[2024] UKUT 59 (LC)

The FTT first recorded that all parties agreed that because the Manager does not hold a legal estate in any part of the buildings, he does not fall within section 72(1)(a) - the first limb of the definition of accountable person. If he is an accountable person it can only be because he satisfies the requirements of section 72(1)(b) i.e. that he is “under a relevant repairing obligation in relation to any part of the common parts”.

The Manager undoubtedly had repairing obligations in relation to the common parts and the FTT therefore considered whether these were “relevant repairing obligations” within the meaning of section 72(6). That required that they be obligations “under a lease or by virtue of an enactment”.

The FTT held that the Manager’s repairing obligations were not “under a lease” because, in accordance with the Court of Appeal’s analysis of Part 2 of the 1987 Act in Maunder Taylor v Blaquiere [2003] 1 WLR 379, the Manager’s rights and duties derive from the tribunal’s order appointing him although they may in part be defined by reference to a lease.

The FTT also accepted the Landlords’ case that the Manager was not under an obligation to repair the common parts “by virtue of an enactment”. It considered that those words were apt to refer to statutory repairing obligations, such as (it suggested) under regulation 4 of the Management of Houses in Multiple Occupation (England) Regulations 2006; they were not intended to refer to obligations imposed by an order of a tribunal exercising a jurisdiction under statute. No statute imposed obligations on the Manager to repair the common parts of the Estate and his repairing functions were not “by virtue of an enactment”. In reaching that conclusion the FTT relied on the statement in the Explanatory Notes that the purpose of section 110 was to “ensure that building safety is kept discrete from other management functions” by preventing the FTT from appointing a manager under section 24, 1987 Act to carry out building safety functions.

The FTT rejected the Manager’s submission that, notwithstanding section 110, he could be appointed under section 24 to carry out functions that include repairing obligations falling within the remit of an accountable person. It concluded that a manager appointed under section 24 cannot be an accountable person for the purpose of Part 4 of the 2022 Act. It then addressed a submission by the leaseholder’s counsel, Mr Upton, that the 2022 Act does not affect existing management orders. At paragraph 80 of its decision it said this:

“We do not accept that submission. Nothing in s.24(2E) suggests that it only prohibits new s.24 orders from requiring a manager to carry out building safety risk functions which are functions of an AP. We agree with Mr Morshead and Mr Bates that there was no need for express provision to be made for s.24(2E) to take retrospective effect because the duties in Part 4 of BSA 2022 Act did not subsist before its enactment, and so cannot have featured in any extant management order.”

The FTT then made the determinations under section 75, 2022 Act which the Landlords had requested, finding that Octagon is an accountable person for all five higher-risk buildings on the Estate under section 72(1)(a) (having regard to section 72(3) and(4) and its repairing obligations regarding structural elements), Canary Riverside Estate Management Ltd and Riverside CREM 3 Ltd are each accountable persons section 72(1)(a) in respect of the buildings of which they hold long leases (because they are in possession of the common parts), and Circus Apartments Ltd is an accountable person in respect of Circus Apartments under section 72(1)(a), because it holds the legal estate in possession of some of the common parts.