Background
Geoffrey James Finch served Venroy Pty Limited with a statutory demand on 27 March 2026 for $10,000, said to arise from a settlement of Local Court proceedings. The demand was not accompanied by the verifying affidavit required for a non-judgment debt.
Venroy promptly identified that defect and disputed that any binding settlement had been reached, asking Mr Finch to withdraw the demand. He declined. Venroy then successfully applied to have the demand set aside on 14 May 2026. It subsequently sought $30,000 in lump-sum costs, alternatively indemnity costs. Mr Finch opposed any costs order or, alternatively, sought ordinary assessed costs.
The Court’s Holding
Brereton J ordered Mr Finch to pay Venroy’s costs on a gross-sum basis of $25,000. Costs should follow the event: Venroy had succeeded in setting aside the demand, and there was no basis to depart from that position.
The Court found that Mr Finch should not have served, or persisted with, the demand. The absence of a verifying affidavit was not a technical defect; it was fatal. Further, the material did not support a reasonable belief that a binding $10,000 settlement debt was due and payable or undisputed. Venroy acted reasonably in seeking urgent relief rather than paying the demand or waiting for a winding-up application.
A lump-sum order was appropriate because a formal assessment would likely be disproportionate to the amount in issue and would add further costs. Applying a broad-brush approach, the Court accepted that the circumstances warranted an amount reflecting indemnity costs, but discounted Venroy’s claimed $30,000 to $25,000.
Key Takeaways
- A statutory demand for a non-judgment debt must be accompanied by a compliant verifying affidavit.
- A creditor who maintains a plainly defective demand after being alerted to the defect risks an adverse indemnity-style costs outcome.
- The Court may order lump-sum costs where formal assessment would be disproportionately costly or contentious.
Why It Matters
Statutory demands carry serious insolvency consequences and must not be used to press disputed or inadequately verified claims. This decision reinforces that a debtor may reasonably seek to set aside an invalid demand promptly, even where its legal costs exceed the amount demanded.
For costs practice, the case illustrates the Supreme Court’s willingness to avoid a further contested assessment by fixing a discounted gross sum where the parties’ conduct makes additional costs likely.