Is a building manager an Accountable Person under the Building Safety Act?

Canary Riverside

Introduction

Under the Building Safety Act 2022 (“the Act”), Accountable Persons have various duties, including putting measures in place to prevent building safety risks and reducing the severity of any incidents. In Canary Riverside, the First-Tier Tribunal Property Chamber (“FTT”) was required to determine who was an Accountable Person under the Act in a scenario where various parties were involved in the five buildings on the development and in the context of an application to the Building Safety Fund (“BSF”) to remediate fire safety defects. The Department for Levelling Up, Housing & Communities had stated that only an Accountable Person could make such an application.

The FTT found that a managing agent was not an Accountable Person for the purposes of the Act. This decision was confirmed by the Upper Tribunal on appeal.

Background

Canary Riverside is a development which comprises five high rise buildings (Higher-Risk Buildings for the purpose of the Act). Several different parties had an interest in each of the buildings, as follows:

1. Octagon Overseas Limited (“Octagon”) were the freeholder of all five buildings;
2. Canary Riverside Estate Management Limited (“CREM”) were the long leaseholder of buildings one to four;
3. Riverside CREM 3 Limited (“Riverside”) were the long leaseholder of building five;
4. Mr Sol Unsdorfer (“Mr Unsdorfer”) was the tribunal-appointed manager of the estate, including all five buildings; and
5. Circus Apartments Limited (“CAL”) was the long sub-lessee of building five, with Riverside being its immediate landlord.

Mr Unsdorfer, in his role as building manager, had made an application to the BSF for funding to remediate fire safety issues to the external cladding. The Department for Levelling Up, Housing & Communities had indicated in a letter that property managers appointed by the FTT would no longer be able to implement building safety projects in relation to High Risk Buildings under the Act.

The FTT heard a Section 75(1) application for a determination as to who the Accountable Persons were under the Act.

What is an Accountable Person?

Accountable Person is defined in Section 72(1) of the Act. The FTT summarised that Section 2 specifies two tests by which parties might be an Accountable Person:

(a) If they hold a “legal estate in possession” (but not including receipt of rents or profits, or the right to receive the same) in part of the common parts; or

(b) If they do not hold a legal estate in any part of the building but are under a relevant repairing obligation in relation to any part of the common parts.

A “relevant repairing obligation” is an obligation “under a lease or by virtue of an enactment, to repair or maintain that thing”.

It is possible for a higher-risk building to have more than one accountable person.

Decision

In relation to the building manager, Mr Unsdorfer, it was clear that he did not hold a “legal estate in possession” and therefore the FTT had to consider whether he was under “a relevant repairing obligation”.
The FTT found that Mr Unsdorfer had no obligations “under a lease” as his powers and duties derived from the FTT’s management order. Although the lease framed the scope of the building manager’s obligations, his obligations did not arise under the lease. The management order was superimposed on the existing contractual framework of the lease.

The FT also determined that Mr Unsdorfer was not obliged to repair or maintain any part of the common parts by virtue of an enactment.

Section 110 of the Act inserted Section 24(2E) into the Landlord and Tenant Act 1987 (“the 1987 AAct”), which states as follows:

“(2E) An order under this section may not provide for a manager to carry out a function in relation to a higher-risk building where Part 4 of the Building Safety Act 2022 or regulations made under that Part provide for that function to be carried out by an accountable person for that building.”

The FTT found accordingly that a building manager appointed by an Order under Section 24 of the 1987 Act, such as Mr Unsdorfer, could not be an accountable person.

The FTT therefore concluded that:

1. Octagon was an accountable person for all five buildings as, despite not being in possession, it had a relevant repairing obligation under its leases;
2. CREM was an accountable person for buildings one to four as it had a legal estate in possession;
3. Riverside was an accountable person for building five as it had a legal estate in possession;
4. CAL was an accountable person for building five as it had a legal estate in possession; and
5. Mr Unsdorfer was not an accountable person of any of the buildings.

The FTT’s decision was upheld by the Upper Tribunal on appeal, stating that there was ”no doubt” that the FTT was correct in determining that Mr Unsdorfer was not an accountable person.

Conclusion

The decision made by the FTT and upheld by the Upper Tribunal is one of the first interpretations of who is an Accountable Person under the BSA. The decision provides clear guidance that building managers will generally not fall within the definition. It will be interesting to see how the tribunals interpret the BSA where some of the other types of parties involved in the management of higher-risk buildings are concerned.