Trends Publishing International Limited v Dalgety Finance Group Limited

[2014] NZHC 55

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2013-404-002740 [2014] NZHC 55

IN THE MATTER OF       Section 290 of the Companies Act 1993

BETWEEN  TRENDS PUBLISHING INTERNATIONAL LIMITED Applicant

ANDDALGETY FINANCE GROUP LIMITED Respondent

Hearing:                   9 August 2013

Appearances:           A R Gilchrist for applicant

M L Kelly for respondent

Judgment:                4 February 2014

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on 4 February 2014 at 3pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

Vlatkovich & McGowan, Auckland
Burton & Co, Auckland

Counsel:

A Gilchrist, Auckland

M Kelly, Auckland

TRENDS PUBLISHING INTERNATIONAL LIMITED v DALGETY FINANCE GROUP LIMITED [2014] NZHC 55 [4 February 2014]

[1]      This case concerns a dispute over brokerage fees charged by the respondent, Dalgety Finance Group Limited (Dalgety), for assisting the applicant, Trends Publishing International Limited (Trends), to find a banker to refinance its banking facilities.

[2]      The parties signed a mandate agreement at the start of their relationship, under which a fee structure was agreed, comprising weekly retainers to cover Dalgety’s expenses and a brokerage fee that was payable if the finance was obtained.

[3]      Trends made four payments of the weekly retainer before the parties met and agreed that the retainer payments would stop (there remains an issue as to when they were to cease).  Trends also contends that the fixed brokerage fee was brought to an end at that point, and that the parties were to negotiate a fee as and when finance was obtained.

[4]      Dalgety continued to work on the refinancing, and refinancing was eventually obtained.   Dalgety sought payment of a brokerage fee as provided in the written mandate agreement.  When that was not forthcoming it issued a statutory demand on Trends for the sum of $73,106.50, comprising one week’s retainer (as being due before the retainer arrangement came to an end), a brokerage fee, interest and legal costs as was provided for in the mandate agreement.

[5]      Since the demand was issued Trends has paid Dalgety $30,000, and has paid the balance into its solicitors’ trust account.  It has applied to set aside the demand on the grounds that the unpaid balance is the subject of genuine and substantial dispute.

[6]      The central issue is whether Trends has established that there is a genuine and substantial dispute over the sum demanded.

Background

[7]      Trends carries on business as a publisher.  It is part of a group of companies. In early 2012 it decided to refinance its bank facilities.1

[8]      In February 2012 Trends engaged Dalgety to help it to find a replacement banker.  On 28 February 2013 the party signed a mandate agreement to confirm that engagement and to find replacement banking accommodation of $12.1 million.  The agreement was a standard printed form used by Dalgety.  It expressly provided the following material terms:

1:  [Trends]  appoints  [Dalgety]  (DFG)  on  a  sole  and  exclusive  basis  to arrange finance on the terms substantially set out below. To be Reviewed on or Before 31st March.

5: [Trends] agrees that the fee payable to DFG shall comprise of; firstly a weekly retainer amount of $2,500 ( non refundable ) to cover expenses and costs incurred ... and secondly, a brokerage fee calculated at (0.05%) percent of the amount of the finance arranged by DFG.

6: [Trends] agrees that unless otherwise consented to in writing by DFG the brokerage fee shall be due and payable by [Trends] immediately on Acceptance and First drawdown of a letter of offer for the finance;

10: [Trends] agrees that in the event of any fee payment not being met by due date, [Trends] will pay a late penalty calculated at ten (10) percent, 10%, (plus GST) of the due amount together with additional penalty amounts calculated and compounded at two (2) percent (plus GST) of the outstanding balance for each calendar month or part month that elapses from the due date for payment until the date on which payment is finally made;

11. [Trends] agrees the [Trends] will pay all collection costs, plus all costs and expenses which are incurred by DFG including all legal costs on a solicitor/client basis;

12: in the event that [Trends] is materially dissatisfied for whatever reason with the performance of DFG in respect of the mandated project, then [Trends] shall have the right to terminate the engagement of DFG in writing but only provided that:

At least 20 working days prior to the termination, written notice is given by [Trends] to DFG stating that the engagement will be terminated and providing the reasons for doing so.

[Trends] in good faith provides DFG with a reasonable opportunity to improve its performance to a level that is satisfactory to [Trends].

1      Trends says that it felt it was not getting appropriate rates of interest from its existing bank, but there is also evidence that it had been in financial difficulty and it had been the subject of “intervention” by its existing bank.

