A judge has ordered a fresh hearing of an insolvency claim after it was suggested that a solicitor and law firm director had misled the court over the financial position of the business.
Deputy Insolvency and Company Court Judge Kyriakides had restrained claims management company Curzon Claims from presenting a winding up petition against Manchester law firm Sandstone Legal following a hearing in November. But in a postscript to the judgment in Sandstone Legal Limited v Curzon Claims Limited t/a Clockwork Claims, published last Friday, the judge said that Sandstone’s managing director Andrew Settle had been required to file with the court a statement showing whether or not the company was solvent.
On 26 November, according to the judgment, Settle stated that Sandstone was solvent on both a cashflow and a balance sheet basis and provided evidence of its cash at the bank and entitlement to a VAT refund of almost £690,000. Settle also referred to ongoing work saying the firm had funding in place to cover it.
But following Settle’s witness statement, counsel for Curzon sent the judge a note stating that on 15 November, a statutory demand was presented against Sandstone by expert witness agency Medical-Legal Appointments Limited based on a debt of £240,000. On 24 December, a winding up petition was presented by MLA against Sandstone, stating there was a further liability for £128,000.
As reported by the Gazette earlier this month, Sandstone recognised the need for it to go into a formal insolvency process and Settle presented an application for an administration order on 31 January. The firm owes around £350,000 to MLA, £200,000 to HM Revenue & Customs and £4.9m to another company, Seven Stars Limited.
Curzon expressed concern that when Settle made his witness statement in November, he knew about the insolvent position of the firm and deliberately withheld from the court details of the true extent of its liabilities.
The judge said these matters were relevant to whether or not she should grant the injunctive relief sought by Sandstone, and she ordered a further hearing to look into these matters.
The court had heard in November that Sandstone and Curzon had entered a written agreement to supply bulk Plevin (financial mis-selling) claims. The agreement had been negotiated by an agent called Case to Answer Limited. In total, almost 18,000 Plevin claims were accepted and charged at £75 per case, giving a total of £1.34m.
The judge ruled that Sandstone had shown it had a bona fide dispute on whether it owed certain sums to Curzon. But in her ruling she was critical of Settle, describing part of his evidence as ‘highly evasive’ and saying he failed to give a straight answer to one question. She added that his evidence to the court during the hearing had been ‘less than frank, in many respects unclear and at times inconsistent with some of the documentation’.
