Appellants v Respondents

1 The respondents seek summary dismissal of an appeal commenced by the appellants by notice of appeal filed 1 August 2014. In the appeal, the appellants seek to appeal an order made by Magistrate G. McNamara at Ringwood Magistrates' Court on 4 July 2014. By that order the Magistrate dismissed the appellants' (then plaintiffs) claim against the respondents (then defendants) and ordered the plaintiffs to pay the defendants' costs fixed in the sum of $13,659.00.

2 The respondents seek summary dismissal of the appeal pursuant to r 58.10(8) of the Supreme Court (General Civil Procedure) Rules 2005 ('the Rules'). That rule provides that at the directions hearing before an Associate Judge for directions on an appeal:

(8) The Associate Judge may dismiss the appeal if satisfied that -

(a) the notice of appeal does not identify sufficiently or at all a question of law on which the appeal may be brought;

(b) the appellant does not have an arguable case on appeal or to refuse leave would impose no substantial injustice; or

(c) the appeal is frivolous, vexatious or otherwise an abuse of the process of the Court.

3 In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd[1] the Court of Appeal held that a court must take a cautious approach to summary dismissal, and should not summarily dismiss a proceeding unless it is clear that there is no real question to be tried.[2] That case was concerned expressly with the power to summarily dismiss conferred by s 63 of the Civil Procedure Act 2010 and whether that section departed from the earlier test that required the Court to be satisfied that a claim was 'hopeless' or 'bound to fail' before summarily dismissing it. However, the Court expressed the need for caution generally, and so I also take that approach in relation to the power to summarily dismiss an appeal from the Magistrates' Court conferred by r 58.10(8).

4 For the reasons set out below I have concluded that the appellants should be given the opportunity to run some aspects of their case at the full hearing of the appeal and, with some limited exceptions, I will dismiss the respondents' summary judgment application. I have reached this conclusion notwithstanding two matters.

5 The first is that while I consider that there is an argument to be put in relation to the construction of the contractual condition here in question, it is not one that was put below. Indeed, in some respects the appellants now seek to advance completely contrary arguments to those that they put below. The respondents rely on authorities which they say establish that '(t) question of law must have been raised below, whether on the pleadings, in evidence or otherwise'.[3] In my view, as elaborated later in this judgment, the impact of this principle on this case is better deliberated after full hearing, rather than following brief argument on a summary judgment application.

6 The second matter to which I have given anxious consideration is that the notice of appeal is very seriously flawed. I will strike out the Questions of Law and Grounds (with the exception of Ground 8 which is consequential only) and the appellants will be required to redraw the notice to properly raise the question of construction that emerges from their written submissions and that I consider to be arguable. That question is not currently articulated with sufficient clarity in the notice of appeal.

7 The respondents did not seek strike out of the notice of appeal, they sought dismissal of the appeal. I will dismiss some questions, but allow others to be redrawn. Accordingly, the respondents have not been in the main successful. However, given the flaws in the notice of appeal, their success in respect of some questions, and the possibility that, at the full hearing of the appeal, the arguments the respondents have advanced in support of summary dismissal may be successful, my preliminary view is that the respondents' costs should either be reserved or in the appeal. I will hear the parties in relation to costs if they do not agree.

8 The amount in dispute in this case is small in comparative terms, and the parties' costs will rapidly exceed it, if they have not already. Accordingly, I would urge the parties once they have absorbed these reasons to make further genuine efforts to reach agreement to end this litigation.

9 The appellants' claim in the Magistrates' Court arose from the sale by them to the respondents in 2005 of their land at 436 Maroondah Highway, Narbethong on which was constructed the Black Spur Inn. The contract for sale also conveyed to the respondent purchasers the chattels and stock contained within the Inn.

10 The contract of sale is dated 3 August 2005. The purchase was settled in June 2006.

11 The contract contained a special condition, special condition 4 which reads as follows:

At settlement stock take will be done by the vendors and the purchasers by agreement and failing agreement a professional stocktaker shall be appointed with the cost to be born (sic) equally by the vendors and purchasers the ascertained value of stock shall be due and payable on the day of settlement.

12 In their claim at the Magistrates' Court the appellants sought the liquidated sum of $25,834.88. This was expressed to be the sum of $14,449.00 for the balance due for the stock under the contract together with penalty interest in the sum of $11,285.88. The claim for penalty interest was abandoned at the commencement of the trial. The claim was expressed in the complaint to be in debt.

13 The defendants raised a limitation defence and a defence of set off in their filed defence, but those matters were abandoned at the trial, with the exception of a minor set off in respect of a glass washer. The parties agreed at the trial that the only issue before the Magistrate on the plaintiffs' claim was whether special condition 4 had been satisfied so as to enliven a debt.