That in the event that [Trends] does in fact terminate the engagement that the quantum of fees payable (both fixed and brokerage) or due to be paid  to  DFG in  respect  of  the  contractual  fee  arrangements  will  be mutually agreed between [Trends] and DFG prior to the termination and then paid out by [Trends] within 7 working days.

....

The weekly retainer figure of $2500 and the brokerage fee rate of 0.05% were handwritten into clause 5 of the printed agreement.

[9]      Trends says that at the meeting to sign the mandate agreement, Dalgety’s director, Mr C Kingston, advised that Dalgety would have a bank within four weeks and the retainer would only be paid for that period, and that Dalgety’s brokerage fee would include all bank establishment fees.

[10]     Dalgety disputes these matters.  Mr Kingston says he has no recall whether he told Trends that he thought refinancing could be achieved within four weeks, but he gave no assurance to this effect, and did not tell Dalgety that the retainer would only be payable for four weeks.  However, he accepts that that the parties agreed to review the mandate by 31 March 2012 (or approximately within four weeks of signing it) and that Mr Johnson amended the agreement by handwriting the last sentence into clause 1, namely “To be Reviewed on or Before 31st March.”   He emphatically denies that he agreed that DFG’s brokerage fees would include bank establishment fees.

[11]     On 30 March 2012 the parties met at Trends’ premises. An alternative banker had not been found by then, although at least three possible alternatives were then being pursued, including Bank of New Zealand.  There is again a dispute as to the specific matters discussed at that meeting:

(a)      Trends maintains that Mr Johnson handed Mr Kingston a letter, dated the previous day, setting out Trends’ position that any ongoing payments would stop and that the parties would negotiate separate remuneration for any finance obtained “on pre negotiated case-by- case basis”.   Mr Johnson says that Mr Kingston accepted Trends’ position.

(b)Mr Kingston denies that he was given the letter or that there was any change to the mandate arrangement other than to stop the retainer payments.   He wrote an email to Mr Johnson the following day recording matters discussed at the meeting, including the discussion over the retainer payments.  There is no mention of any change to the agreement in respect of the brokerage fee.

It is common ground, however, that Dalgety was to continue to seek the required

refinancing on Trends’ behalf.

[12]     At that point Trends had made four retainer payments.  In an email sent the following day, Mr Kingston recorded that the last retainer payment was due on 30

March 2012, and that Dalgety would continue to work on the loan applications with no further retainer unless otherwise agreed.   Subsequent to that meeting Trends’ financial director requested an invoice for the weekly retainer payments and Dalgety sent an invoice for five weekly payments, commencing 2 March 2012 with the last (the fifth) due on 30 March 2012.  There is no evidence of Trends challenging the claim for a retainer for the fifth week at that point.

[13]     Two of the three “live” prospects as at the date of the meeting on 30 March

2012 fell away, but the application to Bank of New Zealand continued, through an extensive period of due diligence.

[14]     One of the matters of importance to Trends was the cost of changing the facilities to BNZ.  On 20 July BNZ gave Trends an indicative schedule of the fees it proposed charging.  Trends’ financial controller, Mr Groves, says that he telephoned Mr Kingston and raised Trends’ understanding (based on what Trends says it was told prior to signing the mandate agreement) that Dalgety’s fee would be the total cost to Trends, including bank fees.   Mr Groves acknowledges that Mr Kingston denied that Dalgety had agreed to this.

[15]     On the same day Trends, BNZ and Dalgety had email correspondence about the overall costs of switching to BNZ, as Mr Groves said that costs of switching had already exceeded Trends’ target “with brokerage fees and a system audit ...still to

come”.  This led to BNZ offering to waive its establishment fees on the main part of the loan (an establishment fee had already been waived on a smaller part) so that Trends would have no up-front bank costs apart from line fees on each facility.

[16]     Mr Groves raised Trends’ view that the brokerage fee would cover all bank fees again by email a week later.  Mr Kingston responded saying that Mr Groves was mistaken but that Dalgety was willing to have discussions about the fee arrangement. Discussions followed about possible alternatives to the agreed mandate fees, including splitting Dalgety’s fee into a cash amount and some contra possibilities (mainly Trends providing Dalgety with electronic goods to which it had favourable access).  In addition, following an approach from Dalgety, BNZ agreed to add its and Dalgety’s respective fees into the loan.

