In Mitsui Sumitomo Insurance Co (Europe) Ltd & Ors v Mayor’s Office for Policing and Crime [2013] EWHC 2734 (Comm) the Court decided that damage to a warehouse and the goods within it caused during the 2011 riots fell to be compensated under the Riot Damages Act 1886, but that consequential losses of profit and rent were not recoverable.
60 second summary
- Mitsui Sumitomo High Court decision concerning a claim brought under the Riot Damages Act 1886 for the looting and subsequent destruction of a warehouse and its contents by fire during the August 2011 riots.
- The issues where (1) whether the incident was properly to be classified as a riot, rather than burglary / robbery & arson and (2) whether compensation was confined to the physical damage to the building and its contents, or whether consequential losses (for loss of profit and rent) could be claimed.
- The Court decided that this was a ‘riot’ within the meaning of s.1 of the Public Order Act 1986. Where a gang of youths had openly gathered over a period of two hours, there was gratuitous and wanton violence towards property, the attack was frenetic, agitated and chaotic, the attackers were “persons riotously and tumultuously assembled together”.
- For these (and connected) reasons, the damage caused fell within the category for which compensation was properly awardable under the Riot Damages Act 1886.
- Compensation was limited to that covering the physical damage to the warehouse and goods within it. Consequential losses are not, in principle, recoverable under S.2(1) of the 1886 Act
The decision of Flaux J in this case is both interesting and important. The finding that compensation payable under the Riot Damages Act of 1886 excludes consequential losses is of great significance to all those businesses who have brought claims following the August 2011 riots, and their insurers, as well as all Constabularies facing such claims.
The Context of Incident on 8th August 2011
The case concerned the highly publicised looting and destruction by fire of the Sony distribution warehouse in Enfield, Essex, at about 23.40 on Monday 8th August 2011.
The conflagration of violence and looting in London and other cities across the UK on that notorious evening will remain fresh in the minds of many. It was the night that the violence peaked in London, and the Metropolitan Police was stretched beyond the immediate resources available to quell and deter spontaneous disorder and looting across the capital. However, it does not follow that every act of violence against property would be treated as a “riot” for the purposes of the 1886 Act, as opposed to section 1 of the Public Order Act 1986. It was agreed that the Court had to confine its consideration of the events surrounding the Sony warehouse incident alone to determine whether the ingredients for requiring the Defendant to pay compensation under the 1886 Act were satisfied.
There had been civil disorder in Enfield Town on the night of 7/8 August, culminating in an attack on a jewellers at about 01.40 on 8 August. The security shutter was forced up, the window broken and jewellery stolen. It appears that a local gang, the “Get Money Gang”, or GMG, were involved.
During the afternoon and early evening of 8 August, rumours of further disorder in Enfield were circulating. From about 16.00 a large group of youths gathered menacingly in Enfield. Some of these were recognised to be members of the GMG. There were several later reports of a group (probably the same group) gathering and being seen in various locations in Enfield Island Village. They were predominantly in dark clothing, wearing hoods and bandanas on their faces, and talking on mobile phones. Shortly before the attack members of the group were carrying items variously described as a combination of one or more of “sticks”, a baseball bat, metal pole, an iron bar or a sledge hammer. It subsequently emerged that they were also carrying homemade petrol bombs.
The Judge found that this group posed a “palpable threat”, and were gathered in an agitated and volatile manner.
The attack on the warehouse, when it came, was rapid and efficient, being over in a matter of about 3 minutes. Around 20 to 25 people were involved, between the ages of 12 and 20. The glazed entrance door was smashed with various implements. As soon as the door was broken, the group swarmed inside. They grabbed armfuls of goods and fled, in some cases dropping boxes of stolen items as they ran. About 90 seconds after entry to the premises, the first petrol bomb was thrown into the shelves inside the warehouse. Fire quickly took hold. Within about 3 minutes all the attackers had left the building.
The Riot Damages Act 1886
Section 2(1) of the Riot Damages Act 1886 provides:
“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, such compensation as hereinafter mentioned shall be paid out of the police fund of the area to any person who has sustained loss by such injury, stealing or destruction…”
The first issue for the Court to determine was whether the losses claimed arose out of damages caused by persons “riotously and tumultuously assembled.”
The Court noted that, were these circumstances made out, liability for the damage was strict. It fell on the shoulders of the local police fund to compensate the victims of this damage, whether or not there was a real opportunity to prevent the damage. This reflected the assumption by the police of the ancient responsibility to maintain order in a local police area and to suppress rioting – a responsibility previously on the local inhabitants of a district prior to the formal creation of police forces.
Previous Cases: Robberies and Raids
The first issue fell to be decided in the context of a number of previous cases of professional robberies where violence had been done to property in pursuance of the intended theft. Two such cases were JW Dwyer Ltd v Metropolitan Police District Receiver [1967] 2 QB 1970 and DH Edmonds Ltd v East Sussex Police Authority (Court of Appeal, 15 July 1988).
In DH Edmonds the Court of Appeal described a robbery beginning with a stealthy arrival by the robbers in a van. There was then shouting (“war cries”), intended to intimidate bystanders. Sledgehammers were used to smash the window, creating more noise. There was a scene of great commotion, even chaos, although much of the noise was said to have been from terrified spectators. It was clearly a focussed, isolated robbery on a jewellers, albeit one that generated much noise. The Court of Appeal decided that the word “tumultuously” in s.2(1) of the Riot Damages Act 1886 added something more than merely noise to the number of people gathered together to constitute a riot under the Public Order Act. It was observed that, “the connotation of ‘multitude’ or ‘crowd’ or ‘mob’ or of a large number of people, has been introduced into the meaning of “tumultuous” and “tumult””. The Court of Appeal in that case decided that there was no riot and no incident of public disorder that the police could, even nominally, be required to suppress.