14 The plaintiffs contended that as a matter of construction i.e. as a matter of law, there were two limbs to the special condition. They contended through their then legal representative Mr Beder[4] that the first limb required a stocktake by agreement, or by a professional stocktaker, but that the 'stock take' there required was to ascertain quantities only, not price. Value or price was the subject of the second limb, which required only that it be 'ascertained', not that it be agreed or determined by a professional stocktaker. Mr Beder supported this submission by reference to a definition of 'stocktaking' to the effect that it was the physical verification of the quantities and condition of items i.e. a count, or the taking of an inventory, not a valuation.[5]

15 The plaintiffs contended that the evidence showed that there had been an agreed stocktake conducted by the first plaintiff and the son of the defendants, within this definition, on the day of settlement, although there was no agreement as to price that day. On the plaintiffs' construction of the condition, agreement as to value was not required. The first plaintiff subsequently submitted his valuations to the defendants. Mr Beder submitted that this constituted ascertainment of the value, as required by special condition 4. He emphasised that the requirement was that the value be 'ascertained', not that it be 'agreed'.[6] When the Magistrate queried this construction of the condition in discussion, Mr Beder qualified the submission in these words:

The plaintiff ascertained the value of the stock and that's what they are obliged to pay. There's no evidence that it was unreasonable.[7]

16 Mr Beder also submitted that the values subsequently submitted to the defendants by Mr Harris had never been disputed by them.[8] Further, that if the Magistrate were to find that some items had been included by Mr Harris which should not have been, then the Magistrate was entitled to 'make an assessment of value' himself and the plaintiffs would accept that assessment.[9]

17 The defendants disputed both the plaintiff's construction, as a matter of law, of the special condition, and their contention that on the evidence there had been a joint stocktake as to quantities on the day of settlement. The events in question had taken place eight years before by the time of the trial, the plaintiffs having commenced the proceeding at the very end of the limitation period. The factual evidence was hotly in dispute, although it was common ground that there had been no involvement by a stocktaker.

18 In relation to construction of the special condition, the defendants submitted that what the condition required was either agreement or professional assessment of both quantity and price. The defendants submitted that the condition must be read as a whole, not in two limbs as the plaintiffs contended. In response to the distinction the plaintiffs' drew between 'agreement' and the 'ascertained' value of stock, the defendants submitted that that construction would make the condition void for uncertainty because it would not provide any mechanism by which the value could be 'ascertained'.[10]

19 In relation to the facts, the defendants submitted that it was not proved by the plaintiffs that there had been any agreement as quantity, and certainly not as to price, and that the evidence showed to the contrary - that there had not been agreement as to items to be included, quantity, or price.[11]

20 Counsel for the defendants addressed first in closing, and also submitted that failure by the defendants to object to the values placed on the stock by the plaintiffs could not as a matter of law constitute agreement as the plaintiffs had alleged in opening.[12] Mr Beder for the plaintiffs did not expressly submit in closing that failure to object could constitute agreement, although he did, as noted earlier, refer to it. The recording of the first day was not transcribable and so I am unable to see for myself whether or not he had put it in opening.

21 On my reading of the closing submissions there were three issues between the parties. The first was the construction, as a matter of law, of special condition 4. In the absence of recourse to an independent stocktaker, did the condition require agreement as to both inventory and price to enliven the obligation of the defendant purchasers to pay for stock? The second issue was one of fact- had there been agreement? The plaintiffs contended that there had been agreement as to the inventory and this was sufficient. It may be that they also contended that there was agreement as to value by acquiescence.

22 The third matter was raised by Mr Beder for the plaintiffs in his final remarks, and that was his submission that the Court could ascertain the value of the stock for itself. In response to that submission, counsel for the defendants said the following:

That may very well be the case if it were a different cause of action. It's not. Your Honour, the dispute that has been put before this court and that both parties have been explicit for this court to consider is whether a debt was enlivened as a result of contract.

That's the only issue here. It's not the reasonableness. There's no quantum meruit like arguments being put and I have not dealt with them. I've not put on expert evidence on the reasonableness of the prices of these stock because that's not the way the case is run. Reasonableness assessment would require us to put on that evidence and I have not had the opportunity to do so.[13]

23 The Magistrate rejected the submission by the plaintiffs as to the meaning of 'stock take', which he summarised as a submission that 'stock take' meant 'simply an evaluation of what stock is there rather than the actual cost of the stock or the value of the stock'.[14] He held that the condition required not only the stock itself but also its value to be determined at a stocktake. If the parties agreed as to the amount so determined, that is what would then be owing. If they did not, then a professional stocktaker would be required and they would be bound by his assessment as to what was owed.[15]

24 The Magistrate did not in terms rule on the submissions by the plaintiffs that the condition had two limbs, that agreement was only required in respect of the first limb, and the value of the stock could be 'ascertained' by the plaintiffs stating their values, at least where the defendants did not object to them. It is implicit, however, in his acceptance of the defendants' submission that agreement was required both as to quantity and value, that he rejected those submissions of the plaintiffs on the construction of the condition.

