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Appeal tribunal upholds a by-law banning short term letting

You have been told time and time again that a body corporate cannot make a by-law banning short term letting or Airbnb within its strata community. 

But a strata community we have been working with closely for almost two years put in place a by-law prohibiting lettings of less than one month as a means of protecting the special residential amenity of their community. 

The by-law was overturned when the lot owner challenged it in the Commissioner’s Office. The strata community was successful in its appeal, and its by-law has been validated.

The reasons given by the appeal tribunal give a most compelling case for why a body corporate’s power to make by-laws is robust, and rightly so.

The Fairway Island appeal – What happened?

The by-law relevantly provided:

“…each proprietor shall not use or permit his lot to be used other than as a private residence of the proprietor or for accommodation of the proprietor’s guests and visitors. Notwithstanding the foregoing, the proprietor may rent out his lot from time to time provided that in no event shall any individual rental for be a period of less than one (1) month.”

The by-law was made by one of those rare bodies corporate, Fairway Island, still governed by the Building Units and Group Titles Act 1980 (Qld) (BUGTA).

Similar to the position under the Body Corporate and Community Management Act 1997 (Qld) (BCCMA), a BUGTA body corporate has the power to make by-laws to regulate the use and enjoyment of a lot.

The fundamental focus for this body corporate was to impose restrictions on the use of lots in order to protect the special residential amenity of its community.

At first instance, a referee (the BUGTA equivalent of an adjudicator) simply found that the by-law offended a provision of BUGTA that provided that a by-law cannot prohibit or restrict a lease or other dealing with a lot. The referee followed the way that many other referees and adjudicators had applied the same provision in the BCCMA, such as in Washingtonia [2018] QBCCMCmr 256:

“…a by-law that purports to prevent a lot from being rented for a term of less than 6 months, or more than twice in one year to different tenants, would operate to ‘restrict’ a ‘lease’ of that lot.”

The body corporate argued that the referee’s interpretation of this statutory provision was wrong, and that short term letting did not amount to a ‘lease’ that would be protected by that provision. The appeal tribunal, presided over by a Magistrate, agreed.

The real task for judging the validity of a by-law is to consider what its true intent is and the purpose for its creation in the context in which it was made, when deciding whether it is within power. The Magistrate said:

“Here the lots are undoubtedly established with a view to privacy and amenity. That much can be gleaned by the presence of a security gate to the entry of a luxury cluster of houses effectively surrounded by a moat and acres of private golf course. Presumably this inspired the name – Fairway Island. The true character of the by-law is to ensure that only people who have some longer term commitment to the premises occupy them. That is, they are residents there and subject to some longer term control over their behaviour.”

Impact on the strata industry

This does not mean that every body corporate is in the clear to make a by-law banning short term letting – that approach would misapply the reasoning of the Magistrate and the other authorities he was persuaded by. Great care must be taken on how this decision can be applied to community titles schemes subject to the BCCMA.

What is exciting about this decision is the considered views the Magistrate gave to why Parliament has given bodies corporate the power to make by-laws, and the purpose that by-laws are intended to achieve.

Adjudicators, and even QCAT when dealing with appeals, have adopted conservative approaches to the power to make by-laws. By-laws are often invalidated for being unreasonable, and many strata communities are left with a sense of futility in making a by-law that can be of any meaningful effect.

Committees are regularly told that it is unreasonable to assume that a dog will cause a nuisance by barking, or that the creation of a large deck will be used to hold noisy parties. The Magistrate made these helpful and common sense statements:

“It appears to me that BUGTA intended to allow the BC to pass by-laws to protect lot owners from even a hypothetical nuisance of the occupier of a lot. They need not wait until a marching band starts rehearsals at midnight in one lot to ban such an activity. The requirement to get approval for a pet is a standard by-law. This is based on no evidence whatsoever that any particular animal is a problem but on the potential for one to be….

…Regulation is not just about stopping proven past behaviours from repeating but also about preventing anticipated breaches based on experience elsewhere or common sense. Likewise regulations need not be limited to just preventing certain noise during certain hours but may in principle act to eliminate the source of some potential problems altogether. The response must be appropriate but there is no need to wait until a problem has actually manifested before addressing it.”