[17]     BNZ eventually completed its due diligence and advised Trends just before the end of the year that it would provide the refinancing.  It made a formal loan offer in January 2013, which included an additional $100,000 to cover fees and other costs associated with changing the banking facilities.

[18]     Trends accepted the loan offer.  Shortly before the loan was drawn down it had  further  discussions  with  Dalgety  over  the  fee  arrangements,  including  the possible contra arrangement (using some electronic products to which Trends had access).   Ultimately those discussions went nowhere as the parties were unable to agree on the method of valuing the contra products.

[19]     Shortly after settlement of the refinancing, Dalgety sent an invoice for the cash component of its fee in accordance with the mandate agreement (on the assumption that the contra arrangement would proceed).  When the discussions on a contra arrangement broke down, Trends issued its statutory demand for the full amount of its fee (the agreed percentage of the loan of $12.2 million) together with a claim for one-off penalty interest of 10% and ongoing interest at 2% per month, the fifth week’s retainer, and legal costs incurred in seeking to enforce its claim.

[20]     Trends responded by making a payment of $30,000 to Dalgety, and by filing the application that is now before the Court contending that there is a genuine dispute as to whether any further sum is owing.

Legal principles

[21]     The principles that the Court applies in determining if there is a substantial dispute as to whether a debt is due or owing2  are well established,3  and it is not necessary to set them out at length.   The following principles have particular relevance for the present application:

(a)      The party applying to set the demand aside has the onus of showing a fairly arguable basis for its case that it is not liable for the amount claimed;4

(b)The inquiry, in essence, is whether the assertion of a dispute passes the threshold of credibility;5

(c)      The applicant is required to place before the court information that is sufficiently reliable and believable to allow the court to conclude that the applicant’s assertions could be correct;6

(d)The applicant must show a sufficient likelihood of a genuine and substantial dispute that it would be unfair to determine that dispute summarily in this court rather than by action in the ordinary way in an

appropriate forum.7

2      Section 290(4)(a) Companies Act 1993.

3      See, for example, Taxi Trucks Ltd v Nicholson [1989] 2 NZLR 297 (CA) and Queen City

Residential Ltd v Paterson Co-Partners Architects Ltd (No 2) (1995) 7 NZCLC 260,936.

4      Eastgate Real Estate Ltd v Walker (2001) 15 PRNZ 308 at [30].

5      Freemont Design & Construction Ltd v W Stevenson & Sons Ltd HC Auckland, CIV 2005-404-

4807, 20 April 2006 at [8].

6      Denize  Farms  Ltd  v  Spotburn  Farms  Ltd  (in  liq)  HC Auckland  CIV  2011-404-5374, 16

December 2011 at [13].

7      Taxi Trucks Ltd v Nicholson, above n 3 at 299.

The opposing contentions

[22]     The essential point at issue is whether there is a credible argument that the sum demanded is not a debt arising out of the mandate agreement.8

[23]     Trends contends that:

(a)      It entered into the mandate agreement following advice by Dalgety that refinance would be found within four weeks, and that bank establishment fees would be covered by Dalgety’s brokerage fee.

(b)Dalgety does not have a contractual right to payment of a defined amount, sufficient to constitute a due debt, because the agreement as to fixed amounts was terminated or varied at the meeting on 30 March

2012 by agreement that retainer payments would cease and that any further payments would be negotiated.  It contends that in the absence of any agreement, any entitlement was on a quantum meruit basis, and it was at least arguable that Dalgety had been paid all that was warranted.

(c)      It has put sufficient information before the court to show that there is a credible basis to its assertions of a genuine dispute over the change to the written agreement.  In particular it says that the evidence of Mr Johnson and Mr Groves is supported by a file note taken by Mr Groves of matters discussed at the meeting prior to the mandate agreement being signed and by the letter that Mr Johnson says he presented to Mr Kingston at the meeting on 30 March 2012. Although its view as to what was said and agreed at these two meetings is disputed, it says that these documents show that there is substance to its  contentions,  and  that  subsequent  events  are  consistent  with  its claim that the fixed fee arrangement had ended.

(d)      It has raised credible disputes over the claims to interest and costs.

8      A claim for damages for breach of the agreement, not converted into a judgment debt, cannot be a due debt: Re Prime Link Removals Ltd [1987] 1 NZLR 510 at 512.

[24]     In response, Dalgety says that:

(a)      The contention that the bank fees were to be included in its fee is not credible.  However, it says that the Court does not need to determine the  credibility  point  as  anything  that  may  have  been  said  was overtaken by the written agreement, no establishment fees were paid in any event, and any significance of the advice in relation to the retainer arrangement was overtaken by the agreement on 30 March.

