Parkland Drive: Tale of a Non-Village

Parkland Drive lowrise, with the Parkridge towers behind
Parkland Drive lowrise, with the Parkridge towers behind

Previous Posts in this Series:

  1.  The DMC Share Regime
  2.  Peninsula Garden
  3.  Shed a Tear for Greenvale, and Siena 2a
  4.  A Worrisome Development

As may be seen from the Supplementary Master Plan for the development of the first phase of DB (Beach, Headland and Parkridge villages), Parkland Drive was not part of the original development concept. Instead, the original concept envisioned more house-type units in Headland Village, and neighbourhood facilities where Parkland Drive now stands.

Unfortunately, when the decision was made to change the development concept, sub-DMCs had already been executed for both Parkridge Village and Headland Village. As explained in the first post in this series (The DMC Share Regime), the DB Deed of Mutual Covenant (DMC) allows Hong Kong Resort Company Limited (HKR) great flexibility to develop the Lot. However, once a sub-DMC has been executed and shares allocated to a village, that flexibility ends. The share regime limits the type and extent of development permitted within that village.

At least, that is the way that it is supposed to work. As has been shown for Peninsula and Greenvale villages, HKR has not always followed the share regime in the past. And the very first time that HKR ignored the share regime was at Parkland Drive in 1987.

Parkland Drive was a Frankenstein creation. Parkland 1 through 7 belong to Parkridge Village; 9 and 11 to Headland Village; and 13 is a stand-alone property — a village on its own, but without any right to have a permanent representative on the City Owners’ Committee (COC).

At this time, we are not concerned with 9 through 13. The Headland Village Sub-DMC had sufficient Residential Development Undivided Shares to sub-allocate to units at 9 and 11, and shares were allocated to 13 direct from HKR’s original share pool.

For Parkland 1 through 7, however, no extra Residential Development Undivided Shares remained under the Parkridge Village Sub-DMC. A total of 7,400 undivided shares had been allocated to Parkridge Village in the sub-DMC. Of these, 3,192 were sub-allocated to residential units in the original four Parkridge towers; 504 to car parking spaces; 2,964 to village retained areas; and 740 to village and building common areas and facilities.

As stipulated in the DMC (Section III, Undivided Shares), only Residential Development Undivided Shares or Reserve Undivided Shares may be allocated to the Residential Development. Residential Development is defined in the DMC as follows:

All the buildings erected or to be erected on the Lot intended for residential use in accordance with the Master Plans.

When Parkland Drive was developed, the Parkland 1 through 7 owners received Village Retained Area Undivided Shares.

It is instructive to note the legal sophistry that was used in the Parkland 1-7 Sub-Sub-DMC to associate the Village Retained Area Undivided Shares with the Parkland 1-7 residential units, and it is therefore worthwhile to quote the relevant clause in full:

(2) Prior to the Assignment hereinafter mentioned the Registered Owner was the registered owner and entitled to (inter alia) All Those 493/250,000th undivided parts or shares of and in All That piece or parcel of ground registered in the District Land Office, Islands as The Remaining Portion of Lot No.385 in D.D. No.352 and the Extensions Thereto (“the Lot”) and All Those 492/7,400th parts or shares of and in the Parkridge Village Together with the sole and exclusive right and privilege to hold use occupy All That portion of the Village Retained Areas (as defined in the Sub-Deed) as shown coloured Pink and Yellow hatched Black on the Plan hereto annexed and the messuages erections and buildings thereon subject to and with the benefit of the Conditions (as defined in the Principal Deed) the Principal Deed and the Sub-Deed .

It all sounds very proper, until one focuses on the parts highlighted in bold for the purpose of this analysis. HKR has every right to transfer Village Retained Area Undivided Shares. It also the right to erect “messuages erections and buildings” on the Village Retained Area. And, certainly, any rights associated with the shares are subject to the Principal Deed (ie, the DMC).

But, the “subject to” provisions under the DMC are pretty onerous. Village Retained Area Undivided Shares do not carry with them any rights to a residential unit within Discovery Bay. By definition under Section III of the DMC, only Residential Development Undivided Shares and Reserve Undivided Shares may be sub-allocated to the Residential Development. Buyer beware.

Further, given that there are no limits on further development of the Lot under the lease, it is essential that the share regime detailed on Page 7 and at Section III of the DMC be respected. The share regime is the only legal protection that the small owners of DB have against untrammeled development on the Lot.

Make Work, Make Money

Scaffolding: A common sight around DB
Scaffolding: A common sight around DB


It is common around DB to see buildings clothed in scaffolding, as yet another village embarks on the once-in-seven-years renovation exercise. No other residential estate in Hong Kong carries out major renovations so frequently. Why do we renovate our buildings so often?

Because City Management (CM) tells us to. Renovations are a nice little earner for Hong Kong Resort (HKR), as CM charges Manager’s Remuneration on all expenses. A major renovation exercise can cost $30 million for a small village like La Costa (including houses), to over $100 million for a large village like Greenvale. According to the 2013-14 audited accounts, the gross expenditure for the management of DB last fiscal year, not including renovations, was $148.42 million. Hence, a major renovation exercise creates a significant bump in expenditure — and earnings for CM/HKR — for relatively little work for CM.

