inns owner and managing director Jonathan Denby told Business Gazette his company took out a £1.2 million loan from Yorkshire Bank.

"After we borrowed the money, the bank came to me and said there was a new product that was cost-free and risk-free which would protect us from interest rates going above eight per cent. What the bank didn't tell me was that if interest rates fell below 4.6 per cent, we would pay eight per cent on the loan.

"When interest rates did fall below 4.6 per cent, about two years after taking out the loan, we found ourselves paying four per cent more than we expected to pay. And to get out of the loan, we had to pay a redemption charge."

After a three-day hearing last year, the judge, His Honour Judge Maddocks, sitting at the County Court, Liverpool, ruled in Lakeside Inns' favour and ordered Yorkshire Bank to pay the company a total of £258,000 - representing the amount of interest it over-paid plus interest on those payments - as well as the costs of the case.

Mr Denby told Business Gazette he was "highly delighted" with the outcome, adding: "We felt we had been badly misled and it was completely unjust." He said he had only been able to launch the legal action for misrepresentation because his solicitor, Ian Gee, of Jobling and Knape at Carnforth, had acted on a no-win, no-fee basis.

Mr Denby said if any other business thought it had been sold a similar loan by Yorkshire Bank, and wanted advice on seeking redress, he would be happy to assist them. He can be contacted on 01524-825454.

Yorkshire Bank said it was disappointed with the judge's ruling and was considering lodging an appeal. Media relations manager Peter Brown said: "We believe that both the bank and our staff acted properly throughout our dealings with Lakeside Inns Limited."