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As highlighted earlier, the share regime in Discovery Bay requires that undivided shares are sub-allocated to individual units from the pool defined when the Deed of Mutual Covenant (DMC) was executed in 1982.
The share regime has not always been followed in the past. I previously detailed the misallocation of undivided shares at Peninsula and Greenvale villages.
Fortunately, it was possible to track back these variances by reviewing the original documents. In the case of both Peninsula and Greenvale villages, the total number of Residential Development Undivided Shares allocated to each village is stated clearly in the sub-DMC.
The newest developments in DB — Phase 14 (Amalfi), Phase 15 (Positano) and Phase 16 (future) — similarly fall under one sub-DMC and several sub-sub-DMCs. Regrettably, with these phases, Hong Kong Resort Company Limited (HKR) has omitted any reference to the types of undivided shares allocated to the village.
The Amalfi Sub-DMC for phases 14, 15 and 16 was executed on 31 May, 2013. As may be seen from Section I, Undivided Shares and Reserved Rights, a total of 3,683 undivided shares was allocated to the Reserved Development Areas (ie, the future development areas) in the sub-DMC. As may also be seen, this treatment ignores the share regime under the DMC as neither use nor share type is specified.
There are no undefined undivided shares in Discovery Bay. Upon the execution of the DMC in 1982, the undivided shares were notionally divided into the uses specified. It is impossible to allocate undefined shares in a sub-DMC. Yet, HKR was able to do so in the Amalfi Sub-DMC
As we saw at Siena 2a, the solicitor responsible for the development, Messrs. Kao, Lee & Yip, vouchsafed for the allocation of Retained Area Undivided Shares to Residential Units. It is important to note that Kao, Lee & Yip was also the solicitor of record for the Amalfi and Positano developments.
Will the treatment of undivided shares that Messrs. Kao, Lee & Yip applied at Siena 2a now be extended to all future residential phases in DB?
Given that, according to the share regime specified in the DMC, HKR should now be sub-allocating Reserve Undivided Shares to Residential Units, and given that the number of such shares is strictly limited, the allocation of undivided shares should be even more transparent now than it has been in the past — not less transparent.
If Messrs. Kao, Lee & Yip’s interpretation is allowed to stand and all unallocated Retained Area and Common Area Undivided Shares are used for residential development, HKR could increase the ultimate gross floor area for residential development in DB by 50% or more.