HKR has submitted an application to the Town Planning Board to develop Area 6f. This is what it looks like now.
To download a copy of HKR’s application, click on the links below:
Area 6f Traffic Impact Assessment
Area 6f Environmental Impact Assessment
To comment on the application to redevelop Area 6f, go to the Town Planning Board website here. The deadline for comments is 8 April, 2016.
There has been a great deal of interest in the super-villas under construction at the golf course. Here is the design concept for the completed villas.
There will be five in total. The building area for each villa is approximately 700 sq.m., while the site area is approximately 7,000 sq.m.
The We Deserve Better Action Group has suddenly appeared out of the blue. Following distribution of their flyer to all households in DB this past week, people are asking: Who and what are they?
According to the We Deserve Better Action Group flyer, the key members are Francis and Carmen Chiu, Maggie Chan, Joe Law and Victor Riley.
These same people largely make up the Steering Committee of Love.Together@DB, a group funded by the developer of Discovery Bay, Hong Kong Resort Company Limited (HKR). According to an announcement by Tony Cheng of HKR at the COC meeting on 7 May, 2014, HKR allocated a total of $5 million to Love.Together@DB between 2012 and 2015.
6.7.6 Tony Cheng informed Members that in the past two years, HKR allocated $1.5 million annually to sponsor the Love.Together@DB community programme. In view of the most positive feedback from residents, HKR would allocate $2 million to fund the programme in the coming year. He thanked Simon Mawdsley, Francis Chiu and Maggie Chan for serving in the Steering Committee of the programme to offer advice on the types of events to be held in the past two years. In the coming year, they will continue to offer advice together with two new members, namely Mr. Victor Riley and Mr. Joe Law.
To put that amount into perspective, consider that HKR International (HKRI), the listed company that manages HKR, donated a total of $2.2 million to charity during the past two years. HKR’s donation to Love.Together@DB during that same period is almost 60% more!
Francis Chiu has been named frequently in publicity leaflets distributed around DB as the Convenor of Love.Together@DB. Both he and Maggie Chan are members of the COC.
Their involvement with HKR is a declarable relationship under the terms of the COC Declaration of Interest. The Declaration requires that members declare “any relationship of any kind with … any … company which has dealings with the City Owners’ Committee or Discovery Bay Services Management Limited.”
Whenever a matter involving HKR comes up at the COC, the Declaration would oblige Francis Chiu and Maggie Chan (as well as COC Chairman Simon Mawdsley) to declare an interest . Yet, no such declaration is recorded in any COC minutes.
The We Deserve Better Action Group’s flyer is laced with references to sabotage, obstacles, perpetual opposition, political stunts and fighting for the sake of fighting.
No one could object to the We Deserve Better Action Group’s efforts to strive for better. But why does striving for better have to be combined with such bitterness?
What evidence does the We Deserve Better Action Group have to support their claims, and who are these people who are “fighting for the sake of fighting?”
By making such unsubstantiated claims in a flyer distributed to all households in DB, whose interests is the We Deserve Better Action Group really serving?
COC members deal with a wide range of financial matters, from review of budgets, to award of contracts, to relations between the developer (HKR), the Manager (CM) and the Owners (you and me).
Millions of dollars are involved. According to the audited accounts, the total income received by the Management Fund in 2013-14, mainly from management fees, was $169 million. This excludes renovations, which are billed separately. It also excludes internal transfers of some $19 million.
Some COC members have long considered it advisable that COC members sign a Declaration of Interest, given the duty that they have to other Owners.
For many years CM objected, stating that there was no such requirement in the Deed of Mutual Covenant (DMC). In 2011, the representatives of the Villages on the COC finally agreed to prepare a Declaration of Interest form, and encourage both COC and VOC members to sign the form on a voluntary basis. It was also decided that any COC member who wished to join a COC working group involving a major contract award would be required to sign the Declaration.
The approved form may be found here.
It has largely been left to the individual VOC chairpersons (who are all COC members) whether or not they inform VOC members of the Declaration of Interest. CM takes a hands-off attitude.
Indeed, both CM and HKR refuse to sign the Declaration of Interest. When challenged about possible conflicts of interest, HKR representatives have repeatedly said that no one has the right to prevent HKR from voting at a COC meeting.
This misses the point. A Declaration of Interest is not about depriving anyone of a vote. It is aimed at improving transparency and accountability at the COC, where many issues that impact the operation of Discovery Bay and charges levied upon Owners are discussed.
The Declaration of Interest has been been raised at a number of COC meetings since adoption, specifically at Item 3.4 on 28 March, 2012, at Item 4 on 7 November, 2012 and at Item 5.8 on 12 February, 2014.
