Linkhill Pty Ltd v The Director of the Fair Work Building Industry Inspectorate

Linkhill Pty Ltd sought special leave to appeal to the High Court of Australia against a decision of the Full Court of the Federal Court. The dispute concerned the Director of the Fair Work Building Industry Inspectorate's claim for penalties and compensation orders against Linkhill, alleging sham contracting. Linkhill argued that the Full Court erred in refusing to allow it to raise a new point on appeal, which would have demonstrated that payments made to workers exceeded their award entitlements, thereby entitling Linkhill to a set-off.

The primary legal issues before the High Court were whether the Full Court had fundamentally miscarried its discretion in refusing leave to argue the new point, and whether there was a substantial conflict in the authorities regarding the principles of set-off in the context of award entitlements and contractual payments. Linkhill contended that the Full Court erred by considering hypothetical evidence the Director might lead, which Linkhill argued would have been detrimental to the Director's case, and by failing to recognise that the Director's own evidence implicitly supported Linkhill's new point. Furthermore, Linkhill argued that the conflict between the line of authority represented by *James Turner Roofing* and that represented by *Poletti v Ecob* and *ANZ v FSU* was substantial and required resolution by the High Court, as it had significant implications for the application of set-off principles in employment law.

The High Court was presented with arguments that the Full Court's refusal to grant leave was an error of discretion, as it was based on a misunderstanding of the evidence and the Director's position. Linkhill argued that the Director, as a regulator, should have acted more cooperatively and that the refusal to allow the new point led to a potentially unjust outcome where Linkhill faced significant penalties and compensation orders despite potentially having overpaid its workers. The appellant also submitted that the conflict between the different lines of authority on set-off was not confined to specific circumstances, such as failed contracts for services, but arose more broadly in cases involving payments made without specific allocation to award entitlements, making its resolution of public importance.

The Director resisted the application for special leave, arguing that there was no arguable case of error in the Full Court's decision and that the novel arguments raised by Linkhill were without substance. The Director maintained that the Full Court correctly applied the principles for granting leave to raise new points on appeal by considering whether the Director could have led non-fanciful evidence to meet the new point. The Director also acknowledged, to some extent, the uncertainty in the law regarding set-off but argued that the specific approach advocated by Linkhill, based on *James Turner Roofing*, was itself a matter that would be contested and that the factual basis for its application had not been fully explored in the courts below.