BCCM Report

By-law basics – the capacity to make by-laws

By-laws are a significant issue for bodies corporate and a frequent source of dispute. Over the next few articles I would like to explore some of the basics and current issues relating to by-laws.

The Body Corporate and Community Management Act 1997 establishes the self-management of bodies corporate as one of its core principles. One of the important features of self-management is the capacity for bodies corporate to decide the by-laws that apply to their scheme.

By-laws have effect as subordinate legislation. While they are subservient to the act and the regulation module, they are legally binding on owners and occupiers within a scheme. Given their potentially significant impact on the rights and activities of owners and occupiers, it is important that the obligations imposed by by-laws are carefully considered.

While the BCCM Act gives bodies corporate broad powers to determine their own by-laws, this is not an unfettered power. The BCCM Act sets parameters on what can be included in a by-law. It then also sets limitations on by-laws. If a by-law does not comply with the requirements of the legislation in this regard, it may be invalid.

A body corporate can decide to make or change its by-laws by passing a special resolution or (in the case of an exclusive-use by-law) a resolution without dissent. The by-laws are then recorded in a new community management statement. However the recording of a CMS does not automatically mean that the by-laws contained in a CMS are valid. If an adjudicator determines that a by-law is invalid, they may require the body corporate to record a new community management statement which removes or amends the invalid by-law. That said, a body corporate is entitled to rely on its recorded by-laws unless and until an adjudicator determines a by-law is invalid.

So what are the legislative constraints on the power to make by-laws?
The key legislative provision to consider is section 169 of the BCCM Act. It establishes the power for a body corporate to make by-laws but provides that by-laws can only provide for the following:
• the administration, management and control of common property and body corporate assets
• the regulation of, including conditions applying to, the use and enjoyment of lots, common property, body corporate assets, and services and amenities supplied by the body corporate
• other matters the BCCM Act permits to be included in by-laws.

If a body corporate tries to make a by-law that is not allowed for under this section, that by-law will be outside the power of the body corporate to make and so will be invalid.

One of the key issues that have arisen in this regard has been by-laws that purports to ‘prohibit’ an activity within a lot.

The Queensland Civil and Administrative Tribunal has considered the application of section 169. In McKenzie v Body Corporate for Kings Row Centre CTS 11632 [2010] QCATA 57, Mr Barlow SC said:
“A distinction has been recognised in the authorities between the regulation of an activity and its prohibition. A section such as s169 permits the regulation of the use and enjoyment of lots but does not authorise a by-law prohibiting a certain use and enjoyment of lots. The underlying rationale is that a power to regulate an activity implies that the activity will, despite such regulation, be capable of continuing, which it would not do if it were completely prohibited. Prohibition of an activity in part, in a particular case, or in a particular way, may however in some circumstances be needed in order to achieve effective regulation. [Mineralogy Pty Ltd v The Body Corporate for The Lakes Coolum [2003] 2 Qd R 381, at [6]-[8].]”

In a subsequent matter (Body corporate for River City Apartments CTS 31622 v McGarvey [2012] QCATA 47, Mr Barlow SC similarly noted that:
“…the blanket prohibition of an activity that an owner or occupier of a lot would normally, according to the ordinary rights of a land owner or occupier, be entitled to carry on in using and enjoying the lot is prima facie invalid. Such a prohibition would go beyond regulation.”

The most common example of this issue is the case of a by-law that seeks to absolutely prohibit an owner or occupier from keeping an animal within their lot or to prohibit certain types of animals (such as dogs) or animals with certain characteristics (such as animals over a particular weight). QCAT has consistently found that these are invalid. For example in the McGarvey case Mr Barlow SC said:
“…a by-law that prohibits altogether the keeping of pets in lots is not a by-law regulating the use or enjoyment of lots, but purports to prohibit a particular use and type of enjoyment altogether. It therefore goes beyond the scope of a valid by-law permitted by s 169 and is invalid.”

The issue has also arisen with regard to by-laws that purport to prohibit an owner or occupier from conducting a business or commercial activities in a residential lot. See for example: Mandurah Village [2013] QBCCMCmr 88 in which the adjudicator noted that
“…living in a home will typically involve most occupiers engaging in some activities properly described as residential in nature and other activities properly described as commercial in nature. If by-law 13.1 was interpreted as prohibiting each and every commercial activity in a townhouse then I am satisfied the by-law would be invalid as prohibiting, without qualification, activities that are fundamental to the use and enjoyment of a lot.”

So in considering any new by-law, or reviewing current by-laws, bodies corporate must have regard to whether they have the legislative authority to make the proposed by-law.

In the next article I will continue this topic by looking at the limitations on by-laws.

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