25 The Magistrate then identified the issue before him as: 'was there an agreement as to price? There was no independent valuation by a stocktaker, so the question is whether there was an agreement as to the value of the stock at that time?'[16] In relation to that issue, the Magistrate summarised the defendants' case as being that 'there never was any agreement as to the value ... there was no valuation, and therefore this complaint must fail.'[17]

26 The Magistrate in his judgment then discussed in detail the evidence before him. The factual evidence as to whether or not there had been a stocktake conducted on the day of settlement and on other factual issues was highly contested. The Magistrate found that the purchasers did receive stock, that both parties intended that the purchasers pay for stock, and that at the time of settlement and after the settlement the parties were trying to come to some resolution about the stock.[18] He held, however, that:

...I'm not satisfied that at any time that there was an agreement about price, and there was nothing, no document ever signed which agreed price which one would expect. And so far as the history which I've gone through quickly now, at no point along that way was there an agreement about price on the evidence. It's strongly denied by the defendants who I think are honest people, and Mr Kennedy-Mr Harris rather, doesn't point to, except for one conversation where he says they agreed the inventory. But whether that was price or not is disputed by Mr Kennedy, and in fact he disputes the inventory as well.

I do accept that Mr Harris has an honest belief that they had come to an agreement at that time, but on the evidence I'm actually satisfied that they hadn't, but even if I hadn't reached that point, it's the case that I have to be satisfied on the balance of probabilities that they had reached an agreement about price and I've not, so the claim will be dismissed.[19]

27 Thus the Magistrate found positively that there was no agreement about price, or, at least, he found that the plaintiffs had failed to prove agreement as to price. He did not in his judgment expressly refer to any submission by the plaintiffs that agreement was constituted by the defendants subsequently failing to object to the plaintiffs' stated values for the stock supplied to them after settlement. He did say, however, that he was satisfied that there was no agreement about price 'at any time' and as his recitation of the evidence included matters that occurred after settlement I conclude that to the extent that submission was pressed by the plaintiffs, the Magistrate rejected it.

Approach to consideration of the appeal for summary dismissal

28 Section 109 of the Magistrates' Court Act 1989 provides for appeal to this Court from a final order of a magistrate on a question of law only. Rule 58.08(1)(b)(iii) of the Rules provides that the questions of law upon which the appeal is brought must be set out in the notice of appeal. The attention of the Associate Judge on an application for summary dismissal pursuant to r 58.10(8) is directed to consideration of the questions of law as set out in the notice of appeal. The authorities show that it is the question or questions of law so articulated that enliven the Court's jurisdiction.[20] Further, the questions of law are not to be distilled from the grounds.[21] The purpose of the grounds is to 'frame' the questions of law by giving them the necessary factual and procedural context.[22]

29 Thus the respondents are entitled to seek summary dismissal of the appeal on the basis of objection to the appeal as formulated in the notice of appeal. They have largely done so, although they have incorrectly focused at least their written submissions on the Grounds.

30 The appellants are now unrepresented, although it appears that Mr Harris has had a legal background. Both parties prepared written submissions for the hearing of the respondents' application, and made oral submissions on that day. Mr Harris also filed further written submissions after the hearing. He did so without leave, but as the respondents have not objected to me reading those submissions and do not wish to reply further, I will also take into account the appellants' further written submissions.

31 Regrettably, the notice of appeal and submissions that Mr Harris has prepared are extremely dense and hard to follow. In his oral submissions, Mr Harris indicated that he was not wedded to all the questions of law he had included in the notice of appeal. He contended that the appeal rests solely on the interpretation of special condition 4, and the other matters are peripheral and he would not object to them being struck out. His written submissions address only matters of interpretation of the special condition.

32 In my view, the proper approach in this case is to consider not only the questions of law and grounds as articulated by Mr Harris in the notice of appeal, but also his written and oral submissions, even where they may depart from the notice of appeal. I do so for the following reasons. Mr Harris is unrepresented; the burden on a respondent who seeks summary dismissal of an appeal is high; and the role of an Associate Judge on an appeal is intended to be that of initial scrutiny rather than substantive determination.[23] Further, summary dismissal pursuant to r 58(10)(8) is discretionary. For all these reasons, I will strike out the questions of law as drafted in the notice of appeal and the accompanying grounds, but not dismiss the appeal in its entirety. The appellants will be required to redraw the notice of appeal in accordance with these reasons.

