Unfamiliar Faces in EU Spaces

Exclusive use grants are a common source of dispute for bodiescorporate. This is especially true for car spaces allocated under an exclusiveuse grant, where the terms of use are often ambiguous and/or neglected.

At Active Law we have noticed a trend in disputes between lot ownersand bodies corporate where a lot owner rents their exclusive use car space to amember of the general public. Disputes of this nature typically arise in innercity areas where car parking is both desirable and at a premium. As Brisbaneand Queensland continue to grow, we expect disputes of this nature to increase.

So, what is the legal position in relation to lot owners renting theirexclusive use car spaces to the general public?

The answer: it depends.

Like a lot of issues in the world of body corporate, there is no clear-cutanswer as to whether a lot owner can rent their exclusive use car space to thegeneral public. The answer is dependent on the terms on which the lot owner isgranted the right to use the car space.

The grant of exclusive use is usually exercised by including a by-law inthe scheme’s CMS. Once registered, a CMS takes effect as a binding contractbetween the Body Corporate, each lot owner and each occupier. Effectively, theterms contained in the exclusive use by-law granting the right to use commonproperty establish how the lot owner or occupier may use the prescribed area ofcommon property.

If an exclusive use by-law is silent on how the car space may be used, the current common law position (according to the Queensland Civil and Administrative Tribunal authority of Ballada Pty Ltd v North Point Brisbane & Anor [2013] QCATA 184 at [77]) is that:

“A party who has the exclusive right to use and possess property prima facie has the rights to its fruit and profits. Unless particular types of dealing are prohibited with respect to subject spaces, or some special limitation is imposed, persons with the right of exclusive use are entitled to retain such profits as they can make from lawful use of the property, provided of course they do not create a nuisance or permit it to be used for some purpose other than car parking.”

We understand this to mean that a lot owner is entitled rent theirexclusive use car spaces to the general public, should they wish to, wherethere is no specific condition prohibiting same.

So how would a Body Corporate prevent a lot owner from renting theircar space to the general public?

If the by-law granting exclusive use expressly regulated, restricted orprohibited the renting of exclusive use car spaces to the general public, then thelot owner must comply with those terms, noting that the CMS (which contains theby-laws) is a contract between the Body Corporate, lot owners and occupiers.

However, schemes with exclusive use by-laws already established cannot simply amend the exclusive use by-laws to prevent lot owners renting out their car spaces.

Exclusive use by-laws can only be amended by way of resolution without dissent and also require the affected lot owners to either vote personally or provide their written consent to the change. Where a lot owner wishes to continue to rent their car space to the general public, it is unlikely that they would consent to amending the exclusive use by-law.

As such, great care should be taken in drafting exclusive use by-laws prior to their registration, as it is notoriously difficult to subsequently amend them.

Even where a scheme’s exclusive use by-law prohibits lot owners from rentingout their car space, the by-law itself,

“must not be oppressive or unreasonable, having regard to the interest of all owners and occupiers of lots included in the scheme and the use of common property for the scheme.”[1]  

Accordingly, a by-law that unreasonably prohibits lot owners from renting their car space may not be valid. However, in order to determine this, consideration must be given to the interests of all owners and occupiers of lots within the scheme and the use of the common property.

Takeaways

Unless explicitly restricted or prohibited by the exclusive use by-lawin the CMS, bodies corporate cannot prevent lot-owners from renting their carspaces to the general public.

We strongly recommend that bodies corporate seek legal advice as to thelegal effect of current exclusive use by-laws prior to taking any adverseaction against a lot owner for renting out their exclusive use car space.

We also recommend that bodies corporate seek legal advice prior to registeringa new CMS containing exclusive use by-laws to ensure that the objectives forboth the Committee for the Body Corporate and Body Corporate as a whole aremet.

As always, the Active team are here to assist with any body corporate legal issues you may have.

[1]Section 180(7), Body Corporate and Community Management Act 1997 (Qld).

Disclaimer - Reliance on Content
The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.