The Government is presently conducting a consultation exercise, to gather views on revision of the Building Management Ordinance (BMO) to address inadequacies in its implementation. This consultation is vitally important for Discovery Bay.
As highlighted previously, the DB Deed of Mutual Covenant (DMC) has been structured so as to accommodate the unique nature of the Government lease, which contains no fixed development scheme. A set of commentaries on this site has described how the share regime has been designed to accommodate this flexibility.
Flexibility is also shown through extensive use of sub-DMCs.
The residential portion of DB has been developed as a series of villages, each covered by its own sub-DMC. No residential phase was included in the DMC. In fact, the definition of “Village” in the DMC is: “Any part or parts of the City constructed or to be constructed on part or parts of the Lot separately designated and described by any Sub-Deed of Mutual Covenant.”
This approach is compatible with the open-ended nature of DB’s development. Villages can be erected anywhere on the Lot at any time and incorporated into the development through the execution of a new sub-DMC.
Most of the control over management of the residential properties rests in the villages — that is, in the sub-DMCs. Management fees are set at the village level. Security, cleaning, landscaping and maintenance are all controlled by the village. The reserve fund is collected and maintained in the name of each village. Major renovations are carried out by the village. Owners’ representatives are elected village by village. City expenses are apportioned to each village in line with the total number of Management Units allocated to the village.
The Building Management Ordinance (BMO) was enacted in 1993 in order to govern the management of buildings held in multiple ownership — ie, most residential buildings in Hong Kong. Key provisions of the Ordinance relate to the management of finances and election of owner representatives under a DMC.
The BMO includes two schedules that are of particular relevance to finances and elections, Schedules 7 and 8. Since 1993, these have been incorporated into all DMCs in Hong Kong, even those that were executed before 1993. The Government took the unusual decision to make application of these schedules retrospective in order to guard against misappropriation of owners’ funds by management companies and others in authority.
Schedule 7 covers such aspects as award of contracts; management of the special (reserve) fund; preparation of budgets; setting of management fees; the right to a separate bank account; etc. Schedule 7 also includes the procedure for replacement of a Manager appointed under a DMC.
Schedule 8 covers the procedures for elections and the conduct of owners’ meetings.
Unfortunately, the Government has decided that Schedules 7 and 8 of the BMO apply to a DMC only, and not to sub-DMCs. As such, most of the villages in DB are not covered and owners do not enjoy the protections introduced in 1993.
Nonetheless, the Government authority in charge of approving DMCs and sub-DMCs, the Legal Advisory and Conveyancing Office (LACO), recognised as far back as 2000 that the protection of the BMO should be applied to sub-DMCs in DB. Starting with Neo Horizon Village in 2000, Schedule 7 of the BMO has been explicitly incorporated into every new sub-DMC.
From Siena One Village in 2002, both Schedules 7 and 8 have been incorporated into every new sub-DMC. Yet, in the present consultation exercise, the Government once again reaffirms that the BMO should not apply to a sub-DMC (pages 37-38).
This is ludicrous.
In DB, every village developed before 2000 has no right to the protection under the BMO, while every village developed from 2000 enjoys such protection.
The Government states that there are “practical difficulties” in applying Schedules 7 and 8 of the BMO to a sub-DMC. But, as the schedules have already been applied to every sub-DMC in DB since 2000, this is clearly not the case for DB. It would be a simple matter for the Government to add a clause that states that, if Schedules 7 and 8 have been incorporated into any sub-DMC in a Building (as defined in the BMO), they shall be incorporated into all sub-DMCs in that Building.
It should be highlighted that, if Schedule 8 is incorporated into pre-2000 sub-DMCs, individual owners will no longer have to appear in person to elect their village representatives. Schedule 8 provides that an individual owner may appoint any person as a proxy; proxies are not restricted to family members, as is required by the sub-DMCs. It is worthwhile to quote the enabling provision as included in the Siena One Sub-DMC in full:
“The provisions of the Eighth Schedule to the Building Management Ordinance (Cap. 344) in force as at the date of this Sub-Deed shall, to the extent that they are consistent with the Principal Deed, be incorporated into this Sub-Deed (the “incorporated provisions”) and to the extent that any provision in this Sub-Deed is inconsistent with the incorporated provisions, the incorporated provisions shall prevail.”
You may make your views known by making a submission to the Home Affairs Department on or before 2 February 2015:
Division V, Home Affairs Department
31/F Southorn Centre
130 Hennessy Road
Wan Chai, Hong Kong
Details may be found at:
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