Can a sectional title scheme have irreconcilable provisions in its management and conduct rules?
In a recent matter I found that there was a management rule that said one thing and a conduct rule that said, very nearly, the opposite. The question was, which rule applies? At first glance it seems obvious that the management rule would apply, but it’s not that easy.
Section 35 of the Sectional Titles Act deals with rules. The first thing it says is that the scheme must be managed and controlled by means of rules, but subject to the provisions of the Act. That’s quite clear and simply means that in the hierarchy of provisions, the Act comes first. No rule may be irreconcilable with a provision of the Act.
Section 35 goes on to say, in subsection 2(b), that a conduct rule may not be irreconcilable with any prescribed management rule. That’s right, prescribed management rule. So what about management rules made by the body corporate? Or by the developer?
In the situation described above, a conduct issue was regulated by the body corporate adding a perfectly valid rule by unanimous resolution in the management rules. Some years later, the same issue was revisited but the owners then felt differently to the body of owners who made the original rule, and they made the new and different provision in the conduct rules, where the issue actually belongs. So which rule now applies and how should this conflict be settled?
There’s nothing in the Act or prescribed rules that specifies a hierarchy in rules the body corporate might make. While management issues should be dealt with in the management rules and conduct issues in the conduct rules, even the prescribed rules contain some crossover so, when made by the body corporate, the only real difference between a management and a conduct rule is the level of consensus needed to make or change it.
The fundamental issue here is that the body corporate already has an agreement in regard to the issue, and one made by unanimous resolution as a management rule. It cannot then adopt a different agreement by special resolution making a conduct rule.
So the answer to the original question is that the management rule applies. The way to change the provision on the issue so that it reflects the will of the current owners would be either to amend the existing management rule or to delete it entirely so that the newer conduct rule applies.
Article reference: Paddocks Press: Volume 09, Issue 07, Page 2