Former Watford FC chairman Jimmy Russo has won a High Court battle over a previously unpaid £250,000 loan.

Mr Russo loaned the cash to Gillingham FC counterpart Paul Scally more than three years ago but only had it repaid in full last month – just weeks before the case reached court.

Now Mr Scally, who was accused of “freeloading” by Mr Russo, must also pay more than £30,000 interest on the loan after a judge dismissed his suggestion that it had been an “interest free, no strings” arrangement between close friends.

Mr Russo argued successfully that the cash was meant only as a short term bail out which should have been repaid within six to nine months.

The Gillingham boss, who needed the cash to fund his family relocation to Dubai from his mansion in Kent - then thought to be worth £4.5m had, according to Mr Russo, “come begging for" the loan – despite enjoying a lifestyle that suggested “phenomenal wealth.”

He told Judge David Wilcox it "just didn't seem right" that he had to wait over three years to get his money back, and that Mr Scally had never offered to pay a penny in interest.

Mr Russo - who loaned the cash through his Isle of Man-based company, Valley Grown Salads - accused Mr Scally of using "hollow words" and "stalling tactics" to delay repayment.

Describing their relationship, Mr Russo commented: "He was a friend, but I didn't view him as a dear friend" - a disclosure which Mr Scally said left him "shocked".

He replied: "I'm staggered to hear him say that we were not close friends. We were very close friends, but sadly not any more," he told the judge.

Judge Wilcox also put Mr Russo's "free-loading" claims to the Gillingham Chairman, asking: "When did you think it appropriate to stop free-loading on a friend"?

Mr Scally said repaying the cash had been a priority for him but he had been bedevilled by problems due to the property slump, and told the judge: "I had no intention of free-loading".

To repay Mr Russo his £250,000 - which he did on February 17 - Mr Scally said he had had to sell at a substantial loss a property in Dubai he had bought "off plan" for himself and his family but which was completed late.

Mr Scally, who currently runs Gillingham FC from a rented six-bedroom villa in Dubai, said he had put his Kent home - Hatchams Place, near Sevenoaks - on the market for £4.5million in December 2007, but it still had not sold, despite the asking price being slashed to £3.5million.

Although the businessman bought Hatchams Place for just £500,000 more than 20 years ago, he told the court it is subject to a £1m mortgage and his only income is £150,000-a-year as chairman and chief executive of League Two Gillingham.

Mr Scally - who owns 78 per cent of the club, which the court was told is £13.5million "in the red" - said he had been "desperate" to sell property so that he could repay Mr Russo his money, and had refunded him as soon as he possibly could.

He told the judge that he now "always flies economy" when jetting in to watch about 20 of his club's home games each season.

Judge Wilcox said he accepted Mr Russo's evidence that the two men had not been "close friends", although Mr Scally had told the court that "they holidayed together and did things together, and that their family did things together".

"A relationship akin to that of a family relationship seems to be asserted," the judge noted, but told the court: "I prefer the evidence of Mr Russo".

Mr Scally had not come across as an "open and candid witness at all times", he told the court, ruling that it was an "implied term" of the loan that interest would become payable with effect from October 2008 - nine months after the date of the £250,000 cash transfer.

The total amount of interest now payable by Mr Scally is expected to exceed £30,000 and the judge's ruling means the businessman can also now expect a hefty legal costs bill.