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  • Unreported Judgment

Cavanagh v Chayil Enterprises Pty Ltd

 

[2020] QCATA 49

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Cavanagh v Chayil Enterprises Pty Ltd [2020] QCATA 49

PARTIES:

joely ann cavanagh

(appellant)

v

chayil enterprises pty ltd

(respondent)

APPLICATION NO/S:

APL198-19

ORIGINATING APPLICATION NO/S:

MCDO 65/19 (Ipswich)

MATTER TYPE:

Appeals

DELIVERED ON:

7 April 2020

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Gordon

ORDERS:

  1. The respondent’s name in the record of the tribunal and the record of the Appeal Tribunal is changed from Chayil Enterprises Ltd to Chayil Enterprises Pty Ltd.
  2. Joely Ann Cavanagh is given leave to amend the grounds of appeal in the form submitted on 3 September 2019 (without the need to serve any documents) but no leave is given for any further amendments to the grounds of appeal.
  3. Leave to appeal is granted.  The appeal is allowed.  The decision made on 2 July 2019 dismissing application MCDO 65/19 (Ipswich) is set aside.
  4. Application MCDO 65/19 (Ipswich) is remitted to the tribunal for reconsideration.

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR  OF LAW – where an Adjudicator dismissed an application on the basis of a knock out point raised at the hearing for the first time by a solicitor representing the respondent – where the self-represented applicant was unable to deal with the  point – where the point was probably not a good one – whether procedurally unfair or other error of law

REPRESENTATION:

Appellant:

Self-represented but assisted by Kevin Bradley, solicitor

Respondent:

Self-represented but assisted by Robinson Locke Litigation Lawyers

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)

REASONS FOR DECISION

  1. [1]
    This is an appeal from the decision made by an Adjudicator in the tribunal’s minor civil dispute jurisdiction.  A dispute arose from the sale of the leasehold business of the Aratula Hotel Motel by Joely Ann Cavanagh to Chayil Enterprises Pty Ltd at the beginning of 2019.  Ms Cavanagh brought a claim in the tribunal against Chayil, and Chayil brought a claim in the tribunal against Ms Cavanagh.  Both claims came before an Adjudicator and were dismissed at the same time.  In this appeal Ms Cavanagh says that her claim against Chayil should not have been dismissed.
  2. [2]
    Leave has not been given by the Appeal Tribunal for either party in this appeal to be represented, so technically both parties to the appeal are self-represented.  The reality is however, that each party has had assistance in this appeal from solicitors as stated in the title above.

Correcting the name of the respondent

  1. [3]
    Chayil say that the appeal should be dismissed because the wrong party is named as a respondent to the appeal.  The party named as respondent to the appeal in the application for leave to appeal or appeal was Chayil Enterprises Limited.  Chayil point out that there is no such company.  Chayil Enterprises Pty Ltd was the entity originally named as respondent to the minor civil dispute application made by Ms Cavanagh.  It appears that the Ipswich Registry incorrectly showed the name of the company on the tribunal’s record as Chayil Enterprises Limited.  This resulted in the decision issued in the minor civil dispute proceedings naming Chayil Enterprises Limited as respondent.  There is no application to correct the name to Chayil Enterprises Pty Ltd but it is clear that it should be corrected.  No one has been misled by the mistake, and all parties were aware throughout that the identity of the respondent was in fact Chayil Enterprises Pty Ltd.