The Magistrate looked abroad to other ways that laws are made to mitigate the risk of problems occurring, even if there is no guarantee that the problem will in fact occur:

“A simple example from the traffic laws illustrates the regulatory response to some problems can be aimed at certainty and ease of enforcement rather than a case-by-case nuanced application of a broader law. Not all drivers at 0.05% BAC will be affected the same way. But it is having that concentration in the blood that is made an offence, not driving badly. Parliament targets the risk that the use of the road by such persons is best regulated by keeping them off the road.”

Parliament gave bodies corporate the power to make by-laws for good reason: local, state and federal governments do not want to decide what the pool opening and closing hours will be for a particular strata community. It’s a matter that lot owners can decide upon amongst themselves.

That is why bodies corporate are regularly referred to as the fourth tier of government. A body corporate is responsible for the management and administration of the lots and common property within their community, and they are given the power to make by-laws to discharge that responsibility effectively.

Lessons to be learnt

One of my biggest criticisms of the BCCMA is the way in which it gave bodies corporate the power to make by-laws with one hand, but then with the other hand seemingly ‘watered down’ that power by imposing so many restrictions on what a by-law cannot do.

This has been compounded by more than two decades of adjudications out of the Commissioner’s Office in which a decision-maker that has never visited the strata community, let alone made the significant decision to purchase or reside in a lot within that community, decides whether the by-law is reasonable.

If an overwhelming majority of voters decide to impose a particular by-law upon their community, why should adjudicators, referees or a minority of owners be empowered to invalidate it? The circumstances should be very limited.

Bodies corporate should be able to make by-laws to set and enforce the values, expectations and rules that the majority consider to be appropriate to properly define their community. The Magistrate made these salient comments:

“In principle there is no reason why a group of people could not set up a highly regulated small community in a way that made it attractive to themselves or likeminded purchasers.

A group of allergy suffers might want to establish a community in which certain plants or animals are prohibited. The ability of a community to govern itself (requiring a 75% majority) would enable the benefits of group titles to extend beyond simply being small lots that share common property.”

Where to from here?

This decision is still within the period in which it could be appealed. But irrespective of whether it is appealed, the Magistrate’s robust decision should influence how referees, adjudicators and strata communities view the power to make by-laws and the limited circumstances in which they should be invalidated.

This case has so far turned on the considered way Fairway Island crafted the by-law that was ultimately challenged, and the purpose the by-law was intended to serve. This was not a body corporate that commissioned a law firm to cheaply provide it with a by-law from a suite of precedents in the hope that what was seemingly suitable for hundreds of other communities might be suitable for theirs.

This considered approach to managing a unique strata community stands as best practice within the industry. It also reflects one of our core values: we want to help create and foster harmonious communities, even though it will not always be smooth sailing.

Please watch this video if you would like to learn more on this.

This article was contributed by Jason Carlson, Partner – Grace Lawyers

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  1. Michael Kleinschmidt

    Readers – it is still unlawful to ban short term letting in BCCMA schemes.

    Whilst an important decision for BUGTA schemes, the Fairway Island decision has no application to BCCMA schemes – and neither should it.

    Magistrate Sinclair in Fairway Gardens rightly concluded that BUGTA has no analogue to s180(3) of, in His Honours words, ‘the more modern’ BCCMA.

    That section provides that if a lot may lawfully be used for residential purposes, the by-laws can not restrict the type of residential use.

    Anti short stay by-laws are, in my view, a classic case of throwing the baby out with the bathwater. The objectionable activity is not the short term stay itself, it is the unacceptable, often ‘party’, behaviour that in some cases comes with it.

    What is needed is reform to the by-law infringement and enforcement process, so that the real problems such as noise, car parking etc can be rapidly and efficiently dealt with.

    What is not needed is the expansion of the powers of (often unqualified, short sighted and poorly advised) Bodies Corporate (and more usually just a handful of committee members) to, in effect, override a town plan and encroach upon the legal rights of user that we have enjoyed, as property owners, for hundreds of years.


