KINDY 4 KIDS (AUSTRALIA) PTY LTD and ANOR v REDGLOVE HOLDINGS PTY LTD and ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE and COLE JJA and GILES AJA 28 July 1995, 28 July 1995 [1995] NSWCA 239 PROPERTY STOCK AND BUSINESS AGENTS ACT 1941 — APPEAL — STATUTORY CONSTRUCTION — 'BUSINESS'- ORDINARY COMMERCIAL MEANING — APPEAL DISMISSED Clarke JA On 5 December 1994 Brownie J gave judgment in a dispute between the present appellants and the respondents and at the end of his judgment directed the plaintiffs, that is the present respondents, to bring in short minutes giving effect to his Honour's reasons and expressed a tentative view on the question of costs. The short minutes were no doubt brought in and on 24 April 1995 there was entered in the court the following order: "(1) The proceeds of the account held with Citibank Ltd in account number 350285953 in the name of Mark Gallego and the third defendant be released to Mark Gallego as solicitor for the plaintiffs forthwith. (2) The parties do all acts necessary to release to Mark Gallego as solicitor for the plaintiffs the proceeds of the account held at Citibank Ltd in account number 350285953 in the name of Mark Gallego and the third defendant. (3) The first and third defendants (that is the two appellants) pay the first and third plaintiffs' costs up until 13 October 1994 on a party/party basis and after 13 October 1994 on an indemnity basis." The appellants appealed against those orders but during the hearing of the appeal advanced only one argument in opposition to the making of the substantive order below. The appellants, or at least the second appellant, wishes or may wish to contest the order for costs but that issue has been deferred for the moment in order that the court can deal with the substantive ground on the appeal. The claim which was made by the first respondent (Redglove Holdings Pty Ltd) was a claim for $30,000 for commission and $19,400 for work done for the first appellant (Kindy 4 Kids (Australia) Pty Ltd). The substantive defence to that claim was that the commission and work had been rendered as an agent upon the sale of a business and insofar as the first plaintiff was not licensed under the Property Stock and Business Agents Act 1941, it was not entitled to maintain its claim or to recover either its commission or payment for the work done. Immediately upon the claim being brought there were proceedings in the court relating to moneys which the second appellant, who had been solicitor for the first appellant, had received upon the completion of a transaction between the first appellant and third parties. At that stage it was recognised that the first respondent had already received $9,500 by way of deposit and that its actual claim was for $49,400 less the sum it already held. The balance, that is $39,900, was held together with other moneys in the trust account of the second appellant and the court ordered that that amount be paid into a Citibank account in the 2 UNREPORTED JUDGMENTS names of Mark Gallego (the solicitor for the plaintiffs) and the second appellant. The effect of his Honour's final order was to order that the proceeds of that fund be paid to the plaintiffs. His Honour has set out in detail the facts concerning the transaction and the reasons which led him to say that the first plaintiff was not claiming agent's commission on the sale of a business. It would in many ways be sufficient for me simply to say that I agree, as I do, with his Honour's reasons. I will, however, in deference to the arguments which have been put before the court by the second appellant, who has appeared for both appellants, say something more, although it must be understood I am putting my reasons in a fairly concise form. The first appellant, a company known as Kindy 4 Kids Pty Ltd, operated a business whereby it acquired a site, constructed on it a building in which a kindergarten might be operated, obtained various approvals and then sold to someone a lease or sublease of the site together with the right to operate a kindergarten there under a name which included Kindy 4 Kids and, typically, thereafter the name of the suburb in which the site was situated. The transaction which led to the present claim was the sale to a Mr and Mrs Wilson of a business which, when operating, was to be known as Kindy 4 Kids Maroubra. At the time of the agreement, which included a reference to the vendor's agent and which, in fairness, it must be said, was described as an agreement for the sale of a business, there was no operating business. The vendor was obliged to perform building works to fit the premises out; the vendor was required to provide educational material and equipment such as required by the Department of Family and Community Services, as there could not be an established child care business without those matters; council permission was still required for the use of the premises as a child care centre and there were no existing licences or permits to be transferred. Kindy 4 Kids Maroubra was to be a business operated by the Wilsons and to an extent, as demonstrated by a licence agreement between them and the first appellant, in conjunction with the first appellant. There was not, however, at the date of the sale, any business in existence nor at that stage had the premises been set up to enable the business to be operated. One description of what was sold was the "wherewithal for a business to be operated". That puts it perhaps too widely and somewhat crudely, but it is a convenient description for what was the subject of the sale. The second appellant referred the court to aspects of the agreement, which supported the appellants, including a reference to goodwill but was unable to indicate just what was encompassed in that goodwill. The critical issue between the parties was whether what was sold by the agreement was a business. Brownie J in