McWilliam Consulting Group Ltd v Keith Ussher Architecture Services Ltd

McWilliam Consulting Group Limited sought to set aside a statutory demand issued by Keith Ussher Architecture Services Limited under the Companies Act 1993. McWilliam claimed that there were substantial grounds for disputing the debt claimed by Ussher. The High Court set aside the statutory demand and reserved the matter of costs. McWilliam applied for an increase from normal scale costs, which Ussher opposed.

The court considered the legal issues involved in determining whether an increase in costs was appropriate. The relevant rule allowed for increased costs if there was some other reason that justified the increase, despite the general principle that costs determination should be predictable and expeditious. The court noted that statutory demands should only be issued when there is a genuine basis for establishing the evidential foundation to support an application to appoint a liquidator. Issuing a statutory demand as a debt collection device or to embarrass a party was improper.

The court found that the statutory demand was improperly issued as there were substantial disputes between the parties over liability for the debt. Ussher should have proceeded with debt recovery proceedings instead of issuing the statutory demand. McWilliam was entitled to reject Ussher's without prejudice offer to withdraw the demand and refile proceedings in the District Court. The court concluded that the statutory demand should not have been issued in the first place and that Ussher should have withdrawn it once the disputes were evident. As a result, McWilliam was put to significant expense in responding to the demand and preparing for the application to set it aside.

The court awarded McWilliam costs in the sum of $10,904, being a 100 percent increase on costs assessed on a 2B basis, together with disbursements as claimed. The court found that the reasons for the improper issuance of the statutory demand justified the significant increase over scale costs.