Riot – Insurance – Riot (Damages) Act 1886 – Looting and destruction of warehouse during London riots – Insurers and owners of stock held in warehouse seeking compensation from defendant statutory body responsible for overseeing Metropolitan Police – Whether compensation being payable out of police fund – Whether losses arising from injury or destruction by persons riotously and tumultuously assembled together within meaning of 1886 Act giving rise to compensation from police fund – Whether consequential losses recoverable in principle – Preliminary issues determined
On the night of 8 August 2011, during the widespread civil disorder and rioting in London following the shooting of Mark Duggan, the Sony Corporation distribution warehouse in Enfield, Middlesex, together with plant, equipment and stock, were destroyed by fire and looting. Following the incident, the first claimant insurer of Sony for property, customer stock and business interruption, sought compensation from the defendant, which was the statutory body responsible for the oversight of the Metropolitan Police, under the Riot (Damages) Act 1886 in respect of £49.5m of indemnified losses. The second claimant, which insured the owners of the warehouse for property damage and loss of rent, sought compensation from the defendant for £9.35m of indemnified losses. The third claimant owners of certain stock held in the warehouse sought compensation from the defendant for £3.96 million for uninsured losses.
Two preliminary issues arose in all three actions and the court was asked to determine: (i) whether the losses claimed by the claimants, insofar as proved, arose out of the injury to, or the destruction of, a house, shop or building, or injury to, theft or the destruction of any property therein, by any persons riotously and tumultuously assembled together within the meaning of section 2(1) of the 1886 Act at the warehouse on 8 August 2011; (ii) whether consequential losses, including loss of profit and loss of rent, were in principle recoverable pursuant to section 2(1) and/or section 2(2) of the 1886 Act.
Section 2 of the 1886 Act, as amended, provided: “(1) Where a house, shop, or building in [a police area] has been injured or destroyed, or the property therein has been injured, stolen, or destroyed, by any persons riotously and tumultuously assembled together, … compensation … shall be paid out of [the police fund] of [the area] to any person who has sustained loss by such injury, stealing, or destruction; …; (2) Where any person having sustained such loss … has received, by way of insurance or otherwise, any sum to recoup him, in whole or in part, for such loss, the compensation otherwise payable to him under this Act shall, if exceeding such sum, be reduced by the amount thereof, …”.
Held: The preliminary issues were determined.
(1) On the facts, the group of youths who attacked, looted and set fire to the warehouse had been “persons riotously and tumultuously assembled together” within the meaning of section 2 of the 1886 Act so that the defendant was liable to provide compensation. There was no doubt that the elements of the statutory offence of riot were satisfied. A person of reasonable fortitude would have feared for his personal safety. The raid on the warehouse had clearly been organised before, although not in a systematic way. Further, there had undoubtedly been a perceived or palpable threat of rioting in the vicinity of the warehouse. The behaviour of the group from the time that they had been gathering had been such that the police ought to have been aware of their presence and could have prevented the incident which had eventually occurred. Further, the use of petrol bombs evidenced wanton violence towards the property damaged or destroyed. Such violence was a hallmark of riotous and tumultuous behaviour and was a paradigm example of the situation where victims of the damage and destruction would qualify for compensation under the Act: Pitchers v Surrey County Council [1923] 2 KB 57, JW Dwyer Ltd v Metropolitan Police District Receiver [1967] 2 QB 970, DH Edmonds Ltd v East Sussex Police Authority (15 July 1988, unreported) and Yarl’s Wood Immigration Ltd v Bedfordshire Police Authority [2009] EWCA Civ 1110; [2010] QB 698 considered.
(2) On the correct construction of the 1886 Act as a whole, the compensation payable was limited to physical damage to the relevant premises or property in it and did not extend to consequential losses such as loss of profit or loss of rent. That was made absolutely clear by the Preamble which, though repealed, was admissible as evidence of what Parliament had intended and in which the reference to “compensation for such damage” was clearly limited to physical damage to the premises or property therein. The compensation was analogous with insurance generally and other such compensation schemes and so there was nothing surprising or alarming in the compensation provided excluding consequential losses. There was no basis for suggesting that the approach of the court ought somehow to be different from that of the compensation authority. Accordingly, consequential losses were not in principle recoverable pursuant to s 2(1) of the act, at least as a free-standing head of claim as such was made in the present case: R v Law Society, ex parte Reigate Projects Ltd [1993] 1 WLR 1531 considered.
Michael Crane QC and Marianne Butler (instructed by DAC Beachcroft LLP) for the first claimant; Michael Crane QC and Charles Dougherty QC (instructed by Kennedys) for the second claimant; Simon Pritchard (instructed by Fladgate LLP) for the third claimant; Sam Grodzinski QC and David Pievsky (instructed by Directorate of Legal Services, Metropolitan Police Service) for the defendant.
Eileen O’Grady, barrister
