By-laws cannot prevent holiday letting

2 September 2021

By Mitchell Downes, partner at Mahoneys until 30 September 2021 after which time Mitchell will be practising as a barrister.

This paper has been prepared in response to claims by certain lawyers and body corporate managers that despite the BCCM Act prohibiting by-laws which restrict the type of residential use, short term or holiday lettings are not “residential use” and can therefore be prohibited by a by-law. 

As this paper concludes, this is not the case.

1. Section 180(3) provides:

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

I         Principles of interpretation

2. The proper approach is to give “the words of a statutory provision the meaning which the legislator is taken to have intended them to have.”[1] This is ascertained by consideration of the text (here, s 180(3)); context (here, the entirety of the BCCMA and its regulation modules); and purpose (here, BCCMA, ss 2 – 4).

3. The interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation.[2]

4. Where two constructions are open, the construction that avoids ‘surplusage’ is to be preferred.[3]

II       Residential\residence\reside

5. Residential is the adjectival derivative of the noun residence and the verb to reside.

6. In determining the ordinary and natural sense of a word, the court tends to rely on a range of dictionaries. The Macquarie Australian English dictionary relevantly defines:

(a) Residential:

adjective

      1. of or relating to residence or residences.
      2. adapted or used for residence: a residential district.
      3. (of a hotel, etc.) catering for guests who stay permanently or for extended periods.

(b) Residence:

noun

      1. the place, especially the house, in which one resides; dwelling place; dwelling.
      2. a large house.
      3. the act or fact of residing.
      4. the time during which one resides in a place.

(c) Reside:

verb

      1. to dwell permanently or for a considerable time; have one’s abode for a time: he resided in Box Hill.

7. But as Isaacs J said in The Australian Temperance & General Mutual Life Assurance Society Ltd v Howe (1922) 31 CLR 290, 304:

…that [the word] “resident” and its cognate terms “reside”, “residing” and “residence,” are terms not of art or defined legal import but of very flexible meaning, acquiring whatever precision they have in any given case from their surroundings.

III     Text

8. Section 180(3) has two parts.

9. First: “If a lot may be lawfully used for residential purposes.” This is a question of lawful use under planning laws. Obviously enough, Parliament started with a proposition that it must be lawful under the applicable planning laws for the lot to be used for residential purposes before the second part is engaged.

10. Second: “the by-laws cannot restrict the type of residential use.” This contemplates that there is more than one type of residential use.

11. Unhelpfully, the BCCMA does not define residential purposes or residential uses.

IV     Context

Section 111C

12. Residential Lot is defined in s 111C (which defines a “specified two lot scheme”).

residential lot means a lot that is used for residential purposes, and includes a lot that is—

(a)        the subject of a lease or letting for accommodation for long or short term residential purposes; or

(b)        immediately available to be the subject of a lease or letting for accommodation for long or short term residential purposes.

13. That definition contemplates that there are long- and short-term types of residential purposes. It is, however, not of any great relevance for two reasons. First, it uses “purposes” in the context that s 180(3) uses “uses”. Second, it is a definition for a different Part of the BCCMA.

Section 205A

14. Section 205A defines residential property by reference to the Property Occupations Act 2014 (Qld). It is not relevant because its definition is stated to only be applicable in its chapter (Chapter 5) and is relevant to a different secondary object of the BCCMA (i.e. consumer protection in land sale transactions).

Regulations

15. Regulations made under an Act do not decide or control its meaning.[4] If this were so, it would be to substitute the rule-making authority for the judge as interpreter and would disregard the possibility that the regulation relied on was misconceived or ultra vires. However, subordinate legislation may be used to construe the parent Act where power is given to amend the Act by regulations (not applicable here) or where the meaning of the Act is ambiguous (arguably applicable here).[5]

16. The Commercial Module, s 3, defines:

accommodation lot means a lot that is—

(a) the subject of a lease or letting for accommodation for long or short term residential purposes, or immediately available to be the subject of a lease or letting for accommodation for long or short term residential purposes; or

(b) part of a hotel.

commercial lot means a lot that—

(a) is used for commercial (including retail) or industrial purposes; and

(b) is not an accommodation lot or residential lot.

hotel means an establishment organised and operated principally for providing accommodation in guest rooms or suites and offering food and drink, whether or not the establishment includes any of the following—

(a) restaurants;

(b) function rooms;

(c) a nightclub or cabaret;

(d) shops for tourists;

(e) recreation facilities.

residential lot means a lot used for residential purposes, whether or not the lot is also an accommodation lot.

