Actually, implicit conversions between TEXT (mapped to Long Varachar in IQ) and char/varchar are limited.
See restrictions provided here
LONG VARCHAR Data Type Conversion
Your sql code works when explicit conversion from Text to Varchar is used instead.
select id, (case when name='clob' then name else cast(notes as varchar(10)) end) as combinedcol from testText ;
Also this works :
select id, name || cast(notes as varchar(10)) from testText ;
Regards,