McLaren Construction has won a case over a £7.9m debt owed to it by a former chairman of Southend United Football Club and his development company.
The contractor served statutory demands on Ron Martin and his company Martin Dawn plc to pay the money, which related to a loan agreement made in October 2020, following a number of agreements between Martin’s companies and McLaren dating back to 2011.
But Insolvency and Companies Court judge Paul Greenwood concluded that Martin failed in his bid to set aside the statutory demands, and ordered the winding up of Martin Dawn plc.
In October 2020, Martin was considering building a housing development on a greenbelt site in Castle Point, Essex, and entered into a loan agreement with McLaren.
This covered three loans, including £7m for existing debts owed to McLaren by the Martin Dawn company operating in Cheltenham and to cover a £600,000 payment for McLaren’s development arm, Living, to promote the Castle Point site.
Martin provided a personal guarantee to back up the loans.
Any proceeds of sales relating to the Castle Point development were due to go towards repaying the debt, while the balance was due in October 2023.
Martin Dawn gave Living the right either to exercise a right of pre-emption, or to receive a defined share of the sale proceeds generated by a sale of the Essex land.
However, after Castle Point Council rejected a draft local plan that would have removed the site’s greenbelt designation, Living felt it was unlikely to receive planning permission and did not attempt to obtain it.
After McLaren issued the statutory demands for the money from Martin and his company, the businessman issued a counter-claim accusing McLaren Construction and Living of unlawfully “conspiring with an intention to cause financial loss” to his firms.
He said that once the council rejected the local plan proposals, the McLaren companies became intent on getting out of their agreement to promote the site and demanded repayment of the loans before they were due.
Martin argued that if Living had tried to obtain planning permission, and succeeded, the value of the land would have gone up and his company could have repaid the loans.
But the judge, who considered both claim and counterclaim in a rolled-up hearing, said there was no evidence to prove the conspiracy.
He said that even if there had been, Martin would be required to show the action caused a financial loss, which he did not.
Martin also argued that the loan agreement implied – i.e. was so obvious it did not need to be put into words – that if Living failed to carry out its agreement to promote the land, the loans would not be repaid.
Greenwood described the argument as “completely hopeless” and based on an incorrect premise.
