[2024] UKUT 59 (LC)

The 2022 Act was enacted following the Grenfell Tower fire of 14 June 2017 and as section 1(1) states, it contains provisions intended to secure the safety of people in or about buildings and to improve the standard of buildings. The Act was preceded by the report of the Independent Review of Building Regulations and Fire Safety, led by Dame Judith Hackitt, and gave effect to many of the report’s recommendations.

The 2022 Act is in six Parts. Part 1 is introductory. Part 2 creates the post of building safety regulator (the Regulator) and describes its functions. Part 3 amends the Building Act 1984 to confer powers and duties on the Regulator. Part 4 is about higher-risk buildings in England and creates the status of “accountable person” and the duties which go with it which are the subject matter of this appeal. Part 5 is about leaseholder protections and Part 6 contains general provisions.

Part 4 of the 2022 Act is titled “Higher-Risk Buildings” and contains provisions about the management of “building safety risks” in relation to such buildings. Most of its substantive provisions came into force on 6 April 2023.

“Building safety risks” are risks to the safety of people in or about a building arising from the spread of fire or structural failure or any other matter prescribed by regulations (section 62(1)).

A building in England is a “higher-risk building” if it is at least 18 metres in height or has at least 7 storeys, and contains at least 2 residential units (section 65(1)). A residential unit means a dwelling or any other unit of living accommodation (section 115). A higher-risk building is “occupied” if there are residents of more than one residential unit in the building (section 71(2)).

Responsibility for the management of building safety risks in higher-risk buildings falls on an “accountable person” and the greater part of Part 4 is concerned with the duties of such a person. One recommendation of the Hackitt report was that there should be a clear duty holder in respect of buildings who can be held to account and will have statutory obligations for building safety. The accountable person is that person.

Although the definition of accountable person is quite complex, the basic point is that an accountable person is someone who owns or has obligations to repair any of the common parts of a higher-risk building.

The status of accountable person is not granted by a determination of a tribunal or by an agreement between owners or occupiers of the building; it applies by virtue of the 2022 Act, and it carries with it duties, breach of which exposes the accountable person to the risk of criminal sanctions. Nor can the accountable person decline or renounce the status (other than by disposing of the interest or obligation which gives rise to it).

Section 72(1) defines “accountable person” and is reproduced in full, together with section 73 which defines “principal accountable person”, in the appendix to this decision. The key provision is section 72(1), as follows:

This basic provision is qualified by definitions and exceptions. The most significant of these, for the purpose of this appeal, are the definitions of “common parts” and “relevant repairing obligation”.

Section 72(6) provides that the “common parts” of a building are the structure and exterior of the building (except so far as they are included in the demise of a single dwelling or of premises to be occupied for the purpose of a business), or any part of the building which provided for the use, benefit or enjoyment of the residents of more than one residential unit. It will therefore normally include both the main structure and installations (lifts, fire alarms, lighting etc) and the internal circulation areas, hallways, corridors, staircases etc which are used by the occupants of more than one flat or apartment in the building.

Section 72(6) also contains the following explanation of “relevant repairing obligation”:

It can therefore be seen that section 72(1) provides two alternative bases on which a person may be accountable.

The first is that the person holds a “legal estate in possession” in any part of the common parts. Section 72(6) explains that for this purpose, “possession” does not include the receipt of rents and profits or the right to receive them. To qualify as an accountable person under section 72(1)(a), a person must therefore hold the common parts in hand and must not have let them to someone else. This limb is subject to section 72(2) which provides that a person, referred to as “the estate owner”, who holds a legal estate in possession in all or part of the common parts is not an accountable person in two circumstances. The first will typically apply where responsibility for the repair of the common parts has been conferred on a management company, and the second where all repairing obligations relating to the relevant common parts have been taken from the estate owner by an RTM company.

The other basis on which someone may be an accountable person is under section 72(1)(b). A person who does not hold a legal estate in any part of the building but who is nevertheless under a relevant repairing obligation in relation to any part of the common parts (such as a management company or an RTM company) will be an accountable person. Circumstances in which this limb will apply will include where one or other of the exceptions in section 72(2) prevents the person who holds the legal estate in possession from being an accountable person. Whether it has a wider application, including to tribunal appointed managers, is the issue in the appeal. It is noteworthy at this stage that there is no equivalent of section 72(2) specifying that where a tribunal appointed manager has responsibility for the repair of the common parts the estate owner is not an accountable person.

Section 72(3)-(4) covers the situation in which the common parts of a building are demised by one or more leases in a chain, with the relevant repairing obligation being retained by a landlord further up the chain than the person in possession. In that situation the landlord which is under the repairing obligation in relation to the common parts is treated as being the landlord in possession for the purpose of determining who is the accountable person.

