Lifestyle Communities awaits DMF contract appeal decision
- Appeal heard: Lifestyle Communities' Supreme Court challenge has concluded
- Decision pending: Court has reserved judgment on the VCAT ruling
- Contracts changed: New DMF model offered regardless of appeal outcome
- High stakes: VCAT ruling has wiped billions from the company's value
The Victorian land lease community operator has appeared before the Court of Appeal – Supreme Court of Victoria.
Last Tuesday (23 June), Lifestyle Communities made applications for leave to appeal and the appeals relating to the orders made by President Ted Woodward in the Victorian Civil and Administrative Tribunal (VCAT).
President Woodward has previously ruled that Lifestyle Communities' DMF model under the Residential Tenancies Act 1997 (Vic) was illegal because it was calculated in a way that benefitted Lifestyle Communities if home values increased – but did not penalise the operator if values declined.
In response, then-new Chief Executive Officer Henry Ruiz introduced an new upfront fee – buyers now have the option when they pay their management fee – either 10% upfront, or up to 20% when they sell.
All existing homeowners will be offered the option to move to the new DMF model (DMF based on purchase price) regardless of the VCAT outcome. The upfront management fee is a separate model, only applicable to new homeowners.
Lifestyle Communities’ applications for leave to appeal, along with its appeals against orders made by VCAT President Justice Woodward, have now been heard by the Victorian Court of Appeal.
The Court has reserved its decision and is expected to hand down written reasons in due course.
Since January 2023, following the ABC’s 7.30 investigation and subsequent legal proceedings, Lifestyle Communities’ market capitalisation has fallen from about $2 billion to $642 million.
