Mitsui Sumitomo Insurance Co (Europe) Ltd and another v Mayor’s Office for Policing and Crime
 UKSC 18;  WLR (D) 208
2016 Jan 21; April 20
Lord Neuberger of Abbotsbury PSC, Lord Clarke of Stone-cum-Ebony, Lord Hughes, Lord Toulson, Lord Hodge JJSC
Crime — Riot — Damage — Warehouse looted and destroyed during riots — Claim for statutory compensation for riot — Whether liability limited to physical damage to property — Whether compensation for consequential losses recoverable in principle — Riot (Damages) Act 1886 (49 & 50 Victc 38) (as amended by Police Act 1964 (c 48), s 63, Sch 9 and Police Act 1996 (c 16), s 103(1), Sch 7, para 9), s 2(1)
During widespread civil disorder and rioting in London a group of youths smashed into a warehouse, looted it and burnt it down with petrol bombs, leading to the total destruction of the plant, equipment and stock. In three separate actions the claimants, who were respectively the insurers of the occupiers of the warehouse for property, customer stock and business interruption, the insurers of the owners of the warehouse for property damage and loss of rent, and the owners of certain stock held in the warehouse, claimed compensation under the Riot (Damages) Act 1886rom the defendant, which was the statutory body responsible for oversight of the relevant police authority. On the hearing of preliminary issues, the judge held, inter alia, that liability under section 2(1) of the 1886 Act, as amended, was limited to physical damage to the premises or property in it and did not extend to consequential losses, such as loss of profit or rent. The Court of Appeal allowed the claimants’ appeals against the judge’s determination on that issue, holding that section 2(1) provided a right to compensation for all heads of loss proximately caused by physical damage to property for which the trespassing rioter was liable at common law, save to the extent that they were excluded by the statute, that the heads of compensation recoverable were to be determined with reference to the common law of tort as it developed over time, and that, therefore, the claimants were, in principle, entitled to compensation in respect of consequential losses.
On the defendant’s appeal—
Held, appeal allowed. Although the wording of section 2(1) of the 1886 Act alone did not disclose whether the loss for which a person would be compensated as a result of rioting was limited to physical damage to property or extended to consequential losses, the Act clearly provided only partial compensation for damage caused by rioters.Section 2(1) did not create an unqualified causal test to which the normal rules of causation in tort could readily be applied. The words of the 1886 Act had to be construed in the light of the prior legislative history, which indicated that the community had not previously stood as sureties for the rioter for all purposes and that compensation had been limited to physical damage to property. There was no reason for inferring that Parliament, when enacting the 1886 Act, had intended to extend the scope of the compensation to cover consequential losses or to mirror the common law of tort. Accordingly, on a true construction, liability under section 2(1) was limited to physical damage to property and did not extend to consequential losses (paras 13–14, 16, 18–34, 41).
Bedfordshire Police Authority v Constable  2 All ER (Comm) 200, CA and Yarl’s Wood Immigration Ltd v Bedfordshire Police Authority  QB 698, CA considered.
Decision of the Court of Appeal  EWCA Civ 682;  QB 180 reversed.
Lord Pannick QC, Sam Grodzinski QC and David Pievsky (instructed by TLT LLP, Bristol) for the defendant.
Michael Crane QC, Tamara Oppenheimer and Marianne Butler (instructed by DAC Beachcroft LLP) for the claimants in the first case.
Michael Crane QC and Charles Dougherty QC (instructed by Kennedys Law LLP) for the claimant in the second case.
Simon Pritchard (instructed by Keystone Law) for the first and second claimants in the third case.
Reported by: Jill Sutherland, Barrister
© 2016. The Incorporated Council of Law Reporting for England and Wales.