By Nigel Hales, Partner, Miller Harris Lawyers*
I am indebted to Tony Cordato for his recently published article which has drawn to my attention the interesting decision in O’Connor (Senior) and Others v The Proprietors, Strata Plan No. 51  UKPC45. The decision may well be of relevance to bodies corporate and owners within strata title schemes throughout Australia. The Privy Council did, in its judgement, acknowledge that it had been referred to a number of Australian decisions pertinent to the case before it, but chose not to refer to these in detail because there are material differences in the various statutes . Bodies corporate throughout Australia would do well to adopt the same cautious approach when considering whether the decision is the game changer for which they may be searching.
A comparison of the relevant legislation reveals that a provision substantially the same as that considered by the Privy Council in O’Connor exists in strata title legislation in Western Australia, New South Wales, Australian Capital Territory and the Northern Territory. Bodies corporate in those jurisdictions have reason to be heartened by the Privy Council’s judgement, and may well consider adopting appropriately worded by-laws to control or prohibit short term accommodation use.
The South Australian legislation contains a provision substantially similar to that considered by the Privy Council in O’Connor , but contains a further provision providing that articles (by-laws) that reduce the value of a unit may be struck out by order of the Magistrates Court or the District Court . That section may lead to some interesting litigation if a body corporate attempted to introduce an article prohibiting short term letting, which an owner might well consider would have the effect of reducing the value of the owner’s unit.
In Victoria the legislation is different again. In that jurisdiction there is no provision similar to that considered by the Privy Council in O’Connor, however the subject matter of rules (by-laws) which an owners’ corporation can adopt are limited to those topics set out in Schedule 1 to the Owners Corporation Act 2006 (Vic). The topics in Schedule 1 include “Change of use of lots” which may well be used to introduce a rule constraining the use of lots for short term accommodation if the rule is carefully worded, and depending on the particular circumstances of the strata scheme involved.
The Tasmanian legislation includes a provision which specifically authorises a bylaw to impose a minimum term, not exceeding six (6) months, for the letting of lots. The issue should therefore not be legally controversial in Tasmania, and O’Connor is of no relevance.
In my home jurisdiction of Queensland, the legislation is quite different to that of the other Australian jurisdictions. Section 180(4) of the Body Corporate and Community Management Act 1997 (Qld) contains a prohibition on by-laws preventing or restricting the transmission, transfer, mortgage or other dealing with a lot. The O’Connor decision is relevant in that respect. However, that provision is flanked by Section 180(3) which provides that:
“if a lot may lawfully be used for residential purposes, the by-laws cannot restrict the type of residential use”
and section 180(5), which provides:
“a bylaw must not discriminate between types of occupiers”.
In Queensland, by-laws attempting to prohibit short term accommodation in “residential” complexes or permanent residence in “holiday” complexes have previously been struck down for infringing section 180(3). A bylaw of a holiday unit building which purported to prohibit permanent residence was even struck down despite there being doubt about the lawfulness of the residential use, with the adjudicator finding that it was unnecessary to make a determination in that respect. The Privy Council’s reasoning in O’Connor will be of little or no assistance in that regard.
Even an argument that short term accommodation is not a “residential” use would be difficult to sustain in Queensland given that section 111C(4) of the act (which applies to two lot schemes) provides that a residential lot includes a lot that is “the subject of a lease or letting for accommodation for long or short term residential purposes”. That would tend to indicate that in Queensland a residential purpose does not require the degree of permanence or length of tenure contemplated by the Privy Council in O’Connor.
Furthermore, the existence of Section 180(5) of the Queensland Act also opens the possibility for a disaffected owner to argue that a bylaw prohibiting a lot from being used for holiday accommodation, when it would otherwise be lawful, is invalid because it effectively discriminates between different types of occupiers. That is, it discriminates between holiday makers and permanent residents.
There have been numerous instances in Queensland of bylaws being struck down because the body corporate has been held to have acted unreasonably in imposing them, in breach of section 94(2) of the Body Corporate and Community Management Act 1997 (Qld). There are many examples of this in the case of bylaws relating to the keeping of animals, in particular. It is quite possible that an owner could argue that a body corporate was acting unreasonably in adopting a bylaw which prohibited the use of a lot for holiday accommodation in circumstances where it would otherwise be lawful. Such an argument might well succeed.
Whilst the decision of the Privy Council in O’Connor is worthy of careful consideration by bodies corporate and owners in most jurisdictions in Australia, the differences in legislation in different jurisdictions mean that it should be considered with particular caution in South Australia, and is unlikely to be of any relevance in Tasmania or of much use in Queensland.
* Nigel Hales Accredited Specialist – Property Law, Partner, Miller Harris Lawyers
Direct Phone: (07) 4036 9731
 At para 10.