Another win for the management rights industry
In an important decision for the management rights industry, a specialist adjudicator with the Office of the Body Corporate and Community Management Commissioner recently ruled
invalid an attempt by a body corporate to change its by-laws to preclude the on-site resident manager from using the manager’s lot for running a letting business from that lot despite the pending end of the letting agreement with the body corporate.
The decision involved an up market Gold Coast high rise complex where there has been an ongoing dispute between the body corporate committee and the resident manager.
In refusing to renew the manager’s management rights agreements the committee proposed that a new manager (who is paying nothing for the management rights) be appointed on terms unsustainably favourable to the body corporate.
The existing by-laws provided that:
• only the manager’s lot could be used for the purposes of conducting a letting business;
• all other lots were limited to residential purposes;
• the owner of the manager’s lot could place signs about common property advertising the letting business.
The committee persuaded owners to vote in favour of removing these rights so as to preclude the current manager (which holds a full licence) from continuing to use the manager’s lot for running a letting business after the letting agreement ended and to allow the proposed new manager to operate a letting business from whichever lot the new manager occupied.
The specialist adjudicator accepted the arguments put forward by Mahoney Lawyers and ruled that:
• the changes to the by-laws were oppressive and unreasonable and therefore unlawful;
• the existing rights in the recorded by-laws were of significant value to the current manager who had a legitimate interest in maintaining those rights;
• the manager had a legitimate right to conduct the letting business after the letting agreement ended and there was no justification for the body corporate stop the current manager from doing so;
• the right to place signs on common property were special rights in relation to common property and therefore the by-law was properly regarded as an “exclusive use by-law” that could not be revoked or amended without the lot owner’s consent and a resolution without dissent;
• accordingly the current manager retained the right to place signs on common property advertising its letting business even after the letting agreement with the body corporate ended.
Although the adjudicator found that the proposed new management and letting agreement was valid, there are serious questions about that part of the decision and it is likely to be appealed.
In any event, so far as the current manager and the management rights industry is concerned, the decision in relation to the by-laws and the ability for the current manager to continue to operate a letting business and place signs on common property, is a significant victory.
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