17. An identical definition of accommodation lot is in the Accommodation Module, s 3.

V       Purpose

18. The primary object (ie purpose) of the BCCMA is expressed in section 2:

The primary object of this Act is to provide for flexible and contemporary communally based arrangements for the use of freehold land, having regard to the secondary objects.

19. The secondary objects are referred to in section 4 and relevantly are:

(a) to balance the rights of individuals with the responsibility for self-management as an inherent aspect of community titles schemes;

(c) to encourage the tourism potential community titles schemes without diminishing the rights and responsibilities of owners, and intending buyers, of lots in community titles schemes;

(g) to provide an appropriate level of consumer protection for owners and intending buyers of lots included in the community titles schemes; …

20. Subsection 4(c) is particularly important because it recognises that Parliament intended tourism within community titles schemes. It was introduced by the Body Corporate and Community Management and Other Legislation Amendment Act 2007.

21. The explanatory note stated inter alia:

Clause 4 recognises the important contribution the community titles sector makes to Queensland’s tourism industry, particularly through the provision of short-term holiday accommodation. The amendment in part encourages bodies corporate to consider tourism issues in the administration of their schemes. The acknowledgement of tourism issues is not intended to override or fetter existing rights of unit owners (for example, the right to object to, or vote against body corporate proposals that may have tourism benefits). The recognition of tourism is also not intended to limit the operation of existing consumer protection provisions for intending purchasers (for example, provisions requiring disclosure of letting arrangements in the course of the sale of lots). (emphasis added)

22. The explanatory note for the 2020 Accommodation Module stated inter alia:

The Body Corporate and Community Management (Accommodation Module) Regulation 2020 (new Accommodation Module) provides management processes designed for community titles schemes that are used predominantly for short or long-term letting purposes (including for example, holiday letting or serviced apartment operations) with the need for accommodation management.

VI     Reasoning

23. It is clear from the secondary objects and the extrinsic material that Parliament intended for short-term holiday letting to be operated from a community titles scheme.

24. It is also clear from the text of s 180(3) that Parliament thought there was more than one type of residential use.

25. But is short term holiday letting a residential use?

26. The dictionary suggests not. But as Isaacs J says, “resident” and its cognate terms “reside”, “residing” and “residence,” are terms not of art or defined legal import but of very flexible meaning.

27. This is where s 14A comes to the fore. The interpretation to be preferred is that which best achieves Parliament’s purposes. Here, one of those purposes is to encourage “Queensland’s tourism industry, particularly through the provision of short-term holiday accommodation”.

28. That is best achieved by interpreting short term holiday letting as a form of residential use.

VII   BUGTA yields a different result because of the absence of ss 2 – 4

29. In Redman v The Proprietors – Fairway Island GTP 107328 [2020] QDC 68, Barlow QC DCJ was construing a by-law made and its validity.

30. BUGTA does not have an equivalent of s 180(3).

31. The validity question was determined by reference to the general lawmaking power in s 30(3)[6] as limited by s 30(6)[7].

32. BUGTA also does not have an equivalent of ss 2 – 4.

33. Accordingly, the issue in Redman was a different question under different legislation.

34. It cannot be said that had the by-law in Redman been made under the BCCMA, it would have been upheld for the same reasoning because:

(a) Firstly, the validity issue would be determined by reference to s 180(3).

(b) Secondly, the court would interpret s 180(3) against the textual, contextual and purposive considerations set out above.

[1] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 384 [78].

[2] Acts Interpretation Act 1954 (Qld), s 14A.

[3] R v Bishop of Oxford (1879) 4 QBD 245, 261 (Cockburn CJ)

[4] Hunter Resources Ltd v Melville (1988) 164 CLR 234 at 244 per Mason CJ and Gaudron J.

[5] Hanlon v Law Society [1981] AC 124 at 193-4 per Lord Lowry.

[6] “for the purpose of the control, management, administration, use or enjoyment of the lots and common property the subject of the plan.”

[7] “No by-law or any amendment of or addition to a by-law shall be capable of operating to prohibit or restrict the devolution of a lot or a transfer, lease, mortgage or other dealing therewith or to destroy or modify any easement, service right or service obligation implied or created by this Act.”


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