    ‘We don’t appreciate what we have until it’s gone. Freedom is like that. It’s like air. When you have it, you don’t notice it.’ Boris Yeltsin

    Or if you appreciate something lighter 😉

    ‘you don’t know what you’ve got ’till it’s gone’ Joni Mitchell

  2. Richard Nowotny

    Michael. You’ve made some important statements in your reply. What is your expertise regarding this matter, please? Richard

  3. Richard Nowotny

    Jason Carlson. Can you comment on Michael Kleinschmidt’s reply, please. There seem to be some differences in what the two of you have written – or are there? Richard Nowotny

  4. Jana Koutova

    HI Michael,

    Thank you for your perspective on BUGTA vs BCCM Act and pointing out the Magistrate’s conclusion.

    The UOAQ receives feedback from many owners who are frustrated with short term stays in their residential buildings and would like to limit the length of rentals, only to be frustrated by s. 180(3) when defending their action.

    If you have holiday makers staying for only couple of days, the by-law enforcement is virtually impossible. However, this is not the only issue. Owners who buy into residential schemes are doing so usually for different reasons than owners buying into ‘hotel’ type schemes (Class 3).

    Loss of amenities and livability, sense of security and feel of community are largely lost in the environment where you stop recognizing people in the scheme’s gym, pool, car park or bbq area, where by-laws are breached but are not enforced because the guests are gone before any action takes place, and common property’s ‘wear-and-tear’ inevitably accelerates. Other issues include insurance issues and fire safety (different requirements for Class 2 as opposed to Class 3).

    The Primary object of BCCM Act is “to provide for flexible and contemporary communally based arrangements for the use of freehold land, having regard to secondary objects”, which recognizes (among others)
    – self management as an inherent aspect of CTSs,
    – body corporate’s flexibility it needs in its operations and dealings to accommodate changing circumstances within CTSs, and
    – need to provide appropriate level of consumer protection for owners.

    QUT panel recognized in its final recommendation that “the body corporate should have the right to decide to prohibit particular behaviour and then enforce that decision. There is a view that the lot owners within the scheme should be able to decide what rules to impose
    on the community and this includes behaviours that are allowed and behaviours that are prohibited.

    Despite the argument of a potential infringement of individual rights, there seems to be very little reason not to allow bodies corporate to pass and enforce a by-law if that by-law is supported by the body corporate. ”

    Accordingly, the QUT Panel recommends the BCCM Act to be amended to allow such by-laws (i.e. prohibiting a lawful activity) to be validly passed.

    I can see no reason why the same principle should not apply to by-law on length of rental.

    By-laws are adopted by special resolution (although recommended by-law on smoking and pets have QUT Panel recommending resolution without dissent), so it would be not left to handful of uninformed committee members.

    In any way, if BCCM Act is true to its primary and secondary objects, it should strive to balance the rights of individuals with the responsibility for self management and give bodies corporate the flexibility they need to deal with changing circumstances within community titles schemes, such as short term stays brought.

    Jana Koutova
    Executive Officer, UOAQ

  5. Michael Kleinschmidt

    Hi Richard, an LLB, LLM, GDURP, over 20 years legal practice, most of it specialising in strata, Fellow of the Australian College of Strata Lawyers (ACSL), current board member of ACSL, Inaugural Chairman of the SCA(Qld) Legislative Committee, current member of the SCA(Qld) Professional Standards Committee, member of the ARAMA Legal Panel, member of the Qld Govt. Stakeholder Panel, and over 7 years of making submissions, on behalf of ACSL, SCA(Qld) and or ARAMA (where possible by helping all 3 of them to make a joint submission) on the current review of property law in Queensland.

  6. Michael Kleinschmidt

    Hi Jana,

    While I appreciate UOAQ’s efforts to better the position of lot owners in Queensland, it can often be its own worst enemy and, frankly, is not truly representative of the interests of all lot owners. Investors are owners too.

    As to being its own worst enemy, that can occur when, for example, people such as yourself deliberately misquote the important work done by the QUT team.

    Your ‘extract’ above in relation to the ability to ban certain behaviours, actually relates only to smoking and pets; for those interested in the facts have a look at the bottom of page 30 of the relevant final report here-

    At the risk of repeating myself, Jana you have made my point – it is the by-law enforcement and infringement process that needs reform; to cope with the uses to which lots may lawfully be put.

