Kyriakides: Further hearing required
The High Court is to reconsider its intention to allow a Manchester law firm to restrain a claims provider from presenting a winding-up petition.
Deputy Insolvency and Company Court Judge Tina Kyriakides said a further hearing was required because she was possibly misled about the practice’s financial position.
She found that Manchester financial mis-selling firm Sandstone Legal has a genuine dispute over whether Curzon Claims really is owed the £588,257 stated in a statutory demand from last August, indicating that injunctive relief was appropriate.
However, Judge Kyriakides said events since November’s hearing raised questions about whether Sandstone director Andrew Settle had withheld the firm’s true financial position from the court.
In February 2024, Curzon began supplying Sandstone with Plevin claims. The agreement was negotiated on behalf of Sandstone by Case to Answer Ltd (CTA) and signed by Mr Settle.
Over the next four months, Curzon delivered 22,370 claims at £75 plus VAT per claim – although 4,431 of them were only ‘provisionally’ accepted by Sandstone.
The terms of the agreement also included a £250,000 bonus for supplying 10,000 accepted claims and a £175,000 sign-on fee.
Curzon claimed it was owed more than £2.5m in all but had only been paid just under £2m.
Judge Kyriakides rejected Sandstone’s argument that CTA had no authority to accept any Plevin claims on its behalf.
“I have found Mr Settle’s evidence to be less than frank, in many respects unclear and at times inconsistent with some of the documentation… his assertion that CTA had no actual or apparent authority to review and accept/reject Plevin claims and that this process never took place is inherently implausible.”
However, the judge found Sandstone had shown there was a “bona fide dispute on substantial grounds”, the legal test for injunctive relief here, over how many claims CTA rejected – it said at least 7,000, Curzon put it at 4,160 – as well as the status of the claims that had only been provisionally accepted.
But Judge Kyriakides recounted how, at the conclusion of the hearing, she asked Sandstone to file a witness statement showing whether or not it was solvent.
Mr Settle did so, stating that it was solvent on both a cash flow and balance sheet basis, providing evidence of its cash at the bank and right to receive a VAT refund of approaching £700,000. He also referred to the firm’s ongoing work, which was funded, and that its accounts were in order.
The judge went on: “Although the witness statement was not satisfactory, in that it did not exhibit any up-to-date accounts disclosing creditors or the company’s net current asset/liability and net asset/liability position, in view of my decision on the merits of the case, I was minded to grant injunctive relief in accordance with the normal principle that even if a company is insolvent, the court will not wind-up it up if the debt is bona fide disputed on substantial grounds.”
But she had since received a note from Curzon’s counsel outlining that on 15 November – before Mr Settle’s witness statement – Medical-Legal Appointments Ltd presented a statutory demand to Sandstone based on a debt of £240,000, followed by a winding-up petition six weeks later on the basis of a further liability of £128,000.
As a result, the court was told Sandstone applied for an administration order on 31 January, supported by a witness statement from Mr Settle which referred to liabilities of £350,000 to Medical-Legal Appointments, £4.9m to litigation funder Seven Stars and a further £200,000 to HM Revenue & Customs.
Further, the balance sheet attached to Mr Settle’s witness statement showed a net liability of almost £500,000.
“It would appear that on 7 February 2025 ICC Judge Barber made an order for an interim manager pending the determination of the administration application,” Judge Kyriakides said.
“The concern expressed by [Curzon] is that Mr Settle knew about the insolvent position of the company as at 22 November 2024 when he made his third witness statement and deliberately withheld from the court details of the true extent of the company’s liabilities…
“Whilst the matters which have been drawn to my attention have no bearing on my decision that the debt is bona fide disputed on substantial grounds, they are relevant to whether or not I should grant the injunctive relief sought by the company.
“In light of this, in my judgment, there should be a further hearing on this issue.”
Mr Settle told Legal Futures that he denied Curzon’s allegations that he misled the court.
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