Conducting business from a body corporate
By Frank Higginson23 Apr 2008
Hynes Legal is often asked to advise on the rights of an occupier to conduct a business from a lot within a complex. The answer depends on the type of business being contemplated.
Usually the by-laws will prohibit any business being conducted on the premises except for the resident manager’s business. It is very difficult to change this position, as doing so will require a special resolution, which amongst other things requires a 2/3 voting majority to pass. If a proposed by-law was to permit a business to compete with the resident manager then it should be ruled invalid or an interim order obtained from the commissioner’s office preventing its consideration. If the by-law was changed then it would be a breach of the resident manager’s agreement and expose the body corporate to a claim for significant damages.
As with many aspects of body corporate law, there is a distinction between what is permitted in the by-laws and what will be excused on the basis that it is just and equitable to allow the conduct to continue.
In our experience, a business may be allowed to continue if it does not inconvenience other occupiers, such as by the occupation of all visitor spaces or the domination of a specific common facility. For instance, engagement in one on one home tutoring, business consulting, or ironing services are all likely to be acceptable provided that they do not inconvenience other owners and occupiers. The situation may be different for an occupier who has 10 students attending tutorials or conducts tennis lessons on the schemes tennis court.
One difficulty usually encountered is proving that someone is running a business instead of just having friends visit. This was particularly the case for one body corporate where very personal services were being provided, but it was impossible to prove anything as the male visitors were not going to be cooperative about providing statements.
An adjudicator has prohibited the use of a lot for a massage business, in circumstances where flyers were distributed for the services. The fact that the lot owner was providing security code information to visitors did not assist her cause.
Another case involved a photographer who sometimes did work from home and whose clients sometimes became lost within the complex. The adjudicator noted that residential use of a lot includes activities that are ‘customarily incidental’ and that ‘with technology developing at the pace it currently is, customary incidental use of the home is evolving rapidly’. Accordingly, people are more likely to be involved in business related activities at home, such as preparing accounts or conducting internet based research.
The adjudicator held that an occasional business visitor did not infringe the residential use by-law, but that the photographer should take all reasonable steps to minimise disruption by visiting clients.
The best way to deal with an occupier who is breaching the by-laws is to discuss the issue and try to work out how to minimise the alleged inconvenience, failing which a future contravention notice needs to be issued.
Planning laws may also restrict what is permissible within a lot in a complex, but this is a separate issue entirely.