A man has been cleared of a criminal offence over a video that showed a model of a building marked “Grenfell Tower” being burned, while a group of friends laughed and joked.

Emma Arbuthnot, the chief magistrate of England and Wales, called the handling of the case against 47-year-old Paul Bussetti “appalling” after evidence was disclosed to the defence just as she was retiring to consider her verdict on Thursday.

More than 70 people died in the tragedy in west London in 2017, one of the UK’s worst peacetime disasters. Bussetti was accused of sending “grossly offensive” video footage, which was taken in his friend’s garden at a bonfire party in 2018.

The prosecution argued that the video, which showed the model of the tower with some black and brown cardboard figures of people inside as it burned, was racist in nature. While the court heard he had used racial epithets in private chats, Bussetti denied holding racist views.

Footage had been shared to private groups on WhatsApp and found its way into the public domain. It was criticised as “vile” by a relative of one of the victims of the disaster.

Bussetti claimed it was a joke and that the characters were actually misunderstood references to him and his friends. Giving evidence at Westminster magistrates court on Thursday, he said it was “certainly not the case” that the figures in the cardboard model, which had “Grenfell Tower” written on it, were meant to be those who died in the fire.

He was found not guilty following his two-day trial when it was revealed, after the prosecution and defence had closed their cases, that two other people had told police the figures were of the defendant and his friends, rather than those who died in the fire.

Mark Summers QC, defending Bussetti, said his team had not previously been made aware of a second piece of footage and it was unclear who had shot and distributed it. He argued that the existence of the additional video meant there was “absolutely no way” to know which piece of footage had made its way onto YouTube and gone viral.

Arbuthnot said: “I am just appalled at the disclosure in this case,” adding that it was “highly unsatisfactory to say the least”.

Acquitting Bussetti, she said: “I cannot be sure the video relied on by the Crown is the one taken by the defendant.” She added that she could not be sure the figures on the tower were not meant to be the defendant and his friends, imagery that she said was “in colossal bad taste”.

• This article was amended on 23 August 2019 to correct the spelling of Emma Arbuthnot’s surname and to clarify that she is the chief magistrate of England and Wales, not just England, as stated in an earlier version.