Mitsui Sumitomo Insurance Co (Europe) Ltd, Royal & Sun Alliance Insurance Plc and others v The Mayor’s Office for Policing and Crime [12.09.2013]
 
Commercial Court confirms that the attack on the Sony warehouse in Enfield during the August 2011 riots was perpetrated by “persons riotously and tumultuously assembled together” within the meaning of the Riot (Damages) Act 1886. However, consequential losses are not recoverable.

The Sony distribution warehouse was looted and set on fire on the night of Monday, 8 August 2011, during the widespread civil disorder and rioting which took place in London following the shooting of Mark Duggan. The attack was carried out by about 25 youths mostly from the nearby Enfield Island Village. They smashed their way into and looted the warehouse before throwing two petrol bombs, leaving the building to burn for almost 10 days resulting in its total destruction.

The Mayor’s Office for Policing and Crime ("MOPC") declined to compensate the claimants under the 1886 Act for property damage and business interruption losses. An action was commenced to recover almost £60 million of indemnified losses by insurers with an interest in the warehouse, as well as £4 million of uninsured losses suffered by the owners of stock held there. A split trial was ordered to allow the court to deal with three preliminary issues, being:

  1. Whether the attack fell within the scope of the 1886 Act
  2. Whether consequential losses
  3. Future anticipated losses are recoverable as a matter of law

The third issue was eventually conceded by the MOPC.

Decision

Mr Justice Flaux helpfully set out the key factors required for a valid compensation claim under the 1886 Act. Firstly, there must be a "riot" within the meaning of s 1 of the Public Order Act 1986. Secondly, the rioters have to be "tumultuously assembled". To satisfy this requirement, the group must be acting in an agitated, excited, volatile manner, usually also making a noise which, at least notionally, should put the police on notice of the riot. However, the judge clarified that D H Edmonds Ltd v East Sussex Police Authority (1988) is not authority for the proposition that "tremendous" noise is required. The real "touchstone" is that there must be some public element to the rioters' behaviour so as to create a perceived or palpable threat. Finally, the rioters must engage in wanton damage to property rather than simply looting it in order to steal.

Having summarised the law, the judge concluded that the youths who attacked the warehouse were "persons riotously and tumultuously assembled together" within the meaning of s 2(1) of the 1886 Act. There was no doubt that the elements of the statutory offence of "riot" were satisfied in this case. The perpetrators, some of whom had been engaged in rioting elsewhere in Enfield that day, openly gathered on a nearby playground several hours prior to the attack.

They used primitive tools to break into the warehouse and did not arrange for any means of transporting the stolen goods as would be expected of professional burglars. The judge also did not accept that the attackers prepared and used the petrol bombs only in order to destroy forensic evidence. He therefore rejected the MOPC's primary contention that the attack was a premeditated crime merely using the civil disorder as a cover.

On the second issue, Mr Justice Flaux held that, on the correct construction of the 1886 Act as a whole, the compensation payable is limited to physical damage only and does not extend to consequential losses. He placed particular emphasis on the wording of the preamble, which, although now repealed, supported this view, as did s 7. Nothing in the 1886 Act suggested that the position in England was different to that in Scotland, where the equivalent Act clearly limited the damages recoverable to the repair of physical damage.

The legislative history also did not suggest that the intention behind the 1886 Act was to compensate claimants for consequential losses. There was nothing in its predecessors, such as the Riot Act 1714, to support a contrary position. The judge considered that the changes of terminology in the various Riot Acts over the centuries were attributable to developments in linguistic style rather than evidence of an intention to provide for a broader scope of compensation.

Although it was not strictly necessary, he accepted that if the wording of the statute was ambiguous, it would be permissible to refer to the 1886 Regulations as an aid to interpretation given that they were passed only a few months after the Act. The Regulations made it clear that the compensable loss was only physical, which explained the limited categories of claims allowed under Regulation 5, for example.

Finally, neither of the two Court of Appeal decisions relating to the Yarl's Wood incident determined that liability under the 1886 Act was equivalent to a liability in tort. Mr Justice Flaux commented, obiter, that the compensation scheme under the 1886 Act was rather analogous to a form of statutory insurance. He pointed out that most insurance policies did not cover consequential losses without an express provision to that effect.

Comment

This decision helpfully summarises the key ingredients for establishing claims under the 1886 Act. In particular, it clarifies that Edmonds does not require rioters to be particularly noisy to be "tumultuous" so long as other key characteristics of a "riotous and tumultuous" assembly are present. The judge also considered the wider context of the Enfield riots as a whole, as well as the contemporaneous social media content relating to it, to find that it had created a sense of palpable threat which was sufficient to make the police notionally aware of the risk of an attack on the warehouse.

Although the decision on the second issue is clearly disappointing for the insurance industry as a whole, it was always possible given that the wording of the 1886 Act is capable of competing interpretations. Provided it remains unchallenged, it will no doubt have a significant impact on the way in which riot insurance is priced, or even made available in relation to properties where BI losses are likely to arise.