Amending the grounds of appeal

  1. [4]
    After obtaining a copy of the transcript and getting legal advice, Ms Cavanagh applied on 3 September 2019 to amend the grounds of appeal, by replacing the original grounds of appeal with new ones.  A decision on the amendment application has been reserved to this hearing of the appeal on the papers.  Since the new grounds of appeal do not add any new grounds of appeal, but remove some existing grounds of appeal, Chayil sensibly do not oppose the amendment and have made submissions on the assumption that leave to amend the grounds of appeal will be granted by the Appeal Tribunal.  It is right to grant leave.  It is often the case that after obtaining a transcript the appropriate grounds of appeal will be clearer to an appellant.  This and the obtaining of legal advice explain why there is a need to amend.  There is no prejudice to Chayil in granting the amendment.  I grant leave to amend the grounds of appeal in the form applied for on 3 September 2019.
  2. [5]
    This has not completely clarified the grounds of appeal however.  On 8 October 2019 Ms Cavanagh prepared submissions for the Appeal Tribunal and these were lodged on 11 October 2019.  These submissions contained four additional grounds of appeal not in the amended grounds of appeal applied for on 3 September 2019 which I have just allowed.
  3. [6]
    Ms Cavanagh seems to wish to argue the following additional grounds.  They are:
  1. (a)
    the tribunal was acting beyond its powers in hearing both the application brought by Ms Cavanagh and the application brought by Chayil against Ms Cavanagh at the same time;[1]
  2. (b)
    the sole director of Chayil should be added as a respondent;[2] and
  3. (c)
    the contract of sale should not have been admitted into evidence because it was not stamped and section 487(1) of the Duties Act 2001 (Qld) prohibits this.[3]
  1. [7]
    The question is whether the Appeal Tribunal should allow Ms Cavanagh to argue these additional grounds of appeal in the circumstances.  One thing tending to favour allowing the additional grounds of appeal is that there would be no prejudice to Chayil in allowing this, because it has made submissions on all the additional grounds.  Also the tribunal and Appeal Tribunal lean against taking a technical approach to such matters.  The Appeal Tribunal often permits additional grounds of appeal to be added informally in submissions, if it is fair to permit this and would not disrupt the progress of the appeal. 
  2. [8]
    Here however, there are reasons not to allow this.  With respect to additional ground (a), this was in the original application for leave to appeal and appeal and was abandoned by the application for leave to amend which I have granted today.  There is no explanation why this ground is being argued again.  It is therefore quite inappropriate to allow this.
  3. [9]
    As for additional grounds (b) and (c) there is no explanation why these additional grounds were not raised in the original appeal nor in the amended grounds.  This makes them very difficult to accept.
  4. [10]
    Additional ground (b) appears to have no merit because the sole director made no such application and in any case joining her would be quite inappropriate.
  5. [11]
    Ground (c) is a completely new point.  It was not in the amended grounds of appeal.  It was not raised before the Adjudicator.  It also seems strange, bearing in mind that Ms Cavanagh’s application relied on the contract of sale concerned, which was attached to her application on Form 3.  It is true however, that the Adjudicator did look at the unstamped contract of sale and relied on it when deciding the application.
  6. [12]
    On behalf of Chayil, it has been submitted that the prohibition in section 487(1) from taking an unstamped contract of sale into evidence does not apply to the tribunal because, as provided by section 28(3) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), the tribunal is not strictly bound by the rules of evidence.  To decide that point would need some analysis of the relevant legislative provisions.  There is also case law about the meaning and effect of the prohibition in section 487(1) in different types of cases, which could be relevant because this case is not a typical type of case where the prohibition is raised.  So to allow this submission would complicate the appeal considerably.
  7. [13]
    One reason why I should ignore the additional grounds of appeal is that the amended grounds of appeal were prepared by Ms Cavanagh’s solicitors and should therefore be regarded as a thoroughly considered case in this appeal.  A formal application was made to amend the grounds in that form, and that application was not amended prior to my decision today to allow the amendment.
  8. [14]
    In the circumstances I shall limit myself to consider the amended grounds of appeal for which I have given leave today.

Application for Chayil to produce documents

  1. [15]
    Ms Cavanagh has applied to the Appeal Tribunal for an order that Chayil produce some documents referred to by Chayil at the hearing before the Adjudicator, and which documents are said to have been relied on by the Adjudicator when making the decision.
  2. [16]
    These documents are not relevant for the appeal and in any case I could not look at such documents because this would be ‘fresh’ evidence and there is no application before me to look at fresh evidence.
  3. [17]
    It is unclear from the application exactly what documents are being sought in this application.  In so far as any documents in Chayil’s possession or control may be relevant to the remitted hearing it is better for an application to be made to the tribunal after some further consideration, if so advised.  So I make no order on this application.

The minor civil dispute application

  1. [18]
    The application made by Ms Cavanagh which is the subject of this appeal claimed the sum of $8,159.91 plus interest and costs, coming to a total of $8,367.71.  It was said that Ms Cavanagh agreed to sell to Chayil, and Chayil agreed to buy, the ‘Aratula Hotel Motel’ for $128,160.87 but only $120,000 was paid.  Hence there was $8,159.91 unpaid.  It can immediately be seen there is a slight disagreement in the amounts stated here.
  2. [19]
    Attached to the application was a written contract of sale dated 31 January 2019 which  stated that the assets being sold were the hotel’s lease with a term commencing on 1 January 2019 and expiring on 31 December 2021, the business of the hotel, and an inventory ‘as attached’ belonging to Ms Cavanagh.  The inventory was not in fact attached to the contract at any time.  Although the contract referred to ‘the Purchase Price for the Assets’ it did not clearly state the amount of that purchase price.  Clause 3 however, said that the purchase price was to be allocated as to $100,000 to ‘goodwill’. 
  3. [20]
    Clause 21 however, required the payment of $100,000 on settlement and stated in paragraph d:[4]

