Contributors
The First Tier Tribunal (FTT) has made a decision as to who the Principal Accountable Person (PAP) and Accountable Persons (AP) are for a Higher Risk Building (HRB) under section 75 of the Building Safety Act 2022 (BSA).
This part of the BSA provides that if there is uncertainty or a dispute as to the identity of an AP or PAP, an interested party can apply to the FTT for determination.
A look at the relevant facts
In the case of Octagon Overseas Limited and others v Mr Sol Unsdorfer, Mr Sol Unsdorfer was a tribunal appointed manager under section 24 of the Landlord and Tenant Act 1987 (LTA). Section 24 of the LTA allows tenants to apply to the tribunal for appointment of a "manager" of their choosing to take over management functions where a landlord has failed to comply with its obligations.
The estate consisted of five HRBs, with the freeholder for all five buildings being Octagon Overseas Limited (Octagon). Octagon granted long leases to:
- Canary Riverside Estate Management Limited in respect of buildings one to four
- Riverside CREM 3 Limited in respect of building five.
The questions the FTT was asked to determine were:
- Who the relevant APs for the buildings were and
- What effect the tribunal appointment of a manager had on his ability to be treated as an AP?
What is an AP?
In brief, APs and PAPs "manage the fire and structural safety risks" of HRBs. There can be more than one AP, but each HRB must have one clearly identifiable PAP.
In slightly more detail, under section 72(1) of the BSA an AP is:
- A person who holds a legal estate in possession in any part of the common parts (where the common parts of a building are essentially the structure and exterior of the building along with any part of the building provided for the use, benefit and enjoyment of the residents), or
- A person who does not hold a legal estate in any part of the building, but who is under a relevant repairing obligation in relation to any part of the common parts. A relevant repairing obligation is where a person "is required, under a lease or by virtue of an enactment, to repair or maintain" anything.
Whether or not someone is an AP or PAP is therefore dependent on the facts of each matter.
What the FTT decided
After considering the matters, the FTT determined that:
- Mr Sol Unsdorfer did not hold a legal estate in any of the common parts, so could not be regarded as an AP based on the section 72(1)(a) limb
- He did have repairing obligations in relation to the common parts under his appointment in accordance with the management order. However, the relevant repairing obligations were not required "under a lease or by virtue of an enactment". Mr Unsdorfer's obligations did not arise by virtue of the legislation (the LTA) (i.e. via a statutory obligation) but rather through the management order.
In light of this, Mr Sol Unsdorfer was not an AP in relation to the buildings.
The FTT also looked at s.24(2E) of the LTA, as amended by section 110 BSA, which states that a section 24 order may not provide for a manager to carry out building safety functions in relation to an HRB where Part 4 of the BSA (or regulations made under that Part) provide for those functions to be carried out by an AP. As such, managers appointed under section 24 of the LTA "are kept separate and insulated from building safety obligations imposed on APs under the BSA".
It was determined that Octagon was the AP for all five of the buildings as freeholder. Canary Riverside Estate Management Limited and Riverside CREM 3 Limited were also identified as being APs as long leaseholders of the various buildings.
Other considerations
The FTT accepted that this conclusion is likely to have significant practical consequences for Mr Undorsfer in carrying out his functions under the management order. Other professionals in similar circumstances (i.e. operating building management services through a management order) should be made aware that the parts of the BSA that relate to fire and building safety management (Part 4) in relation to HRBs are, currently, not within the scope of appointment of a property manager.
This obviously runs the risk of creating conflict with the other AP(s) and the FTT accepted that there is a risk of disagreement between Mr Undorsfer and the PAP as to how the cladding removal works in relation to the HRBs should be progressed.
It was speculated that Mr Undorsfer could potentially, however, be appointed as a Special Measures Manager (and to carry out the functions of both a section 24 manager and Special Measures Manager) under provisions of section 102 and Schedule 7 of the BSA. (A tribunal may make a Special Measures Order if there has been a serious failure, or failure on two or more occasions, by an AP for the building to comply with certain obligations.)
At the time, as noted in the FTT's decision, section 102 and Schedule 7 were not in force. However, these came into force a few weeks ago and are therefore now a potential option.