his judgment referred to the claims of the respondents that the subject of the agreement was not a business because what was bought and sold was not an established business but rather the right to occupy some premises and the right to start up a business with the name including the expression "Kindy 4 Kids" with certain ancillary rights and obligations. His Honour did not accept that the Act applied to the Maroubra transaction and concluded that what was bought and sold was not a business in the dictionary meaning of that term, so that when Redglove Holdings, that is the first respondent, acted as agent in respect of that transaction, it did not act as a business agent within the meaning of the Act. WENDY 4 KIDS (AUSTRALIA) PTY LTD and ANOR v REDGLOVE HOLDINGS PTY LTD ané ORS (Giles AJA) I would add to his Honour's conclusions reference to the dictum of Mason J in Hope v Bathurst City Council (1980) 144 CLR 1 at 8 and 9 where his Honour said that the word 'business' in the context of the facts of that case had its ordinary and popular meaning which he defined as that of "a commercial enterprise in the nature of a going concern, that is activities engaged in for the purpose of profit on a continuous and repetitive basis". The case was argued below and in this court upon the basis that 'business' had its ordinary popular meaning and I would adopt, for the purposes of this judgment, the definition ascribed to that meaning by Mason J as being appropriate and correct. It cannot, in my opinion, be said that the subject of the sale was a commercial enterprise in the nature of a working concern. It was no more than I have previously described it. In my opinion his Honour was correct in his conclusion and the substantive ground of appeal must fail. Cole JA I agree. Giles AJA I also agree. Clarke JA: The second appellant, who is appearing for himself and the first appellant, has indicated to the court that he wishes to seek an amendment to the notice of appeal to challenge the cost order made against him by Brownie J. He recognises that there was no challenge to this costs order in the notice of appeal and that until today the respondents had not been on notice that he wished to make this challenge. More importantly, he also recognises that if he were today, while acting for both appellants, to make the application on his own behalf and press an argument on his own behalf, he may well be regarded as having a conflict of interests. For this reason he has informed the court that he has had discussions with Miss Robinson, whom he said acts for the first appellant in general matters, with a view to securing representation for the first appellant, but she neither has instructions to appear for the first appellant today to argue any question of costs, nor instructions to enable anyone else to appear to argue the point. Accordingly, in order to overcome the difficulty about a conflict of interest, quite apart from any difficulty occasioned to the respondents, the second appellant has sought an adjournment of the proceedings in order that he can give appropriate notices and come back and apply to have the costs ordered below varied. He relies, in support of his application, on what he describes as odd features of the order below and the apparent lack of reason for his appearing as a party in the contested proceedings in December last year. However, it must be recognised that he did appear and he did cross-examine and defend his own situation. The court has not heard detailed argument upon the breadth of the issues that were litigated below, although Mr Green, counsel for the respondents, has said that if his clients had failed in the fundamental claim they would, as they did, have mounted an alternative claim directed against the second appellant and for that reason the second appellant was a necessary party. This court has not heard enough argument on that matter to give any view about it. We simply note that on the surface it appears strange that Mr Licardy, the second appellant, remained as a party but there may, as has been pointed out, have been good reasons for that to occur. The application for adjournment is opposed. It is opposed first because the parties are here today on the duly allocated date to conclude the appeal. That does present a sound reason for declining to grant the adjournment but 4 UNREPORTED JUDGMENTS there is an even stronger one, and that is the impecuniosity of the appellants. Mr Licardy has informed the court, with great candour, that the first appellant has no money or little money and he himself has got financial problems. The consequence is that even if a costs order is made against the second appellant in respect of a further day's hearing, it may be that it will be the respondents who end up paying the additional costs to which they have been put by this adjournment. I recognise that the court endeavours, so far as it can, to entertain all arguments which parties may wish to put before it. There are, however, obvious limits to that desire and it is necessary to hold the scales of justice evenly between the parties. Here, it must be said, that the second appellant finds himself in his present position because of his own lack of preparation for the challenge he wishes to make and, perhaps some lack of foresight. As against his claim it must be said that the end result of the granting of the application could be an added financial burden to the respondents. In all the circumstances I am of the opinion that the application should be refused. Cole JA. I agree. Giles AJA. So do I. Clarke JA: The order of the court will be that the appeal is dismissed with costs. Grant liberty to the parties to apply, if there are any problems, on twenty-four hours notice. COUNSEL: Appellant: RA LICARDY (Solicitor) Respondent: BM GREEN SOLICITORS: Appellant: RA LICARDY, Woolloomooloo Respondent: BARNETTS, Chatswood