all stock to be paid for at hand over for the amount agree to by stock taking

  1. [21]
    In the event, it is agreed that $120,000 was paid by Chayil in total, with $20,000 understood by both sides to be for stock, although Ms Cavanagh is saying it was insufficient and the stock was worth more.
  2. [22]
    Ms Cavanagh’s application on Form 3 did not explain why it was said the purchase price was $128,160.87 when the contract said it was $100,000.  In particular, it was not suggested in the application that there was any agreement about how the stock inventory was to be done and as to the amount which was to be paid for stock.
  3. [23]
    Because the claim was brought on Form 3, Chayil was required to file a formal response.  The response described the contract as being for $100,000 plus stock, and agreed that $120,000 was paid.  The main point in defence was that the parties had agreed that the maximum value of the stock was $20,000.[5]  Hence the correct amount had been paid.  It was also said that it had been agreed that a third party would conduct the stocktake immediately prior to settlement,[6] but that it was actually done by Ms Cavanagh’s father in the absence of anyone from Chayil and inventory which was produced was not agreed because it included some business assets which should not have been included.[7]
  4. [24]
    At the hearing, mostly the same points were made on Chayil’s behalf.  It was said that there was an oral agreement that the stock would not be more than $20,000,[8] that there was an oral agreement that the stocktake would be done by an external person but it was done by the sellers instead,[9] and that Ms Cavanagh’s father would do it with someone from Chayil but that did not happen either.[10]  Ms Cavanagh brought her father to the hearing, and he explained to the Adjudicator how he had done the stocktake and he vouched for it.[11]  This led the Adjudicator to express a view that the stocktake had been done accurately.[12]
  5. [25]
    However, at the hearing a new point was made.  It was said that Chayil was running the business with no lease because the lease of the hotel had not been assigned to Chayil,[13] and so Ms Cavanagh was in breach of clause 6 of the contract of sale.[14]  This point was made by Mr Millard, a solicitor who attended the hearing with the director of Chayil.
  6. [26]
    The point was picked up by the Adjudicator and relied on as the reason to dismiss the application.  The Adjudicator said during the discussion that Ms Cavanagh had a clear obligation to ensure that the lease was assigned in favour of Chayil and if this did not happen, then Chayil did not have ‘to pay a cent’.[15]  It was on the same basis that the Adjudicator when giving reasons dismissed the application.[16]  Effectively the principle applied by the Adjudicator was that of dependent obligations, which often arises in such contracts.  As applicable to this matter, the principle is that Chayil would not be obliged to pay for the stock because that obligation was dependent upon Ms Cavanagh performing all important obligations on her part.  Her failure to assign the lease meant that the obligation to pay for stock never arose.
  7. [27]
    I shall need to come back to this finding when considering the grounds of appeal.
  8. [28]
    In this appeal it is said that allowing Mr Millard to be involved in the hearing was unfair to Ms Cavanagh, and so it is necessary to recite what happened at the hearing and prior to the hearing, relevant to Mr Millard’s involvement.
  9. [29]
    There is a file note made the day before the hearing on 1 July 2019, that Chayil had lodged an online application for its solicitor ‘to be joined to the hearing’.  The application appears in the file.  It was made on Form 45 which is not the correct form to apply for representation.[17]  It would appear that the application was made by email at 4.16 pm on 1 July 2019 leaving little time for it to be processed before the hearing.  There is nothing in the email showing that Ms Cavanagh was notified that the application had been made, although the email did state that it was the third attempt to make the application and that previous online attempts had been made.  There is nothing on the file however showing that there was an earlier application made.
  10. [30]
    The result was that the hearing started without any formal decision about legal representation having been made.  At the commencement of the hearing Mr Millard introduced himself and explained that two applications for legal representation had been made without response.  He was attending on behalf of his client because she was ‘on the verge of having a breakdown at the moment, given all of the stress that’s been created’.[18]
  11. [31]
    Ms Cavanagh objected to Mr Millard representing Chayil on the basis that she was not represented by a solicitor, had only just been handed the application for representation and had not had any prior notification of it, and it appeared to be contrary to the idea in the tribunal that there would be no legal representation.[19] 
  12. [32]
    The Adjudicator gave leave for Mr Millard to represent Chayil.
  13. [33]
    I also need to mention that there were two applications dealt with in the hearing before the Adjudicator and they were closely related.  Only one of them, the application brought by Ms Cavanagh, is the subject of this appeal.  The other application was a claim brought by Chayil against Ms Cavanagh for damages in the sum of $12,406.[20]   This was based on alleged breach of contract for failure to provide the owner’s written consent to the assignment of the lease and estoppel certificates showing that there were no arrears of rent or breaches of covenant.[21]  It was also said that the seller had failed to paint in accordance with the lease, had failed to provide evidence for pest control, and that there were problems with the hotel’s plumbing, gas and beer system.  The issues were said to be breaches of various warranties in the contract.[22]
  14. [34]
    Despite not being a claim to recover a debt or a liquidated demand of money, Chayil’s application was brought on Form 3 and required a formal response from Ms Cavanagh.  In that response Ms Cavanagh said that the owner had given consent, which also amounted to the required estoppel certificates, and any breaches of covenant were denied.
  15. [35]
    At the hearing the Adjudicator dismissed Chayil’s claim being unsatisfied that any breach had been proved.[23]  Of importance for this appeal, it is necessary to understand the Adjudicator’s finding on the question of owner’s consent to the assignment of the lease, and I need to come back to that when considering this appeal. 