(b)It has a clear entitlement to the amounts claimed under the terms of the written mandate agreement, and that Trends’ assertions of relevant disputes do not pass the threshold of credibility.  In particular it says that Mr Groves’ note and the letter said to have been given to Mr Kingston on 30 March do not, in fact, support Trends’ assertion that the mandate agreement was varied.  It says that subsequent events all point to the parties proceeding on the basis of a subsisting mandate and without change to the agreed terms for fees.

(c)      There is nothing in the alleged disputes concerning interest and costs, which have been calculated.

The alleged pre-contractual representations

[25]     It is not possible, nor is it necessary, to resolve the differences between the parties over what was discussed at the meeting on 28 February 2012, ahead of execution of the mandate agreement.

[26]     Mr Groves’ note of the meeting supports there having been a discussion about and an agreement on the retainer. That is reflected in the written agreement. The note is equivocal, however, as to whether the word “agreed” relates to the retainer being limited to four weeks, particularly when considered in light of the fact that Mr Johnson amended the printed agreement to provide that it was to be reviewed on or

before 31st March but did not stipulate that the retainer was for four weeks only.  The

point falls away, however, as it is beyond question that the parties did review the period on 30 March and the evidence about that review will determine this issue.

[27]     Trends’ assertion that Dalgety represented that its fee would cover any bank establishment fees is less credible.  Again Mr Groves’ note indicates that there was discussion about an “all up” figure, but it is telling that there is no note to the effect that this point was agreed.  Even more telling is the fact that Mr Johnson did not see any need to amend the printed agreement in this respect.  It is understandable that the parties would have discussed likely outcomes, particularly in relation to costs, but that is a different matter to saying that there was an agreement on them separate to the agreement they signed.

[28]     I accept Dalgety’s submission that it is not credible that Dalgety would have made such a representation in the circumstances of this case.  Mr Kingston has said that Dalgety inserted a lesser rate than normal for its brokerage fee (recognising the likelihood of some bank fees, and clearly wanting to make the overall costs manageable), and that banks’ establishment fees were typically between 0.55% and

1% (a fact supported by BNZ’s initial indication in July 2012 that it would charge an establishment fee of 0.55%, and an assessment by Mr Groves before the establishment fees were waived that they were in the order of $70,000).  The effect of any such agreement is that Dalgety would have embarked on the project with a real risk that it would receive nothing from its brokerage fee if the only refinancing available was offered with establishment fees at typical rates.

[29]     The evidence also suggests that Trends was experiencing financial difficulties at the time, and had been unable to obtain refinancing itself, and was not in a strong negotiating position.  I can accept that Trends would have wanted certainty on the overall costs of refinancing, but it is not credible that Dalgety would have accepted engagement on the suggested terms, or would have made the alleged representation. This finding is supported by the fact that Trends ultimately obtained an additional sum of $100,000 to meet the brokerage and other initial fees (as a way of making the refinancing economically acceptable).

[30]     In a reply affidavit Mr Groves said that he had had an earlier indication from BNZ that it would charge an establishment fee of just over $30,000 (and this may be what ultimately led Trends to pay $30,000) but he did not produce any evidence to

support this bald statement, whether as to the time it was made, the financing that was being discussed, or the other terms being discussed.

[31]     However, I do not need to determine the point on a credibility basis, as I find that  the  discussions  were  overtaken  by  the  signed  agreement  and  the  express provision in clause 5 that Trends was to pay Dalgety “a brokerage fee calculated at (0.05%)  percent”  (emphasis  added).    This  was  a  commercial  arrangement,  and Trends was a substantial and sophisticated commercial entity.  It is not credible that it would not have sought alteration to the written agreement to include reference to this representation other than the stipulation that it was to be reviewed within a month.  It is significant that Trends did not argue that it had a counterclaim or set-off arising out of this representation.

The alleged mandate agreement termination

[32]     This contention was not advanced by Trends’ counsel with any vigour.  I can deal with it relatively quickly.   First, it is clear that Dalgety continued to seek refinancing for Trends after 30 March 2012, and in later correspondence continued to refer back to the mandate agreement, without any contention from Trends that the agreement (as distinct from the term for a fixed brokerage fee) was no longer on foot. Secondly, it is unquestionable that Trends did not follow the procedure for termination in clause 12 of the agreement.

