Beauty Health Group Ltd v Sholl

Judgment

1. By Originating Process filed on 2 August 2017, the Plaintiff, Erma Properties Pty Limited ("Erma") applies to set aside a creditor's statutory demand ("Demand") served by the Defendant, A Plus Fire Pty Limited ("A Plus") on 17 July 2017.
2. The Demand was for the amount of $137,197.64, being the total of numerous individual invoices specified by reference to, inter alia, date, invoice number and amount in a schedule to the Demand. Those invoices were generally described as issued by A Plus to Erma for "fireproofing and related services by [A Plus] for [Erma] at the request of [Erma]". No question of the arithmetical accuracy of the total claimed was raised in this application. The schedule also referred to payments made by Erma to A Plus which it quantified as "nil". Erma took a point as to that matter to which I will refer below. The Demand was dated 17 July 2017 and signed by the solicitor for A Plus. It appears that it was verified by Mr Adrian Cencigh, a director of A Plus, by affidavit dated 17 July 2017, although that affidavit was not tendered in this application.

Affidavit evidence and factual background

1. I should briefly set out the background to the application, drawn from the affidavit evidence. The application to set aside the Demand is supported by an affidavit of Mr Benjamin Schmitzer dated 2 August 2017. Mr Schmitzer describes himself as the chief executive officer of Erma, although it appears that he has ceased to be a director of Erma and his wife now occupies that role. Mr Schmitzer was the director of Erma until February 2017 when his wife became its sole director. Mr Schmitzer's evidence is also that his wife "has had the day-to-day running" of Erma.
2. Mr Schmitzer's evidence is that Erma sought work orders from strata managers on behalf of strata plans, including fire preventive maintenance and fire rectification works and subcontracted work to individual fire companies. He contends that Erma entered into an "agreement" with a predecessor entity of A Plus, AC Fire, and subsequently A Plus, "for that entity to deal with [Erma] exclusively", apparently in March or April 2012. There was no admissible evidence of such an agreement, which was denied by A Plus, and Mr Schmitzer also refers at other points in his affidavit to Erma dealing with "specific subcontractors and contacts", although the suggestion may be that Erma dealt with multiple subcontractors and A Plus was expected to work only for Erma. Nothing turns on the existence of such an exclusivity arrangement for the purpose of this application.
3. Mr Schmitzer sets out the history of Erma's subsequent dealings with A Plus in respect of fire maintenance and rectification works and identifies a multitude of complaints relating to the provision of quotes and services by A Plus. Mr Schmitzer refers to the fact that AC Fire was placed in administration in February 2016, and to a dispute as to a payment made to AC Fire which A Plus contended should have been made to it. I do not treat the fact that AC Fire was placed in administration as adverse to it or to A Plus and it appears that the relevant monies were recovered from the administrator of AC Fire and transferred to A Plus' account.
4. The bulk of Mr Schmitzer's first affidavit refers to several occasions on which A Plus is alleged to have misquoted particular jobs or undertaken work in a deficient manner. Each complaint is then followed by evidence, in conclusory form, that the conduct damaged the reputation of Erma; that Erma's client subsequently did not deal with it in respect of the particular job or generally; and that the loss of profit to Erma on the job was in a specified amount. I will refer to examples of that evidence below.
5. By an affidavit in reply dated 31 August 2017, Mr Cencigh took issue with substantial aspects of Mr Schmitzer's evidence. Substantial parts of that affidavit were also inadmissible, and were not read, or were admitted with limiting orders under s 136 of the Evidence Act 1995 (NSW) as submission only. It is not necessary to deal with the areas of factual dispute between Mr Schmitzer and Mr Cencigh, and I recognise that Mr Cencigh's denial of matters put on oath by Mr Schmitzer would likely not have excluded a genuine dispute or offsetting claim in respect of the Demand had it otherwise been established. Mr Cencigh's evidence was also that Erma had made payments to A Plus totalling $30,000 by the end of May 2017; that Mr Cencigh required a further payment of $40,000 by the end of June 2017, or otherwise A Plus would stop work; and that only $19,000 was received by A Plus by 3 July 2017. Erma relied on that evidence in a challenge to the Demand to which I will refer below.
6. By a further affidavit dated 4 October 2017, Mr Schmitzer responded to Mr Cencigh's affidavit sworn 31 August 2017, taking issue with significant aspects of that evidence. Again, significant parts of that affidavit were inadmissible and were rejected for form with leave. Mr Schmitzer also gave oral evidence, by leave, to address matters that had not been admitted in his affidavit evidence. I bear in mind that an interlocutory application of this kind is not a proper occasion on which to reach substantive findings as to credit, and I do not do so. I should, however, note that Mr Schmitzer plainly had little specific recollection of several matters of which he had given evidence, in specific but inadmissible terms, in his affidavit, and Erma's attempt to supplement that inadmissible evidence by admissible oral evidence largely failed. It is not necessary to address the detail of that evidence, given the nature of the issues between the parties.