The grounds of appeal

  1. [36]
    The amended grounds of appeal (as separated and simplified) are:[24]

Ground of appeal 1

It was procedurally unfair to allow Chayil’s solicitor to address the Adjudicator and to act as Chayil’s legal representative, particularly in the absence of an application for legal representation.[25]

Ground of appeal 2 

The Adjudicator’s rejection of Ms Cavanagh’s claim on the basis that she had not assigned the lease with the owner’s consent to the assignment was contrary to law and against the evidence, bearing in mind the burden of proof about this was Chayil’s.[26]  Also by taking possession of the business without an assignment Chayil waived any obligation of Ms Cavanagh to provide an assignment at the time of settlement.[27]

Ground of appeal 3 

The hearing was conducted in an informal way and without structure but with numerous interventions from the Adjudicator, so that Ms Cavanagh did not have a reasonable opportunity to present her case,[28] or to comment on what Mr Millard was saying.[29]  In particular, if the Adjudicator had complied with the obligation to ensure that all relevant material was disclosed the tribunal, like an email of 30 January 2019 referred to at the hearing, instead of relying on the information given by Mr Millard from the bar table, the Adjudicator would have found that it was Chayil and not Ms Cavanagh who had failed to complete the owner’s requirements to consent to an assignment of the lease.[30]

Ground of appeal 4 

The claim based on the valuation of the stock should have succeeded because (seemingly) it was an obligation independent from any obligation of Ms Cavanagh to assign the lease in the ways set out in paragraphs 6c to 6e of the grounds of appeal.[31] 

Ground of appeal 5

Having allowed Chayil’s solicitor to participate in the hearing, the Adjudicator should have given Ms Cavanagh a chance to apply for an adjournment to consult a lawyer.[32]

  1. [37]
    I shall consider each ground of appeal in turn.

Ground 1 of the appeal

  1. [38]
    The file demonstrated that Chayil had tried unsuccessfully to make an earlier application to be legally represented and this was confirmed by Mr Millard at the hearing.  The Adjudicator was entitled to accept what was said about this.  In the circumstances, it reasonably appeared to the Adjudicator that due to some unfortunate circumstance the application to be legally represented was made at the hearing and not earlier.  It was within his discretion to give leave. 
  2. [39]
    What was said by Mr Millard at the hearing as the reason for his presence was compelling.  The Adjudicator was aware that the tribunal’s obligations and procedures would also reduce any imbalance arising from one side being represented and the other not. 
  3. [40]
    Mr Millard told the Adjudicator that the purpose of his attendance was ‘not really to raise any legal issues’ and that he would not be raising any ‘new issues’.  It was on that basis that the Adjudicator gave leave for Mr Millard to act as Chayil’s legal representative.  Although as can be seen below, Mr Millard did raise an important new issue, when he made the decision to give leave the Adjudicator was not aware of that.  His decision to give leave when the hearing started cannot be impugned in this appeal.

