B e f o r e :
LORD JUSTICE CHADWICK
LORD JUSTICE MOSES
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EUROPA 2000 LIMITED Appellant |
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MR MUSTAFA KELES Respondent |
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MR A BUTLER (instructed by Messrs Edwin Coe, London, WC2) appeared on behalf of the Appellant.
MR J SWIRSKY (instructed by Barnes & Partners, Enfield, Middlesex) appeared on behalf of the Respondent.
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HTML VERSION OF JUDGMENT
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- LORD JUSTICE CHADWICK: This is an appeal from an order made on 17th February 2005 by His Honour Judge Collins CBE, sitting in the Central London County Court, in proceedings brought by the appellant, Europa 2000 Limited, against the respondent, Mustafa Keles. Mr Keles is the owner, or joint owner, of property known as 98, Farringdon Road, EC1. The property comprises a late 19th century building which fronts on to Farringdon Road. It is flanked on each side by other buildings, Nos 96 and 100, to form part of a row of commercial shop premises, with residential accommodation on the upper floors.
- As constructed, the buildings were on three floors above a basement; the ground and basement floors having commercial use and the first and second floors having residential use. By the end of the last century the adjoining properties, Nos. 96 and 100, had been enlarged by the addition of a third upper floor under a mansard roof. No. 98 had not been enlarged. It must have been obvious that No. 98 presented a similar opportunity for development by the addition of a third floor.
- By a lease, dated 28th May 2001, the then owners of the building let the two upper floors, described as the 1st and 2nd floors, to the appellant company for a term of 99 years at a nominal rent (initially £100 per annum) and in consideration of a substantial premium, £170,000. It is not in dispute that it was then in contemplation that the new tenant would seek to develop the building by the addition of a further floor. But there is no reference to that in the lease.
- The lease contained at paragraph 2(g) a covenant by the tenant:
"Not to make any structural alterations to any part of the [demised premises] or the present appearance of the exterior and not to make any other alterations without the consent in writing of the Lessor such consent not to be unreasonably withheld."
So, under the terms of the lease, the contemplated development could not be carried out without the consent of the landlord.
- That consent was granted by a licence dated 1st March 2002. Under the terms of that licence the landlord consented to the carrying out of works (described as "the Works") and particularised in the schedule. They were:
"the formation of a new mansard third floor and conversion of upper floors to form a one bedroom flat on the third floor and a two bedroom maisonette in the combined second and third floors as referred to in Drawing No.200102-03B annexed."
The consent was given subject to the observance and performance of the tenant's covenants contained in the licence.
- Clause 2(2) of the licence was in these terms:
"[The tenant covenants] to carry out the works at his own expense;
(i) in a proper and workmanlike manner;
(ii) with good quality materials fit for the purpose for which they are required;
(iii) to the reasonable satisfaction of the Landlord and to the satisfaction of the Local and any other Authority and, where applicable, of any superior landlord;
(iv) with the least possible inconvenience disturbance and annoyance to the owners or occupiers of other premises; and
(v) taking all necessary precautions to ensure that the structure of the demised premises or of adjoining premises is not undermined or made unsafe during the carrying out of the works."
- Clause 3 of the licence, under the heading "General Terms", included the following provisions:
"(1) This Licence is supplemental to the Lease and is a Deed.
(2) Nothing contained in this Licence will be deemed to permit any action other than that expressly permitted by this Licence.
(5) If the Works
(i) have not been commenced within three (3) months; or
(ii) are not completed within six (6) months of the date hereof this Licence shall in its entirety with the exception of Clause 2(9) become void and without liability of the Landlord to refund any monies paid to or for the account of the Landlord in connection with this Licence.
(8) Any breach of the terms of this Licence shall operate as a breach of the Lease and will give rise to a right of re-entry under the terms of the Lease."
- It is not in dispute that, notwithstanding that the language in clause 2 might suggest otherwise, the licence imposed no obligation on the tenant to carry out the works. The position under the licence may be summarised as follows. The tenant had consent to carry out the works, which he could not do without that consent. Second, if the works were to be carried out, they had to be carried out within the tight timescale in clause 3(5). Third, if the works were carried out, then the tenant, in carrying out the works, had to observe the provisions in clause 2. In particular, the tenant had to carry out the works in a proper and workmanlike manner. Fourth, a failure to observe that covenant in the course of carrying out the works, would have effect as a breach of the covenant in the lease; so, potentially at least, triggering the right of re-entry under the lease.
