“Present, extant repairing obligation” required: FTT clarifies the criteria for an “Accountable Person” under the Building Safety Act
Summary
What may seem at first glance a fairly straightforward decision relating to a determination of the Accountable Person (“AP”) for a higher-risk building (“HRB”) pursuant to section 75 of the Building Safety Act 2022 (“BSA”), the Globe View House decision highlights a serious drafting flaw in the BSA: section 75 of the BSA gives no right to challenge the registration of a HRB by a person who has been incorrectly registered as an AP.
As well as highlighting this “quirk”, the case gives useful analysis as to who the AP in a HRB is where the long leaseholders have exercised the right to manage (“RTM”), pursuant to the Commonhold and Leasehold Reform Act 2002 (“2002 Act”).
Background
Globe View House is a mixed-use and higher-risk building of 86 residential units in London, managed by Globe View House RTM Company Limited (“RTM company”). Clarion Housing Group (“Clarion”) is the head leaseholder of 27 flats located in Globe View House.
The building was recently the subject of an application to the First-tier Tribunal (“FTT”), submitted by Clarion to determine whether it should be classified as an AP under section 75 of the BSA.
The FTT found that Clarion was not an AP based on the following:
- all management and repairing obligations concerning the building’s common parts had been transferred to the RTM company after acquiring the right to manage; and
- Clarion does not hold a legal estate in possession of any part of the common parts of Globe View House nor is it under a relevant repairing obligation.
Interested person
The FTT’s decision points to a procedural “quirk” in the legislation: a party who is registered as an AP but did not consider itself to be one may not fall within the category of “interested person” who can bring an application under section 75 of the BSA.
In this instance, the FTT overlooked the procedural issue given the RTM Company had also sought a determination and was clearly an “interested person” so could be treated as the applicant.
However, it then follows that a person/entity who has been wrongly designated as an AP cannot apply to the FTT for a determination that they are not an AP – highlighting the importance of correct registration of APs at the outset.
This may be of particular concern to freeholders where the RTM has been exercised. The BSA is not easy legislation to navigate and, as was the RTM’s position here, the RTM may consider that the freeholder should be an AP even where the BSA does not reflect that. It also seems that simple registration errors, such as naming a Director or Managing Agent instead of a company, cannot be rectified without the cooperation of all parties.
The Substantive Application
In determining whether Clarion was an AP, the FTT considered the following questions:
- Is Clarion an AP?
Clarion was held to not be an AP, because it did not hold a legal estate in possession in any part of the common parts under the headlease.
- Does Clarion have a relevant repairing obligation?
No - the FTT confirmed the statutory test under section 72(1)(b) requires a “present, extant obligation” to repair or maintain common parts, not merely a right to do so. The headlease gave Clarion rights to connect, use, inspect and maintain certain service installations but imposed no legal obligation for the repair or maintenance of any common parts.
However, the FTT indicated that (although not determinative), that service installations could properly fall within “any part of the building provided for the use, benefit and enjoyment of the residents” under section 72(6)(b) of the BSA, rejecting the narrow interpretation of “part of the building” as confined to corridors, lobbies and staircases.
Furthermore, the FTT rejected the RTM Company’s argument that an insolvency-triggered duty in the headlease constituted a relevant repairing obligation, because it was conditional.
The RTM Company further argued that failure to impose the responsibilities of an AP on Clarion now could lead to practical issues for building safety risk mitigation and management continuity in the event of manager’s insolvency and/or the termination of the right to manage. The FTT firmly rejected this submission, stating that duality of accountability “whilst an attractive proposition as a matter of practicality… does not follow under the provisions of the statute” and therefore is not a “sufficient ground for imposing liability”.
- Does the RTM effect whether Clarion is an AP?
Yes – the FTT held that, under sections 96–97 of the 2002 Act, the acquisition of the right to manage transferred all relevant management functions, including repairing obligations, to the RTM Company, unless the section 96(6) exception applied. Therefore, if Clarion had any relevant repairing obligations under its leases, they would not be relevant following the RTM acquisition.
Conclusion
This decision provides clarity on accountability under the BSA, particularly following an acquisition of the RTM. The FTT will strictly apply the AP test outlined in section 72(1) BSA, reinforcing that statutory definitions and lease structures underpin the classification of an AP under the BSA (not practical concerns).
Any person who has been incorrectly registered as an AP will need to liaise with the correct APs to have the register corrected. If there is a dispute as to whether that person is an AP, the AP may need to rely on the person it is in dispute with to make an application to the FTT – something we assume they may not be prepared to do if they maintain that person is an AP. That does not appear to be a satisfactory position, and we consider that the FTT was generous in labelling this as merely a “quirk”.