33 The other matter to which I adverted in the introduction to this judgment was the extent to which the appellants may arguably now be seeking to raise new matters on appeal. The respondents rely on Fiorelli Properties Pty Ltd v Professional Fencemakers Pty Ltd and anor[24] ('Fiorelli') in support of their submission that the question of law now sought to be ventilated on appeal must have been raised below. In that case, Kaye J held that an appellant could not raise on appeal a cause of action not run below. He articulated the principle he applied as being that the appellant must identify an error of law made by the magistrate, and in the case before him the 'appellant is now seeking to rely on a significantly different right of action to that which it propounded before the magistrate'.[25] That case concerned a new cause of action raised for the first time on appeal. In this case, both parties agree that the cause of action below was in contract, and the appellant does not seek on appeal to advance any other cause of action, and indeed is insistent that no other cause of action would have been available.[26]

34 The arguments that the appellants now put on the construction of special condition 4 in opposition to the summary dismissal application are different to those they put through their counsel below. I have given consideration to whether the application of the Fiorelli principle means that they should not be permitted now to do so. On the broadest view of that principle, that may be its effect. In my view, however, this is a matter for determination after full argument on the appeal, not on a summary dismissal application. I reach this conclusion because in articulating the principle, Kaye J noted that its application is not to be determined:

...solely by reference to the manner in which the causes of action, relied upon by the appellant at first instance, were formulated in the statement of claim, or, indeed, articulated in argument. Rather, it is necessary to consider the substance, and not just the form, of the proceeding which was brought before the Magistrate.[27]

35 Further, the case before him concerned a new cause of action, not a new argument, and the other cases that he discussed concerned new defences.[28] In this case, the appellants seek to run new arguments, but not a new cause of action, and the arguments concern the construction of special condition 4, which was a central issue before the Magistrate.

36 I turn now to consideration of the questions of law that the appellants seek to ventilate. I turn first to the arguments that the appellants wish to put in relation to the construction of special condition 4, as those arguments emerge from all their material. A question of construction is a question of law. Accordingly, the matters I have considered are whether the questions raised by the appellants as to the construction adopted by the Magistrate are arguable, whether they are sufficiently set out in the notice of appeal, and whether they are questions on which the appeal may be brought.

37 The clearest statement by the appellants that their appeal concerns alleged error by the Magistrate in the construction of special condition 4, and the clearest articulation of the arguments that they wish to put in that regard, is to be found in the Appellants Further Submission.[29] They assert that the purchasers' liability to pay for stock arose on execution of the contract for sale, and that the intention of special condition 4 was to provide a mechanism for the ascertainment of the value of the stock as at the date of settlement. Mr Harris expresses this most clearly in the fifth paragraph on page 2 of those Submissions in the following words:

This valuation is not the trigger [sic] that enlivens the contractual liability as suggested by the respondent which is in fact the execution and exchange of the written contract as from the 3/8/05 the respondent had a contractual obligation to pay for all of the merchantable stock at settlement while the stocktake is merely a valuation process that provides a value to be paid and the court has the jurisdiction to make a finding on the evidence supplied by both parties as to the value (note Mr Beder of counsel page 116 of day two transcript). This finding is made to settle a dispute as to value and enforce an agreed term of the parties [sic] agreement.

38 Elements of this assertion appear to be reflected in Question of Law 1(A) (when did the liability to pay for stock arise?); Question of Law 2(A), (E)- (G) (which posit that liability to pay for stock received arose on execution of the contract and the purpose of the special condition was only to value stock as at the date of settlement); and Grounds 1-3 (which similarly posit that liability arose on execution of the contract).

39 Counsel for the appellants below did not put this submission that there was a temporal division between liability (arising on execution of the contract) and the ascertainment of quantum (to take place at settlement) to the Magistrate. He made submissions in relation to quite a different two limbed reading of special condition 4 - that the first limb required a determination of quantity by agreement or by professional stocktaker (which was to take place on settlement and had taken place) and the subsequent ascertainment of price, which did not require agreement. Thus the argument the appellants now wish to put was not only not put below - it requires a meaning to 'stock take' that is the opposite of what they submitted below. Before the Magistrate, Mr Beder submitted that a 'stock take' was only a count or inventory. The Magistrate found against the appellants on that point. Now the appellants embrace that finding, and say, as quoted above, that 'the stocktake is merely a valuation process that provides a value to be paid' and, in the preceding paragraph in those Submissions:

(a) stocktake is a mechanical process whereby numbers are matched with wholesale prices extended and added to generate a value with no reference to an agreed price.[30]

40 If this was the sole aspect of the appellants' submissions on construction I would dismiss the appeal summarily. To run exactly the opposite argument on appeal that was run below cannot be said to arise from error by the Magistrate in determining the case as run. However, the appellants' arguments go further. In essence, as I understand their argument, they submit that the construction placed on the special condition by the Magistrate defeated the shared intention of the parties that the purchasers would pay for stock. The appellants submit that this construction results in a 'rediculous [sic] and absurd commercial result clearly not intended by the parties'.[31]