    I do hope Jana that you, and indeed the UOAQ, will be more careful with your references to the QUT reports in the future – including so that you do not mislead the credulous.

    1. Jana Koutova

      Hi Michael,

      Thank you for appreciating the efforts of UOAQ; indeed, we have entered our 5th decade of supporting and advocating for the rights of unit owners in Queensland this year.

      The motivation of owner occupiers buying into residential complexes is usually different from investor owners – and therefore it would help if each scheme was able to adopt the set of by-laws giving new owners a framework they can reasonably rely on when considering the purchase.

      I must disagree with your assertion that I have deliberately misquoted QUT Panel’s recommendation. The text in the quote marks is precise but for two words ‘no smoking’ (page 31). Apologies for the crime committed.

      I was drawing attention to the different fact – that QUT Panel came to the view ” that the lot owners within the scheme should be able to decide what rules to impose on the community and this includes behaviours that are allowed and behaviours that are prohibited.” (3rd para on page 31).

      The fact that this view is discussed within discussion on proposed smoking by-law is, in my view, not important (and I may be wrong). But I submit that the principle of the above quote is what matters. The principle of self-management, which UOAQ advocates for on behalf of unit owners, in line with primary and secondary objects of the BCCM Act, leads to harmony in unit living – something everyone deserves in their homes.

      I fully agree with your point that by-law enforcement and infringement process need reform, as, alas, many other areas of BCCM Act. Inevitably, unit living will always be about “the tyranny of majority” – such is the way a body corporate makes its decisions – whatever prescribed majority (ordinary, special, majority resolutions) it is.

      The ability of the scheme to decide which set of rules (by-laws) should apply to their community is therefore vital – be it smoking, keeping of pets or time limit on rentals. Once clear, incoming owners will be able to decide if the scheme is for them – thus investors will invest in the schemes where they can run their business the way they want.

      I join all discussions in good faith and read the other contributions with interest – one can always learn. It is the same principle the UOAQ has been encouraging owners to apply for many years – get better informed in order to make educated decisions – and become less credulous.

  7. Grace Lawyers Listing Owner

    I very respectfully disagree with Michael’s assessment that this decision has no application to BCCMA schemes.

    The BUGTA and the BCCMA both have a very similar restriction on by-laws: a by-law cannot prevent, prohibit or restrict a leasing or other dealing with a lot. Adjudicators considering similar by-laws under the BCCMA have consistently held that they contravene this restriction, as have referees under the BUGTA. I thought that was a wrong interpretation of the BUGTA (and also to the BCCMA), and Fairway Island succeeding into demonstrating that it was wrong.

    The BCCMA has other restrictions that the BUGTA does not: a by-law cannot restrict the type of residential use, or discriminate between different types of occupiers. Adjudicators and the QCAT appeal tribunal have consistently held that a by-law preventing short term letting restricts a type of residential use. In this appeal tribunal decision, the learned Magistrate commented on the issue by saying that he does not believe short term letting is by definition residential – a resident is someone who lives in the unit on a permanent or long term basis. That departs from QCAT appeal decisions. It may be for Queensland’s Court of Appeal to decide. It certainly is a big hurdle for BCCMA schemes to jump, which is why I said great care needs to be taken to how this decision could be applied.

    Would a by-law restricting short term letting discriminate between different types of occupiers? It is an interesting question, and one that hasn’t (in my view) been considered properly. I think it is arguable that a by-law limiting short term letting arguably doesn’t discriminate between different types of occupiers: owner-occupiers and tenants. Tenants are still permitted, but the length of the tenancy is restricted. The by-law isn’t preventing the tenants from using the common property pool (which is the example used in the BCCMA). This is an underdeveloped area of the law.

    The line of reasoning in Fairway Island would apply to some extent to similar by-laws made on the BCCMA, but there are different challenges to be met. No scheme is the same. Some BUGTA communities are purpose-built for short term accommodation (ie Azzura Greens in Hope Island), just as other BCCMA schemes are as well (ie if the Accommodation Module is in place). This decision can’t be seen as a precedent that applies in a uniform way to every strata community. I think it simply opens the door for some schemes that value permanent residency to explore.

