by Nicholas Dobson
“If you carry on doing that I’ll read you the Riot Act!” So might a hapless parent or teacher plead to their unruly charges. But the real Riot Act 1714 (removed only in 1973 by the Statute Law (Repeals) Act of that year) meant business. For, if more than 12 people “unlawfully, riotously, and tumultuously assembled together”, it allowed a justice of the peace (or other specified local official) to command the assembly to disperse and within an hour “peaceably to depart to their habitations or to their lawful business”. If not they were liable to “suffer death” as felons.
But the fundamentals of human nature remain unchanged. Riots can still erupt and afflict even a modern and supposedly civilised society. As Lord Hodge pointed out in the Supreme Court on 20 April 2016, for four days from 6 to 9 August 2011, “London suffered from serious rioting” with the rioters causing extensive damage to property: “Property owners and insurers suffered significant losses.”
The case in question (The Mayor’s Office for Policing and Crime (MOPC) v Mitsui Sumitomo Insurance Co (Europe) Ltd and others  UKSC 18) concerned the construction of s 2 of the Riot (Damages) Act 1886 (R(D)A 1886). In particular, “whether persons who suffer loss when rioters destroy their property can in principle obtain compensation for consequential losses, including loss of profits and loss of rent” and if so on what basis.
As Lord Hodge indicated: “Parliament first provided for compensation for riot damage in 1714 in response to the public disorder which followed the succession to the throne of Great Britain of George, the Elector of Hanover, as George I.” However, jurisprudence in this area has subsequently developed up to and beyond R(D)A 1886. Lord Hodge gave the lead judgment with which Lords Neuberger, Clarke, Hughes and Toulson agreed.
The circumstances prompting the litigation were that in the late evening of 8 August 2011 a gang of youths broke into the Sony DADC distribution warehouse in Enfield, Greater London. They stole goods and threw petrol bombs, causing a conflagration which destroyed the warehouse and the stock, plant and equipment within it.
Section 2 of R(D)A 1886 (among other things) provides that: “Where a house, shop, or building in a police area has been injured or destroyed, or the property therein has been injured, stolen, or destroyed, by any persons riotously and tumultuously assembled together, such compensation as hereinafter mentioned shall be paid out of the police fund of the area to any person who has sustained loss by such injury, stealing, or destruction.”
Compensation claims are made to the police authority. However, that authority does not have the final say since (under s 4) an aggrieved claimant may bring an action against the authority to recover compensation.
As Lord Hodge indicated, Flaux J at first instance held that s 2 of R(D)A 1886 provided compensation only for physical damage and not for consequential losses. However, this was reversed by the Court of Appeal which held that s 2(1) of R(D)A 1886 provided “a right to compensation for all heads of loss, including consequential loss, proximately caused by physical damage to property for which the trespassing rioter is liable at common law, save to the extent that they are excluded by the statute”. The MOPC appealed against that finding. It was therefore for the Supreme Court to unravel the strands and find the answer.
History trumps legal theory
However, Lord Hodge considered that no clear-cut answer was to be found only by linguistic analysis of relevant provisions in R(D)A 1886 (as was the Court of Appeal’s starting point). In his view “the resolution of the dispute is to be found in the words of R(D)A 1886, interpreted against the backdrop of the prior legislative history ” (emphasis added). For to him “this is a case in which history rather than legal theory casts light, revealing the correct answer”. It was “striking” that R(D)A 1886 “does not expressly provide compensation for either…personal injury caused by rioters and resulting medical expenditure or…damage to property in the streets such as a parked car”. So “On any view…the Act provides only partial compensation for damage caused by rioters”.
The court indicated that the wording of the various statutes leading up to R(D)A 1886 made it clear “that the statutory compensation was confined to physical damage to property”. Lord Hodge found nothing in R(D)A 1886 to remove that limitation—none of its compensation provisions “suggested any intention to extend the measure of compensation beyond physical damage to property”.
In the circumstances, there was nothing in the wording of R(D)A 1886 to support “an intention to extend the scope of the compensation to cover consequential loss”. For “…R(D)A 1886, like its predecessors, created a self-contained statutory scheme which did not mirror the common law of tort.”
Past its sell-by date?
However, although R(D)A 1886 had a long shelf life, the future of riot damage compensation is to be found in a new measure. The Riot Compensation Act 2016 (RCA 2016) received Royal Assent on 23 March 2016. This resulted from a Private Member’s Bill introduced in the House of Commons by Mike Wood, Conservative MP for Dudley South and sponsored in the House of Lords by Lord Trefgarne (Conservative). As the Act indicates, its purpose is “to repeal the R(D)A 1886 and make provision about types of claims, procedures, decision-making and limits on awards payable in relation to a new compensation scheme for property damaged, destroyed or stolen in the course of riots”.
The Explanatory Notes point out that R(D)A 1886 had not from the outset been substantially revised. The government therefore considered its archaic language to have contributed to uncertainty in compensation entitlement. However, the new measure continues the general exclusion of consequential loss claims now found as indicated by the Supreme Court to be integral to the scheme of R(D)A 1886.
Dr Nicholas Dobson is a consultant with Freeths LLP specialising in local & public law
An extended version of this article is published on New Law Journal.