Grounds 2, 3 and 4 of the appeal

  1. [41]
    It is convenient to deal with these three grounds together.
  2. [42]
    The issues in the application would, in an ideal world, have been identified as follows and dealt with accordingly:
  1. (a)
    Was there any oral or written agreement about the stocktake as contemplated by clause 21d or otherwise, binding on the parties and capable of supporting the claim?
  2. (b)
    If the answer to (a) is ‘yes’, is a claim in respect of any such agreement a claim to recover a debt or a liquidated demand of money or otherwise within the tribunal’s jurisdiction on the basis that the parties are both traders and the claim arises out of a contract between them?
  3. (c)
    What exactly were Ms Cavanagh’s obligations with respect to obtaining the owner’s consent to the assignment of the lease and to assigning the lease at the time of settlement or any time thereafter?
  4. (d)
    Did Chayil waive Ms Cavanagh’s obligations found under (c) by paying the $100,000 on settlement and paying $20,000 for stock thereafter, by taking possession of the hotel and trading from it over a period of about six months immediately prior to the hearing (including by selling the stock), and by negotiating with the owner to give consent to the assignment of the lease?
  5. (e)
    Was Ms Cavanagh in breach of any obligations not waived by Chayil?
  6. (f)
    If the answer to (e) if ‘yes’, was the obligation to pay for stock so dependent upon performance by Ms Cavanagh of the obligation of which she was in breach, that the application should fail on that basis?
  7. (g)
    If Ms Cavanagh has grounds to succeed in the application, what is the unpaid amount for the stock?
  1. [43]
    It can be seen that it would be complex and difficult to give full consideration of the issues in the usual time allocated to hearings of this type, and it may well have been out of proportion to the size of the claim, and contrary to the tribunal’s own objects.[33]  Instead, the Adjudicator cannot be criticised for taking a direct and summary approach to the matter, particularly as both parties expressed the view that they wanted it dealt with at that hearing.[34]  In that respect also, the Adjudicator cannot be criticised for taking an inquisitorial approach to the hearing – this is a recognised and acceptable practice which is particularly efficient in these types of disputes.  As recognised in ground of appeal 3 however, care needs to be taken to ensure that the parties have a fair chance to comment on issues which may determine the outcome.
  2. [44]
    In this appeal, the difficulty appears to be that on the central issue, that is whether Ms Cavanagh was in breach of a fundamental obligation under the contract of sale by failing to assign the lease, the Adjudicator seems to have assumed that she was, which as said in ground 2 of the appeal may have been incorrect, where as said in ground 3 of the appeal, Ms Cavanagh did not have a full opportunity to deal with the issue.  Then as suggested in ground 4 of the appeal, the Adjudicator assumed that Chayil’s obligation to pay for stock was dependent upon performance of the fundamental obligation of which he had found Ms Cavanagh to be in breach, when they may well be separate and independent obligations, which was not considered.  And as said generally in the appeal, since these were new issues which arose from Mr Millard’s last minute involvement, it was procedurally unfair to Ms Cavanagh to reach a conclusion on them in a peremptory way.
  3. [45]
    As for Ms Cavanagh’s relevant obligations under the contract of sale, the following need to be considered:
  1. (a)
    By clause 22d, on or before settlement, she had to obtain the owner’s consent to the assignment of the existing lease to Chayil.
  2. (b)
    By clause 5, at the time of settlement and upon Chayil paying the purchase price in full, she had to ‘deliver the Assets’ to Chayil.[35]
  3. (c)
    By clause 6, at the time of settlement and upon Chayil paying the purchase price in full, she had to provide Chayil with an assignment and other documents ‘where required’.[36]
  1. [46]
    As for the obligation in (a), as stated above, the Adjudicator dismissed Chayil’s claim against Ms Cavanagh for damages for failure to do this.  Clause 22d was silent as to whether such consent could be given orally or whether it was required in writing, and to whom such consent should be given.  Ms Cavanagh said in her formal response to Chayil’s claim that the owner had informed its own solicitors that it consented.  This information must have reached Ms Cavanagh in some way, and since it was not in dispute that the owner’s solicitors were corresponding with Chayil’s solicitors about the lease, it is likely that Chayil would have been aware of this as well, if it were correct.  It is not apparent from the Adjudicator’s reasons when dismissing Chayil’s claim under clause 22d, the basis on which it was dismissed.  The likelihood is that either he accepted that the owner did express consent and that this was sufficient to satisfy clause 22d, or he found that Chayil may have waived the obligation under clause 22d by settling and proceeding with the purchase without such consent.[37]  Either way, important for this appeal, the Adjudicator found that there was no breach of the obligation in (a).
  2. [47]
    As for (b), the effect of this clause was not raised at the hearing.  It was not Chayil’s case that there was any breach of this clause, probably because it is very unclear what it means when one of the assets referred to in this clause is described as the ‘lease’.  For the purposes of this appeal there is no need to consider clause 5 any further.
  3. [48]
    As for (c), this was drawn to the Adjudicator’s attention at the hearing.  Clause 6 says:

