The First Tier Tribunal makes their first determination on the Accountable Person regime under the Building Safety Act 2022

In their first determination pursuant to section 75(1) of the Building Safety Act 2022 (‘the BSA’), the First Tier Tribunal (‘FTT’) has made a determination as to who is, or are, the Accountable Person(s) (‘APs’) for a higher risk building. 

Background

The matter concerned an estate comprising of five higher-risk buildings which formed part of the Canary Riverside Estate (‘the Estate’). 

The FTT had previously appointed a manager of the Estate pursuant to a management order which first came into effect on 1 October 2016 (‘the Management Order’). 

The FTT would use the hearing to determine: 

1. Who are the accountable persons in relation to each building?
2. What is the effect of appointing a manager on the accountable person regime?

The Legal Framework

The FTT considered the two tests by which one might be an AP, namely: 

1. 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 
2. 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.

Also relevant to the FTT’s decision, were two further sub-sections of section 75 set out below: 

“(3) Subsection (4) applies where— 

(a) under a lease, a person (“the estate owner”) holds a legal estate in possession in the common parts of a higher-risk building or any part of them (“the relevant common parts”), and 

(b) a landlord under the lease is under a relevant repairing obligation in relation to any of the relevant common parts.”

“(4) For the purposes of this section and section 73— 

(a) the legal estate in possession in so much of the relevant common parts as are within subsection (3)(b) is treated as held by the landlord (instead of the estate owner), and 

(b) if (and so far as) the landlord's actual legal estate in those common parts is held under a lease, the legal estate in possession mentioned in paragraph (a) is treated as held under that lease (and, accordingly, subsection (3) and this subsection may apply in relation to it).”

The Higher-Risk Buildings (Key Building Information etc) (England) Regulations 2023 are relevant in situations where there is more than one AP for a building. Amongst other things, this provides that an AP is responsible for the part of the common parts of the building for which they hold a legal estate in possession or a repairing obligation.

Finally, section 110 of the BSA is also relevant as it amended the provisions which relate to appointment of a manager – the section reads: 

“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 accepted that they were not making a declaration regarding the effect of that but that it may be relevant to their interpretation when considering who can be an AP. 

The Decision

In relation to the manager appointed by the FTT, the judgment concluded that they could not be an AP. Considering the two threads of the test under s.72(1), the FTT determined that a manager appointed pursuant to an order of the FTT did not hold a legal estate in the Buildings and therefore could not satisfy the first limb of the test. 

Turning to the second limb of the test, the FTT accepted that although the FTT order appointing a manager means they have repairing obligations in relation to the common parts, the key question is whether or not he is under a ‘relevant’ repairing obligation. S.72(6) defines relevant repairing obligations as being one that is required “under a lease, or by virtue of an enactment”. As above, the manager has no obligations “under a lease” but rather it is the FTT, through the Management Order, which imposes functions and duties on them. The question was, whether “by virtue or an enactment” refer to a direct requirement imposed by legislation or whether they can include obligations imposed under an order that is made under an enactment. Applying General Medical Council and others v Michalak [2017] UKSC 71 the FTT determined that it did not and that “by virtue of an enactment” is to be interpreted as a specific provision made in legislation. Therefore, a manager appointed by the FTT through a Management Order could not satisfy the second limb of the test and was not an AP in respect of the Buildings. 

The FTT went on to analyse, in line with the specific lease wording, the applicable legal tests for which entities will be an AP for the relevant buildings that make up the Estate. 

The FTT formed the view that a manager appointed under by the FTT is not to carry out any function in relation to higher-risk buildings where Part 4 of the BSA, or regulations made under that Part, provide for such functions to be carried out by an AP. There is a separate regime - the Special Measures Manager regime – which reflects this policy objective. 

Under the BSA, the regulator may apply to the FTT for an order appointing a person to be the special measures manager (known as a special measures order) in respect of a building and to carry out the functions of all accountable persons for that building. The FTT may make a special measures order if satisfied that there has been a serious failure, or a failure on two or more occasions, by an accountable person for the building. 

For more information, please contact Hannah Keane, Lee Russell or Mark London.