A property developer is facing a bill of up to £500,000 after plans for an exclusive £30 million flats development in the Jewellery Quarter hit the rocks.

Mazamal Hussain, who established a company called Junared Two (J2) in early 2007 to redevelop the historic Birmingham Mint building into luxury apartments, has been told he must pay the money which had been a “personal guarantee” to the Bank of Scotland (BoS).

The company had secured a £19.5 million overdraft facility from the bank to make the scheme a reality but the Birmingham Post revealed in 2009 that bankers had pulled the plug after the recession took its toll.

And a High Court judge has ordered Mr Hussain to pay the bank £500,000 – on top of significant interest and legal costs – after a two-year legal battle.

Separate plans to create a “gated community” on the Hockley site have been revealed after Junared Two went into administration.

Mr Hussain said he put £700,000 of his own money into the scheme, but the project began to come unstuck when a valuer reported in late 2008 that, on a “realistic basis”, the building might only be worth £5.6 million and said a £21.9 million valuation was “optimistic”.

Although the report said that, on an optimistic basis, The Mint might be worth £41.7 million on completion of the scheme, it went on to give a “realistic” valuation of £27.7 million.

Mr Justice Kitchin said those valuations were “plainly of the greatest concern to BoS because it indicated that the value of the site was less than its lending”.

The bombshell dropped in March 2009 when the bank informed Mr Hussain it was not prepared to provide any more funding for the project, the judge told London’s High Court.

Mr Hussain put J2 into administration in June that year.

Back in February 2007, Mr Hussain had signed a “personal guarantee” to the tune of £500,000, and BoS took him to the High Court to enforce that.

In his defence, the businessman accused BoS of breaching the “fiduciary duty” it owed him. He said he had been told that the bank would fund the entire project, even if that meant lending up to £30 million.

Mr Hussain also claimed he had given his personal guarantee not to underwrite J2’s debts, but to cover any overrun in construction costs.

However, ruling that Mr Hussain is bound by the £500,000 guarantee, Mr Justice Kitchin said: “I have reached the conclusion that none of the defences raised by Mr Hussain has a real prospect of success and BoS is therefore entitled to summary judgment”.

Mr Hussain also now faces having to pay £49,000 in interest, along with £55,000 in legal costs.

The development had been designed to create a modern living space while preserving Grade I and II-listed features including the 130ft chimney which originally sat above a furnace to smelt metals for coins.

And prior to going into administration Junared’s website had claimed that all of the 186 one, two and three-bed flats on Icknield Street at the fringes of the Jewellery Quarter had been sold.