Who bears the costs of statutory demands, asks Elaine Palser
This article considers the cost consequences following service of a statutory demand in two scenarios:
- X serves a statutory demand on Y (an individual). Y applies to set aside the statutory demand. Upon seeing the application and evidence in support, X withdraws the statutory demand.
- X serves a statutory demand on Z (a company). Z applies to restrain presentation of a winding-up petition. Upon seeing the application and evidence in support, X gives an undertaking not to present a winding-up petition.
Creditor takes the risk
While scenarios (a) and (b) are common scenarios, awareness of the authorities governing the costs consequences seems to be less so. Often X will assert that Y and Z should bear X’s costs—or that there should be no order as to costs— because X simply did not know that there was any potential defence until seeing the evidence. The invariable outcome though is that X will have to pay Y and Z’s costs. This is because of the