It may be noted from the meeting on 28 March, 2012 that COC member Amy Yung sought transparency in the handling of the COC Register of Declaration of Interests, while COC member Francis Chiu raised privacy concerns.
At the meeting on 7 November, 2012, the COC Chairman confirmed that public release of the COC Register of Declaration of Interests would not contravene the Privacy Ordinance.
Nonetheless, the Register has never been incorporated in COC minutes, even when it has been presented by Powerpoint at COC meetings. Why is there such reluctance to release this information?
The City Owners’ Committee (COC) minutes for 2013-14 and 2014-15 have been posted under “COC Minutes” in the top menu. (If viewing the site on a smart phone or tablet, click the three horizontal bar symbol at the top right.)
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
Fax: 2575-1009
Email: bm_consultation@had.gov.hk
Details may be found at:
http://www.buildingmgt.gov.hk/en/whats_new/2_12.htm
For more information on dbConfidential, click on ‘About‘ in the top menu. On a mobile device or tablet, the top menu may be accessed from the three horizontal bar symbol next to the search icon on the right-hand side of the screen.
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 prompted a resident of Mid Levels to write to the South China Morning Post on 29 December, 2014, under the heading Original Developer Must Not be Allowed to Manage Property. This insightful letter highlights the inherent conflict of interest involved when a subsidiary of the original developer manages an estate.
Given the clear conflicts of interest exposed on dbConfidential in the Open Letters to CM and other commentaries, many residents and owners in DB will be sympathetic to the views expressed in this letter.
The Government already recognises that owners may not be satisfied with the manager appointed by the developer under a DMC. The current version of the BMO provides a procedure to remove such manager: Owners must first form an Owners’ Corporation (OC) using the provisions of the BMO, and then apply the mechanism to remove the manager stipulated at Schedule 7, Paragraph 7.
However, in a classic Catch 22 scenario, the BMO makes it impossible for DB owners to form an OC. Unable to form an OC, DB owners thus have no means to remove City Management (CM).
In DB, the total number of Residential Development Undivided Shares is only 56,500, while the number of shares in aggregate is 250,000. The developer controls over 70% of the undivided shares in the Lot, and no OC can be formed without the developer’s support.
The present BMO consultation seeks views on whether to reduce the requirement from 30% of shares in aggregate to 20%. This will not change matters for DB, however. The developer will still control over 70% of the undivided shares in the Lot, and no resolution to form an OC can be passed if the developer is opposed.
There is no procedure in the DB DMC to call a general meeting of all the owners of the Lot. By specifying the voting rights at a general meeting of owners, the BMO has in fact given powers to the developer that the developer does not have in the DMC.
The only comparable procedure in the DMC relates to a meeting of the owners of a building in the event that such building becomes uninhabitable. In this event, only those owners holding undivided shares in the residential or commercial units in the building may vote — all other undivided shares are excluded.
It is also useful to know that, at the City Owners’ Committee (COC) — which is recognised as the Owners’ Committee under the DMC — the residential owners’ representatives are entitled to vote the Village Retained Area Undivided Shares (ie, the residential development retained area shares), not the developer.
It should further be pointed out that over 90% of the undivided shares held by the developer are not liable to pay management fees.
In the lead-up to the present BMO Consultation, many citizens’ groups proposed that shares that are not liable to pay management fees be excluded from voting on a resolution to set up an OC. This would provide a good solution for DB, ensuring that those who pay for the management of DB have the right to select their management company. However, the Government is hesitant to strip the voting rights from non-paying shares. Government’s view is stated in the Consultation as follows:
3.7 There is also suggestion that the counting of shares for the formation of OCs can make reference to that for the termination of appointment of DMC manager, whereby only the shares of owners who pay or who are liable to pay management fees relating to those shares shall be entitled to vote. However, it should be noted that owners who are not liable to pay management fees may still have the right to vote at an owners’ meeting under their respective DMCs. Therefore, it may not be entirely logical to exclude all of them from the counting of shares for the formation of OCs.
With respect to DB, this is to call black white.
The Government will not disenfranchise shares that are not subject to management fees in order to protect the developer’s right to vote shares owned by him. Yet, under the DB DMC, the developer has no right to vote Village Retained Area Shares. The BMO has tilted the playing field in favour of the developer, against Government’s own policy to give owners more say in the management of their buildings.
To correct this gross distortion, Government must revise the BMO to ensure that, on any vote to form an OC, “only the shares of owners who pay or who are liable to pay management fees relating to those shares shall be entitled to vote“. This is the only just way forward.
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
Fax: 2575-1009
Email: bm_consultation@had.gov.hk
Details may be found at:
http://www.buildingmgt.gov.hk/en/whats_new/2_12.htm
Previous Posts in this Series:
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.
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.
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.