Şenay Nihat
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On appeal from the First-Tier Tribunal (FTT), the Upper Tribunal has decided that a Tribunal-appointed "independent manager" cannot be the 'Accountable Person' in respect of a higher-risk building under the Building Safety Act 2022 (BSA). The case is Solomon Unsdorfer v Octagon Overseas Limited and others [2024] UKUT 59 (LC).
This means the independent manager cannot carry out building safety obligations (such as removal of flammable cladding), which remains the responsibility of the Accountable Person (which could be the landlord). Significantly, this decision does not affect management orders already in place, but there is plenty to think about when those orders expire. Here, we consider what this case will mean for the appointment of managers going forward.
This was an appeal from the FTT concerning a residential estate in East London comprised of 5 buildings (the Estate). The parties had asked the FTT to determine who were the Accountable Persons and, of these, who was the Principal Accountable Persons (PAP) for the purpose of the BSA, (see below). This is the first reported decision of the FTT – and now the Upper Tribunal – on the identity of Accountable Persons. The second part of the application, concerning the identity of the PAP, remains to be determined by the FTT.
The parties included the freeholder and various leaseholders and the independent manager for the Estate, Mr Unsdorfer. Mr Unsdorfer had applied to the Building Safety Fund for financial assistance to carry out remedial work to the cladding. His application had been denied because he was not an Accountable Person, and therefore not responsible for building safety work under the BSA.
The FTT found that an independent manager appointed under s.24 Landlord and Tenant Act 1987 (LTA) could not be an Accountable Person under the BSA. Mr Unsdorfer then appealed to the Upper Tribunal.
Long leaseholders of residential flats can apply to the tribunal for the appointment of an independent manager, where the landlord of the building has been at fault on specified grounds (S.24, LTA). The independent manager would take over management responsibilities for the building, from the landlord, and would be supervised by and answerable to the tribunal.
Clearly, this is a very important tool for leaseholders who are dealing with poor management by their landlord (or their managing agents). However, if the poor management relates to a building safety risk at a high-risk building (e.g. arranging a waking watch, removing flammable cladding), then the independent manager cannot take control of these functions. Perhaps, surprisingly, responsibilities for this will stay with the Accountable Person (who cannot be the independent manager), and may well be the defaulting landlord.
Everyone in the property sector will be acquainted with the mammoth legislation that is the BSA, and the considerable secondary legislation that has amended and clarified it. Brought into force following the tragic Grenfell fire, its fundamental purpose was to ensure the safety of residents whilst protecting them from the costs of making their buildings safe. The obligation to comply with duties under the BSA is the responsibility of the Accountable Person, who is required to be registered with the Building Safety Regulator.
Building Safety risks are defined in the BSA as a risk to the safety of people in or about a building arising from the spread of fire, structural failure, or any other prescribed matter (S.62, BSA). Commonly, this would include cladding works. An Accountable Person must put measures in place to prevent building safety risks, and reduce the severity of any incident that does happen. Therefore it is crucial to identify who this is.
As we set out in our previous insight, 'Building Safety Act 2022: Replacing managers in higher-risk buildings, an Accountable Person is broadly:
If a building has only one Accountable Person, they are the PAP. However, where there is more than one Accountable Person, the PAP is the Accountable Person who:
The FTT had found that the independent manager could not be an Accountable Person for the purposes of the BSA. On appeal the Upper Tribunal agreed, and found that:
In the Explanatory Notes to the BSA, it was noted that building safety was intended to be kept discrete from other management functions. The Upper Tribunal's decision ensures that this separation is felt in practical terms.
Counsel for the independent manager summarised the problem well in submissions:
"[Counsel for the independent manager] suggested that the exclusion of a tribunal appointed manager from the status of Accountable Person produced such an absurd and inconvenient result that it cannot have been the intention of Parliament. The consequence of the FTT's construction [he] submitted, was that "managers of higher-risk buildings would at a stroke be stripped of the majority of their management responsibilities, in particular those relating to the most serious risks in the building". Management of those parts of a building which represented the greatest safety risk would revert to the original landlord. A professional manager, vetted by the FTT before appointment and held by it to high professional standards, would be replaced by a landlord whose past conduct had warranted them being stripped of the management of their own property."
The BSA did provide one solution – the Building Safety Regulator could ask the tribunal to appoint a "Special Measures Manager", expressly to undertake Part 4 duties instead of the Accountable Person (s.102 and Sch.7, BSA). These provisions recently came into force and it remains to be seen how effective this solution is in practice.
For more information, please contact Şenay Nihat.
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