@JimmyT said:
For the record, I asked the Ministry twice to check if this was true. I told them what I was going to write and that I really didn’t want to get it wrong. I asked them what the point was of getting independent advice if the ruling was that you couldn’t have a by-law. What they wrote back was what I published.
Could they have got it so spectacularly wrong? Wouldn’t be the first time.
By the way the Attorney-General’s office (who look after NCAT) refused to confirm or deny as they will not offer legal advice.
It is disappointing that this type of (mis)information is released by Government agencies.
As another contributor (apickles) said, s123 of the E P & A Act specifically says anyone can bring proceedings for a breach of that Act, whether or not their rights are infringed by the breach. This section is pretty common knowledge. I can think of one relevant case – Dobrohotoff v Bennic, from Gosford – where one neighbour did exactly that – they successfully took L & E Court action for the other person renting their place out for short term accommodation, without permission.
The purpose of a by-law saying something similar is that it allows owners corporation to take NCAT action for a breach, rather than the more costly L & E Court action.
Further – standard by-law 18 in Schedule 3 to the 2016 Regulation (by-laws for new schemes), says:
(1) The owner or occupier of a lot must ensure that the lot is not used for any purpose that is prohibited by law.
(2) The owner or occupier of a lot must ensure that the lot is not occupied by more persons than are allowed by law to occupy the lot.
This shows the Government DOES want owners corporations to be able to take NCAT action for planning breaches.
There are other errors in what the OFT representative said. It is true that a by-law cannot outright ban leases of less than 3 months, but most short term letting by-laws are smart enough not to approach it that way. An OC can ban the type of use to which a lot is put, and this approach has been upheld by the Supreme Court in cases like Salerno (smoking) and Hamlena Pty Ltd v Sydney Endoscopy Centre Pty Ltd (medical uses). The Court said that whilst such a by-law might reduce the pool of potential lessees and purchasers, it does not offend the prohibition on by-laws that restrict leasing and transfer.
The exception is where an owner obtains development approval for that use, as the DA trumps the by-law (this is s28 of the EP&A Act and clause 1.9A in most Local Environmental Plans).
If a by-law can ban those uses, it can ban commercial uses such as Airbnb (with the same exception).