[2024] UKUT 59 (LC)

Section 24, 1987 Act has now been amended by section 110, 2022 Act by the addition of new subsections apparently intended to separate the two statutory regimes and to give effect to the recommendation of the Hackett Report that clear lines of responsibility should exist in relation to building safety matters.

A new section 24(2ZB) now stipulates that a breach of a building safety obligation owed by an accountable person under Part 4 of the 2022 Act cannot be relied on as a breach of an obligation owed to the tenant for the purpose of satisfying the ground for appointment of a manager in section 24(2)(a).

A new section 24(2E) creates a further separation by providing that:

Further relevant amendments to section 24 are contained in paragraphs 8 and 9 of Schedule 7 to the 2022 Act, as part of the regime of “special measures” and the appointment of special measures managers. A special measures order is a means by which the Regulator may take responsibility for compliance with Part 4 away from the accountable person and give instead to a special measures manager appointed by the FTT in a procedure comparable to an application under section 24, 1987 Act.

Paragraph 8 of Schedule 7, 2022 Act is concerned specifically with the relationship between a special measures manager and a manager appointed by the FTT under section 24, 1987 Act. Paragraph 8(1) provides that where a special measures order is made by the FTT in relation to a higher-risk building at a time when an order appointing a manager under section 24 is in force, paragraph 8(2) applies, as follows:

Paragraph 9(3) of Schedule 7 inserts a new section 24ZA into the 1987 Act which creates a procedure by which a special measures manager may themselves apply to the FTT for an order under section 24 appointing a manager. The grounds for such an application are specified in the new section 24ZA(4)(b), which provides:

It is not at all clear how the duties of the special measures manager and a section 24 manager are intended to relate to one another, but the opportunity for a special measures manager to seek the appointment of a section 24 manager does not provide a route by which a section 24 manager appointed before the commencement of the 2022 Act may assume responsibility for the functions of an accountable person. That is for two reasons.

First, an appointment under section 24ZA is a new appointment, and a newly appointed section 24 manager cannot be given any of the functions of an accountable person (section 24(2E), 1987 Act). The thinking may perhaps be that the new section 24 manager will be responsible for management functions other than those which are also functions of an accountable person (such as in relation to insurance, routine maintenance or the collection of service charges). If so, it is not obvious why those matters are any concern of a special measures manager or why the appointment should have been made conditional on breaches by the accountable person of their obligations under a special measures order, which are unlikely to relate to such matters.

Secondly, the defaults by an accountable person which are preconditions to the appointment of a manager under section 24ZA can only occur after the commencement of the 2022 Act. Before a special measures manager can be appointed there must first have been a serious or persistent failure by the accountable person to comply with a Part 4 duty; further non-compliance, this time with an obligation imposed on the accountable person by the special measures order, must then occur before the appointment of a new section 24 manager can be requested by the special measures manager. It is clear, therefore, that whatever section 24ZA is intended to achieve, it is not a transitional provision allowing existing section 24 managers to be accommodated within the new regime of building safety functions.

The purpose of the amendments to section 24 was explained in Explanatory Notes prepared under the authority of Parliament by the drafters of the Building Safety Bill. Paragraph 859 explained the background to section 110 and refers to the FTT’s power to appoint a manager to take over management functions where a landlord has failed to comply with its obligations. It continues:

“If that principle were to be carried through into building safety, it could compromise the authority of the Building Safety Regulator. The amendments to section 24 ensure that the new regime is compatible with existing legislation and provides clarity as to avenues of redress for breach of obligations. Under the Act, redress should be sought through the residents’ complaints mechanism to the Building Safety Regulator who can arrange for the appointment of a Special Measures Manager if there have been persistent breaches of building safety obligations by the Accountable Person.”

The commentary on section 24(2E) and section 24(2ZB) is uninformative. Paragraph 858 simply paraphrases the latter provision: “a tribunal cannot appoint a manager under section 24 where the breach of obligations complained of by tenants is a breach of the Accountable Person’s building safety obligations”. Nor “when appointing a manager under section 24” can the tribunal confer on the manager “any building safety functions which are due to be carried out by an Accountable Person”.

The Explanatory Notes do not directly address the situation which exists at Canary Riverside where a manager with responsibility for the maintenance of the building and compliance with statutory obligations was appointed by the FTT before the commencement of the 2022 Act. That possibility is alluded to at paragraphs 1598 to 1601 of the Notes, where it is explained that the power to amend a section 24 management order given to the FTT by paragraph 8 of Schedule 7 will “ensure there is no overlap of functions of the two types of managers in situations where two separate managers have been appointed”. This contemplates that an order under section 24 may already be in force in relation to a building at a time when the FTT makes a special measures order; in those circumstances the FTT may amend the section 24 order to avoid duplication of functions as between the section 24 manager and the special measures manager. For that combination of circumstances to exist the section 24 order must have continued to have effect after the commencement of Part 4, and the tribunal appointed manager must have been performing functions under the management order which are functions of an accountable person under Part 4. The only functions given to a special measures manager by an order under paragraph 4(2) of Schedule 7 are those of accountable persons and the separation of functions contemplated by paragraph 8(2) must therefore be a separation of building safety functions which have previously been included in the section 24 order and are now included in the special measures order. This appears to be confirmed by the example given after paragraph 1601 in the Explanatory Notes, which refers to an application being made for a special measures manager to be appointed at a time when an existing manager appointed under a section 24 order “is carrying out functions which relate to the fire and structural safety of the building”.

The effect of these amendments, and in particular the new section 24(2E), 1987 Act are the subject of argument in the appeal. They demonstrate conclusively that Parliament had not lost sight of the FTT’s jurisdiction under Part 2, 1987 Act to appoint a manager with a wide range of functions and responsibilities when it created the status of accountable person. They also seem to me to envisage that, after the commencement of the 2022 Act, a section 24 manager may have continued to perform functions which Part 4 provides are to be carried out by an accountable person and which Schedule 7 envisages will be taken over by a special measures manager if they are appointed.