41 Special condition 4 does not expressly say that the purchasers will pay for stock, and then set out a mechanism by which the price that they are to pay is to be determined. To read it this way requires consideration of the condition in the light of the whole of the contract and questions of commercial efficacy. Those arguments were not put below by the appellants from my reading of the transcript and judgment (as noted earlier, the first day is not available). In other words, I accept the submission of the respondents that the questions raised by Grounds 1 and 2 were not raised below, and, indeed, the contrary argument to that put by Ground 2 was put below.[32]

42 On the other hand, there was evidence adduced from the respondents that they had intended to pay for stock. They relied in their case on a stock take they said that they had prepared. The arguments that the appellants now wish to run are capable of determination on this existing evidence. Further, the respondents themselves below and in this application have advanced arguments of certainty and commercial efficacy in support of their construction of the contract. Below, they asserted that to read the special condition in the way the then counsel for the plaintiffs urged upon the Magistrate would render it void for uncertainty because no mechanism was set by it to determine price. In this application, they also assert that if the 'ascertained value' need not be an agreed value but may be set unilaterally, then the condition contains an 'illusory promise'.[33]

43 It is not possible on the hearing of an application for summary judgment for full consideration to be given to the whole of the evidence, the whole of the contract, and an approach to construction necessary to give commercial efficacy, and nor is it appropriate that those matters be summarily determined. I consider that the appellants have an arguable case to put that the construction of special condition 4 adopted by the Magistrate does not give effect to the shared intention of the parties that the purchasers would pay for stock, and nor does it give the contract in that regard commercial efficacy. Whether those arguments should be permitted to be run on appeal, not having been raised below, should only be determined after a full hearing.

44 I turn now to consider how these questions are currently raised in the notice of appeal.

45 The notice of appeal poses two questions of law, each with sub parts, and seven grounds. The grounds to an appeal limited to a question of law should put that question in the factual and procedural context of the particular case. The Grounds in this notice of appeal seek to raise further and distinct questions. The respondents themselves in their submissions treated the Grounds as questions of law. Accordingly, I consider that the fair way to regard them is to treat them as intended questions of law, which, if they arise from the trial and are arguable, could be appropriately redrawn as Questions of Law.

46 In my view, for the detailed reasons set out below, none of the Questions of Law or related Grounds as currently drafted express with sufficient clarity the alleged error as to the construction of special condition 4 that the appellants assert in their written submissions as summarised by me in paragraph 43 above. I will strike out the whole of Questions of Law 1 and 2, and Grounds 1-5, but will permit the appellants to redraw questions of law and associated grounds that comply with these reasons.

47 Questions of Law 1(B) or 1(C) and Grounds 6 and 7 raise other alleged errors. For the reasons given below, I will dismiss the appeal in so far as it relates to those alleged errors.

48 In the analysis that follows I have grouped the Questions and Grounds by subject matter, under three headings - the construction of special condition 4; whether the purchasers were permitted to accept part only of the stock and a related question of procedural fairness; and the absence of written reasons.

Construction of special condition 4: does it concern quantum only?

49 Question of Law 1(A) poses the question as to when the purchaser's contractual liability to pay for stock arose. In its terms, it assumes a contractual liability. Whether or not there was such liability was, however, the very issue before the Magistrate. The accepted fact that the purchasers had signed the contract and the sale of land settled did not of itself determine this issue. Liability in relation to payment for stock was to be determined having regard to the requirements of the contract and in particular special condition 4. The construction for which the appellants now contend of that special condition may require liability to be implied because it reads the express terms as limited to determination of quantum, and assumes a temporal division between liability and determination of quantum. That construction was not argued before the Magistrate.

50 Questions 2(D), 2(E), 2(F) and 2(G) also assume in their terms a contractual liability to pay for stock prior to ascertainment of the price for same.

51 The second limb of Question 2(D) on a generous view also reflects the argument put below by Mr Beder in his closing submissions that the Magistrate was at liberty to determine the stock for which the purchaser defendants were liable to pay and the amount to be paid by them for that stock. The defendants opposed that submission on the basis that it amounted to a quantum meruit claim, and the claim had not been put that way. The Magistrate did not refer expressly to the plaintiffs' submission in his judgment, but it is necessarily implicit in his decision that he rejected it. He held that, in the absence of an independent stock taker being appointed, agreement as to price as well as inventory was required. In other words, the plaintiffs sued on a contractual liability which was not proved to arise.

