Barber: Solicitor made application on fundamentally false premise
A judge has strongly criticised the boss of a consumer claims law firm for giving false evidence and trying to force through a prepack administration sale in favour of his own newly incorporated company.
Manchester firm Sandstone Legal, which specialised in financial mis-selling claims, has instead had its caseload transferred to four law firms and its other assets sold to a litigation funder.
Insolvency and Companies Court Judge Barber said it was “deeply troubling” that Andrew Settle “should knowingly include self-serving material falsities in two witness statements”.
Mr Settle has denied misleading the court.
The judge explained that Mr Settle’s evidence was based on Sandstone being a going concern but that it was “effectively reaching the end of its trading life, requiring an immediate prepack administration” in favour of his new firm, Precision Solicitors.
However, it subsequently emerged that, on 31 January, the date of the first witness statement, he had in fact made Sandstone’s 31 staff redundant and exercised a break clause in its lease.
Judge Barber said: “In my judgment, on the evidence as a whole, it is clear that Mr Settle knew at the time of signing each of his first and his second witness statements that each such witness statement contained material, self-serving untruths likely to mislead the court.”
On 7 February, the court in any case rejected Mr Settle’s application for an order that Marco Piacquardio and Alan Coleman of FTS Recovery be appointed as joint administrators of Sandstone, with a view to the prepack.
Judge Barber found the consideration offered was “so low and the margins overall so tight” that it did not meet the test for an order.
She adjourned the hearing, rather than dismiss the application, as there remained appetite for an administration order among other creditors and a desire to explore competing offers.
At the same time, with Sandstone in a “precarious” position and at risk of intervention by the Solicitors Regulation Authority (SRA), she appointed Phillippa Smith and Jessica Thomas of Leeds insolvency practitioners Smith & Barnes as interim managers.
At the final hearing on 21 February, Judge Barber decided to grant an order, finding that administration would deliver a better outcome than compulsory liquidation.
Mr Settle and TrueHaven Capital, whose claim to be the largest creditor was disputed, favoured the appointment of the FTS administrators.
However, three other creditors – litigation funder Seven Stars Legal, claims provider Curzon Claims and the petitioning creditor, Medical-Legal Appointments – supported the appointment of Smith & Barnes.
In deciding to go with the latter, Judge Barber said Ms Smith and Ms Thomas had “the advantage of no prior connection” with those creditors.
By contrast, Mr Piacquadio and Mr Coleman were last year appointed as administrators, on the application of Mr Settle, of another company of which he was the sole director and shareholder with a view to a “very similar” prepack to the one he proposed for Sandstone.
The judge added that the “fundamentally false premise” on which Mr Settle’s application had been made – that Sandstone was a going concern – “in turn infected” evidence given in support of the prepack, an estimated outcome statement prepared by Mr Piacquadio, and the skeleton argument prepared by Mr Settle’s barrister, Catherine Doran, for the 7 February hearing.
Judge Barber stressed that neither Ms Doran nor her instructing solicitors, Mezzle Law, were aware of the falsity at the time.
Whilst Mr Settle admitted in his third witness statement of 19 February what had happened to the staff and offices, the judge said, he did not offer an apology or any explanation for the first two.
Ms Doran told the court that he had instructed her to apologise and to explain that he had been extremely stressed when he wrote them, and also to proffer an assurance that there would have been workers available to continue Sandstone’s work had funding been made available.
“In my judgment, this is too little, too late,” Judge Barber said. “It is deeply troubling that Mr Settle, an officer of the court, should knowingly include self-serving material falsities in his first and second witness statements.
“It is also deeply troubling that, having filed a further witness statement as recently as 19 February (2 days prior to this hearing), Mr Settle studiously avoided offering any explanation or apology in that statement.
“I find the unevidenced apology and explanation which he has since proffered through counsel entirely unpersuasive and unsatisfactory. I do not accept stress as an explanation.
“The purported ‘urgency’ of the administration application was engineered from start to finish by Mr Settle himself.”
He knew “full well by (at the very latest) November 2024” that Sandstone was insolvent, Judge Barber said.
“On the evidence as a whole, I consider it legitimate to conclude that he left making the administration application to the very last minute with a view to forcing through a prepack in favour of his own newly incorporated company.
“In those circumstances, his (unevidenced) claims to have been stressed at the time of making his first and second witness statement in support of the application are entirely unpersuasive.”
Judge Barber said she was also concerned that, once Mr Settle’s actions had come to light, Mr Piacquadio and Mr Coleman did not file a further witness statement correcting or explaining the false premise on which their original estimated outcome statement was prepared.
Seven Stars Legal announced yesterday that it had completed the acquisition of the non-legal assets of Sandstone and procured the transfer of its case load to four other client firms – Brandsmiths, FDM Law, 56 Law and Justizia. Brandsmiths also represented Seven Stars in the litigation.
“After six months of dedicated work, we are pleased to have secured this acquisition,” said Leon Clarance, chief strategy officer at Seven Stars. “Our primary focus has been to ensure that client cases have found appropriate new homes.”
Mr Settle told Legal Futures: “I do not accept I misled the court but accept the witness statement should have further clarified the fast-moving position.”
He said a number of factors, which were the responsibility of others in the business, had caused Sandstone’s insolvency. “I uncovered serious failings and removed them from the operation but it was unfortunately not enough to save Sandstone,” he said.
“I have liaised with the SRA at each stage and tried to protect all clients’ interests.”
We reported in February that another judge in related proceedings was to reconsider her intention to allow Sandstone to restrain Curzon Claims from presenting a winding-up petition amid concerns that Mr Settle may have withheld the firm’s true financial position from the court. He denied doing so.
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