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

This dispute concerned whether certain lease covenants continued to bind the lessee after sale of the land. Under cl 29 of the lease, the appellant, as lessee was required to allow the respondent, as lessor, to conduct certain ceremonies and display memorabilia on the premises as well as provide offices and function rooms free of charge. When the respondent sold the land to a third party, the appellant argued that they were no longer entitled to the benefit of cl 29. The Court held that, on its proper construction, the clause created obligations that were personal in nature and did not run with land. As such, the respondent remained entitled to their benefit after sale.

McMurdo, Bond and Dalton JJA

21 July 2023

The respondent is a sub-branch of the Returned and Services League of Australia (“the RSL”). [1]. The objects of that organisation include providing for the sick and needy among those who have served in the Australian Defence Force and preserving commemoration days in their honour. [1]. The appellant is not affiliated with the RSL but has an arrangement with that body which allows the appellant to use the RSL name. [3]. The appellant leased a parcel of land from the respondent and operated an RSL club on the land. [3].

Clause 29 of the lease stated, “the [appellant] acknowledges that the [respondent] will continue to carry on its traditions & functions of a sub-branch of the Returned and Services League of Australia at the Premises during the Term with the concurrence support & assistance of the [appellant]”. [18]. In particular, the appellant was required to inter alia, assist the respondent in the conduct of certain ceremonies, allow the respondent to appropriately display memorabilia, and provide free of charge offices and function spaces. [18].

The respondent sold the leased premises to an unrelated third party in December 2019. [6]. In March 2020, the appellant sought to exclude the respondent from the premises. [7]. At first instance, the respondent successfully sought a declaration that it remained entitled to the benefit of the covenants expressed in cl 29 of the lease and was awarded $182,000 as damages for the rent of a new premises. [8], [48]. The appellant raised three points on appeal, each of which was dismissed by Bond JA with McMurdo and Dalton JJA agreeing. [1], [64]–[65].

First, the appellant contended that the covenants in cl 29 were not personal in nature, but ran with the land such that following sale, the respondent was no longer entitled to the benefit of those covenants. [27]–[28]. That point turned on the proper construction of cl 29. [30]. The court held that the covenants were personal in nature. That was so particularly given that the chapeau to cl 29 referred specifically to the respondent and “its” traditions and functions as an RSL sub-branch. [31]. In addition, many of the specific obligations in cl 29 supported the objects of the RSL, such that they “only make sense” as obligations personally owed to the respondent. [32]–[34].

Second, the appellant argued that s 62 Land Title Act 1994 (“LTA”) had the effect of vesting the respondent’s rights under cl 29 in the new owner. [38]. Under that provision, “on registration of an instrument of transfer for a lot… all the rights, powers, privileges and liabilities of the transferor in relation to the lot vest in the transferee”. [40]. Here, the issue was whether cl 29 created rights that were “in relation to” the land. [42]. As the rights under cl 29 did not touch or concern the land, they were not regarded as sufficiently connected with the land to vest under s 62 LTA.

Third, on the point of damages, the appellant contended that the primary judge erred in the assessment of damages. [48]. The new premises rented by the respondent was at least four times the size of the two office spaces previously provided by the appellant. [53]. The appellant argued that the award of damages should have been reduced by three quarters to account for the difference. [53]. However, the court noted that cl 29 required the appellant to do more than provide office spaces. [55]. In order for the respondent to be placed in the same position they would have been in had the contract been performed, it also needed an equivalent space to display memorabilia and host functions. [18], [55]. The new premises allowed them to do so, and the primary judge did not err in assessing damages on that basis. [53], [58].

L Inglis