    Is a short term by-law a good idea? That’s a political question, and it is one that I think each strata community should answer for itself. If the BCCMA needs to be amended to give strata communities under the BCCMA the ability to answer that question, then it undoubtedly should be amended. The BCCMA was drafted in 1996 and introduced in 1997. The world was very different back then. The rise of Air Bnb was not contemplated when it was drafted.

    Strata communities should be able to put in place by-laws to restrict uses of lots that could cause a nuisance, even if the nuisance is not proven. That was the point of the appeal tribunal’s decision when the Magistrate was considering whether the by-law could be challenged for being unreasonable. As I quoted in the appeal tribunal’s decision: “It appears to me that BUGTA intended to allow the BC to pass by-laws to protect lot owners from even a hypothetical nuisance of the occupier of a lot”. Why should a strata community subject itself to constant supervision and enforcement of the by-laws against a small minority of units that choose short term letting in the face of a predominantly long term residential community? As the appeal tribunal said, a body corporate should be able to regulate to eliminate the source of potential problems altogether.

    Two years ago it was widely acknowledged in the strata legal industry that no body corporate, whether under the BUGTA or the BCCMA, could validly make a by-law restricting short term letting. The strata community that Grace Lawyers acted for challenged that assumption. Many will now come out and say BCCMA schemes cannot possibly implement the same by-law. Change comes when assumptions are challenged. In this context, that is either through legal challenge or through challenging the Government to amend the BCCMA. Lawyers consider whether a body corporate could put in place this by-law, whereas politicians needs to be concerned with whether a body corporate should be able to put in place this by-law. After six long years of review, all stakeholders should be lobbying Government to look at whether the BCCMA needs to be amended to better adapt to how much our society has changed in the last 20+ years.

    Michael is an authority in the strata industry. He makes some very good points. We have worked together on many important submissions to the Government on the need for strata law reform, and will continue to do so. We all agree that this is just one of many issues Government needs to look at and then take the significant step of introducing legislative change for.

    Jason Carlson, Grace Lawyers

  8. Grace Lawyers Listing Owner

    Jana, thanks for your comments.

    I agree with Michael that the Government’s review paper was considering the specific issues of pets and smoking, but I also agree with you that there is no reason why those same principles cannot extend to other behaviours. The paper Michael linked was produced in 2017, in response to submissions made in the previous 2 – 3 years. The impact and effects of Air Bnb weren’t truly felt in the strata industry until 2017 and beyond, so it is not surprising that it wasn’t focused on in that 2017 paper.

    As explained in our video linked to the main article, strata law needs to be as fluid as human behaviour because it needs to keep pace with how rapidly developing our norms, values and expectations are. The discussion with Government should not be whether a body corporate can introduce a by-law banning pets or smoking, but on whether the restrictions on the power to make by-laws should be relaxed so a strata community can more flexibly adapt to these changes instead of waiting 6+ years for the Government to adapt.

    The debate about short term letting by-laws does not have to be viewed through the narrow prism of residential v short term, but on whether these different uses of a lot are best suited together. I am sure some smokers would appreciate living in their homes without the anxiety that comes from worrying about whether their sensitive neighbour is about to put in another complaint, or a pet owner panicking when their dog starts barking. In a similar vein, some investor owners would value the certainty of having a lot in a scheme that appreciates short term letting, without the fear that a diligent committee member will be monitoring the every move of their guests. To each community, their own.

    Jason Carlson, Grace Lawyers

  9. Michael Kleinschmidt

    Thank you Jason, and as they say ‘the arguments of lawyers are endless’.

    I would add that I thought you and your team did a great job in Fairway Gardens, as did Magistrate Sinclair – the reasons are well constructed and no doubt they were closely informed by your submissions of similar quality and depth.

    The law is settled in BCCMA schemes at present however, in accordance with Body Corporate for Hilton Park CTS 27490 v Robertson
    [2018] QCATA 168; short term stay bans are unlawful.

    The utility of these public discussions (and thank you to Smart Strata for the platform) is so that Jason and I, and others, can give informed comment on legislative change that is needed or is proposed.