At Closing and upon the Purchaser paying the Purchase Price in full to the Seller, the Seller will provide the Purchaser with duly executed forms and documents evidencing transfer of the Assets, where required including but not limited to, bills of sale, assignments, assurances, and consents.  The Seller will also co-operate with the Purchaser as needed in order to effect the required registration, recording and filing with public authorities of the transfer of ownership of the Assets to the Purchaser.

  1. [49]
    The context here is that the existing lease was included in the ‘Assets’ listed in the contract.
  2. [50]
    Clause 6 was not in absolute terms, and only obliged Ms Cavanagh to provide the described documents ‘where required’.  It was not suggested on Chayil’s behalf at the hearing that Chayil ‘required’ the assignment at settlement.  Instead, on the day of settlement, Chayil proceeded with the purchase despite not being given an assignment of the lease.  Had an assignment been required on settlement then Chayil would not have proceeded with the purchase.
  3. [51]
    There appears to have been nothing before the Adjudicator therefore, showing that Ms Cavanagh was in breach of the contract of sale at the time of settlement. 
  4. [52]
    The Adjudicator did find however that Ms Cavanagh was in breach of the contract of sale, and it is possible that the Adjudicator was referring to a continuing obligation to assign the lease after settlement.  But the difficulty is that there is nothing in the contract of sale imposing such an obligation.  It could only arise by separate agreement (if admissible) or by implication.  At the hearing, the Adjudicator was not told of any such separate agreement. 
  5. [53]
    The question of it arising by implication was not discussed either.  It seems unlikely that an absolute obligation to assign the lease could arise by implication because the owner’s consent to such an assignment would be outside Ms Cavanagh’s control.  Instead, it seems more likely that any such implied obligation would be for Ms Cavanagh to co-operate and not to do anything which could impede any negotiations between the owner and Chayil and to execute a Form 1 Transfer to assign the lease when the correct time arose. 
  6. [54]
    There was no suggestion at the hearing that Ms Cavanagh was in breach of any such obligation, nor any suggestion that she would not execute the transfer when asked to do so.  The information about this at the hearing came from Mr Millard.  He was in a position to give this information because he was corresponding with the owner’s solicitors on Chayil’s behalf as its solicitor.  He told the Adjudicator that the owner’s solicitors had indicated that consent to the assignment would be forthcoming upon receiving a copy of the inventory,[38] a stamped transfer,[39] and a Form 5 which concerns liquor licensing.[40]  In submissions it is suggested that the owner also required Chayil’s director to give a guarantee.[41]  Mr Millard told the Adjudicator that he asked Ms Cavanagh to sign a transfer and she had signed it immediately, and he had then sent this to the owner’s solicitor.[42]  There is nothing here showing that Ms Cavanagh had failed to co-operate or that she was impeding the negotiations in any way.
  7. [55]
    In addition to this, there was nothing before the Adjudicator to indicate that Chayil’s occupation was precarious vis á vis the owner.  It was not said for example, that the owner was seeking Chayil’s removal, or had sought Chayil’s removal at any time over the six months that Chayil had been trading at the hotel by the time of the hearing.  There was no information at the hearing about whether the owner had accepted rent from Chayil over that time. 
  8. [56]
    Overall, there appears to have been nothing before the Adjudicator showing that Ms Cavanagh was in breach of the contract of sale.
  9. [57]
