JC – notwithstanding the differing approach to Strata Development Applications by Councils (about which I’m not surprised), Clause 49(1) of the NSW Environmental Planning and Assessment Regulation (2000) provides that a Development Application (DA) may be made by the owner of the land to which the DA relates or by any other person with the consent, in writing, of the owner of that land.
There’s no doubt in my opinion that the Owners Corporation (O/C), as the entity / collective of all lot owners is the “owner of the land”, so the resolution of your conundrum comes down to what numbers of owners voting in favour of submitting the DA constitutes a consent by the O/C as a whole, and whether the change in the use of the Scheme to permit short-term occupancy is covered by the provisions of Sect 65(A) of the NSW Strata Schemes Management Act.
The easier answer first – with regard to Sect 65(A), it prescribes that a special resolution is required for an O/C’s prior written consent to any addition or alteration to, or to the erecting of a new structure on the common property, and as much as I’d like to agree with your preferred position and that of others who have commented on this, I don’t think that a proposal to change the use of lots in a Scheme is captured by this Section, that appears to me to relate just to physical changes involving common property.
So to the second matter concerning the required numbers of owners voting in favour of a motion to change of use of lots and consequently to be in favour of submitting a DA to Council. If I can change the scenario slightly to one where a developer had completed and sold part of newly built Scheme, where an O/C had been formed, and where that developer then wished to amend the Development Contract (DC) that they’re required to submit to Council following its approval of their DA.
If the developers proposed amendment to the DC involved a change to the use of any completed/sold lots or more commonly to lots in the next stage of the development, then NSW Land & Property Information (L&PI) would require any such application to be accompanied by evidence of a supporting special resolution of the O/C.
So maybe contact L&PI to ascertain if their requirement for evidence of a special resolution of the O/C to be provided by a developer in the above scenario would similarly apply to your circumstances.