52 Questions 2(E) and 2(F) reflect the clear grievance the appellants feel that, notwithstanding that even on their own calculations the defendants acknowledged that they owed the plaintiffs an amount for stock, they were not by the order of the Magistrates' Court required to pay any amount. They are companion questions to the second limb of Question 2(D). Question 2 (D) asks why the court could not determine the quantum. Question 2(E) asks why no quantum was ordered when the defendants did not dispute their liability to pay. Question 2(F) asks why the defendants' calculations as to the value of the stock did not constitute the 'ascertained value of stock' within special condition 4 so as to require them to pay that amount.

53 These questions all suffer from the same defect as Question 1(A). That defect is that they all assume a proved contractual liability, rather than asking whether that is the true construction of special condition 4. Questions 2(E) and (F) relate to quantum, and that issue only arises once liability is proved or accepted. Whatever the defendants' actions in preparing their own stocktake may have suggested, it is self-evident from the way they ran their case that they did not accept liability by virtue of that special condition. The plaintiffs were required to prove liability, and on the construction that the Magistrate adopted of special condition 4 they failed to do so. As liability under that condition was the only cause of action advanced, the court was not then required to consider quantum and indeed could not.

54 Question 2(G) is in similar vein. It reiterates the appellants' contention that the word 'ascertained' relates to quantum, not to liability. In support of this contention, this question contains a submission - that the appellants' construction of the special condition is to be preferred because it better reflects that the value of stock fluctuates, and could not have been known at the time the contract was entered into. It is not clear to me from my reading of the closing submissions below that this submission was put by the appellants. Whether it is an argument that can be put on appeal should be determined after full hearing.

55 I will strike out Questions of Law 1(A), 2(D), 2(E), 2(F), and 2(G). The appellants will have leave to redraw them to more clearly articulate the questions of law as to the construction of special condition 4 articulated in their submissions as identified by me.

56 It is not clear to me how Question 2(A) sits with the new construction that the appellants seek now to advance as to special condition 4. It asks if the 'agreement' referred to in the special condition relates to the mode of stock taking. I accept the submission of the respondents that there was no submission put by the plaintiffs below to this effect. It was plainly not put by the defendants, as their contention was that all matters must be agreed. The plaintiffs did, however, put clearly below that the 'agreement' envisaged by the special condition was only as to the taking of an inventory and not the setting of prices for the stock. The appellants appear to now wish to accept the Magistrate's determination that 'stock take' involves the setting of a price or value to the stock as well as the taking of an inventory. If that is so, then Question 2(A) may no longer arise. I will strike it out for lack of clarity, but it falls within the general leave I will give to the appellants to redraw questions of law as to the construction of special condition 4.

57 In my view, Questions 2 (B) and (C) are entirely hypothetical questions of law as to the construction of special condition 4. Not only was there no argument below as to the meaning of 'SHALL', there is no argument that I can identify in the appellants' submissions to explain the significance of this word in the construction of special condition 4 that they now wish to advance, and which is arguable. I will strike out Questions 2(B) and 2(C). I do not consider that they can be redrawn to fall within the questions of law identified in the submissions.

Grounds related to the construction of special condition 4

58 Grounds 1-5 appear intended to relate to the construction of special condition 4. As discussed below, they suffer from the same defects as the associated Questions of Law. I will strike them out, but give leave to redraw them consistently with these reasons.

59 Grounds 1 and 2 assert a temporal aspect to the construction of special condition 4. This temporal argument appears to be that liability arose on execution of the contract, and what was to occur on settlement was in relation to quantum only. As noted earlier, this was not put below. Further, as noted earlier, the reference in Ground 2 to the purpose of the stocktake being to ascertain value is entirely the opposite of what the appellants asserted below. I consider, however, that whether or not these arguments may be put on appeal should only be determined after full argument on the appeal.

60 The second limb of Ground 1 (the reference to stock that could be rejected) was also not raised as a matter of construction below. It fails for the reasons I will shortly set out in relation to Questions of Law 1(B) and (C).

61 Ground 3 is not intelligible. If it is intended to reiterate Question of Law 2(A) it fails for the same reason. To the extent it is intended to challenge the construction of special condition 4 that the Magistrate adopted, it may be redrawn.

62 Grounds 4 and 5 reiterate the grievance articulated in Questions of Law 2(E), (F) and (G) that the effect of the Magistrate's decision was not to require the defendants to pay anything for stock. I strike them out, but, subject to the next paragraph, give leave to redraw them, for the same reasons as advanced in relation to those Questions of Law.

63 The aspect of Ground 5(D) that asserts that the plaintiffs indicated in summing up that they would accept the defendants' valuation may not be included in the redrawn Ground, because the respondents dispute that this occurred, and have shown that there is no basis for it in the transcript. The portion of transcript to which Mr Harris referred me in support of this contention[34] shows only that Mr Beder invited the Magistrate to determine what was properly to be included as stock, not that the plaintiffs accepted what the defendants said about that, or the value they placed on it.