    Analysing Ms Cavanagh’s obligations under the contract of sale as above also tends to indicate that Chayil’s obligation to pay for the stock was separate from, and independent of, Ms Cavanagh’s obligations under the contract of sale.  This is a point made in ground of appeal 4.  That question would turn on the terms of the contract and the objective intention of the parties.  For Chayil in this appeal, it is submitted that the contract was ‘entire’.[43]  That might be the case with respect to the main obligations, but clause 21d expressly contemplated a separate agreement about the stocktake.  The question is whether enforcement of any such agreement was dependent upon performance of the main obligations in the contract of sale, and if so whether in fact Ms Cavanagh had performed those.
  10. [58]
    Ms Cavanagh’s submissions in this appeal try to show that she was not to blame for there being no assignment of the lease to Chayil by the time of the hearing. 
  11. [59]
    This is difficult to do without an application to put fresh evidence before the Appeal Tribunal, so the way it is put is that the Adjudicator should have investigated this issue at the hearing with Ms Cavanagh, and it was procedurally unfair simply to accept what Mr Millard said from the bar table.
  12. [60]
    There is considerable strength in this argument for two reasons. 
  13. [61]
    Firstly, the point about the failure to assign the lease was new.  It was raised by Mr Millard at the hearing.  It had not previously been raised in paperwork before the tribunal.[44]  Previously, Ms Cavanagh’s alleged failures to comply with the contract of sale were set out in the application by Chayil against Ms Cavanagh which was heard at the same time as the application under appeal.  The ‘consent’ point under clause 22d was raised in that application, and was answered by Ms Cavanagh in her response to that application, but the ‘failure to assign’ point was not raised in that application.  So that point was unexpected. 
  14. [62]
    It is clear from the transcript that Ms Cavanagh was unable to deal with the failure to assign point at the hearing.  One difficulty with this was that the Adjudicator expressed Ms Cavanagh’s post-settlement obligation as an absolute one, where her obligation was to assign the lease with the owner’s consent.  If this were her obligation, then there could be no answer to it.  Had the Adjudicator considered her post-settlement obligation to be merely to co-operate, not to impede, and to execute a transfer when asked, she may have been able to deal with that issue.
  15. [63]
    Secondly, Mr Millard was acting as Chayil’s legal representative at the hearing.  But he also provided information to the Adjudicator about the state of the negotiations with the owners for the assignment of the lease.  In her appeal submissions, Ms Cavanagh says Mr Millard therefore gave evidence from the bar table, and this evidence should not have been accepted, so that the hearing was procedurally unfair.  Instead she says, what was required was an examination of the document or documents concerned, in particular the email of 30 January 2019, which would have shown she was not at fault for the fact that there was no assignment. 
  16. [64]
    The difficulty here is that a solicitor is not permitted by the codes of conduct to be an advocate for a client before a court or tribunal if it is known, or becomes apparent, that the solicitor will be required to give evidence material to the determination of contested issues before the court or tribunal.[45] 
  17. [65]
    The information Mr Millard gave the Adjudicator was probably not material to the determination of contested issues before the court or tribunal because the Adjudicator regarded Ms Cavanagh’s post-settlement obligation as being an absolute one to assign the lease with the owner’s consent.  On that basis, who was to blame for it not happening was irrelevant.
  18. [66]
    It is clear from the grounds of appeal however, and from the transcript, that Ms Cavanagh thought that her blameworthiness was an important issue.  Hence, it has appeared to her that Mr Millard’s information was accepted in evidence and was the reason for her application being dismissed.
  19. [67]
    Ironically, this belief is given force by Chayil’s own submissions.  At paragraph 14 the status of that information given by Mr Millard is described as ‘evidence’:[46]

