Facts:
Canary Riverside is a large mixed estate comprising both residential and commercial premises, five of which are classified as higher-risk buildings due to their size. These buildings have been the subject of disputes between the owners of the estate and its residents since 2005. The residential parts have been managed by Mr Sol Unsdorfer, tribunal-appointed manager of the estate under Section 24 of the Landlord and Tenant Act 1987, since 2019.
Octagon Overseas Ltd, the first respondent, owns the freehold of the estate. Octagon granted long leases to Canary Riverside Estate Management Limited in respect of buildings one to four and Riverside CREM 3 Limited in respect of building five. Circus Apartments Ltd holds a sublease of Circus Apartments from Riverside CREM 3 Ltd for a term of 999 years.
Decision:
As Mr. Unsdorfer did not meet the requirement under section 72(1)(a) as an accountable person – as he did not hold a legal estate in possession in any part of the common parts of the buildings – it was for the Tribunal to decide whether he met the requirements for section 72(1)(b) of the Act. The FTT noted that, since Mr. Unsdorfer's obligations and powers came from a FTT
Management Order and did not derive from the lease, he could not be an accountable person. The Upper Tribunal (UT) confirmed that a manager of flats appointed by the FTT pursuant to Part 2 of the Landlord and Tenant Act 1987 cannot be an accountable person for the purposes of section 72 of the Building Safety Act 2022 (BSA). The Tribunal explained that this conclusion is based on the straightforward interpretation of BSA.
It is clear from the statute that no managers appointed since the coming into force of the BSA can be ordered to undertake management of building safety risks that fall within the scope of the duties of accountable persons. However, since it does not have a retrospective effect, in relation to existing management orders, insofar as the order imposes on the manager building safety risk functions found in Part 4, that order remains valid and enforceable in addition to the obligations of the accountable person. An existing appointed manager will only be required to carry out any of the duties imposed on accountable persons if they are expressly required to do so in the terms of their appointment order. There will, therefore, be an overlap in functions between the manager and the accountable person until that order expires or is varied. As the Tribunal puts it “potential for an uncomfortable and impractical overlap between the responsibilities of the manager and the landlord.” While acknowledging that this situation is not ideal, the Tribunal also explained that such overlap would only be temporary as the manager could apply to the FTT to vary an existing appointment order to clarify the division of the responsibilities.
Finally, the Tribunal noted that “section 72 does not excuse the estate owner from being an accountable person where there is already a tribunal-appointed manager, as it does in 72(2) where a management company or an RTM company is responsible for all repairs.”
Implication:
This judgement is important for appointed managers or owners of buildings that are managed by an appointed manager. Indeed, this ruling clarifies who has the various obligations to manage the building safety risks as set in the BSA as well as who is the proper party to make an application to the Building Safety Fund for assistance with remedial works.
This saga is not over, as the question of whether Mr. Unsdorfer’s appointment should be renewed, and on what terms, is the subject of applications to the FTT under section 24, Landlord and Tenant Act 1987 will be decided by the FTT in May.