    It is precisely because of that discussion, and cooperation, that we have been able to knock a lot of rough edges off what is coming – in the new Regulation Modules (out now) and the Act (which we should see next year).

    I would also agree with Jason that ultimately, it is the politicians who will decide what will change. My preference is that the by-law infringement and enforcement process is brought into the 21st Century!

    Better that, I think, than legitimising discrimination (residents over investors). That is a slippery slope that inevitably leads to an erosion of the rights of the individual and to the tyranny of a majority.

  10. Ianb

    “Tyranny of the majority”? Isn’t that democracy in action…

  11. Philip Williams

    Jana Koutova, yes I totally agree.
    As a manager of a CTS I can support your considered observations.
    Philip Williams

  12. Michael Kleinschmidt

    Hi Jana,

    Thank-you for acknowledging your error with respect to the QUT report.

    I can assure you, based on my working and collegiate relationship with at least two of the coauthors, that your thesis of what these comments relate to is incorrect.

    The discussion related specifically to smoking and pets, and the QUT team considered the objects of the Act because, as a matter of legal academic enquiry, when you propose to recommend making a change as significant as allowing a body corporate to make a by-law to ban something, then you must consider the schema of the entire Act.

    As to buyer’s motivations, fortunately we still regulate deeds and not thoughts. It is also a feature of the rule of law here in Australia, that we are equal before the law (investors too!).

    You won’t win my support for empowering Bodies Corporate to ban short term letting (or banning any other thing for that matter, such as red heads using the BBQ, pinata parties by the pool or bicycles in the lift) unless you can come up with some extraordinary justification – because to grant such a power would be an extraordinary thing.

    A friend and colleague of mine has written about why, in effect, private rights of veto over land use rights is a singularly bad idea, that will lead to all sorts of problems; economic and social.

    Have a read of Sherry, Cathy — “Lessons in Personal Freedom and Functional Land Markets: What Strata and Community Title Can Learn from Traditional Doctrines of Property” [2013] UNSWLawJl 13; (2013) 36(1) UNSW Law Journal 280.
    Which is available here:

    You might have specific regard to the private contractual rights that purchasers ‘agreed’ to when buying into private communities in the USA, and the abhorrently discriminatory practices that became enshrined in private law as a result. Getting rid of them became a major legal project…

    That is one of the reasons why I am regularly stunned that members
    of the generations of Australian citizens that fought so hard against discrimination on the basis of gender, race, sexuality or age, are so apparently willing to facilitate discrimination in by-laws.

    Their argument always reduces to the ‘people’ being empowered to regulate the ‘people’. If a Body Corporate was subject to the same checks and balances as, for example, our representative parliamentary democracy in Queensland, then I might agree that ceding more power to Bodies Corporate is a good idea (but then again I may not, as a supporter of the argument that, as Australians, we are some of the most over governed people in the world!).

    The fact is however that Bodies Corporate are not democracies; they are, at best, oligarchies, and even when they work well, they require a very high degree of restraint to avoid the overuse, and subsequent abuse, of the power granted.

    Its the abuse of that power that most often keeps Jason and I in a job!

    ‘Don’t trust children with edge tools. Don’t trust man, great God, with more power than he has until he has learned to use that little better. What a hell we should make of the world if we could do what we would!’ -Ralph Waldo Emerson

  13. Ross Anderson

    I have read the skirmishing above between 2 very experienced and respected strata lawyers, and cannot help draw comfort from an observation by a colleague of mine about lawyers and the adversarial legal system system we experience in Australia:
    “When you are sitting at the back of a courtroom and listening to learned arguments from the occupants of both ends of the bar table, it is useful to remember that no matter how many qualifications they have, no matter how smart they are and how many years of experience they have, half of them are wrong. Works out 50:50 every time.”
    I wonder how many learned people told Jason that his client didn’t have a chance, and the matter was trite law?

    Continuing Michael’s penchant for classical references:
    A well-known Greek philosopher ‘Arry Tottle once observed there are two fundamental truths…the Truth of Logic (things are what they are eg length, time, weight, volume etc) and the Truth of Rhetoric (things are what you say they are ie it is a matter of judgment.) Most law is judgmental, and it is the judges who make the decisions, not the lawyers who merely provide arguments and opinions.