The original hearing proceeded relatively informally in that no witness was sworn to give testimony, no evidence was given by way of statements, and no exhibits tendered.  These submissions proceed on the basis that the discussion from the bar table, from various people, as seen from within the Transcript, has been acted upon as evidence.

  1. [68]
    In addition to the above passage, the sections of the transcript containing the information given by Mr Millard are set out in paragraph 29 of the same submissions.  In that paragraph they are again referred to as ‘evidence’.
  2. [69]
    Since the reason for the rule in the code of conduct is that it is of paramount importance that advocates remain independent and therefore better able to fulfil their duty to the court and to the administration of justice, if advocates are permitted to give material evidence this may well be regarded as unfair to the other side.  Here, it is difficult to say that it was not properly perceived by Ms Cavanagh as procedurally unfair to permit this to happen.
  3. [70]
    In the circumstances, grounds 2, 3 and 4 of the appeal succeed.

Ground of appeal 5

  1. [71]
    Since the parties in attendance at the hearing expressed the view that they would prefer it to be dealt with at that hearing, the Adjudicator was justified in proceeding with the hearing having given Chayil leave to be legally represented.  Had Ms Cavanagh asked for an adjournment to take legal advice then the Adjudicator would have considered this.  But this did not happen.

Conclusions in the appeal and its disposal

  1. [72]
    Grounds 2, 3 and 4 succeed, and so I will give leave to appeal and allow the appeal.  This is an appeal on a question of law only, and under section 146 of the QCAT Act on allowing such an appeal I may substitute my own decision.  However it seems to me that quite apart from the issues identified in these reasons as arising from the new point taken by Chayil at the hearing, the outcome of the application could turn on exactly what was agreed between the parties about the stocktake, and whether Chayil is correct that a cap on the value of the stock was agreed.  This was not investigated at the hearing and evidence will be needed at least on those matters.  For an appeal under section 146, the Appeal Tribunal is unable to rehear the matter and so it will have to be remitted back to the tribunal for reconsideration.

Footnotes

[1]Paragraph C7.

[2]Paragraph A1.

[3]Paragraphs D(d) and I(g).

[4]The grammatical error is not corrected in this quote.

[5]Response, paragraphs 1(e) and 2(a).

[6]Response, paragraph 1(d).

[7]Response, paragraphs and 1(f), 1(j) and 1(i).

[8]Transcript 1-6 line 35.

[9]Transcript 1-9 line 29.

[10]Transcript 1-9 line 30.

[11]Transcript 1-6 and 1-20.

[12]Transcript 1-9 line 22, 1-25 line 30, 1-34 line 21, 1-35 line 11.

[13]Transcript 1-9 line 45 and subsequent passages.

[14]Transcript 1-14 line 47.

[15]Transcript 1-21 line 40, and put in different terms at transcript 1-23 line 35.

[16]Transcript 1-35 line 35.

[17]Form 45 is used to apply to be joined as a party; Form 56 should have been used.

[18]Transcript 1-2 line 35.

[19]Transcript 1-2 line 43.

[20]Application 106/19 (Ipswich).

[21]Relying on clause 22d of the contract.

[22]Clauses 9e, 9l, 9m and 11.

[23]Transcript 1-36 line 6.

[24]There are other grounds of appeal which seem simply to be a rewording of the grounds set out here – for example that the Adjudicator’s decision was unreasonable on the Wednesbury principles, procedurally and substantially unfair, generally contrary to law and against the weight of the evidence.  It is also suggested that there should be leave to appeal because there are questions of general importance and to public advantage.

[25]Grounds of appeal 4c, 4d, 4e, 4f. Also paragraph 9(h) of the submissions filed on 11 October 2019.

[26]Ground of appeal 5 and paragraphs 13(e), 14(c) and 14(e) of submissions filed on 11 October 2019.

[27]This appears to be what is meant in paragraph 14(c) of the submissions lodged on 11 October 2019.

[28]Ground of appeal 4 and paragraph 9(a) of submissions filed on 11 October 2019.

[29]Paragraphs 9(e) and 13(e) of submissions filed on 11 October 2019.

[30]Grounds of appeal 4a, 4b, 5, 6a. Also paragraphs 9(e), and 13(e) of the submissions filed on 11 October 2019.

[31]Grounds of appeal 6b to 6e.

[32]Ground of appeal 4f.

[33]To deal with matters in a way that is accessible, fair, just economical, informal and quick – section 3(b) of the QCAT Act.

[34]Transcript 1-3 line 7.

[35]Which assets were said to include the existing lease.

[36]Clause 6 is set out in full below.

[37]The terms of clause 22 itself state that the obligation could be waived by the purchaser.

[38]Transcript 1-18 line 16.

[39]Transcript 1-17 line 38.

[40]Transcript 1-18 line 30.

[41]Amended grounds of appeal 4a.

[42]Transcript 1-17 line 39.

[43]Submissions in the appeal 10 October 2019, paragraph 13(a).  This is also stated in clause 45 of the contract.

[44]In Chayil’s submissions on appeal it is suggested that the point was made in the formal response to the application, but this is not in fact the case: paragraph 29 of submissions filed on 1 October 2019.

[45]Rule 27.1 of the Australian Solicitors Conduct Rules.

[46]Filed on 1 October 2019.

Close

Editorial Notes

  • Published Case Name:

    Joely Ann Cavanagh v Chayil Enterprises Pty Ltd

  • Shortened Case Name:

    Cavanagh v Chayil Enterprises Pty Ltd

  • MNC:

    [2020] QCATA 49

  • Court:

    QCATA

  • Judge(s):

    Member Gordon

  • Date:

    07 Apr 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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