Whether a genuine dispute is established in respect of the Demand

1. Although the Originating Process did not specify the statutory basis of that application, it was ultimately pressed by reference to each of ss 459G, 459H and 459J of the Corporations Act 2001 (Cth).
2. Mr Locke, who appears for Erma, submits, first, that there is a genuine dispute about the existence or amount of the alleged debt which is the subject of the Demand, such that the Demand should be set aside under s 459H(1)(a) of the Corporations Act. Mr Locke submits, uncontroversially, that the test for whether there is a genuine dispute about the existence or amount of the debt to which a creditor's statutory demand relates requires that the dispute is not "plainly vexatious or frivolous" or "may have some substance" or involves "a plausible contention requiring investigation" and is similar to that which would apply in an application for an interlocutory injunction or a summary judgment: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787; Re UGL Process Solutions Pty Ltd [2012] NSWSC 1256 at [6]. Mr Locke refers to several of the well-known authorities as to the scope of the Court's ability to set aside a creditor's statutory demand for a genuine dispute, including Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290; (1993) 11 ACSR 362; Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452; CGI Information Systems and Management Consultants Pty Ltd v APRA Consulting Pty Ltd [2003] NSWSC 728; (2003) 47 ACSR 100 and TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70; (2008) 66 ACSR 67 at [71].
3. In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd above at 464, the Full Court of the Federal Court of Australia held that a "genuine dispute" must be bona fide and truly exist in fact, and the grounds for that dispute must be real and not spurious, hypothetical, illusory or misconceived. In CGI Information Systems & Management Consultants Pty Ltd v APRA Consulting Pty Ltd above at [16], Barrett J (as his Honour then was) summarised the principle as follows: "[T]he task faced by the company challenging a statutory demand on the genuine dispute grounds is by no means at all a difficult or demanding one. The company will fail in that task only if it is found, upon the hearing of its s 459G application, that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that on rational grounds indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger."
4. In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd above at [71], Dodds-Streeton JA observed that a company which seeks to establish a genuine dispute or offsetting claim: "… is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or off-setting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile. … [I]t is not necessary for the company to advance, at this stage, a fully evidenced claim. Something 'between mere assertion and the proof that would be necessary in a court of law' may suffice."
5. In Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601, the Court of Appeal, in summarising the case law applicable to the threshold to demonstrate an offsetting claim, conducted a comprehensive review of the cases referable to establishing whether a genuine dispute was established. Their Honours there emphasised (at [36]) that the court must be satisfied that there is a serious question to be tried or an issue deserving of a hearing or a plausible contention requiring investigation but also emphasised that the evidence necessary for that purpose "need not conclusively prove the claim or otherwise be incontrovertible or substantially non-contestable". Their Honours also observed (at [46]) that: "In determining whether there is evidence of a genuine dispute as to the debt, or that there is an offsetting claim, except in extreme cases, the court is not concerned to engage in an enquiry as to the credit of the deponent of the affidavit filed in support of the application." The Court also summarised the position (at [47]) as being that the court's role is: "to determine whether there was plausible evidence to establish the existence of a genuine dispute, not whether the evidence was disputed or even likely to be accepted on a final hearing of any such claim."
6. I also summarised the applicable principles in Re Wollongong Coal Ltd [2015] NSWSC 1680; (2015) 110 ACSR 134 at [9]-[22]. I proceed on the basis that the test for a genuine dispute is not a particularly demanding one and the court would not embark upon any extended inquiry as to the claims in determining whether a genuine dispute exists.
