CA-2024-001597 - [2025] EWCA Civ 1308

From 2006 until 2013 the leaseholders of the flats had exclusive use of the gym. From 2006 to 2010 it was open around the clock; in 2010 the landlord and the residents agreed that it would be open from 6 am to 10 pm each day. The then landlord charged 100% of the costs of maintaining the gym to the residential leaseholders as part of the service charge. There has never been any dispute over that, and in their application to the FTT the Leaseholders expressly accepted that they were not seeking to challenge the inclusion of 100% of the gym costs in the service charges from 2006 to 2013.

By a lease dated 25 October 2013, however, Romney House Developments Ltd granted a lease of the gym (referred to as “the Unit”) to Nash City Ltd (“the Gym Lease”). It appears that the Gym Lease was shortly afterwards assigned to Mr Adam White, who remains the proprietor and who operates a personal training business in the gym. The Gym Lease was also for a term of 999 years from 1 January 2004. No premium was payable and the rent was an initial £5,000 per year (subject to 5-yearly upward only rent reviews in line with increases in RPI with minimum and maximum increases equivalent to 1% and 5% per year respectively).

The covenants by the Tenant (“the Gym Tenant”) (in schedule 4) included a covenant to use for the Permitted Use only, which was use as a gym and supplemental uses. The Gym Lease does however contain several provisions which make it abundantly clear that this was not intended to derogate from the use of the gym by the leaseholders of the flats. First, clause 2 contains acknowledgments as follows:

“(e)

The parties acknowledge that the Occupiers have rights of entry onto the Unit pursuant to the Flat Leases to utilise the Gym Equipment (and are entitled to bring with them a personal trainer specifically for their own personal training) and the demise to the Tenant is subject to those rights of the Occupiers

(f)

It is acknowledged that the Gym Equipment belongs to the Landlord but is being provided in the Unit by the Landlord for the common use by the Tenant the Occupiers and those authorised by the Tenant on the basis that:

(i)

the Landlord shall not be entitled to remove or replace any of the Gym Equipment except as hereinafter permitted or required

(ii)

the Tenant shall not allow such number of Guests to use the Gym Equipment that the Occupiers are routinely prevented from using the Gym Equipment (with the intent that there should always be Gym Equipment available for use by a reasonable number of Occupiers).”

“Occupiers” is defined in clause 1(a) to mean the occupiers of the residential flats in the Building from time to time; and “Guests” is defined to mean those, other than Occupiers, using the Gym Equipment with the permission of the Tenant.

Second, clause 5 contains covenants by the Landlord including the following:

“(c)

The Landlord will provide to the Unit (at its own cost) heating lighting water and electricity for the use by the Tenant the Occupiers and the Guests;

(d)

The Landlord will

(i)

provide to the Unit (at its own cost) the Gym Equipment for the communal use by the Tenant the Guests and the Occupiers;

(ii)

maintain the Gym Equipment (at its own cost) in a good state o[f] repair and condition;

(iii)

regularly service the Gym Equipment at its own cost; and

(iv)

replace the Gym Equipment (at its own cost) with like items (or items of a superior quality) as and when reasonably required or when any item thereof is beyond economic repair

(e)

The Landlord will provide to the Unit a suitable quantity of towels (as reasonably required by the Tenant) for use by the Occupiers the Tenants and the Guests.”

Third, the Unit was demised together with the rights specified in schedule 2. These included in paragraph 6:

“The right for the Tenants and Guests to use the Gym Equipment from time to time in the Unit in conjunction with the Occupiers provided that the Tenant shall not allow such number of Guests to use the Gym Equipment that the Occupiers are routinely prevented from using a reasonable proportion of the Gym Equipment (with the intent that there should always be Gym Equipment available for use by a reasonable number of Occupiers)”.

This echoes the almost identical provision in clause 2(f)(ii).

Fourth, the Tenant by clause 3 covenants with the Landlord to perform and observe the obligations in schedule 4. These included the following (in paragraphs 19, 21, 23 and a second 23):

“19.

In the event of an Occupier utilising any of the Gym Equipment when the Tenant is present and requesting Assistance on how to use the Gym Equipment in question (as opposed to requesting personal training services) to provide reasonable assistance to the Occupier to explain how the item of Gym Equipment in question actually operates

…

21.

Not to use all the Gym Equipment at the same time for Guests but to make sure that there is always a reasonable proportion of the Gym Equipment available for use by Occupiers.

…

23.

To ensure that the Unit is staffed at the cost and expense of the Tenant by suitably qualified personnel provided by the Tenant between the hours of 7am to 10am and 5pm to 8pm Monday to Saturday (excluding bank and public holidays)

23.

To launder the towels provided by the Landlord in the Unit and make the same available to both Guests and Occupiers”.

Finally clause 4 contains a covenant by the Tenant with the Landlord and with the other lessees of all other parts of the Building to perform and observe the obligations set out in schedule 5. These included (by paragraph 7):

“To permit the Landlord the Landlord’s agents the lessees of other parts of the Estate and those authorised by them to enter the Unit in accordance with the exceptions and reservations set out in the Third Schedule hereto”.

Schedule 3 includes, as part of the rights to which the Unit is subject or which are excepted or reserved, the following (by paragraph 4(a)):

“All easements or quasi-easements and all rights and benefits of a similar nature over under or through the Unit or any part or parts thereof now enjoyed or intended to be enjoyed by all and/or any other part of the Estate”.

As set out above the Gym Lease contains covenants by the Landlord in clause 5 to provide, maintain, service and replace when required the Gym Equipment at its own cost. It also contains covenants by the Landlord in schedule 6 in terms very similar to those in the Flat Leases, including covenants to repair the structure and exterior of the Building and Common Parts and to insure. It is noticeable however that there are no provisions for the Tenant to pay any contribution to the costs by way of service charge.

From 2013 the leaseholders of the flats continued to have the use of the gym from 6 am to 10 pm, albeit shared with Mr White and his clients. In 2014 the then freeholder agreed with the residential leaseholders that the rent received under the Gym Lease would be put towards the costs of maintaining the gym, thereby reducing the leaseholders’ overall liability by £5,000 a year. In 2017 Abacus acquired the freehold subject to both the Flat Leases and the Gym Lease; it continued to credit the rent received from Mr White to the costs of maintaining the gym.

The gym was closed during the 2020 lockdown. After the 2020 lockdown the gym was reopened but the residents’ access was considerably reduced. Mr Rhodes’ evidence was that the residents were only allowed access from 7 am to 10 am and from 5 pm to 8 pm (and not at all on Sundays or bank holidays). (It may be noted that these are the hours during which the Tenant under the Gym Lease covenanted by paragraph 23 of schedule 4 to have the gym staffed: see paragraph 19 above).

In 2019 there was a dispute between Mr White and Abacus. Mr White complained that Abacus was in breach of its repair and maintenance obligations under the Gym Lease. This dispute was settled in 2021 on terms that Abacus would refurbish the gym and would also take no rent for a period of 3 years. That meant that the credit of the rent to the service charge account also stopped. In 2021 Abacus served notices on the leaseholders under the provisions of the Landlord and Tenant Act 1985 (“L&TA 1985”) indicating its intention to carry out major works to the gym to be paid for through the service charge. Estimates for the cost of these works were later provided showing the cost at over £218,000.