Part 4 of the Act imposes duties on the accountable person to take a variety of steps to manage building safety risks. The purpose of the definitions in section 72 is to identify those who are in a position to take those steps. Thus, the essence of being an accountable person is that one must either be in possession of the common parts of the building (including the structure and exterior) or be under a relevant repairing obligation in relation to the common parts.

It is possible that more than one person may be an accountable person for a building as, for example, where one estate owner is under a relevant repairing obligation in relation to the structure and exterior of the building, and a different person is under a relevant repairing obligation in relation to the interior common parts. I was told, for example, that Octagon, as freeholder, has retained responsibility for repairs to the foundations of Canary Riverside, but has passed on responsibility for the repair of the rest of the common parts to the other Landlords. To avoid duplication of responsibility and the confusion or delay which might result, section 73 provides for one accountable person to be identified as the “principal accountable person”.

Where a building has only one accountable person, they are the principal accountable person (section 73(1)(a)). Where a building has more than one accountable person, the principal accountable person is the one who holds a legal estate in possession in the relevant parts of the structure and exterior of the building, or who is within section 72(1)(b) because of a relevant repairing obligation in relation to the structure and exterior of the building (section 73(1)(b)). Once again, the Act seeks to assign responsibility to the person in the best position to take necessary steps to manage building safety risk and assumes that to be the person who controls or is already obliged to repair the structure and exterior of the building.

The Higher-Risk Buildings (Key Building Information etc) Regulations 2023, made under section 74, allocate responsibility for different parts of a building which has more than one accountable person. As this appeal does not raise any issue to which the Regulations relate it is not necessary to consider them.

Section 75(1)(a) and (b) provides that any interested person may apply to the FTT for it to determine who are accountable persons and who is the principal accountable person as regards a higher-risk building; an application may also be made under section 75(1)(c) to determine the part of the building for which any accountable person is responsible. For this purpose, interested persons include the building safety regulator, anyone who holds a legal estate in the common parts, and anyone who is under a relevant repairing obligation in relation to any part of the common parts. The application which has given rise to this appeal was made by the landlords under section 75(1)(a) and (b) (as the FTT pointed out, it did not ask for a determination under section 75(1)(c)).

The appeal raises no issue about the scope of the duties of an accountable person and it is not necessary to refer to these in detail, but I mention them in outline to draw attention to the extent of the duties and the role of the Regulator in ensuring they are complied with.

The most significant duty for the purpose of this appeal, because it is where the functions of a manager appointed under section 24, 1987 Act and the duties of an accountable person might be expected to coincide most closely, is the duty of the accountable person under section 84 to take all reasonable steps to prevent a building safety risk materialising or to reduce the severity of any incident resulting from such a risk materialising, steps which “may in particular involve the accountable person carrying out works to the part of the building for which they are responsible”.

I was told that in this case it is common ground that substantial work is required to the cladding of the buildings at Canary Riverside (which may include its complete replacement). That work is likely to fall squarely within the accountable person’s duty under section 84 to take all reasonable steps to prevent a building safety risk materialising. But it would also appear to fall just as squarely in the functions of the Manager under the FTT’s Management Order, and indeed the Manager has taken steps to prepare to carry out the work including applications to the Building Safety Fund to cover the very considerable costs.

The accountable person’s numerous other duties include ensuring that a completion certificate is issued and that the building is registered with the Regulator before it is occupied (sections 76 and 77); applying to the Regulator for a building assessment certificate (section 79); carrying out an assessment of building safety risks after the building first becomes occupied and at regular intervals thereafter (section 83); preparing a “safety case report” for the building recording risks and steps taken to reduce them (section 85); keeping prescribed information and making it available to the Regulator (sections 88 and 89); and engaging with residents of the building and consulting them on building safety decisions (section 91).

Sections 98 to 101 are concerned with enforcement of the accountable person’s duties by the Regulator (as well as other duties placed on residents). By section 101, an accountable person commits an offence if, without reasonable excuse, they contravene any requirement of Part 4 or regulations made under it (subject to prescribed exceptions) and the contravention places one or more people in or about the building at a significant risk of death or serious injury arising from a building safety risk. The penalties for such an offence include up to two years imprisonment.

Section 102 and Schedule 7 to the 2022 Act strengthen the Regulator’s powers by creating a scheme of “special measures”. The Regulator is entitled to apply to the FTT under paragraph 4 of Schedule 7 for a special measures order appointing a “special measures manager” for the building. The circumstances in which a special measures order may be made by the FTT are specified in paragraph 4(4) of Schedule 7, as follows:

The 2022 Act includes provisions, at section 110 and paragraphs 8 and 9 of Schedule 7, dealing specifically with the subject of tribunal appointed managers and orders under section 24, 1987 Act. These are considered below.

Finally, the Secretary of State was given power by section 170(6) to make transitional or saving provisions, but none have been made dealing with the position of a tribunal appointed manager, or allowing an accountable person’s track record of non-compliance with building safety obligations before the commencement of the 2022 Act to be taken into account as grounds for the appointment of a special measures manager.