Southport Memorial Club Inc v Returned and Services League of Australia (Queensland) Southport Sub-Branch Inc

Southport Memorial Club Inc appealed against a decision of the primary judge which held that the benefit of certain covenants under a lease remained with the Returned and Services League of Australia (Queensland) Southport Sub-Branch Inc (the respondent) after the respondent sold the land to an unrelated third party. The appellant argued that the primary judge misapplied the test for measuring damages and that the evidence did not support the amount awarded. The court found that the primary judge was correct to disregard the size of the office space as a false comparator and to accept that the arrangement with the Southport Bowls Club was caused by the appellant’s breach of clause 29 and that it provided sufficient office space, memorabilia display availability and function room availability. The court held that the onus was on the appellant to show that the respondent had failed to mitigate its damages, which it could not do. The court also held that the primary judge was correct to regard the accrued personal liability of the appellant for damages as not being a liability “in relation to the lot” for the purposes of section 62(1) of the Property Law Act 1974 (Qld). The appeal was dismissed, and the appellant was ordered to pay the respondent’s costs of the appeal.

The primary legal issue in this case was whether the benefit of the covenants under the lease remained with the respondent after the respondent sold the land to an unrelated third party. The court considered whether the covenants were personal to the respondent or whether they were covenants which ran with the land and bound the new owner. The court held that the covenants were personal to the respondent and did not run with the land. The court relied on the decision of the Court of Appeal in Bank of Queensland Limited v Y & L Promising Pty Ltd, which held that an accrued personal liability of a transferor of land for damages consequent upon a completed breach of a lease covenant is not a liability “in relation to the lot” for the purposes of section 62(1) of the Property Law Act 1974 (Qld). The court held that the primary judge was correct to disregard the size of the office space as a false comparator and to accept that the arrangement with the Southport Bowls Club was caused by the appellant’s breach of clause 29 and that it provided sufficient office space, memorabilia display availability and function room availability. The court also held that the onus was on the appellant to show that the respondent had failed to mitigate its damages, which it could not do. The court held that the primary judge was correct to regard the accrued personal liability of the appellant for damages as not being a liability “in relation to the lot” for the purposes of section 62(1) of the Property Law Act 1974 (Qld).