O’Connor (Senior) and others v The Proprietors, Strata Plan No. 51

Strata by-laws should be construed benevolently, having regard to their purpose of securing good management for residents and, where possible, consistency with the governing statute. A statutory prohibition on restrictions affecting transfer, leasing or other dealings does not prevent reasonable restrictions on use, even if they narrow the potential market. A minimum rental period may define residential use by requiring sufficient stability and distinguishing residential occupation from short-term holiday accommodation. Such a condition is a restriction on use, not an impermissible restriction on leasing under section 20(4) of Strata Titles Ordinance.

The respondent statutory corporation brought proceedings against the registered owners of a residential strata lot. The owners had allowed holidaymakers to occupy the lot for periods of less than one month, contrary to by-laws requiring residential use and permitting rentals only for at least one month. Ramsay-Hale J dismissed the claim, but the Court of Appeal of the Turks and Caicos Islands reversed that decision. The appeal concerned the construction of the by-laws and their validity under section 20(4) of the Strata Titles Ordinance. The central question was whether the minimum rental period regulated use or impermissibly restricted leasing.

Lord Carnwath delivered the judgment of the Board, which dismissed the appeal.

1. Construction of by-laws. By-laws governing a strata development should be construed benevolently, with regard to their purpose of assisting the good management of the development for the benefit of residents as a whole. The construction should, where possible, avoid inconsistency with the governing statute.
2. Use and alienation. Section 20(4) of the Strata Titles Ordinance prohibits by-laws restricting devolution, transfer, leasing, mortgaging or other dealings with strata lots. It does not prevent reasonable restrictions on use, even where they inevitably reduce the potential market for a lot. The Board’s discussion of White v Betalli [2007] NSWCA 243 supported the community-regulatory function of by-laws. Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104 illustrated the distinction between restrictions on use and restrictions on alienation.
3. Meaning of the impugned provisions. The initial proprietor-only restriction was relaxed by the later permission to rent, which allowed reasonable residential use by others, including lessees or licensees. The material emphasis was on the period of occupation rather than the word rental. Following the reasoning in Caradon District Council v Paton (2001) 33 HLR 34, short-term holiday occupation lacked the stability necessary to constitute use as a residence. The one-month minimum was therefore a lawful restriction on use and did not breach section 20(4).
4. Other matters. The possible right of appeal under section 3 of the Turks and Caicos Islands (Appeal to Privy Council) Order 1965 was left undecided because permission to appeal had been granted. Costs before the Board were to follow the event, subject to submissions within 28 days.

• Privy Council — In [2017] UKPC 45, the Board dismissed the appeal and held that the one-month rental condition regulated use rather than leasing.
• Court of Appeal of the Turks and Caicos Islands — Reversed the trial judge’s dismissal of the Corporation’s claim.
• Trial court — Ramsay-Hale J dismissed the Corporation’s claim.