Court of Appeal upholds VCAT ruling on Lifestyle Communities’ Deferred Management Fees
Lifestyle Communities (ASX: LIC) advised the market on 21 August 2026 that it was unsuccessful in its appeal before the Court of Appeal, with the Supreme Court of Victoria upholding the Victorian Civil and Administrative Tribunal (VCAT) orders concerning Deferred Management Fees (DMF).
The appeal was heard in the Court of Appeal, Supreme Court of Victoria, on Tuesday 23 June 2026, with the decision received on 21 August 2026. It related to orders made by President Woodward in VCAT on 25 July 2025 concerning DMFs “based on the resale price of the home.”
The Court of Appeal determined that the company was unsuccessful in its challenge and, as a result, upheld VCAT’s orders.
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What the ruling means for Lifestyle Communities
As previously disclosed, the company has recognised a provision in its Financial Statements for the repayment of DMFs collected from previous homeowners impacted by the July 2025 VCAT orders.
The announcement does not disclose the dollar value of that provision. the company noted it will still digest the detail of the decision and update the market as required.
Lifestyle Communities’ FY26 full year results, released the day before the Court of Appeal decision, disclosed a $5.1 million quarantined DMF fund held pending the outcome, with the company returning to statutory profit of $46.9 million as the legal overhang remained unresolved at the time of that presentation.
The key legal timeline is set out below:
- 7 July 2025 — original VCAT ruling
- 25 July 2025 — orders made by President Woodward in VCAT
- 23 June 2026 — Court of Appeal hearing
- 21 August 2026 — Court of Appeal decision received (appeal unsuccessful, VCAT orders upheld)
Understanding Deferred Management Fees in land lease communities
The core issue in this case concerned how the fee was calculated. Under the method challenged at VCAT, the DMF was worked out “based on the resale price of the home,” an approach the tribunal ruled against.
How Lifestyle Communities has evolved its business model
Since the original VCAT ruling on 7 July 2025, the company amended its DMF calculation method to align with the July 2025 ruling. The DMF is now “based on the purchase price and pro-rated over a 5-year period to a maximum of 20% of this price.”
This revised method is also consistent with the recent proposed Consumer Legislation Amendment Bill 2026. For investors, the forward-looking model is already aligned with both the ruling and the proposed legislation.
The revised DMF structure is not the only fee mechanism change the company has introduced: an upfront management fee payment option was launched in Q3 FY26, with 13.6% of net sales electing that pathway, accelerating cash receipts and reducing the deferred revenue exposure that sits at the centre of this case.
| DMF Feature | Previous Method | Revised Method |
|---|---|---|
| Calculation basis | Based on resale price of the home | Based on purchase price |
| Pro-rata period | Not disclosed | Pro-rated over a 5-year period |
| Maximum cap | Not disclosed | Maximum of 20% of purchase price |
| Legislative alignment | Not disclosed | Consistent with proposed Consumer Legislation Amendment Bill 2026 |
What happens next
The company stated it will digest the detail of the Court’s decision and provide a further update to the market as required. No financial quantum or timing for that update has been disclosed. The release was authorised by the Board.
Company Statement
“Lifestyle Communities will digest the detail of the Court’s decision and will provide a further update to the market as required.”
Based in Melbourne, Victoria, Lifestyle Communities develops, owns and manages affordable independent living residential land lease communities. The company has twenty-nine residential land lease communities under contract, in planning, in development, or under management, with over 5,800 Victorians calling Lifestyle Communities home.
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