A contested 2025 ADGM Small Claims judgment — in which our team acted for the successful claimant — answers a question that recurs across Abu Dhabi's managed communities: can a manager appointed by the master developer recover service charges from an owner when no Owners' Association has ever been formed? The Court said yes — and the reasoning is a useful map of standing, charge assessment and the limits of a statutory charge.
1. The dispute in brief
Our client, a real estate management company, had been appointed by the master developer of a Reem Island development to manage the common areas and collect charges from owners. It claimed several years’ unpaid service charges and chiller-water charges (2019–2024) against the owner of a residential unit. The owner resisted on four fronts: the manager had no standing to sue; the charges were “arbitrary” and wrongly assessed; the chiller-water charge was a duplicate levied for a third party; and the development had been mismanaged. The Court rejected each defence on the substance and entered judgment for USD 90,111.18.
2. Standing to sue without an Owners' Association
The central issue was the manager’s standing. It was not a party to the owner’s sale and purchase agreement (SPA); it relied instead on an Appointment Notice from the master developer. The Court held that the Appointment Notice had legal effect: the SPA itself anticipated the developer engaging a manager, and the matters covered by the Notice (issuing NOCs, collecting service charges, managing the common areas) fell squarely within the developer’s day-to-day management powers. The developer could therefore validly confer that authority on the manager.
Crucially, the absence of a registered Owners’ Association did not preclude recovery. Under Chairman Decision No. 245 of 2015 (Art. 27.1), the developer remains responsible for managing and maintaining the common areas pending the establishment of an Owners’ Association; and the ADGM Strata Title Regulations 2015 impose no obligation on a developer to create one. The owner’s argument — that only a registered Owners’ Association may levy charges — was rejected.
3. Were the charges validly assessed?
The owner said the charges were arbitrary and inconsistently calculated. The Court found a robust, externally regulated basis for them. Service charges for jointly-owned property may be imposed on owners only after written approval by the Abu Dhabi municipality (ADM), confirmed in correspondence from the Abu Dhabi Real Estate Centre (ADREC). The manager produced ADM approval letters fixing the permitted per-square-foot charge for each period, and the unit’s net floor area had been recalculated in 2021 to reflect ADM’s methodology (including only 25% of balcony area). Against that evidence, the owner’s bare assertion of “arbitrary” figures could not stand.
4. Chiller-water is separately chargeable
The owner argued that chiller (chilled) water was already inside the annual community charge, and that invoices from a third party (the billing operator) were unenforceable. The Court disagreed on both points. On a proper reading of the SPA and the master community declaration, chilled water is a utility recoverable separately where not already metered or included in shared expenses; and the operator raising the invoices was simply the manager’s billing agent, not an unrelated third party. No defence to the chiller-water charge was made out.
5. Mismanagement complaints do not justify withholding
The owner catalogued alleged mismanagement — parking, pandemic-era maintenance, lobby works, budgets. The Court held these did not entitle him to withhold charges. This is not an ordinary bilateral contract where one side’s breach suspends the other’s performance: the owner receives the benefit of the common services continuously, and withholding payment to protest lesser grievances would, if replicated across owners, starve the development of the very funds needed to run it. The complaints, even if proved, were of “considerably lesser value” than the benefits enjoyed.
6. What the claimant did not recover
The judgment was not a clean sweep, and the limits are instructive:
- No statutory charge over the unit. Section 51(8) of the Strata Title Regulations gives a charge only to an Association. As none had been formed, neither developer nor manager could claim one.
- No fines or contractual interest. Those powers, too, belong to an Association that did not exist.
- No pre-judgment interest. The claimant had not given the particulars required by Practice Direction 3.3(b)(iii); only 5% post-judgment interest was ordered.
- Costs at 3%. As the claim was decided on the papers rather than at a trial, costs were set at 3% of the judgment sum (not the 5% trial figure) as an order nisi.
Practical takeaways
- An appointed manager can recover charges without a formed Owners’ Association — but its authority must be documented (a clear appointment from the developer, anchored in the SPA/community declaration).
- Keep the assessment trail: ADM/ADREC approvals, area methodology and per-period rate letters defeat “arbitrary charge” defences.
- Statutory charges, fines and contractual interest depend on an Association actually existing — plead the contractual debt, and particularise any interest claim under PD 3.
- Owners cannot self-help by withholding community charges over service complaints.
Sources & citations
- Judgment: ADGMCFI-2024-324 (ADGM Court of First Instance — Small Claims Division). Small Claims Division judgment of 21 July 2025. Not yet published on the public ADGM judgments database; a sealed copy is on file with the firm. See the ADGM Courts judgments database.
Rules & practice directions cited
- ADGM Strata Title Regulations 2015 (ss.48, 50, 51, 83) — functions of an Owners' Association; statutory charge over a Strata Lot
- Abu Dhabi Law No. 3 of 2015 & Chairman Decision No. 245 of 2015, Art. 27.1 — developer responsible for common areas pending an Owners' Association
- ADGM Court Procedure Rules 2016 & Practice Directions (PD 9 small-claims costs; PD 3 interest)
This case note is for general information only and does not constitute legal advice. For advice on an ADGM debt-recovery, enforcement or set-aside matter, please contact us. Last updated: 21 July 2025.