64 Questions of Law 1 (B) and (C) pose questions as to whether the purchasers were entitled to take part only of the stock. Ground 6 asserts that the Magistrate erred in permitting them to 'lead evidence' with respect to their rejection of stock. Neither these Questions nor Ground 6 identify the 'stock' that the appellants contend the respondents wrongfully rejected, or about which they were permitted to lead evidence. The appellants have exhibited the amended notice of defence as further amended during the course of the hearing.[35] The effect of those further amendments was to delete all reference to stock items said to be defective or deficient, and all reference to defective chattels said to give rise to a set-off except a glass washer. However, the alleged defective items of stock had not been particularised in the amended defence when filed, and so the pleading does not identify what was in contention.

65 There was evidence adduced and argument put in relation to whether various items that Mr Harris had included in his stocktake (glasses, firewood, gas and food) were stock and so the subject of special condition 4. I infer that these are the items to which Questions of Law 1(B) and (C) and Ground 6 relate. However, as I read the transcript, those matters were relied upon in relation to the factual question as to whether or not agreement had been reached, and in relation to what. That factual issue arose once the proper construction of the special condition had been determined. No appeal lies from findings on the facts unless there was no evidence to support that finding, and that is not here contended.

66 I was not directed to any legal argument put below as to whether on its proper construction special condition 4 permitted the purchasers to take some only of the stock, or what 'stock' in the special condition meant. Nor did I locate any such argument in the closing submissions. Further, Mr Harris has not put any such argument in his submissions in response to the summary judgment application. Accordingly, in my view the question of law of whether the special condition required the purchasers to accept all stock, or allowed them to reject some, is not one that arises on the appeal. I will dismiss Questions of Law 1(B) and (C).

67 Ground 6 raises the question as to whether the Magistrate erred in allowing the defendants to lead evidence relating to the rejection of stock or classes of stock, when the issue to which that related had not been pleaded. As noted, there were not at any time (at least on the pleadings as exhibited in this appeal) particulars given as to claimed defective stock. The Ground assumes that the rejected items were in truth 'stock'. The evidence that was given in the respondents' case was to the effect that glasses, firewood and gas were not stock at all. Mr Kennedy contended in his evidence that glasses are chattels not stock (and that Mr Harris accepted this), and that firewood and gas are not stock because they are not saleable. The evidence in the respondents' case was that they did not include food for health and safety reasons, because they could not know the conditions in which it had been kept.

68 The respondents assert that this Ground is not maintainable for a number of reasons. The reasons are that first, no objection was taken at the time this evidence was given. Secondly, because even if the Magistrate erred, that error did not affect the final order. Thirdly, because the conduct of the trial was a matter of practice and procedure within the discretion of the Magistrate.

69 Procedural error can be a question of law, if it amounts to a breach of procedural fairness. Further, contrary to the submission of the respondents, I consider it possible that the admission of evidence as to the rejection of stock did affect the final result on the facts, although not on construction. Evidence as to rejection of stock (in particular food) was explicitly taken into account by the Magistrate in reaching his determination on the facts that there was not the required agreement.[36] The Magistrate expressed his final conclusion as being that there was no agreement as to 'price', but as price depends at least in part on what is included, as well as the value to be ascribed to it, I cannot say that the inclusion of this evidence did not affect the result.

70 I do, however, accept the contention of the respondents that if objection was not taken at the time then the question is not one on which the appeal may be brought. To ascertain whether or not this was so, I have read the whole of the available transcript which commences with the re-examination of Mr Harris. In the course of that re-examination, counsel for the appellants asked Mr Harris questions about a glass washer. The questions were objected to as not arising from cross examination, but allowed. The glass washer was asserted to be a chattel, not stock, but the relevance of this exchange is that in relation to the glass washer Mr Beder expressly reserved the right to seek to re-open the plaintiffs' case if evidence from the defendants on matters not previously particularised made that necessary. In the event, he did not seek to do so. This would, however, also have been the remedy had the plaintiffs been caught unawares by evidence from the defendants in relation to stock they did not accept. This exchange shows that Mr Beder was fully aware of that remedy.

71 The defendants did give evidence about items claimed to be stock by Mr Harris that they did not accept, but much of this was in cross examination.[37] In other words, Mr Beder considered cross examination to be the way of dealing with this evidence, whether the claim had been particularised or not. No objection was taken to evidence about the rejection of food as stock when it was given by Scott Kennedy in chief, and there was no request by Mr Beder for the plaintiffs to re-open their case. In my view, the transcript shows that this Ground does not raise an arguable question of law that may be brought on appeal.

72 Further, the Ground asserts that the plaintiffs were prepared to waive the difference between the parties' respective stocktakes. If this is intended to assert that the plaintiffs took this position at the trial, then as set out earlier this is not shown in the transcript. I will dismiss the appeal in so far as it arises from Questions 1(B) and 1(C) and Ground 6.

