A key change was the creation of the new role of an “Accountable Person”, who is responsible for building safety risks in taller buildings containing residential units.
The legislation was brought in relatively quickly in Parliamentary terms, particularly given the scope of what it is designed to do. It was therefore inevitable that problems would arise that had not been anticipated by those who drafted the legislation.
One such issue arose in Unsdorfer v Octagon Overseas Ltd [2024].
To keep building safety-related duties separate from routine management responsibilities, the BSA 2022 prevents the tribunal from appointing a new manager under the Landlord and Tenant Act 1987 (LTA 1987) for a breach of an Accountable Person’s obligations.
However, the BSA 2022 does not say what should happen when an LTA 1987 manager had already been appointed before the BSA 2022 came into force.
In this article, we look at how the Upper Tribunal in Unsdorfer sought to reconcile the relationship between an existing manager appointed under the LTA 1987, and the Accountable Person under the BSA 2022.
Appointing a manager
It is reasonably well known that tenants of residential flats can collectively claim the "right to manage" their building, without needing to show that the landlord is at fault.
It is less well known that there is a separate, fault-based, procedure that can be used to take over the management of a building, under section 24 of the LTA 1987.
Unlike right to manage claims, an application to appoint a manager is not a collective right. It can be made by one, or more than one, tenant. The powers are also potentially much wider than under the no-fault process and can, for example, result in the manager being appointed over more than one block of flats.
To appoint a manager, the tenant(s) have to prove one or more statutory grounds (for example, that the landlord is in breach of an obligation owed to them under the terms of the lease relating to management). They must also satisfy the tribunal that it is just and equitable for the order to be made.
Before submitting an application to the tribunal, the tenant(s) must serve a preliminary notice on the landlord stating the grounds on which they intend to rely, and give the landlord the opportunity to remedy them.
If one or more of the grounds are proved, the tribunal, in considering whether it is just and convenient to appoint a manager, will focus on the landlord’s likely future conduct. It will also consider the proposed manager’s plans for future management.
The tribunal will not appoint a manager lightly.
The tenant(s) will often need to demonstrate that the landlord’s historic conduct is sufficiently serious to warrant intervention, and that this behaviour is unlikely to change.
The tenants will also need to show that their proposed manager is a suitable candidate to take over the management. The proposed manager must therefore have appropriate credentials and a clear draft management plan.
A manager is appointed as an officer of the tribunal, and must act independently of the parties.
Crucially, the appointed manager’s powers and authority derive exclusively from the management order under which they are appointed, not from the terms of the leases.
Management orders are often time-limited (for example, three or five years), but they can be extended.
Building Safety Act 2022 (BSA 2022)
The Building Safety Act 2022 (BSA 2022)is an extremely important, and wide-ranging, piece of legislation.
The stated aim of the Act is to learn the lessons from the Grenfell Tower tragedy, and remedy the systemic failures that were identified in subsequent reviews.
The BSA 2022 seeks to ensure that there is greater accountability and responsibility for fire and structural safety, throughout the lifecycle of those buildings that are in scope of the new regulatory regime.
There is a particular emphasis on "higher-risk buildings", which is generally buildings of at least 18 metres in height or with at least seven storeys, containing two or more residential units.
Many taller residential blocks of flats are therefore higher-risk buildings.
The BSA 2022 does many things, including introducing:
- A new Building Safety Regulator (Regulator), with specific functions, duties and powers in relation to improving the standard of buildings, and higher-risk buildings in particular.
- An amended building control regime, strengthening the procedures that apply when new buildings are designed and built, and when existing buildings are refurbished.
- New provisions governing how higher-risk buildings should be managed once they are occupied.
- Provisions concerned with who is, and who is not, responsible for fixing historic building safety defects (such as cladding issues) and who should and shouldn’t have to pay.
The BSA 2022 defines who the AP will be, and sets out a process for determining who the AP is where this is unclear.
Broadly, the AP is someone that either has a legal estate in the common parts (subject to certain exceptions), or who does not have a legal interest but who is under a relevant repairing obligation in relation to the common parts under the terms of a lease, or by virtue of an enactment.
The AP is responsible for managing building safety risks (concerning the spread of fire and structural failure) in higher-risk buildings once they are occupied.
To this end, the AP has various duties, such as to assess building safety risks, take reasonable steps to prevent building safety risks from materialising and keep and provide others with key information about the building.
If the AP does not comply with its obligations, the Regulator can serve a compliance notice.
Ultimately, if the AP still fails to comply, the Regulator can apply to the tribunal for an order appointing a "Special Measures Manager" to be the manager to carry out the AP’s building safety-related functions.
