http://www.bailii.org/uk/cases/UKSC/2016/18.html

The previous decisions in this case were reported in Weekly Updates 32/13 and 19/14. During the widespread UK riots in 2011, a gang of youths broke into the Sony distribution warehouse in Enfield and stole goods and threw petrol bombs, which destroyed the warehouse. At both first instance and on appeal, it was found that this incident was a "riot" and so fell within the scope of the Riot (Damages) Act 1886. This Act provides that: "Where a … 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 responsible statutory body".  Of issue in this appeal to the Supreme Court was whether the claimants (here, the insurers of warehouse and stock) were entitled to recover consequential losses. The Court of Appeal held that they were so entitled (as there was nothing in the wording of the Act to exclude such losses), but the Supreme Court has now unanimously reversed that decision.

Lord Hodge, delivering the leading judgment, held that "this is a case in which history rather than legal theory casts light, revealing the correct answer". Linguistic analysis of the Act did not itself provide a clear-cut answer. However, it was noted that the Act provides only partial compensation for damage caused by rioters: for example, the Act does not expressly provide compensation for either personal injury caused by rioters or damage to property in the streets (even where such losses resulted from damage to, or the collapse of, a building).

Having regard to prior legislation, the Supreme Court concluded that such legislation made it clear that statutory compensation was to be confined to only the cost of repairing physical damage to property. Nothing in the 1886 Act removed that limitation and the preamble to the Act did not suggest an intention to alter the basis on which compensation would be paid. It was concluded that: "A claim for loss of rent or loss of profits in addition to the cost of restoring or replacing a building is different from an estimation of the diminution in value of a commercial building, in which the valuation of the undamaged building had regard to its income earning potential. They are different heads of loss".

COMMENT: In reaching its decision, the Supreme Court did not refer to the point raised by the judge in the first instance decision that the Act is analogous to a form of statutory insurance and "most insurance policies will not cover consequential losses without an express provision to that effect". The Court of Appeal did not refer to, or overrule, that general principle but its finding did raise the possibility that an insured might argue that the Court of Appeal's interpretation of compensation "for" property damage should be applied to similar wording in an insurance policy. The Supreme Court's ruling therefore excludes that possibility, albeit for reasons unrelated to the general principle.