UK Construction and Law

A freezing injunction capped at 1.5 million pounds will run to trial after a development joint venture broke down

By Staff Writer  |  1 September 2026

A lender who put money into a stalled residential scheme says he was promised half the developer and a preserved director's loan account, and got neither. A construction cost baseline of 970,242.99 pounds became an estimate of 1.5 to 1.6 million pounds, requests for arm's length contract documents went unanswered, and the property was sold without his consent. The High Court has continued the freezing injunction until trial.

Development joint ventures are usually documented lightly at the front end and argued about heavily at the back. A judgment handed down on 13 August sets out how one went wrong, and it reads as a checklist of what a funder ought to insist on before the money moves.

The claimant had lent to the company that owned the site, advancing some 597,000 pounds in twelve tranches between January 2022 and October 2023 against a loan note, a debenture and a charge ranking behind the primary lender. That company could not finish. He was then introduced to two men acquiring the property, and what he calls a joint venture was discussed.

The terms he says were agreed

On his case he was to become a director and a 50 per cent shareholder in the acquiring company, put in 400,000 pounds of new money, half as loan and half as equity, and keep the earlier 600,000 pounds alive as a director's loan account. Heads of terms exchanged in February 2024 recorded the earlier loan being treated as a loan to the new company. He paid a 40,000 pound deposit in March 2024 and entered a loan agreement for the 200,000 pounds later that month.

Because 200,000 pounds of the new money was equity rather than debt, the total lent was 263,000 pounds. Added to the disputed 600,000 pounds, the aggregate debt claim cannot exceed 863,000 pounds plus interest. Only the 600,000 pounds is challenged by the respondents. Despite requests, he says no shares were ever issued to him.

Costs that moved and information that did not

The construction cost baseline prepared in October 2023 put the total cost to completion at 970,242.99 pounds. Once the new parties were involved that became an estimate in the region of 1.5 million to 1.6 million pounds. The claimant asked for independent quotations and for sight of any arm's length building contract. He did not get them.

From August 2025 costs escalated further. A request for an independent audit was refused, and what he received instead was high level information only. In September 2025 he was told, without being consulted, that the property would be sold on completion to a local authority for 3.9 million pounds. In October he was told another 2.1 million pounds was needed to finish. In December he was told the total project cost would be 3.8 million pounds, and only then that another lender held a charge on the property.

Earlier in 2025 there had been an outstanding community infrastructure levy liability, and the primary lender had refused a further drawdown until it was paid. The monitoring surveyor was shown an email appearing to come from an officer of the local authority stating the levy had been discharged. He checked. No such email had been sent and the liability was outstanding. The respondents say the claimant proposed the scheme and they went along with it.

Why the injunction stands

The court found solid evidence of a real risk of dissipation in five things: transfers out of the company's accounts to avoid legal process despite the claimant's stipulation, the circulation of and reliance on that levy email, a denial of knowledge of agreements the respondent had himself signed, the closure of the only bank account the claimant could see, and a payment of 125,000 pounds to one respondent personally after completion without his knowledge. Net transfers of 390,000 pounds moved between companies in May 2026.

The cap on the injunction is 1.5 million pounds, which reflects the debt claim for 863,000 pounds plus interest and the costs of the proceedings to trial. The claim is a substantial one, and I am satisfied that the injunction is a proportionate response to the evidence presented to the court.

His Honour Judge Paul Matthews

An argument that delay undermined the case for a continuing risk did not succeed. The claim was first put forward in February 2026, the sale completed in April and the application was not issued until 26 May. The court accepted that this was a complex matter and that a premature application might have failed and prompted more elaborate steps.

The practical lesson is in the paper trail. Shares that were never issued, a building contract never produced, an audit refused and one visible bank account closed are not, individually, dishonesty. Put together in evidence they were enough to tie up 1.5 million pounds until trial.