Bedfordshire Police Authority (BPA) v Constable (sued on his own behalf and on behalf of all other members of Syndicate 386 at Lloyd's) (the Syndicate) [2009] EWCA Civ 64 concerned an appeal by the Syndicate against a declaration that the Syndicate was liable to indemnify the BPA. At first instance (see our previous blog), the Court held that the obligation of the BPA to pay compensation under the Riot (Damages) Act 1886 (1886 Act) was the sort of liability which the parties would have expected to be covered by a public liability policy and, despite the requirement that the legal liability must be a "liability to pay as damages" that requirement was satisfied.

On appeal, the Syndicate agreed that the Court was bound to accept that a police authority's obligation to pay compensation under the 1886 Act stemmed from the notional responsibility of the police to preserve law and order in their locality. However, the Syndicate pointed out that that notional responsibility was not stated on the face of the 1886 Act. Furthermore, the Syndicate submitted that the words "liable as damages" had a settled meaning and that "damages" did not include a liability to pay compensation under the 1886 Act and that, in any event, the damage did not arise out of the business of the BPA.

In dismissing the appeal, the Court of Appeal held that it was the concept of responsibility for the preservation of law and order which afforded the distinction between sums for which an insured was liable in damages and sums for which he was not so liable. Once it was appreciated that the police were placed under the burden, pursuant to the 1886 Act, of paying compensation to the victims of riot damage because the police authority were responsible for law and order and that they were (notionally) in breach of that responsibility, it seemed that compensation payable was a sum which the BPA was "liable to pay as damages". Further, once it had been concluded that the policy covered liability arising under the 1886 Act, it would be almost absurd to say that the damage must arise out of business of the BPA.

Lord Justice Longmore, who delivered the lead judgment, said that he did not consider it unreasonable when determining the meaning of the words "liable as damages" to start with the premise that a public liability policy will provide indemnity in respect of liability to the public at large. This decision reiterates the courts' willingness to adopt a commercial approach when interpreting the words used in an insurance policy.