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I am not aware of what the NSW legislation says but if it is like the ACT legislation, then the proposed bylaw would be likely to be invalid. In the ACT the Act says a unit owner must not have a pet without permission from the owners corporation but that is balanced by a provision that the OC must not unreasonably refuse.
So, the OC might easily manage to find grounds to reasonably refuse an elephant but probably not a goldfish. Since the Act takes precedence over any rule/bylaw, does NSW have something like the ACT provision in its Act?
In our OC, in the ACT, we adopted a rule that gives automatic permission for most common ordinary instances of pet keeping such as one or two dogs or cats or small numbers of ‘small animals’ such as fish, mice, cage birds, guinea pigs. Our rule retains the right to withdraw permission in instances of substantial repeated nuisance (IE. reasonable demonstrated non-trivial grounds, not just one person getting a bit bothered once).
Our rule still requires residents to apply for instances of unusual animal keeping not covered by our standard provisions. For example there might be some uncommon species that might make an excellent pet but most people wouldn’t know. Then a reasonable committee might require some research before they can decide whether it would or would not be reasonable to grant or withhold permission.