- Curiously, there is nothing in the licence which indicates whether, and to what extent, the tenant is to have access over the landlord's property for the purpose of carrying out the works.
- A drawing referred to in the description of the works shows in considerable detail what are the works to which the landlord is consenting. In particular, it shows the construction of the third floor and the mansard roof. A close comparison of the drawing attached to the licence with the existing rear elevations on a drawing attached to the lease, reveals that, in addition to the works to the mansard roof to create a new third floor, there is the enlargement of an existing window on what appears to be the second floor at the rear of the property. Prior to conversion, there is a small window shown at the top right of the rear elevation; after conversion, that has become a larger window matching the other existing windows in the rear elevation. But, although that change can be identified on a close comparison of the two drawings, there is nothing in the drawing annexed to the licence which indicates that that is work which is going to be carried out. That is surprising, in that the drawing appears to detail comprehensively all the works that are going to be done; and the notes to the drawing direct attention to works to the windows. But there is nothing which draws attention to this particular change. For the reasons that I shall explain, this window has become of greater importance than a person comparing the lease plan with the drawing attached to the licence would have expected.
- After the licence was granted, but before work had begun, Mr Keles - who had previously been the tenant of the ground floor and basement where he carried on the business of restaurant and cafe - had the opportunity to buy the whole of the building, subject to the lease and the licence from the previous landlord. He did so. He then became, not only the occupier of the restaurant and cafe premises on the ground floor, but also the landlord of the upper floors.
- The ground floor premises extend beyond the back of the original building, so as to fill the whole space between the building and a rear wall. That space, which may formerly have been a yard or garden, is now filled with the kitchen, coldroom and store used in connection with the cafe and restaurant. The kitchen, coldroom and store is itself housed in a building with a flat roof. The position, therefore, approaching the property from the rear, is that there is a substantial wall, (not itself part of the property) which abuts the low flat roof of the kitchen premises which itself abuts the three storey building.
- The effect of that is that if access is to be gained to the rear elevation of the building, there are only three ways in which that can be done. It can be done by some structure which rests on, or is constructed from, the flat roof of the kitchen premises; or it can be done from some structure or mobile appliance, either in the parking area on the far side of the rear wall or, possibly, on the top of the wall itself; or, thirdly, it could be done from above by suspending some structure from the roof area of the building.
- It must have been plain from an early stage that, if the works of conversion to add a third floor and a mansard roof were going to be carried out, it would be necessary to have scaffolding somewhere; in order to gain access to that roof area. Because the building formed part of a row or terrace, any scaffolding to give access to the roof area would have to be erected, either at the front of the building - that is to say, on the pavement or roadway of Farringdon Road - or on some raft or platform over the top of the kitchen's flat roof. The tenant's initial preference was to erect scaffolding at the rear. But, to do that the tenant needed the consent of Mr Keles. It needed his consent either to put scaffolding on the flat roof; or, at the least, to have access to the flat roof so that scaffolding could be suspended over it. There were considerable doubts as to whether the flat roof would be strong enough to support scaffolding suitable to enable access to be gained to the new mansard roof.
- The tenant, Europa, took advice from its builder, Mr Taylor. His view was expressed in a witness statement which he made in April 2002. At paragraphs 6 and 7 he said this:
"6. In order to proceed with renovations to the third floor, it is necessary to erect scaffolding to the rear of the building. We have arranged for the scaffolding to be suspended scaffolding; that is, it will not rest upon the flat roof to the rear of the cafe. In order to erect the scaffolding, however, it will be necessary for one or perhaps two workmen to have access to the flat roof during the day that the scaffolding is erected.
7. The flat roof in question appears to be of basically sound construction, and I would not expect that one or two workmen walking or standing upon it would cause any damage. In order to alleviate any concern on the part of the cafe owners, however, we have agreed that I will re-felt the roof at the expense of Europa 2000 Limited in any event following the erection of the suspended scaffolding."
