Macleay Tower & Villas [2017] QBCCMCmr 12 (17 January 2017)

Last Updated: 27 March 2018

ADJUDICATOR’S ORDER

Office of the Commissioner

for Body Corporate and Community Management

ORDERS MADE:

REASONS FOR DECISION

Introduction

[1] At its annual general meeting held on 30 August 2016, the Body Corporate made the following decision on Motion 8 which had been proposed by the committee:

Tenancy

Resolved that the following By-law be added to Schedule C in the Community Management Statement:

“The obligations imposed by these By-Laws are to be discharged by each owner and occupier together with the tenants, sub tenants, servants, agents and visitors; and the owner or occupier will be responsible for ensuring that any residential tenancy shall be permitted only for a minimum of three months.....” (my underlining)

[2] The applicant believes the underlined part of the motion is inconsistent with section 180(1) and (3) of the Act. For this reason, the applicant seeks an adjudicator’s order that the Body Corporate be instructed to remove the underlined part.

[3] After receiving the application, the Commissioner for Body Corporate and Community Management invited the other lot owners and the committee to make submissions about the matters raised. Five owners and the committee made submissions. After the applicant replied to submissions, the Commissioner referred the application to departmental adjudication.^[1]

Analysis

Section 180(1) and (3) of the Act

[4] Section 180(1) of the Act provides:

“If a by-law for a community titles scheme is inconsistent with this Act (including a regulation module applying to the scheme) or another Act, the by-law is invalid to the extent of the inconsistency.

Example for subsection (1)—

If a by-law for a community titles scheme purporting to give a body corporate manager, service contractor or letting agent exclusive use of common property is inconsistent with the regulation module applying to the scheme, the by-law is invalid to the extent of the inconsistency.”

[5] Section 180(3) of the Act provides:

“If a lot may lawfully be used for residential purposes, the by-laws can not restrict the type of residential use”.

Residential use

[6] Given the words in the motion and submissions from the committee and lot owners, it is apparent that the underlined part of Motion 8 relates to “any residential tenancy” including those offered by service providers such as Airbnb and Stayz.

[7] The committee submits it is arguable that a short-term tenancy is not a ‘residential use’ as intended in the Act because:

1. The defined meaning of ‘residential’ implies living in a place over a period of time, a sense of permanency and a sense of belonging to a community.^[2] Short-term tenancies do not have these characteristics.
2. The construction of the Act with a separate regulation module for ‘accommodation’ recognises that there are differing requirements for schemes which are predominantly for accommodation purposes which suggests that the provision of accommodation is seen as distinct from a residential use.
3. The Brisbane City Council Planning Guidelines define a bed and breakfast operation as a home based business. The City Plan defines a home based business as a dwelling used for a business activity where the business use is subordinate to the residential use. This suggests that the provision of short term tenancies is viewed as a business use and distinct from (or subordinate to) a residential use. Therefore, the proposed by-law does not restrict a residential use and is not inconsistent with section 180(3).

[8] The owners of Lots 96 and 114 claim short term tenancies of less than three months constitute running a business according to the Australian Taxation Office.

[9] In reply, the applicant submits the Standard Module does not preclude lettings or define the period of tenanted occupancy and the City Council does not preclude lettings. The applicant points out that the legal firm publications^[3] referred to by the committee clearly indicate the Act prevents the Body Corporate from attempting to impose short term tenancy restrictions.

[10] The online and submitted excerpts of both publications support the applicant. Nicholsons Solicitors and Hopgood Ganim Solicitors express the view that short term letting (including in the context of Airbnb and Stayz) is a type of residential use.

[11] This view is consistent with the adjudicator’s findings in First Avenue Mooloolaba^[4]. The adjudicator said:

“[12] A question I need to determine is whether occupation of a unit under a short term lease is ‘residential use’ of the unit. Two alternative interpretations of the words ‘residential use’ have been put forward. The body corporate says ‘residential use’ separates those living in a unit as a place of residence from those simply holidaying in a unit and having another place of residence. The applicant says this term simply separates ‘residential use’ from commercial use.

[13] The starting point for statutory interpretation is to read the relevant section in the context of the Act as a whole, allowing for consideration of the language and purpose of every section that is included in the Act.^[5] Ultimately, the interpretation that will best achieve the purpose of the Act is to be preferred (Acts Interpretation Act, 14A).

[14] The body corporate says people using a unit for holiday accommodation are not using the unit for residential purposes. Rather, they reside or live elsewhere and are merely invitees of the owner of the holiday accommodation for the duration of their holiday. The body corporate’s argument is therefore that letting arrangements with holiday makers who do not have a ‘residential tenancy’ in place are not covered by section 180(3). I do not find this argument persuasive. Persons staying in a unit for a holiday would appear to be ‘occupiers’ under the BCCMA based on past decisions of adjudicators and the Queensland Civil and Administrative Tribunal.^[6] Also, there is no good reason for thinking the term ‘residential use’ should be given a meaning based on the defined meaning of a ‘residential tenancy’ under the Residential Tenancies and Rooming Accommodation Act 2008.

[15] Rather, the ordinary meaning of ‘residential use’ appears to be to distinguish use of the unit as a dwelling from use of the unit for commercial or industrial purposes. This ordinary meaning is consistent with the term ‘residential property’ as defined in Schedule 6 of the BCCMA that specifies a unit to be residential property based on whether it was constructed as a residence or is in a residential area. People holidaying in a unit would be the occupiers of the unit and be putting the unit to a ‘residential use’, even if they only had a short term lease. Also, even if the owner of the unit was running a commercial enterprise involving the letting out of the unit, the people holidaying in the unit would be putting the unit to a residential rather than a commercial or industrial use.

