In what has in effect been a test case, the Court of Appeal has ruled in a judgment handed down today (20 May) that the redress available under the Riot (Damages) Act 1886 is not limited simply to the cost of repairing physical damage, but extends to consequential losses (such as lost rent, loss of profits etc).

The Court was hearing appeals stemming from last year’s High Court decision which concerned the breaking into, looting and burning down of the Sony distribution warehouse in Enfield in the riots of August 2011. The parties claiming under the Act were the insurers of the warehouse’s occupiers and owners, some owners of stock in the warehouse, and the Mayor’s Office for Policing and Crime (MOPC – successor of the Metropolitan Police) was defending. Briefly, the High Court had decided (1) MOPC was liable as those causing the damage were “riotously and tumultuously assembled” and thus were within the scope of the Act and (2) consequential losses were not recoverable under the Act.

MOPC appealed against (1) and the claimants appealed against (2). The Court of Appeal found against MOPC on (1) and for the claimants on (2).

This will be a very welcome decision not only for insurers but also anyone else who made  a claim under the Act following the 2011 riots which included consequential loss. Up to now, MOPC (and other police authorities) had been ready to settle just the physical damage elements of any claim; on the strength of this decision, claimants will be able to dust down their consequential loss claims and pick up where they left off. However, there must be a real prospect that MOPC will seek to appeal to the Supreme Court, given (a) that the amounts claimed for consequential losses in the Sony case total some £14.3m and (b) so many other claims are riding on this decision.

The decision itself is a fascinating exploration of the history of this area of the law, and goes back as far as the law in the time of Alfred the Great, when people were responsible for each other’s good behaviour. This meant that loss due to rioters was paid for by the community as a whole. This responsibility was in time transferred to the police. The Court of Appeal saw nothing in the Act which restricted liability to physical damage only, and found the case law supportive of this approach.

The Court of Appeal did refer to the possibility that some might consider this approach to be unfair and unwarranted in the 21st century, but stated that it is for Parliament and not the Courts to amend the law. This is, of course, what is currently being considered by the Home Office – an independent report has already recommended changing the Act, including stating that consequential losses should not be recoverable, and a Consultation Paper is about to be put out by the Home Office seeking views on how the legislation should change. However, that will only affect future riots – all claims following the 2011 riots are currently governed by this latest decision, and will remain so unless it is successfully appealed to the Supreme Court.