Property Management: Whether a Manager Appointed by the FTT Can Be an “Accountable Person” Under the Building Safety Act 2022 (Unsdorfer v Octagon Overseas Limited and Others – 2024)

The Upper Tribunal considers an appeal against a First-tier Tribunal decision which found that the manager of a building appointed under a Management Order was not an accountable person for the purposes of the Building Safety Act 2022 (“BSA 2022”).

The background

In Unsdorfer v Octagon Overseas Limited and others [2024], Octagon was the freeholder and landlord of a mixed development of five buildings, which fell within the ‘higher-risk’ category of the BSA 2022, being a minimum of 18m high or comprising a minimum 7 storeys with at least 2 residential units. The other respondents are companies forming part of the landlord’s group of companies, or are intermediate landlords of units such as serviced apartments within the development.

Mr Unsdorfer had been appointed as the manager of the residential parts of the estate, replacing an earlier manager and both of whom were appointed as a result of a number of disputes between estate owners and residents. Initially, the application in the FTT was to consider whether Mr Unsdorfer’s appointment should be renewed and, if so, the terms of that appointment.

Under the BSA 2022, an accountable person is responsible for the management of building safety risks in higher-risk buildings, including the repair of any of the common parts of a higher-risk building. The definition of an ‘accountable person’ is set out at s.72(1) of the BSA 2022:

• In this Part an “accountable person” for a higher-risk building is –
• A person who holds a legal estate in possession in any part of the common parts…, 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.

The ‘common parts’ are defined as the structure and exterior of the building, or any part of the building provided for the use, benefit or enjoyment of the residents of more than one residential unit, generally including the structure of the building, its installations such as lifts, fire alarms and lighting, and internal areas such as entranceways, corridors and staircases.

Substantial works were required to repair the external cladding of the buildings, which presented a fire safety risk. In the FTT, it was agreed that Mr Unsdorfer’s duties and obligations arose from the Management Order and not under the lease. The FTT found that a manager appointed by the FTT could not be an accountable person for the purposes of the BSA 2022.

It was found that he holds no legal estate, and could not therefore be an accountable person under limb (a). The FTT further found that Mr Unsdorfer’s repairing obligations were not obligations arising “under a lease or by virtue of an enactment” as they arose from the Management Order which appointed him. The FTT concluded that a manager appointed by a Tribunal could not be an accountable person for the purposes of the BSA 2022, and instead identified who the accountable persons for each of the five buildings were.

The decision

The Upper Tribunal dismissed the manager’s appeal, agreeing with the FTT that he is not an accountable person for the higher-risk buildings at the development. The UT found that he is however obliged by the Management Order to carry out management functions, including some building safety responsibilities which are also duties of the accountable person. He does not have responsibility for building safety functions which are not required by the Management Order.

Arguments were forwarded by Unsdorfer and a number of the other parties supporting the view that, had a provision excluding managers from being accountable persons been intended, it would have been included in the statute. Further arguments stated that a manager has all the obligations of the landlords in respect of repairs, and that there is a sufficient connection between those obligations and the Management Order for obligations to be said to be ‘under a lease’ or ‘by virtue of an enactment’.

The UT found that the manager’s obligations did not arise either ‘under a lease’ or ‘by virtue of an enactment’. His obligations, powers and duties arose under the Management Order, and were not imposed by statute. In its judgment, the UT states that this conclusion appears to reflect the intention of Parliament.

The UT agreed that the FTT had identified the correct accountable persons in respect of each of the five buildings.

Advice and action for landlords

As the BSA 2022 continues to take effect in the industry, this early decision is useful guidance in determining who may, or may not, be an accountable person and particularly in establishing a precedent as to the building safety obligations of property managers appointed by the Tribunal.

Managers are appointed to deliver the services set out in their management orders and, per this decision, will likely not be considered accountable persons for the purposes of the BSA 2022.