The Court in Mitsui Sumitomo concluded at [20] that the obligation on the police to compensate under the 1886 Act only arises where (although it is irrelevant whether the police could actually have prevented the violence) “the “riotous and tumultuous assembly” manifests itself in such a way that the police ought notionally to have been aware of it and to have prevented it”.
Conclusions on the First Issue
The Court considered the approach taken at first instance in Yarl’s Wood Immigration Ltd v Bedfordshire Police Authority [2009] EWCA Civ 1110, and applying that overview to the present case, concluded at [28] that, where the relevant Police Authority (now Police and Crime Commissioner or, in the case of the Metropolitan Police, MOPAC) is said to be liable to pay compensation:
- there must be a riot within the meaning of Section 1 of the Public Order Act 1986;
- the assembly must be of some size to satisfy the concept of a “tumult”;
- the persons assembled must be acting in an agitated, excited, volatile manner, and making a noise, rather than acting stealthily. There must be some ‘public’ element to their behaviour, to give rise to a perceived or palpable threat of riot to which – however notionally – the police could have responded;
- in previous cases the rioters had exhibited an “animus towards the property in question”, and had engaged in wanton damage to property, rather than merely looting in order to steal.
The Court then embarked on a detailed factual analysis at [29] – [63] before deciding at [69] – [77] that the obligation to pay compensation under the 1886 Act was satisfied because members of the group were “riotously and tumultuously assembled together”. The Court relied on four principle findings:
- There were more than 12 persons present, and their actions taken together meant they were using or threatening unlawful violence. The conduct was sufficient to cause a hypothetical bystander of reasonable fortitude to fear for his own safety (as two witnesses had described their own reaction).
- The behaviour of the group was agitated and volatile as it was gathering and moving towards the business park. The incident itself was frenetic, agitated and chaotic. While it was a planned attack, it was not the behaviour of a gang of professional thieves.
- There was undoubtedly a perceived or palpable threat of rioting, both in Enfield generally, and specifically in relation to the group that gathered and later attacked the warehouse. The group had gathered quite openly, two hours before the incident, and moved towards the business park 15 minutes before the attack, demonstrating a palpable threat of a riot, to which the police could notionally have responded.
- Whatever the true motive for the use of petrol bombs, their use constituted wanton violence towards property, a hallmark of riotous and tumultuous behaviour, and a paradigm example of the situation where victims of damage or destruction should qualify for compensation. It was a very different situation to professional robberies of jewellery shops, where damage to the premises was incidental to the real purpose of the attack.
The Claim for Consequential Losses
This argument revolved around the question of whether compensation payable under s.2(1) of the Riot Damages Act 1886 was akin to tortious damages, which under English Law may include consequential losses, or whether it was a more restrictive basis for compensation, similar to that for insured losses (which do not include consequential losses unless the policy of insurance expressly allows for them).
The Claimant argued that the wording of s.2(1) requires compensation for a person “who has sustained loss by such injury, stealing or destruction” rather than merely compensation “for” the injury, stealing or destruction, and that the use of the word “by” included consequential losses. It was argued that the tortious basis for compensation, even for torts of strict liability, required account to be taken of losses consequent on the damage to property.
The parties’ submissions included reference to cases even pre-dating the 1886 Act. The Defendant relied upon the original preamble to the Act which, although it is now repealed, was said to demonstrate the intention of Parliament at the time the legislation was passed. The preamble read, “Whereas by law the inhabitants of the hundred or other area in which property is damaged by persons riotously and tumultuously assembled together are liable in certain cases to pay compensation for such damage…” The phrase “such damage” was said to relate back only to property which is physically damaged, not damages in the general sense of compensation for all losses incurred.
Ultimately, the Court was able to deal with this point fairly shortly at [113] – [125]. Flaux J seems to have had little doubt about the correct construction of the statute:
- On the correct construction of s.2(1) of the 1886 Act, compensation payable is limited to compensation for physical damage to the relevant premises or property in it, and does not extend to consequential losses such as loss of profit or loss of rent. This was made clear in the original preamble to the Act.
- The use in s.7 of the Act of the phrase “in relation to” the building and the property therein did not suggest a wider meaning than compensation for the physical damage to the building and property.
- The 1886 Act was a self-contained regime of compensation for riot damages. It has a number of features alien to the general law of tort and the assessment of damages in tort. These include the timescale for submitting a claim and the discretionary basis (albeit quasi-judicial) on which the amount of compensation is determined.
- The basis for compensation under the 1886 Act was closer to that in a typical contract of insurance, where losses consequential on physical damage to property are not recoverable.
Comment
It is to be hoped that the decision in Mitsui Sumitomo will provide some assistance to the assessment and valuation of the many other claims brought under the Riot Damages Act 1886 following the nationwide August 2011 riots. At the time of writing it is not known whether either side (or both) will appeal.
Whether or not riot damages should be paid out of police funds is a policy debate for another day. Policing & Criminal Justice Minister Damien Green announced on 9 May 2013 that the Home Office had commissioned a review of the Riot Dames Act 1886. The review will look at the criteria which determine when compensation is payable including the definition of a riot, who should be liable, and what level of entitlement should be afforded under the Act.