7. The first basis of the genuine dispute asserted by Erma appears to be that A Plus had agreed that it would not be paid until Erma was paid, on the basis of evidence led in paragraphs 80 and 97-98 of Mr Schmitzer's affidavit. The conversation in paragraph 80 of Mr Schmitzer's affidavit is denied by Mr Cencigh (Cencigh 31.8.17 [33]) and Mr Phillips, who appears for A Plus, points out that the most that A Plus is said to have agreed to do was to consider changing its payment terms, rather than to have changed those terms. That part of paragraph 97 of Mr Schmitzer's affidavit that was admitted goes no further than to establish Erma's practice of paying A Plus after it was paid by its client, and not that A Plus' entitlement to be paid was qualified by that practice; and paragraph 98 is inconsistent with the claim to set aside the Demand on this basis, so far as it refers to A Plus' requiring payment within 30 days from 9 September 2016. Mr Cencigh's evidence in response was that all the work done by A Plus for Erma was done under a quotation previously provided by A Plus and accepted by Erma; each of those quotations had A Plus' standard terms attached to it; and clause 44 of those terms provided that "[p]ayment is strictly due 30 days from the end of the invoiced month". That evidence may not have been sufficient to avoid a genuine dispute arising on that basis had it otherwise been established. Mr Phillips submits that, in any event, Erma has not led evidence that would enable the Court to find that some part of the debt is subject to a genuine dispute on this basis, since it does not assert or establish that any of the A Plus' invoices relate to work for which Erma has not been paid.
8. Mr Phillips also points to Mr Schmitzer's affidavit evidence that "some" of Erma's clients were taking "up to three months to pay" (Schmitzer [80]), and I recognise that Mr Schmitzer referred in oral evidence to one client who paid more slowly. That evidence does not assist A Plus, since it does not show that Erma's clients would have paid Erma for the work referable to the latest of the invoices included in the Demand, issued on 31 May 2017, by the date when the Demand was issued on 17 July 2017.
9. Mr Locke did not abandon that submission in oral submissions, but placed little weight upon it. Mr Phillips responds that, even if an understanding existed at some point that Erma was only required to pay A Plus when it was paid by its client, any such understanding was displaced whenever Erma and A Plus subsequently entered into a contract that contained the express written term that payment was "strictly due 30 days from the end of the invoiced month"; and even if A Plus had at some point waived its right to demand payment of its invoice within 30 days of the end of the invoiced month in relation to some contract, that waiver could not operate in respect of subsequent contracts entered into between Erma and A Plus after the acts alleged to constitute the waiver were performed.
10. It seems to me that a genuine dispute is not established on this basis, even to the low standard that is required to establish such a dispute. There is no evidence of any agreement by A Plus that Erma's payment obligations to A Plus were conditioned upon its receipt of payment by its clients, as distinct from a practice by Erma of paying on that basis, and, more fundamentally, there is no evidence that Erma had in fact not been paid by its clients in respect of the relevant invoices by the date the Demand was issued so as to avoid any obligation of payment to A Plus, even if Erma's payment practice qualified A Plus' standard payment terms.
11. Mr Locke placed primary weight, in oral submissions, upon the different proposition that a genuine dispute existed because A Plus had made the payments of $30,000 by the end of May 2017 and $19,000 by the end of July 2017, to which I referred above. It seems to me that a genuine dispute is not established on that basis. As Mr Locke accepted in oral submissions, the premise of that submission was necessarily that the invoices specified in the Demand were the only invoices issued by A Plus to Erma. Erma led no evidence to establish that premise; it is inconsistent with the evidence that Erma was dealing with A Plus (as distinct from AC Fire) from at least March 2016 and the earliest of the invoices specified in the Demand was issued in December 2016; Mr Cencigh gave oral evidence, by leave, when this issue was first raised by Mr Locke in oral submissions at the hearing, that the amounts received had been applied against earlier outstanding invoices of A Plus, and the invoices included in the schedule to the Demand were all invoices that were outstanding after the relevant payments were received; and Erma did not seek to lead evidence in reply from Mr Schmitzer to contest that proposition. It seems to me that the onus of establishing any genuine dispute on that basis rested on Erma, and would require that it establish at least an arguable basis for a claim that the relevant payments should have been applied to the invoices specified in the Demand rather than to earlier invoices. It could readily have done so, by, for example, the tender of an account or ledger or other financial records recording the dealings between the parties, but did not do so. For these reasons, a genuine dispute is not established on that basis.

