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.