Update: Upper Tribunal determines that a manager appointed by the First Tier Tribunal is not an Accountable Person under the Building Safety Act 2022

The manager, Mr Unsdorfer, appealed the First Tier Tribunal’s (‘FTT’) decision that a manager appointed by the FTT under a management order does not satisfy the definition of Accountable Person (AP) contained in the Building Safety Act 2022 (BSA 2022) and is therefore 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. 

The article we wrote on the FTT determination can be found here: The First Tier Tribunal makes their first determination on the Accountable Person regime under the Building Safety Act 2022

The arguments on appeal

There was no dispute between the parties as to the proper approach to statutory interpretation. The Upper Tribunal’s (‘UT’) task was to identify the meaning of the words used by Parliament in the light of their context and the purpose of the provision. 

Counsel for the manager argued that the FTT had taken too narrow a view of the statutory language and had not paid sufficient regard to the “absurd” consequences of finding that an FTT  appointed manager could not be an AP. The manager went so far as to say that the outcome was so “absurd” that it could not have been the intention of Parliament. Namely, that the consequences of such a decision meant that management of the parts of a higher-risk building (‘HRB’) which presented the greatest safety risk would revert to the original landlord whose past conduct was such that it had warranted them being stripped of management responsibilities. The manager relied on the fact that the FTT had itself acknowledged the ‘significant practical consequences’ of its decision including the ‘risk of disagreement’ that may arise between a manager and AP/PAP in respect of remediation works. The divide between a manager’s duties and that of an AP/PAP were not clear and would require a higher degree of co-operation and co-ordination between those involved. 

Turning to the FTT’s interpretation of whether or not the manager had a relevant repairing covenant arising “under a lease” or “by virtue of an enactment”, the manager argued: 

1. that the position in K Group Holdings Inc v Chuan-Hui [2021] 1 WLR 5981 should be applied – namely that the provisions contained in the management order are superimposed on the existing contractual framework of the lease; and 
2. that it was possible for a management order, made pursuant to Part 2 of the Landlord and Tenant Act 1987 (‘LTA 1987’) was by virtue of the LTA 1987 (i.e. an enactment).

The Residents’ Association and the fourth respondent, Circus Apartments Ltd, made arguments in support of the manager’s position. 

The UT’s Decision

The question for the UT to determine was whether the manager’s extensive repairing obligations are granted either “under a lease” or “by virtue of an enactment” i.e. whether a manager can satisfy the definition of an AP contained in section 72 BSA. 

The UT considered that in this context, the definition was not apt to describe an obligation of the manager to comply with the terms of the management order. Their view, as well as that of the FTT’s, was consistent with a previous Court of Appeal decision. It formed the view that it is the FTT, through the management order, which imposes obligations on the manager, not the lease. 

It is by this same argument that the UT formed the view that the manager’s obligations did not arise “by virtue of an enactment”. The UT held that the order itself that provides the obligation is not an enactment (i.e. it is not primary or secondary legislation). 

The UT concluded that Part 4 of the BSA was drafted with some appreciation that managers may have been appointed under a management order to undertake functions of the AP which, from commencement of the BSA, have become functions of the AP. 

Whilst the UT did not agree with the whole of FTT’s analysis of Part 4 of the BSA, it concluded that the FTT’s decision reflected the clear intention of Parliament and the proper construction of section 72. The manager is obliged by the management order to continue to carry out the obligations therein, not withstanding that the same may include building safety responsibilities which are duties of the AP. However, the manager is not obliged to carry out building safety functions which are not requirements of the management order. 

The UT dismissed the manager’s appeal. 

For more information, please contact Hannah Keane, Zoe McLean-Walls or Lee Russell.