Whether an offsetting claim is established

1. Mr Locke rightly submitted that an offsetting claim, for the purposes of s 459H(1)(b) of the Corporations Act is the amount of a claim or claims that a company has against the person who served a creditor's statutory demand by way of counter-claim, set-off or cross-demand, whether or not the amount arises out of the same transaction or transactions as the debt to which the Demand relates.
2. Mr Locke referred to authority as to the circumstances in which a company can establish an "offsetting claim", if there is a "serious question to be tried" or "an issue deserving of a hearing" as to whether the company has such a claim against the creditor and that claim is made in good faith and is arguable and not frivolous or vexatious, referring to Re Morris Catering (Aust) Pty Ltd (1993) 11 ACSR 601 at 605; Scanhill Pty Ltd v Century 21 Australasia Pty Ltd [1993] FCA 618; (1993) 12 ACSR 341 at 356-357; Beauty Health Group Ltd v Sholl [2011] NSWSC 77 at [23]; Re Halal Meats Pty Ltd [2015] NSWSC 2041 at [18]. Mr Locke also referred to the Court of Appeal's explanation of the test for an offsetting claim in Britten-Norman Pty Ltd v Analysis and Technology Australia Pty Ltd above at [30] as follows: "It is settled law that s 459H requires the court to be satisfied that there is a 'serious question to be tried': see Scanhill v Century 21 Australasia at 467, or 'an issue deserving of a hearing' as to whether the company has such a claim against the creditor: see Chase Manhattan Bank Australia Ltd v Oscty Pty Ltd [1995] FCA 1208; 17 ACSR 128 at [42] per Lindgren J; Eumina Investments Pty Ltd v Westpac Banking Corp [1998] FCA 824; 84 FCR 454 per Emmett J (as his Honour then was). The claim must be made in good faith: Macleay Nominees v Belle Property East Pty Ltd. In that case, Palmer J observed, at [18], that good faith, in this context, meant that the offsetting claim was arguable on the basis of facts that were asserted 'with sufficient particularity to enable the court to determine that the claim is not fanciful'."
3. It is necessary for Erma to establish a seriously arguable case not only as to liability, but also as to quantum, in respect of its offsetting claim. In Royal Premier Pty Ltd v Taleski [2001] WASCA 48 at [57], Ipp J in turn noted that "there must be at least some material upon which the court can conclude that some damage has been sustained and which will enable the court to make a reasonable assessment as to the amount thereof". In Beauty Health Group Ltd v Sholl above at [23], Barrett J (as his Honour then was) similarly observed that s 459H(1)(b) of the Corporations Act, read in conjunction with the definition of "offsetting claim" in s 459H(5) of the Corporations Act: "… requires the court to consider whether the plaintiff has a 'genuine' claim against the defendant in respect of the matter raised. It is also necessary to ascribe an 'amount' to any 'genuine' claim in order to determine, under s 459H(2), the 'offsetting total' which plays a central part in determining whether the 'substantiated amount' is less than the statutory minimum of $2,000. The court's task is not to make any final choice between the competing contentions about the relevant matter. It need only see that the plaintiff has asserted a claim and that the claim rises to the level of a serious question to be tried (Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 12 ACSR 341), is based on a cause of action advanced in good faith for an amount claimed in good faith (Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743) and is not frivolous or vexatious (Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37)."
4. In Douglas Aerospace Pty Ltd v Indistri Engineering Albury Pty Ltd [2015] NSWSC 167 at [40], Brereton J observed that: "While the full amount of an offsetting claim is to be deducted from the admitted total to ascertain the substantiated amount [Classic Ceramic Importers Pty Ltd v Ceramica Antiga SA (1994) 13 ACSR 263], that applies only to the extent that the offsetting claim is genuine. Thus a company relying on an offsetting claim must adduce evidence that enables the court to ascertain the amount of the genuine claim to the extent necessary to apply the formula in s 459H. If the offsetting claim must plainly exceed the amount of the demand, it is unnecessary that it be precisely quantified. But where that is not clear, the court must be able to quantify an offsetting claim, and if the evidence does not permit it to do so, will attribute to it only a nominal value [Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 1) (1994) 13 ACSR 455]."
5. Mr Phillips addressed each of the fourteen offsetting claims on which Erma relied in submissions, although it is not necessary for me to address those claims in detail given the lack of admissible evidence to support them. As I noted above, Mr Schmitzer's first affidavit refers to several occasions on which A Plus is alleged to have misquoted particular jobs or undertaken work in a deficient manner and claims, in conclusory form, that the conduct damaged the reputation of Erma; that Erma's client subsequently did not deal with it in respect of the particular job or generally; and that the loss of profit to Erma on the job was in a specified amount.