[16] I can see no reason to depart from a number of other previous decisions in which by-laws prohibiting short term letting have been found to contravene section 180(3) of the Act.^[7] The short term occupation of a residential unit for holiday purposes would still be a type of residential use for the purposes of section 180(3) regardless of the separate question of whether short term letting is allowable according to the building classification.”

[12] In my view, these reasons deal with arguments raised in relation to the ordinary meaning of ‘residential’, the construction of the Act and the impact of other laws or regulations. There is nothing to suggest there are distinguishing factors in this case. I agree and adopt the above First Avenue Mooloolaba reasons. Similar findings were recently reached by the adjudicator in Lynkim Lodge^[8].

[13] The Body Corporate has power to make by-laws, including by-laws regulating the use and enjoyment of lots in the scheme.^[9] However, provisions such as section 180(3) of the Act limits the Body Corporate’s by-law making power. Lots included in ‘Macleay Tower and Villas’ may lawfully be used for residential purposes. By-law 13 provides in part that “each lot other than Lot 13 in the building shall only be used for residential purposes”. On the above analysis, the short term letting of a lot is a type of residential use. The underlined part of Motion 8 purports to prevent the letting of a lot for any period less than three months. It is a restriction on a type of residential use. The Body Corporate does not have power to decide to make the by-law.

Other arguments

[14] The committee and the five owners who made submissions give a number of reasons for making the by-law.

[15] The committee’s reasons for submitting Motion 8 include safety and security, damage to common property by unknown individuals, illegal parking, increased noise and wear and tear on common property, and by-law enforcement problems.

[16] The owners of Lot 56 believe the by-law protects owners and tenants by providing security and better prospects of allowing peaceful enjoyment of a lot. They say the scheme is close to Eagle Street and the by-law is a reasonable attempt to preserve the character of a prestigious building while protecting the majority of owners.

[17] The owners of Lot 61 support the motion saying they do not want unknown people coming and going every weekend and partying in the building.

[18] The owners of Lot 78 say that short terms tenancies would change the dynamics of the community, jeopardise their quiet enjoyment and increase maintenance costs.

[19] The owners of Lots 96 and 114 submit the by-law is necessary to safeguard the interests of all owners, and short term tenancies will undermine current practices in place to maintain the quality of tenancies and scheme security, and will degrade the quality of the building, its value and the value of lots.

[20] The applicant counters these arguments saying there is no evidence of instances of problems with short term tenants, and the Body Corporate has by-laws and a building management arrangement in place to deal with any minor issues which may occur.

[21] The applicant correctly argues that the majority vote is not sufficient reason to allow the by-law to remain if the underlined part of the motion is inconsistent with the Act. Arguments of the nature raised above were discussed by the adjudicators in First Avenue Mooloolaba and Lynkim Lodge. However, as the adjudicator said in First Avenue Mooloolaba, arguments of this nature “fail to make an otherwise unlawful by-law lawful”^[10].

Conclusion

[22] The Body Corporate does not have power to make a by-law preventing short-term letting. To the extent it includes the underlined part, the proposed by-law is contrary to section 180(3) of the Act. The applicant asks that the underlined part of Motion 8 be removed. If a by-law is inconsistent with the Act, it is invalid to the extent of the inconsistency.^[11]

[23] The underlined part is discrete in itself. Its removal will leave the remaining part of the motion intact. There is nothing to suggest this part of the motion is invalid. While I note the remaining part of the motion is in similar terms to By-law 29, I have made an order in terms of the nature sought.

^[1] Act, s 248.

^[2] Sources: Cambridge Dictionary, www.edenics.net/, www.etymonline.com/ and www.yourdictionary.com/.

^[3] http://www.nicholsons.com.au/think-nicholsons-blog/short-term-letting-a-change-in-the-air, http://www.hopgoodganim.com.au/page/Publications/”Airbnb” and “Stayz”-what is the impact on bodies corporate-12 May 2016/.

^[4] [2011] QBCCMCmr 241.

^[5] Project Blue Sky v ABA [1998] HCA 28; (1998) 194 CLR 355 at paragraph 69. Re Metronet Rail BCV Ltd (In PPP Administration) [2007] EWHC 2697; [2008] 2 All ER 75 at paragraph 33.

^[6] Dibb v Colombia Tower Body Corporate [2011] QCATA 1 March 2011, APL179-10 determined a person was an ‘occupier’ under the BCCMA where the person lived permanently overseas and only stayed in the unit for about one week each year, under an informal arrangement with his parents. Gresham Gardens [2006] QBCCMCmr 355 determined it is not necessary for a unit to be the principal place of residence for that person to be considered an occupier of the lot and that it ‘is conceivable that a person may occupy more than one residential abode’. An adjudicator has also referred to the dictionary definition of ‘dwelling’ and said it means no more than ‘a place where people may live’, without any condition as to how long they may live there: Palm Springs Residences [2010] QBCCMCmr 248.

^[7] On the Beach [2010] QBCCMCmr 412; Palm Springs Residences [2010] QBCCMCmr 248.

^[8] [2016] QBCCMCmr 419.

^[9] Act, ss 95 and 169.

^[10] At paragraph 27.

^[11] Act, s 180(1).