73 Ground 7 asserts that the Magistrate in chambers refused to provide a written judgment although he had earlier said he would do so. I was informed by counsel for the respondents, who was also counsel for them as defendants at the trial, that after the Magistrate gave his judgment and made his ruling on costs, he invited both counsel into his chambers for a cup of tea as it was the last brief for Mr Beder, a retired magistrate, before the expiration of his practising certificate. Mr Silver says that the Magistrate did not then refuse a request by Mr Beder, counsel for the plaintiffs, to provide a written judgment. There is no contrary evidence or statement from Mr Beder, and necessarily no written record of any discussion that then occurred in the Magistrate's chambers.

74 Whatever occurred in chambers, I was not directed by the appellants to where they allege that the Magistrate agreed in open court on the second day to give a written judgment, and I have not found in the transcript of that day (which is all available) any such agreement. I accept the submission of the respondents that what occurred in open court on the second day is that the Magistrate referred to the possibility of a written judgment, but did not commit to it,[38] and further, that at the conclusion of his ruling he invited counsel for the plaintiffs to seek any further reasons, and none were sought.[39] Accordingly, I do not consider that this Ground raises any arguable question of law and will dismiss it.

75 The respondents are successful in their summary judgment application in respect of Grounds 6 and 7. Ground 8 merely recites that the costs order was consequential on dismissal of the plaintiffs' application. It does not raise a distinct question of law for consideration. It is not struck out and need not be repleaded.

76 The respondents are also successful in relation to Questions of Law 1(B) and (C) and 2(B) and (C). I will dismiss the appeal in respect of those Grounds and Questions.

77 I will strike out the remaining Questions of Law and Grounds, but allow them to be redrawn consistently with these reasons. I consider that the appeal should then proceed to hearing, if not otherwise resolved by agreement, without further interlocutory consideration of the notice of appeal. As noted earlier, I urge the parties to give real consideration to a negotiated settlement to minimise legal costs, given the quantum originally in dispute.

78 The appellants have also sought a stay on the costs order made below pending the hearing of the appeal. That application has not yet been heard. It may be that the parties can now agree on the question of stay.

79 I will ask the parties to draw orders to reflect these reasons, including in relation to stay and the costs of the application. If they cannot agree on those orders, I will hear them further but again urge them to take a cost effective approach to further disputation.

[1] [2013] VSCA 158.

[2] Warren CJ and Nettle JA at [35(d)].

[3] Outline of Respondents' Submissions at [13] citing Fiorelli Properties Pty Ltd v Professional Fencemakers Pty Ltd and anor (2011) 34 VR 257, [2011] VSC 661.

[4] His name is given as 'Mr Peter' in the transcript of the proceeding.

[5] Plaintiffs' closing submissions, at transcript pages 106-107, 112 and 117-118 of day 2 of the trial 25 June 2014 (henceforth 'Transcript'), exhibited as PAL-1 to the affidavit of Patrick Anthony Lawler sworn 30 October 2014.

[12] Transcript page 93 line 11-94 line 11.

[14] Transcript of day 3, 4 July 2014 exhibited as RAH-2 to the affidavit of Robert Allen Harris sworn 15 October 2014 (henceforth 'Ruling') at page 2 lines 29 to 31. page 3 line 9.

[18] Ruling page 3 lines 10-14; page 12 line 29- page 13 line 4.

[20] Hoe v Manningham City Council [2011] VSC 37 at [3] and [4]; Commissioner of State Revenue v STIC Australia Pty Ltd and anor [2010] VSC 608 ('STIC') at [9]-[10]. These are cases concerning appeal from the Victorian Civil and Administrative Tribunal, but as such appeal may also only be brought on a question of law they are applicable.

[21] Osland v Secretary to the Department of Justice [2010] HCA 24; (2010) 267 ALR 231 at [21].

[22] Davies J, STIC, above n 20, [10].

[23] Neely v Southern Cross Feeds Pty Ltd [2013] VSC 152 [4].

[24] [2011] VSC 661.

[26] Appellants' Further Submission page 3.

[29] These are the written submissions filed and served after hearing.

[30] Appellants' Further Submission paragraph 4 on page 2.

[31] Appellants' Submission page 2 lines 11 and 12.

[32] Outline of Respondents' Submissions at [16] and [18].

[33] Outline of Respondents' Submissions at [26].

[35] Exhibit RAH 15 to the affidavit of Robert Allen Harris sworn 15 October 2014.

[36] See, for example, Ruling at page 8 line 19- page 9 line 1.

[37] See, for example, cross examination of Mr Kennedy at Transcript at pp 25, 27, and re-examination at Transcript page 42.

[39] Ruling at page 14, lines 10-19. The Ruling does not record any subsequent request by counsel for the plaintiffs for further or written reasons.