6. By way of example, a suggested misquote by A Plus in respect of a strata plan at Bellevue Hill (Schmitzer 2.8.17 [48]) is asserted to have brought about a loss of confidence by the client in Erma, and Mr Schmitzer then states, without further indication of the basis of the calculation (and in evidence admitted under s 136 of the Evidence Act as a contention only) that: "The loss of profit to [Erma] on this job was approximately $26,000 to $30,000." (Schmitzer 2.8.17 [53]) Mr Schmitzer also refers to the company that requested that quote, presumably a strata manager, and asserts that Erma has not received requests for quotes on any other big fire orders since that misquote (Schmitzer 2.8.17 [54]), presumably from that entity, and that this has resulted in a loss of future profits for Erma and reputational damage, and then asserts, again without identification of the basis of the calculation (and in evidence also admitted under s 136 of the Evidence Act as a contention only) that: "I would estimate that the future loss of profit for the Company in respect of [client] to be within the range of $60,000 per annum to $100,000 per annum." (Schmitzer 2.8.17 [55])
7. To take another example, Mr Schmitzer refers to a suggested attendance by a technician by A Plus at a property at Lilyfield (Schmitzer 2.8.17 [58]); gives evidence that was rejected, for form with leave, in respect of that attendance and supplemented in oral evidence; and indicates, again without detailing the basis of the calculation and in evidence admitted with a limiting order under s 136 of the Evidence Act as evidence of Erma's contention only, that: "As a result of the said conduct on the part of A Plus Fire, [Erma] lost a contract with a value worth $1,116.50 per annum together with reputational damage." (Schmitzer 2.8.17 [59])
8. Mr Schmitzer's affidavit also refers (in evidence admitted with a limiting order under s 136 of the Evidence Act as Erma's contention only) to a suggested loss to Erma of $18,500 in respect of work on a fire door contract at Potts Point (Schmitzer 2.8.17 [62]) and to reputational damage and loss of profits from other work quantified (in evidence admitted with a limiting order under s 136 of the Evidence Act as Erma's contention only) as future losses of $50,000-$80,000 per annum (Schmitzer 2.8.17 [65]).
9. Mr Schmitzer also advances an allegation, also admitted with a limiting order under s 136 of the Evidence Act as evidence of Erma's contention only, that Erma lost several jobs as a result of "excessive quotes" provided by A Plus (Schmitzer 2.8.17 [66]), although no basis was exposed for the proposition that those quotes were excessive. Mr Schmitzer refers to, and Mr Locke relies on, an increase in prices by A Plus in October 2015, which it is suggested led Erma to lose jobs at Bondi, Rockdale, Pyrmont and Potts Point (Schmitzer 2.8.17 [67]-[69]). Mr Schmitzer also refers to, and Mr Locke relies on, delays in A Plus providing a quote for work at Rushcutters Bay (Schmitzer 2.8.17 [72]), and suggested late and excessively priced quotes, poor workmanship and communications with resulting loss of work for Erma and loss of profit in respect of other premises. In each case, the evidence as to the suggested loss of profit was admitted with a limiting order, under s 136 of the Evidence Act, such that it is proof of the contention only and not proof of the fact.
10. Mr Schmitzer's evidence of the alleged loss of profit would have been rejected, as plainly inadmissible, in substantive proceedings between the parties. I admitted that evidence in this application, with a limiting order under s 136 of the Evidence Act as evidence of Erma's contention only, and not proof of the relevant fact, because the basis on which Erma contends that the Demand should be set aside is itself a relevant matter in this application. Mr Locke did not submit that the evidence should be admitted on any wider basis. Erma has therefore established that it contends that numerous offsetting claims exist against A Plus, but it has not (with one exception) established any evidentiary basis for the quantification of the loss of profit which it attributes to those claims. That exception is Mr Schmitzer's evidence of one conversation, in which he asserted a loss of profit of $20,000 (Schmitzer 2.8.17 [80]) in respect of a Cabramatta property, which was admitted without a limitation under s 136 of the Evidence Act. However, Mr Schmitzer's evidence as to that loss did not rise beyond bare assertion.
11. Assuming, without deciding, that the allegations of deficiencies in A Plus' work and excessive quotes could have established an offsetting claim, on the relatively low standard that is required to do so, Erma has not established by admissible evidence either that the loss it claims exceeds the amount claimed in the Demand, or even that there is a genuine question that it might do so, and its evidence does not provide a sufficient basis to quantify any lesser offsetting claim to allow any reduction of the Demand under s 459H of the Corporations Act.

