Kennedy Civil Contracting Pty Ltd (subject to Deed of Company Arrangement) v Linx Constructions Pty Ltd

Kennedy Civil Contracting Pty Ltd, the appellant, sought an appeal from the Local Court to the Supreme Court against Linx Constructions Pty Ltd, the respondent, in a matter concerning the Security of Payment Act 1999 (NSW). The dispute arose from a payment claim made by Kennedy under the Act, which Linx had disputed. Kennedy argued it was entitled to recover the unpaid portion of the claimed amount, while Linx contended that Kennedy's reliance on a payment made, which reduced the unpaid portion, amounted to bringing a cross-claim, which was prohibited under the Act. Linx further argued that a payment not made to Kennedy but found to reduce the unpaid portion should not be taken into account in determining the unpaid portion.

The primary legal issue before the court was whether Kennedy's reliance on a payment made to reduce the unpaid portion constituted a cross-claim, which was prohibited under the Security of Payment Act. Additionally, the court needed to determine whether a payment not made to Kennedy but which reduced the unpaid portion, should be considered in calculating the unpaid portion. These issues involved the interpretation of statutory provisions and the application of relevant case law.

The court held that Kennedy's reliance on a payment made to reduce the unpaid portion did not constitute a cross-claim, as it did not involve a claim by Kennedy against Linx for money owed by Linx to a third party. Instead, the court found that this was a legitimate method of calculating the unpaid portion. The court also determined that a payment not made to Kennedy, which reduced the unpaid portion, could be taken into account when determining the unpaid portion. The court concluded that these issues involved questions of law and were appealable from the Local Court to the Supreme Court.

The Supreme Court allowed the appeal, setting aside the decision of the Local Court. The matter was remitted to the Local Court for rehearing in light of the Supreme Court's determination on the legal issues. The court did not make any orders as to costs.