The scaffolding is described as "suspended" in that passage because, as Mr Taylor indicated in a sketch plan which was subsequently produced, what he had in mind was a bridge of scaffolding poles, one end of which would rest on the rear wall and the other end would rest on a window ledge on the first floor of the building. From that raft or platform scaffolding could then be erected upwards against the wall of the building. That arrangement would depend on obtaining the consent of the owner of the rear wall. Mr Keles was not the owner of the rear wall.
- That arrangement was not acceptable to Mr Keles, because he feared that the need for one, or perhaps two, workmen to have access to the flat roof for the purpose of erecting the raft on which the suspended scaffolding would rest would itself damage the flat roof. He thought that the flat roof was not sufficiently strong even to bear the weight of the workmen carrying out that limited operation. So he refused to consent.
- It was in these circumstances that these proceedings were commenced by the issue of a claim form in the Central London County Court in April 2002. The order sought in the proceedings was a declaration that Europa was entitled to access to the flat roof at 98 Farringdon Road for the purposes of erecting suspended scaffolding. In context, that is a declaration that Europa could have access to carry out what I may describe as Mr Taylor's scaffolding plan. At that stage the access was required for the purpose of erecting the scaffolding that would be needed to carry out the construction of the rear mansard roof of the building. That is made clear from paragraphs 13, 14 and 15 of the particulars of claim, which are in these terms:
"13. The Works provide for extensive renovation and construction to the mansard roof area of the Building. It is not reasonably practicable to carry out such construction without erecting scaffolding to the rear of the Building.
14. The Claimant has made arrangements to have suspended scaffolding fixed to the demised premises. In order to erect the suspended scaffolding, however, the Claimant requires his builders to have access to the flat roof of the Shop constituting the rear portion of the Building.
15. The Defendant has since March 12th 2002 prohibited the Claimant and his workmen from having access to the said flat roof. The Claimant has advised the Defendant that the access required is limited to workmen standing and walking on the roof for the period of approximately one day, and that no scaffolding or equipment will be erected on the roof. The defendant has nevertheless prohibited the claimant from obtaining access to the roof."
- Although these proceedings were commenced in April 2002, it was not until the beginning of 2005 that they came on for trial in the Central London County Court. A rather startling feature of this action - among others - was that by that time the tenant, as developer, had managed to complete the work to the rear mansard roof by scaffolding erected on the roadway and pavement at the front of the building. The tenant had been able to do all the work it needed to do to the new mansard roof without gaining access to the rear elevation of the building.
- So it was that, when the matter came before His Honour Judge Collins, his first reaction appears to have been that the question raised by the claim had really answered itself. If the question was "was it necessary to erect scaffolding to the rear of the building in order to complete the works to the mansard flat roof?", the answer was provided by the fact that the works to the mansard roof of the third floor had been completed without erecting the scaffolding at the rear of the premises.
- Nevertheless, in the course of Mr Taylor's evidence at the trial he seems to have reminded the parties that there was other work to be done. In particular, there was the work of enlargement to the rear window on the second floor. That had not been a matter which had been raised by the claim as originally made. But, following Mr Taylor's evidence, counsel for the tenant applied to amend the particulars of claim to raise it; and he was given permission to do so.
- The amendment is recorded in the order of 25th February 2005 with other paragraphs, which are not subject to the appeal. Paragraph 13 of the particulars were amended to read:
"The works provide for extensive renovation and construction to the rear and mansard roof of the building. In order to carry out and complete such construction, it was necessary to erect scaffolding to the rear of the building."
That had the effect that there was then a live issue in relation to scaffolding when the matter came for decision before the judge.
- The judge dealt with that issue in conjunction with a second case between the same parties which was also before him for trial. That case involved the provision of drainage to the upper floors. At paragraphs 31 and 32 of his judgment the judge said this:
"31. What this case is really about is a very narrow evidential point as to whether the necessity for scaffolding, which was envisaged by the first action and which was made necessary (or was thought to have been made necessary) by the first action was in fact access which was, to use the words of the lease, 'necessary for the proper performance of the lessee's obligations'. The word is not 'desirable' or 'convenient', but necessary. I ought to add that I gave Mr Butler permission this afternoon to make an amendment to his pleading in relation not only to the work which was immediately on hand in April 2002 when the action was commenced, but also to the completion of the drainage works, and other outstanding works which are mainly the subject of the second action.