Whether some other reason to set aside the Demand is established

1. Mr Locke alternatively submitted that there was either a "defect" in the Demand by reason of an overstatement in the debt for the purposes of s 459J(1)(a) of the Corporations Act or some other reason to set aside the Demand because the statement in the verifying affidavit that the debt claimed was due and payable and not genuinely disputed was untrue making the Demand an abuse of process or unconscionable for the purposes of s 459J(1)(b) of the Corporations Act.
2. The inclusion in a creditor's statutory demand of substantial amounts which are not due for payment may be a defect that would give rise to substantial injustice, by requiring the recipient of that demand either to move to set aside the demand, even if it paid any amount claimed that was otherwise properly due: Portrait Express (Sales) Pty Ltd v Kodak (Australasia) Pty Ltd [1996] BSWSC 199; (1996) 20 ACSR 746 at 750. This would warrant an order setting aside a demand under s 459J(1)(a) of the Corporations Act. The Court may also set aside a creditor's statutory demand under s 459J(1)(b) of the Corporations Act if it is satisfied that there is some other reason that the demand should be set aside. In First State Computing Pty Ltd v Kyling (1995) 13 ACLC 939, Santow J observed that a statutory demand could be set aside under that section by reason of a substantial overstatement in the amount claimed, and that, where a statutory demand has been so grossly inflated as to comprise matters which it should have been obvious from the outset were in genuine dispute between the parties at the time the demand was served, then an order under s 459J(1)(b) setting aside that statutory demand may well be required to prevent such an abuse of the regime under Pt 5.4 of the Act.
3. Mr Locke relied on the payments made by Erma, to which I referred above, in order to establish that the Demand should be set aside on these bases. No basis to set aside the Demand is established on these grounds, since Erma has not led evidence that is capable of establishing, even as a serious question to be tried, that those payments should have been applied to the invoices claimed as unpaid in the Demand rather than to earlier invoices, and no overstatement of the amount of the Demand has been established. For that reason, no other reason to set aside the Demand has been established.
4. For these reasons, the Originating Process filed by Erma seeking to set aside the Demand should be dismissed with costs.

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