The alleged agreement variation

[33]     Trends’ main  argument  is  that the mandate agreement  was  varied  in the review on 30 March 2012.   It says that the parties agreed that there would be no further payments of retainer and that any further payment would be a matter for negotiation based on what refinancing was obtained.  It relies heavily on a letter that Mr Johnson says he handed to Mr Kingston at the meeting, at which time Dalgety allegedly accepted the points made in it.  The terms of the letter are significant.  It is dated 29 March 2012 and reads:

This letter confirms that from March 29th  all payments from Trends Publishing International to Dalgety Finance Group Limited will be ceased [sic].

Moving forwards Trends Publishing International will be making payments to Dalgety Finance Group Limited only based on pre negotiated case-by- case basis.

[34]     Mr Kingston denies that he was given this letter, notwithstanding that both Mr Johnson and his personal assistant (who typed the letter and was present at the meeting) say it was given to him.  It is not possible to resolve the conflict on this point, and I accept that it is arguable that the letter was given to Mr Kingston as Trends claims.   However, that it not determinative of Trends’ claim that Dalgety accepted Trends’ position as stated in the letter, that no further retainer payments were to be made, and any further payments were to be a matter for negotiation.  I will deal with these two aspects separately.

[35]     Mr  Johnson  says  that  he  took  this  position  because  there  had  been  no progress by Dalgety at that time.  Although it is true that there was no certainty of refinancing at that time, it is overstating the position to say that there had been no progress.  Mr Kingston produced copies of email correspondence from several banks showing that while some were not interested in refinancing Trends at that time, other approaches were still being actively pursued (including BNZ, who ultimately provided the refinancing).

[36]     Mr Kingston accepts that the parties reviewed their agreement, and  agreed that the payments should stop but only after payment of the retainer that was due that day (in fact, under the agreement, the payment was due on 28 March 2012, being the start of the fifth week after the date that the agreement was signed and the retainer payments began).

[37]     If that was all the evidence I would accept that there is an arguable dispute. However, the following day Mr Kingston sent an email to Mr Johnson confirming matters discussed the previous day, including that Dalgety would continue to work with two identified banks (one being BNZ) who were undertaking due diligence investigations, and stating:

As per our agreed mandate, we discussed & reviewed the weekly $2500;

with the last payment due on Friday 30/3/2012.

Thereafter we will continue to work on the Loan applications with no further weekly retainer unless otherwise agreed.

We understand that Simon [Groves] was in Australia on Friday and note the last agreed payment was not credited to the designated account.

Could you kindly draw Simons [sic] attention to this matter on Monday.

[38]     There are two significant points arising out of this email.  The first is that the agreement was recorded as being a cessation of retainer payments after 30 March, unless otherwise agreed (presumably if expenses exceeded the amount paid).  The second is that there was no mention of the brokerage fee.  I will come back to the latter point.

[39]     Trends did not dispute Mr Kingston’s statement that there was to be a last payment on 30 March.   Subsequently Dalgety reminded Mr Groves that the fifth payment had not been made, and his response was simply to request an invoice for all payments (for Trends’ end of year accounts).  Dalgety issued an invoice for five payments, which showed the fifth as outstanding.  Although Trends did not pay the unpaid balance, it did not challenge its obligation to do so until the statutory demand was issued.

[40]     It is clear that Mr Johnson was concerned about an ongoing obligation on the retainer payments (which were payable regardless of success on the refinancing). However, and accepting that he wanted those payments to stop immediately, the contemporary evidence shows that the agreement reached was that they would stop after the payment that had fallen due by the time of the meeting.

[41]     Trends’ case that Dalgety agreed to waive the fixed brokerage fee in favour of an undefined amount to be negotiated in due course is entirely lacking in credibility. Again I make the point that this was a commercial arrangement.  I read Trends’ letter of 29 March as referring to the weekly retainer, but even if Mr Johnson intended it to refer to the brokerage fee as well, there is no evidence to suggest that Mr Kingston agreed to this. There is no obvious reason for him to have done so (and move to a completely unknown remuneration), particularly where he had agreed to waive the retainer payments.  Moreover, if that had occurred it is such a significant change that one or other of the parties would have recorded the change explicitly.  Mr Kingston

does not refer to it, and Mr Johnson does not add to Mr Kingston’s record of the discussions in circumstances where the change was so significant that he must have noticed the omission.