Manager’s Remuneration is set at 5% of expenditure, including all salaries, rents and contract expenses. CM presently rebates 2% on renovation expenditure.

CM encourages Village Owners’ Committees (VOCs) to embark on a new renovation exercise by advising that the mandatory seven-year inspection under the Deed of Mutual Covenant (DMC) is due, and then issuing a three-stage tender document that includes survey, tender preparation for renovation, and project management. If any VOC objects, CM advises that stages two and three are optional. Of course, the survey is always designed in a way that encourages the VOC to proceed to the remaining stages.

Perhaps even worse, surveys are delayed until they can be combined with a renovation. Throughout the 30-year history of DB, only Headland Village (2014) has tendered for a survey without bundling tender preparation and project management.

Under the Building Management Ordinance (BMO), any expenditure of a kind not incurred annually requires the approval of the Owners’ Committee. VOCs can say no to a major renovation. But few do.

VOC members would be wise to review the DMC instead of relying on CM. Here is the relevant section of the DMC:

 … the Manager shall have the following duties :-
(1) At least once in every 7 years to employ a competent and qualified person or persons to inspect the entire City (save only the interior of the Residential or Commercial Units or Other Units) and the City Common Facilities and Village Common Facilities and to prepare a report of such inspection which report will be kept at the Manager’s office in the City and will be open to inspection by all Owners and tenants of any part of the City and the Manager will furnish to any such Owner or tenant on request a copy of such report at a reasonable charge.

Thus, the requirement under the DMC is very different from the practice followed by CM for the past 30-plus years. The DMC requires that CM employ “competent and qualified persons” to inspect buildings and city/village infrastructure, and to keep the report at its offices “open to inspection” by both owners and tenants. Any owner or tenant in DB is entitled to inspect any report for any building in DB, including the schools and commercial properties.

These reports in fact represent an audit of the standard of maintenance provided by CM and HKR. The inspections are not intended as the precursor to a renovation exercise, but as a useful reference for all owners and tenants.

Do you want to know whether Discovery Bay International School (DBIS) is properly maintained and safe for your children? Once in every seven years CM is required to hire competent persons to conduct an inspection of the school premises and keep the inspection report open for viewing at its offices.

Do you want to know a professional’s opinion of the condition of the main road? Ditto. The reason that water pressure from the common pipes is low? Ditto. The condition of the common drains? Ditto.

It is the right of every owner and every tenant in DB to view these reports and obtain a copy at nominal cost. No fuss, no waiting. That’s what the DMC says.

And knowing the actual condition of buildings would make it much easier to plan for and carry out a proper renovation when it is really needed.


2013-14 Audited Accounts

The Audited Accounts of the Management Funds for the financial year 2013-14 have now been added to the top menu, “Accounts”.

The main source of the Management Funds is the monthly management fee paid by owners and residents. However, in fact, all monies received by City Management (CM) in pursuance of its role as Manager of Discovery Bay must be deposited to the Management Funds — everything from parking fines to renovation charges to late payment fees.

The Management Funds (the DMC term, but more descriptively called the “Discovery Bay City Owners’ Fund” by the auditor) belong to all the owners of Discovery Bay. CM holds the funds on trust for the owners, and is entitled to draw on the funds to carry out its duties as Manager under the DMC. (This, incidentally, is why one should never withhold payment of management fees as a way of protesting the actions of CM — you are not punishing CM, you are punishing your fellow owners.)

CM is required by the DMC to produce a set of audited accounts within 180 days of the end of each financial year. In addition, the DMC authorises the City Owners’ Committee (COC) and each Village Owners’ Committee (VOC) to review any of the accounts itemised on the last page of these audited accounts throughout the year. This power is above and beyond the right of any owner to receive a copy of any of the budgets, account statements and audited accounts, as shown at paragraph 8 in the link above.

Thus, the owners potentially have significant power to ensure that the Management Funds are properly deployed. However, very few COC and VOC members are aware that they have this important right. Nor has CM volunteered this information. CM perpetuates the myth that the COC and VOCs are advisory bodies only, by selectively quoting the DMC and Sub-DMCs and ignoring the paragraph highlighted in the link above.

Building Management Ordinance Consultation

The mandatory provisions in the Building Management Ordinance (BMO) are very important to Discovery Bay, due to the fact that  the DB Deed of Mutual Covenant (DMC) was written before the enactment of the original Ordinance in 1993.

The mandatory provisions provide protection to DB owners that was not provided in the DMC, for example, the requirement that any expenditure from the reserve fund must be approved by a resolution of the Owners’ Committee. City Management cannot spend from the Reserve Fund without this approval. This provides a much-needed check to ensure that funds for major projects are spent wisely.

The Hong Kong Government is presently conducting a consultation on the next revision to the BMO. This is our opportunity to provide input on issues that are important to us. The deadline for submissions is 2 February, 2015.

Please visit dbConfidential for updates on the relevance of the BMO to Discovery Bay. To find out more on the consultation, and download a copy of the consultation document, go to: