Unsdorfer v Octagon Overseas Ltd and others

Building safety – Accountable person – Tribunal appointed manager – Building Safety Act 2022 – First-tier Tribunal appointing appellant as manager of residential parts of estate – Landlords seeking determination of accountable persons in relation to higher-risk buildings under 2022 Act – FTT deciding appellant not accountable person – Appellant appealing – Whether tribunal appointed manager being “accountable person” within section 72 of 2022 Act – Appeal dismissed Canary Riverside was a large mixed estate comprising residential and commercial premises in the Docklands area of east London. It included five buildings which, because of their size, were classified as “higher-risk buildings” for the purpose of the Building Safety Act 2022. In 2019, the appellant was appointed manager of the residential parts of the estate by the First-tier Tribunal pursuant to Part 2 of the Landlord and Tenant Act 1987. The first respondent owned the freehold of the estate. The second respondent held part of the reversion to a long lease comprising four of the higher-risk buildings. The third respondent held the severed remainder of the reversion comprising the fifth higher-risk building. The fourth respondent held a sublease of one of the buildings for a term of 999 years which it used as serviced apartments. The fifth respondent was the residents’ association representing the long leaseholders of the residential buildings. The first, second and third respondents (the landlords) applied to the FTT under section 75 of the 2022 Act for a determination identifying the “accountable persons” for the higher-risk buildings. They argued that they alone were accountable persons under both section 72(1)(a) and (b) of the 2022 Act. The appellant argued that he should be designated as the principal accountable person. The fourth and fifth respondents supported the appellant’s claim. The FTT made determinations in favour of the landlords. The appellant appealed. Held: The appeal was dismissed. (1) Part 4 of the 2022 Act created the status of “accountable person” and the duties which went with it. Section 72(1) identified an accountable person as: (i) a person who held a legal estate in possession in any part of the common parts; or (ii) a person who did not hold a legal estate, but who was under a relevant repairing obligation in relation to any such part. A person who would otherwise fall within section 72(1)(a) was not an accountable person if someone else, who did not have a legal estate, was under a relevant repairing obligation in relation to all the relevant common parts, or if all repairing obligations relating to the relevant common parts had become functions of an RTM company: section 72(2). The first of those exceptions could not have been intended to refer to a tribunal appointed manager because the relevant obligation had to be included “in each long lease of which the estate owner is lessor”. The second exception was limited to an RTM company, but the requirement was that it had “all repairing obligations”, and not “all relevant repairing obligations”.  In this case, section 72(1)(a) did not apply to the appellant, because he did not hold a legal estate. He could only be an accountable person if he fell within section 72(1)(b), which required that he be under a relevant repairing obligation, ie, was required “under a lease or by virtue of an enactment” to repair or maintain the subject of the obligation. (2) Pursuant to section 24 of the 1987 Act, the functions taken on by the manager were only those which the FTT determined the manager should have. It was the FTT, through the order it considered just and convenient to make, which imposed obligations on the manager, not the lease: section 24(5)(a). The FTT was therefore entitled to confer functions on the manager which were different from those conferred on the landlord by the lease. But in view of the statutory objective of ensuring that each higher-risk building had a clearly identified duty holder in relation to building safety matters, it was unlikely that the status of accountable person could have been intended to turn on the precise terms of an order under section 24 appointing a manager.   Nor could the repairing obligations conferred on the appellant by the FTT’s order be said to be obligations arising “by virtue of an enactment”.  It was the order and not either the lease or the Act which imposed duties on the manager. The order itself was clearly not an enactment: see section 23(2) of the Interpretation Act 1978. (3) By section 24(2ZA) any breach of a building safety obligation was not a ground for the appointment of a manager under section 24. By section 24(2E) an order under section 24 might not confer functions on a section 24 manager where Part 4 of the 2022 Act provided for those functions to be carried out by an accountable person. But neither section 24(2ZA) nor section 24(2E) purported to have any effect on existing orders. They were directed solely to the content of orders which had not yet been made and were concerned only with what they might not contain.  Section 24(9A) required that, on an application by a landlord, the FTT might not vary or discharge a management order unless it was satisfied that that would not result in a recurrence of the circumstances which led to the order being made, and that it was just and convenient to do so. (4) In the absence of transitional provisions, and for so long as the FTT was not satisfied that the section 24(9A) conditions for modification or discharge were met, the only way to resolve a possible impasse between section 24(2E) and section 24(9A) might be for the FTT to make no order on an application by the landlord, leaving the manager to continue to perform the functions originally conferred by the order until either the manager themselves or another interested person applied for discharge or modification free of the section 24(9A) restrictions.  The FTT was correct to conclude that the appellant was not an accountable person for the higher-risk buildings. He was nevertheless obliged by the management order to continue to carry out the functions conferred on him by the order, notwithstanding that those included building safety responsibilities which were also duties of the accountable person under Part 4 of the 2022 Act. He was not obliged to carry out building safety functions which were not required of him by the management order.  Daniel Dovar (instructed by Wallace LLP) appeared for the appellant; Timothy Morshead KC (instructed by Freeths LLP) appeared for the first to third respondents; Philip Rainey KC and Jonathan Upton made written submissions on behalf of the fourth and fifth respondents respectively. Eileen O’Grady is a barrister Click here to read a transcript of Unsdorfer v Octagon Overseas Ltd and others