Amendments made to the LTA 1987 by the BSA 2022
The BSA 2022 amended the provisions in the LTA 1987 relating to the appointment of managers.
The rationale for doing this was so that there is a clear division of management responsibilities when it comes to managing building safety risks, and a clear path to redress in the event of a breach.
The AP is the duty holder with statutory obligations to maintain the fire and structural safety of higher-risk buildings. If they do not carry out their duties properly, the Regulator can step in and, if necessary, appoint a Special Measures Manager.
The BSA 2022 recognised that there was a potential for overlap if the tenants could apply to the tribunal to appoint a manager under the LTA 1987, and that this could compromise the authority of the new Regulator.
To avoid this, the BSA 2022 states that the tribunal cannot appoint a new manager under the LTA 1987 where the breach of obligations that the tenants are complaining about is a breach of the AP’s building safety obligations. The tenants’ recourse should instead be to notify the Regulator. The Regulator can then take necessary action to ensure compliance.
In addition, when appointing a manager under the LTA 1987, the tribunal cannot give the manager any building safety functions that the AP is responsible for.
However, if the Regulator successfully applies to appoint a Special Measures Manager, the Special Measures Manager can apply to the tribunal to appoint a manager under the LTA 1987. In this way, the Special Measures Manager would be responsible for building safety-related matters, and the tribunal appointed manager could manage everything else.
If the tribunal appoints a Special Measures Manager, and a tribunal appointed manager is already in place, the tribunal can amend the existing management order to ensure that it is clear that the Special Measures Manager will carry out the building safety-related functions.
Unsdorfer v Octagon
In this case, the tribunal had appointed a manager in 2016, well before the BSA 2022 came into force.
The BSA 2022 did not, however, cater for a situation where a tribunal appointed manager was already managing a higher-risk building at the time the new regime came in.
There was therefore nothing to explain how an existing appointed manager's responsibilities should sit alongside those of the newly created AP.
An application was made to seek clarification.
The landlord and the appointed manager both argued that they, not the other, was the AP.
This was particularly pressing, as the buildings in question had serious cladding issues that needed to be urgently addressed. Indeed, the appointed manager had already taken steps to prepare to carry out the necessary works.
The Upper Tribunal concluded that an appointed manager is not an AP under the definition in the BSA 2022.
An appointed manager does not hold a legal estate in the property, nor is it under a relevant repairing obligation under the lease or other legislation, the appointed manager's obligations derive from the management order.
The appointed manager was accordingly not required to carry out the duties of the AP.
However, the Upper Tribunal considered that, for so long as a management order made before the commencement of the BSA 2022 continues in force, the appointed manager remains obliged to comply with it.
This means that if the management order requires the appointed manager to carry out building safety related functions that the BSA 2022 confers on the AP, the manager must continue to perform them.
A landlord is not, though, excused from being an AP where there is already a tribunal appointed manager in place.
The tribunal recognised that this means that there is therefore potential for an "uncomfortable" overlap between the responsibilities of an existing appointed manager, and the landlord.
This overlap could have been avoided by the inclusion of transitional provisions in the BSA 2022, but there were none.
The Upper Tribunal did not, however, consider that Parliament could have intended that an existing appointed manager would have to stop carrying out vital building safety-related functions straightaway, when the BSA 2022 came into force, rather than arranging an orderly handover.
In addition, the Upper Tribunal believed that any overlap will be temporary and will continue only until management orders which pre-date the BSA 2022 expire, or the tribunal makes another order.
If appointed managers and landlords/APs cannot work together where there is overlap, one of them may need to apply to the tribunal for further directions.
WolfBite
Subject to any appeal, or amendment to the legislation, this decision clarifies that managers appointed by the tribunal before the relevant provisions of the BSA 2022 came into force, are not accountable persons but will continue to have any building safety related obligations that the original management order may have imposed.
Whilst the potential for overlap between appointed managers under the LTA 1987 and accountable persons under the BSA 2022 may only be temporary, it is regrettable that there is scope for any confusion when dealing with a matter as fundamental as building safety.
There is a wider question as to what role tribunal appointed managers will have for taller residential buildings in the future.
Subject to any amendment, it is possible that we may see fewer applications to appoint managers in connection with taller blocks of flats. Such applications may be harder to bring if building safety-related breaches cannot be relied on. Appointing a manager may in any case be less attractive if the manager will only have partial management powers, and where they could face difficulties trying to cooperate with a potentially hostile landlord on matters outside their control.
We might, for these reasons, start to see the emergence of a super breed of manager, who can fulfil the role of both a Special Measures Manager and a tribunal appointed manager.
