When Lifestyle Fees Collide with the Law: Lessons from Dowling v Lifestyle Management 2 Pty Ltd [2025] VCAT 590

When Lifestyle Fees Collide with the Law: Lessons from Dowling v Lifestyle Management 2 Pty Ltd [2025] VCAT 590

A recent decision of the Victorian Civil and Administrative Tribunal (VCAT) has significant implications for residential park operators and their residents. In Dowling v Lifestyle Management 2 Pty Ltd [2025] VCAT 590 (Dowling), Justice Woodward, President of VCAT, declared that Deferred Management Fee (DMF) clauses imposed under a series of Residential Site Agreements (RSAs) were void, and that the operator could not hold residents liable to pay them.

The Tribunal also found that provisions requiring rent to accrue after a resident’s death, while no one could live in the home, were “at least harsh, if not unconscionable”.

Background

The case involved more than 80 residents from Lifestyle Communities’ Wollert and Chelsea Heights residential parks. The operator, Lifestyle Management 2 Pty Ltd (LM2), charged outgoing residents a DMF calculated as a percentage of the home’s value on sale or transfer, capped at 20%.

The residents challenged these provisions under Part 4A of the Residential Tenancies Act 1997 (Vic) (RTA), with three preliminary questions, including:

• whether the DMF was a prohibited assignment fee (s 206ZZG);
• whether the DMF complied with the RTA’s disclosure requirements to state “the amount” of fees/charges (s 206S); and
• whether post-death rent terms were harsh or unconscionable (s 206G).

The Tribunal’s Findings

Justice Woodward held:

• DMF is not a prohibited assignment fee (s 206ZZG): While residents argued the DMF was effectively a disguised “key money” payment for assignment, VCAT found the section applied only to assignments of site agreements, not sales of homes. Although the structure may have been designed to avoid the prohibition, Parliament have the ability to close that loophole rather than the tribunal.
• DMF void for failing disclosure requirements (s 206S): This was the decisive issue. The RTA requires disclosure of “the amount” of any rent, fee or charge at the time of entry. LM2’s RSAs disclosed only a calculation method (e.g. 4% per year of “Home Value”), not a fixed amount. Because the fee was neither known nor knowable when the agreements were signed, it failed under s 206S(1)(b). As a result, the DMF clauses were void held to be void by s 206F(3), and LM2 was barred from collecting them.
• Post-death rent provisions held harsh (s 206G): Rent continuing to be charged after death may be permissible in principle, but not where the estate is barred from arranging occupation pending sale. VCAT found this was “at least harsh, if not unconscionable” and ordered they be varied so occupation may occur with LM2’s consent, which cannot be unreasonably withheld.

Why it Matters

This decision reshapes the landscape for residential parks and lifestyle communities in Victoria. Operators can no longer rely on DMFs unless they are disclosed as a clear “amount” at the time of entry into the RSA, something inherently difficult where fees are tied to future sale values.

For residents, the case underscores the consumer-protection purpose of Part 4A of the RTA. Disclosure must be meaningful, allowing prospective residents, often retirees investing their life savings, to understand the true financial impact of joining a community.

For operators, the ruling is a warning that innovative fee structures may fail if they do not align with the RTA’s strict disclosure regime. Rent and charge provisions after death also require careful review to avoid being struck down as harsh.

A Western Australian Lens

Unless overturned on appeal, Dowling will reshape the way residential parks operate in Victoria. But its implications extend further afield.

Western Australia has its own framework under the Residential Parks (Long-stay Tenants) Act 2006 (WA). That act already emphasises disclosure and fairness in park rules and site agreements. Reforms introduced in 2021 strengthened requirements around disclosure of exit fees, sales processes and ongoing charges.

While WA doesn’t mirror Victoria’s “Part 4A”, the consumer-protection purpose is the same: to protect often older and financially vulnerable residents from opaque or unfair terms.

The National Message

In that sense, Dowling resonates nationally. It shows how tribunals are increasingly willing to strike down unclear or harsh provisions, even where operators argue the market has long accepted them.

Across jurisdictions, regulators and tribunals are tightening expectations around transparency, calculability and fairness in residential parks and lifestyle communities. Operators in WA, NSW, and other states should be reviewing their RSAs and disclosure packs now, especially where exit fees reference future values or where post-death rent is charged without a realistic occupation option to ensure they can withstand the kind of scrutiny VCAT applied in Dowling.

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This article was first published on 29 August 2025. It was written by Julia Moroz, from our Melbourne office and Nicholas Cooley from our Perth office.

© Bugden Allen Group Legal Pty Ltd. This is general information only and not legal advice. You should not rely on this information without seeking legal advice tailored to your specific circumstances.