32. The question of drainage did not arise until December 2002, and there is no evidence which has been adduced to support the notion that access to the defendant's premises would be required for the performance of any outstanding works, save for an observation which was made by the claimants' builder during the course of his oral evidence yesterday, that it would be necessary to put the scaffolding up and involve the flat roof again in order to complete the drainage. While there were sufficient questions raised by Mr Stott's evidence in the second action to justify an adjournment I did not consider that the same applies to Mr Taylor's evidence in relation to the first action."
- The judge explained why. In particular, he said this:
"Mr Taylor was the claimant's builder. He told me himself that the solution to the problem raised by the first action was a scaffolding device invented by the scaffolder and therefore the observation by Mr Taylor, who was neither a scaffolder nor a surveyor and who had plainly not been asked to give his mind to the question before he gave his evidence, did not seem to me to raise a serious question on this issue and therefore it does not seem to me that it justified an adjournment to see whether or not he was right, particularly since the point had never been raised by the claimants until Mr Taylor gave that evidence."
The judge was there addressing the submission that Mr Taylor's evidence was unreliable. It was pointed out to Mr Taylor he was now giving evidence that, although the third floor and the mansard roof had been completed satisfactorily without the need to erect scaffolding to the rear, that evidence was contrary to what he had said in his witness statement made in July 2002. So, it was said, Mr Taylor's evidence that scaffolding was necessary to complete the outstanding works and the drainage could not be given weight.
- The judge dealt with that submission in paragraphs 33 and 34 of his judgment:
"33. The clear and undisputed evidence was that a method had been devised of doing what I call 'the first action works' without access to the defendant's premises and in those circumstances it seems remarkable at first blush that the claimants are still pressing on arguing that it was necessary to obtain access in order to do the works. The ingenious way in which Mr Butler has organised his argument, almost at the last gasp of the case, is to say that clause 2(8) of the lease imposes an obligation on the tenant not to do anything which is an inconvenience to the landlords, and as the landlord demonstrated graphically in his evidence an hour or so ago that he was extremely inconvenienced by having scaffolding at the front, it follows that it was necessary to have the scaffolding at the back. If I may say so, I respectfully admire the ingenuity of that argument, but unfortunately like so much in this case it is not justified by the evidence, because there is no material on which I could come to the conclusion that the only alternative to having scaffolding at the back was to leave scaffolding hanging around in the front for over a year, so the point is really one which does not stand up on the evidence.
34. It seems to me in all the circumstances abundantly plain that the first action is simply incapable of succeeding, because the claimants cannot show that it was necessary for the performance of the works to have scaffolding at the back invading the defendant's premises when in fact by some ingenuity on the part of the scaffolders they managed to have it done in a different way."
- The appellant criticises those passages on the grounds that the judge, in effect, had overlooked the need to complete the outstanding works for which scaffolding was said to be necessary at the rear of the property. The outstanding works, in that context, are, principally at least, the enlargement of the second floor window. The judge was led, by his belief that all the works had been completed by the scaffolding erected at the front of the building, to overlook the need to deal with the outstanding works which he had allowed to be added to the claim in the first action. And, it is said, had he appreciated that, he would have been bound to hold, in the light of Mr Taylor's uncontradicted evidence, that scaffolding was necessary in order to do the work to the window and to complete other works.
- That argument did not impress Sir Martin Nourse, who refused permission to appeal on paper. But it did find favour with a full court at an oral hearing on 5th October 2005. On that day Waller LJ and Jonathan Parker LJ gave permission to appeal. The permission was limited to the factual question whether it is practically necessary to erect scaffolding at the rear of the premises. It is not as clear as it might be from the order made on 5 October 2005 just what the scope of that question is: practically necessary for what? But that does become clear in the judgment of Jonathan Parker LJ:
"The judge referred to the evidence of Mr Taylor and said that he was not a builder, a surveyor or a scaffolder and his evidence could not therefore carry any weight. Mr Butler submits that the judge was wrong to reject this evidence so peremptorily. The extension occupies the entire rear of the property and there was no evidence before the judge of an alternative method. Further, the respondent appeared to accept that the scaffolding at the rear would be necessary.