[42]     Further, Trends did not refer to the alleged change when the composition of the brokerage fee (whether it included the establishment fee) was raised in July and discussed in early August, notwithstanding that Mr Kingston explicitly stated in an email to Mr Groves on 2 August 2012:

Our written DFG mandate clearly sets out the agreed terms of remuneration between our companies.

....

We met two weeks ago where at the end of the meeting David [Johnson} asked us to consider discounting down our fees if your company went ahead with the BNZ proposed engagement terms (KPMG audit on your financial accounts & a new Property Valuation by a BNZ approved Valuation firm).

In summary we have been working on the agreed mandate terms for six months in good faith.

We are happy to meet with David Johnson to discuss further; again in good faith.

[43]     It was open to Trends to exercise its right to terminate the agreement at that time, or even to write and formally challenge the fee arrangement.  It did neither, and in particular did not respond that the parties were no longer working under the mandate agreement.   It is evident that the parties did meet and have discussions about the means of payment of the fee both before and after BNZ made the loan offer that was eventually accepted, but the evidence shows that these discussions were  about  whether  the  fee  could  be  paid  partly in  cash  and  partly  by  contra arrangements.

[44]     Counsel  for  Trends  submitted  that  these  discussions,  and  its  contention (disputed by Dalgety) that it had told Dalgety before drawdown of the loan that it was not intending to pay the fee as provided in mandate agreement, gave credibility to Trends’ case that the parties were to negotiate the fee.     I do not accept that submission.    The  evidence  before  the  Court  indicates  both  that  Trends  did  not contend  in  these  discussions  that  they were  a  consequence  of  an  agreement  to

negotiate a fee and that Dalgety entered into these discussions without derogating from its entitlement to a fee in terms of the mandate agreement.   I find that the discussions related to how the fee was to be paid rather than how it was to be determined.

[45]     For the sake of completeness, and for the reasons already given, I also find that Trends has not established a sufficient evidential basis for contending that there was any agreement as to the fee including bank establishment fees, or indeed that it paid establishment fees, so as to reduce the amount payable for the brokerage.  I note that Trends did not pay any amount until the demand was issued, and then did not stipulate how it reached the view that the appropriate sum was $30,000.

Other grounds advanced

[46]     Trends has disputed Dalgety’s claims for interest and costs.  It says that the penalty interest has been demanded improperly because it was made before the loan was drawndown, and that the claim for ongoing interest has been miscalculated for similar reasons.  It also says that Dalgety has not justified its claim for costs.

[47]     I find no basis for these claims.   I accept that the invoice attached to the demand of 7 May 2013 was dated 5 March 2013, but accept Dalgety’s evidence that this was a typographical error.  This view is supported by the fact that an invoice issued in early April (in anticipation that a contra arrangement would be agreed) was also misdated.  I find that the demand for 10% penalty interest was  made after drawdown and in accordance with clause 10 of the agreement.

[48]     I accept that Dalgety has a claim for ongoing interest, but that there may be an issue as to the date from which the amount claimed in the demand was calculated (the date is not stated in the invoice).  However, as Dalgety’s evidence is that the fee was payable from 5 April 2013 rather than the date of drawdown Dalgety is entitled to ongoing interest from that date.   If this results in a difference from the sum demanded it will be inconsequential, and insufficient to justify setting the demand aside.   Lastly, I find that Trends has been provided with details of the legal costs claimed in the demand, and that those costs fall within clause 11 of the mandate agreement.

[49]     Counsel for Trends referred to Dalgety’s failure to follow dispute procedures either as stated in its website or as in the mandate agreement.  There is nothing in this point.  Dalgety has always maintained that there is no basis to the dispute, and its view is confirmed by this judgment.   I also doubt whether the clause in the agreement applies other than in relation to a dispute arising in respect of the termination clause (which I have found Trends has not exercised).  I also note that Trends  itself  has  not  in  fact  engaged  the  procedures,  but  merely  indicated  its intention to do so.

Decision

[50]     For the reasons given I find that Trends has not established a credible case for a genuine and substantial dispute over the sum demanded in the statutory demand. Its application is dismissed.

[51]     I accept however, that Trends has resisted the demand genuinely, and is in a position to pay now that its application has been determined.  I take into account that it has placed the sum in dispute into its solicitors’ trust account, and I extend the time for complying with the demand to ten days from the date of this judgment.

[52]     Counsel were agreed that costs of the application should be awarded on a scale 2B basis, whichever way the application was determined.  I order Trends to pay Dalgety its costs on this application on a scale 2B basis, together with disbursements

as fixed by the Registrar.

Associate Judge Abbott