In Mitsui Sumitomo Insurance Co (Europe) Ltd v Mayor's Office for Policing and Crime (2013), the Metropolitan Police was found liable to compensate Sony’s insurers for the physical loss and damage arsing from the August 2011 riots. The compensation is limited to the destruction and theft of property but does not extend to consequential losses such as loss of profits and rents.

Under the Riot (Damages) Act 1886 (the “1886 Act”), the police are strictly liable to compensate persons who have sustained loss and damage to property as a consequence of acts committed by “persons riotously and tumultuously assembled”. The court clarified the scope of the 1886 Act and confirmed that the Police are not liable to compensate for consequential losses.

Background

On the evening of 8 August 2011, Sony’s distribution warehouse in Enfield was looted and burned down. A group of twenty-five people had met in a nearby playground before descending upon Enfield business park. CCTV footage showed that the attack, whilst planned, was disorderly in nature. Members of known local gangs recruited others to take part on their mobile phones. Looters then broke in and emptied the warehouse of as much electronic equipment as they could carry before setting fire to the building.

Sony’s insurers made a claim for over £60 million worth of riot damage, which the police refused to compensate on the grounds that the attack was a criminal enterprise. Mr Justice Flaux had to consider whether the damage resulted from persons riotously and tumultuously assembled within the meaning of the ancient statute and, if so, whether it intended to cover consequential losses.

“…persons riotously and tumultuously assembled”

There are two limbs to Section 2(1) of the 1886 Act. The first limb requires there to be a “riot”, which is now statutorily defined in the Public Order Act 1986. This definition requires twelve or more people to use or threaten unlawful violence for a common purpose and for their conduct to cause a person of reasonable firmness to fear for his personal safety. Mr Justice Flaux undertook a detailed analysis of the events on the evening in question and concluded that the definition was satisfied given the frenetic and volatile nature of the quorate group.

The second limb requires the rioters to have been “tumultuously assembled”. The rationale behind this element is that the actions of the rioters need to be sufficiently agitated notionally to have put the police on notice. This does not mean the police need to be alerted by noise, only that the group’s behaviour serves to create a “perceived or palpable threat”. The court decided that the congregation of youths on a playground, in the context of the August 2011 riots, was enough to place the police on notice. The behaviour of the group, captured on CCTV, confirmed its behaviour to be akin to that of a tumult; boisterous and unruly. The court ruled that there was wanton physical damage suffered by Sony which constituted riot damage and was therefore recoverable under the 1886 Act.

Consequential loss

Sony’s insurers also claimed for loss of profit and loss of rent as a result of the damage caused by the rioters. The Court, therefore, had to consider whether the 1886 Act envisaged that compensation should be limited to physical losses only. Using the repealed preamble, the Judge found that Parliament’s intention when referring to “compensation for such damage” was clearly limited to physical damage. Therefore, compensation for consequential losses was deemed irrecoverable under the 1886 Act.

Comment

Whether or not an assembly of persons constitutes a riot is a question of fact. Mr Justice Flaux was at pains closely to analyse all the evidence and despite the fact that the assembly of persons and subsequent looting was highly orchestrated and planned through social media networks he did not consider the attack on the Sony warehouse to have been a planned criminal enterprise to steal from commercial premises. The attack he concluded was carried out by persons riotously and tumultuously assembled. It remains to be seen if this aspect of the case is to be appealed since, in the absence of liability insurance, the loss would fall on the public purse.

Moreover, the case confirms the generally accepted view that consequential losses are not recoverable under the 1886 Act (see link to our briefing note of 11 August 2011 where the heads of claim to be submitted for compensation cover physical damage to property).