I can see an arguable case based upon the alleged practical impossibility of carrying out the outstanding works, especially those to the window, without the erection of scaffolding at the rear of the property. Although not presented to the judge as of fundamental importance, it seems at least arguable the judge should have addressed this."
At first sight, the observation in the first of those paragraphs that the judge thought Mr Taylor was neither a builder, a surveyor or a scaffolder, is a little surprising, because, whatever other skill Mr Taylor had, he was plainly a builder. The explanation, I think, is that the passage in which the judge made that observation is a passage directed, not to Mr Taylor's expertise, but to the expertise of Mr Keles, who is the cafe and restaurant proprietor.
- The question which this court is required to answer is whether it is necessary to erect scaffolding at the rear of the building to enable the outstanding works to be carried out. There is, however, an introductory question raised by the respondent's notice filed on behalf of Mr Keles. Although filed out of time and not in compliance with the rules, we decided to hear argument on the point. It was not suggested that the late filing of the respondent's notice gave rise to any prejudice to the appellant. The point raised by the respondent's notice is that the judge was wrong to hold that Mr Keles was under any obligation to give any access, necessary or otherwise, for the carrying out of the works envisaged by the licence.
- As I have said, there is nothing in the licence itself which deals with the question of access, surprising though that may seem. The tenant relies on the words of grant in the lease; and, in particular, the habendum. The property demised is:
"ALL THAT Demised Premises TOGETHER WITH the following rights in common with the Lessor and occupiers of any other flat in the Building:-
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(e) Such rights of access and entry upon the Estate and/or Common Parts and/or the Shop in the Building with or without workmen and materials as may be necessary for the proper performance of the Lessee's obligations hereunder provided that the Lessee shall
(i) have given reasonable notice (save in the case of emergency) of intention of carrying out obligations to the occupier of the Flat to which he requires access
(ii) make good any damage resulting from the exercise of his right."
That, plainly, is grant which is needed in the context of the tenant's covenants in the lease; in particular, the covenant to keep the tenant's part of the property in repair. But, at first sight at least, it is difficult to see why an easement granted to enable the tenant to carry out his obligations under the lease should have the effect of giving him a right of access to the landlord's property in order to carry out works which he has permission to carry out under the licence.
- It is said that the effect of the licence is that, if the works are carried out at all, they have to be carried out in accordance with the covenants in the licence; that the licence imports those covenants into the lease - as if they were covenants in the lease; and that they become obligations under the lease in relation to which the tenant is entitled to have access, so as to enable him to carry those obligations out. It is difficult to avoid the conclusion that that is really a "boot-straps" argument. The judge dealt with the argument in paragraph 30 of his judgment:
"Now it is of course the case that the provisions of the lease giving the claimants the right of access to the defendant's property do not relate directly to the performance of any of the lessee's obligations under the lease as it was granted, because the claimants had no obligations under the lease in relation to the works which were the subject matter of the action. But Mr Butler submitted, and I think rightly, that once the licence had been granted, although the claimants were not under any obligation to perform the works under the licence, once they chose to embark on those works, they then assumed the obligations set out in the licence, which were enforceable as if they had been terms of the lease. If a breach of those obligations was capable of giving rise to a right of forfeiture under the lease then it seems to me to follow that Mr Butler's arguments are right and that clause 1(e), where it uses the expression 'the proper performance of the Lessee's obligations' must include the proper performance of the lessee's obligations under the licence. So that once the works had been started the claimants were entitled to take advantage of clause 1(e) of the lease to enforce their rights in relation to the works that they were carrying out."
- I have read that passage because it explains why the judge - and the Court of Appeal when giving permission - focused upon the need to show that access was necessary for the proper performance of the lessee's obligations. That is the phrase used in clause 2(e) of the lease. For my part, I would prefer not to rely on the terms of the lease as giving access; I would hold, more simply, that it must be implied, as a term of the licence, that the licensee will have the access which he needs to carry out the works for which he has been given permission. I would reach that conclusion in the circumstances that it is not disputed that, at the time when the lease was granted, it was contemplated that these works of conversion, or works indistinguishable from them, would be carried out by the tenant. To grant a lease at a premium of £170,000 with those works in contemplation; to grant a licence which permits those works to be done; and then to withhold the access which is needed in order to carry out those works, would seem to me to amount to a derogation of grant. That is not how the case was pleaded below and was not how it was put before the judge. But that matters not, because it leads to the same conclusion. The access to which the tenant is entitled is the access necessary properly to carry out the works for which consent is given in the licence of 1st March 2002.
- The question, then, is whether it is necessary to erect scaffolding at the rear of the building in order to carry out those works. As to that, the only evidence was that of the landlord's builder, Mr Taylor. This court is hampered by the decision of the appellant not to obtain a transcript of that evidence. We have Mr Taylor's witness statement - where he is plainly directing his evidence to the work to be done to the roof. We have, also, the undisputed fact that Mr Taylor's opinion as to scaffolding needed in relation to the roof turned out to be wrong; because the roof could be constructed without the need to erect scaffolding at the rear. We do not have the evidence that he gave in the course of his cross-examination at the trial. The nearest we get to that evidence is a question put to Mr Keles by the tenant's counsel. Mr Butler put this question (page 28):
"What Mr Taylor was telling us yesterday is that they cannot put scaffolding down by the side of the building because it will collapse, and that is why they cannot finish the first and second floor of the property, is it not?
(A) They finished already except ----
(Q) Except the drainage, except the window, except also the guttering to the mansard. Is that correct?
(A) Yes."
- Leaving aside the obvious infelicity in referring to scaffolding down by the side of the building - when the only places in which scaffolding could be erected were at the front or at the back - it is by no means obvious that scaffolding suspended from the roof structure and extending down the rear elevation of the building would collapse; and, because we do not have Mr Taylor's evidence, it is by no means clear either that that suggestion was put to him or what his response would have been to that suggestion. Nor is it possible to say that Mr Keles, who was not an expert, had ever accepted that scaffolding must be erected at the rear in order to carry out the work to the window.
- In the papers prepared for the appeal we can see other ways in which it might be possible to gain access to the window without erecting scaffolding. For example, it might be possible to do so by means of a mobile hoist or lift standing in the open space to the rear of the property. That, of course, would require the consent of the owner of the open space; but so, also, would the suspended scaffolding solution for which the original claim was made in the particulars of claim. That suspended scaffolding would have to rest on the rear wall, which did not belong to either Mr Keles or to Europa.
- I am left, therefore, with the conclusion that, although Mr Taylor's suspended scaffolding solution might be one way of dealing with the problem of access to the rear window - and might well be the most convenient way of dealing with that problem - there is insufficient evidence to reach the conclusion that it is the only way of dealing with the problem; so as to make it necessary that suspended scaffolding be erected in the way that Mr Taylor described.
- That cannot be regarded as a satisfactory outcome. But it is an outcome which results from the fact that the window was an afterthought raised by Mr Taylor in the course of the trial; and was never the subject of the evidence that needed to be called if the point was going to be resolved by the judge.
- Ironically, that window remained an afterthought in the correspondence leading up to the appeal. The landlord's solicitors wrote to the tenant's solicitors to invite them to describe the outstanding works which needed to be done to the property. The reply was a letter dated 8th November 2005 which listed four items of work: the gutter on the second floor level, holes below the guttering on the first floor; holes on the second floor right-hand side where the pipes emerged from the wall; and pointing to the brickwork over various areas of the second floor rear elevation. It was only some three weeks later, on 29th November 2005, that the tenant's solicitors remembered that the outstanding works which needed to be done included the enlargement of the window on the second floor.
- Given that we were told that these properties had been converted and that flats are in the process of being marketed, I am comforted by the thought that this window is a forensic rather than a real problem.
- I would dismiss the appeal.
- LORD JUSTICE MOSES: So would I, for the reasons given by my Lord. I would only add this. After a year during which the conversion work was done, Mr Keles, before anyone could ask a question in cross-examination said this:
"Mr Taylor, (that is the builder) and his people, you know, working, they were working above the shop, the restaurant side not the kitchen, they were doing dust and everything, this is even before the scaffolding. Anyway, but there is, this has made me very, very sick, sir. I am taking depression pills, these pills, you know, I'm really going mad, you know. But I believe British justice."
Since this litigation took longer than a year and resisted all attempts at sensible case management, I am not at all sure that I do.
ORDER: Appeal dismissed with costs, save for the costs of the respondent's notice; detailed assessment.