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URL: http://www.bailii.org/ew/cases/EWHC/Comm/2013/2734.html
Cite as: [2013] EWHC 2734 (Comm), [2013] WLR(D) 356

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Neutral Citation Number: [2013] EWHC 2734 (Comm)
Case Nos: 2012 FOLIO 975 and 1025
and HQ12X03420

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

and HQ12X03420
Royal Courts of Justice
Strand, London, WC2A 2LL
12/09/2013

B e f o r e :

THE HONOURABLE MR JUSTICE FLAUX
____________________

2012 Folio 975


(1) MITSUI SUMITOMO INSURANCE CO (EUROPE) LTD
(2) TOKIO MARINE EUROPE INSURANCE LTD


Claimants
- and -

THE MAYOR'S OFFICE FOR POLICING AND CRIME
Defendant

AND BETWEEN


2012 Folio 1025


ROYAL & SUN ALLIANCE INSURANCE PLC
Claimant
- and -

THE MAYOR'S OFFICE FOR POLICING AND CRIME
Defendant

AND BETWEEN


Claim No: HQ12X03420


(1) LACE INTERNATIONAL LTD
(2) CLEAR VISION LTD
(3) ASPHYXIATION FILMS LTD



Claimants
- and -

THE MAYOR'S OFFICE FOR POLICING AND CRIME

Defendant

____________________

Michael Crane QC and Marianne Butler (instructed by DAC Beachcroft LLP ) for the Claimants in Folio 975
Michael Crane QC and Charles Dougherty QC (instructed by Kennedys) for the Claimant in Folio 1025
Simon Pritchard (instructed by Fladgate LLP) for the Claimants in HQ12X03420
Sam Grodzinski QC and David Pievsky (instructed by Directorate of Legal Services, Metropolitan Police Service) for the Defendant

Hearing dates: 8th to 11th July 2013

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    The Honourable Mr Justice Flaux:

    Introduction and background

  1. This case concerns the destruction by fire and the looting of the Sony distribution warehouse ("the Warehouse") at 6 Solar Way, Enfield, Middlesex at about 23.40 on the night of Monday 8 August 2011 during the widespread civil disorder and rioting which took place in London and elsewhere in the country, following the shooting of Mark Duggan in Tottenham. I will refer to this civil disorder as "the August 2011 riots". The attack on the Warehouse was perpetrated by a group of some 25 youths who had come across the fields from Enfield Island Village, a nearby housing estate, where they had congregated earlier. The youths smashed into the Warehouse using a variety of makeshift weapons and ran through the building looting it of a certain amount of the stock held there. Two of them then threw petrol bombs into the stacking within the Warehouse and they all made their escape, some carrying what had been looted, and left the Warehouse to burn. The whole incident took no more than just over three minutes. However the fire took hold and burned for some ten days, with the total destruction of the plant, equipment and stock.
  2. The claimants in 2012 Folio 975 are the insurers of Sony DADC for property, customer stock and business interruption. They seek compensation from the defendant, which is the statutory body responsible for the oversight of the Metropolitan Police, under the Riot (Damages) Act 1886 ("the 1886 Act") in respect of some £49.5 million of indemnified losses. The claimants in 2012 Folio 1025 are the insurers of the owners of the Warehouse, Cresta Estates Ltd, for property damage and loss of rent. They seek compensation from the defendant under the Act in respect of £9.35 million of indemnified losses. The claimants in the third action HQ12X03420 (transferred to the Commercial Court so that the preliminary issues in all three actions could be tried together) are the owners of certain stock held in the Warehouse who seek compensation from the defendant under the Act of some £3.96 million for uninsured losses.
  3. By an Order of 16 November 2012, Christopher Clarke J ordered the trial of three preliminary issues:
  4. (1) Do the losses claimed by the claimants (in so far as proved) arise out of the injury to or the destruction of a house, shop or building, or injury to, theft or the destruction of any property therein, by any persons riotously and tumultuously assembled together within the meaning of section 2(1) of the 1886 Act at the Warehouse on 8 August 2011?
    (2) Are consequential losses (including loss of profit and loss of rent) in principle recoverable pursuant to section 2(1) and/or 2(2) of the 1886 Act and if so on what basis?
    (3) Are future anticipated losses in principle recoverable pursuant to section 2(1) and/or 2(2) of the 1886 Act?
  5. In the event, that third preliminary issue was not pursued against the insurer claimants and it was agreed by Mr Sam Grodzinski QC on behalf of the defendant that whatever issue remained against the uninsured claimants in HQ12X03420 would not be pursued by way of preliminary issue but left so far as necessary for future determination. In the circumstances, I do not need to consider further that third preliminary issue.
  6. The 1886 Act

  7. The relevant provisions of the 1886 Act as amended by the Police Acts 1964 and 1996 provide as follows:
  8. "2 Compensation to persons for damage by riot
    (1)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; but in fixing the amount of such compensation regard shall be had to the conduct of the said person, whether as respects the precautions taken by him or as respects his being a party or accessory to such riotous or tumultuous assembly, or as regards any provocation offered to the persons assembled or otherwise.
    (2)Where any person having sustained such loss as aforesaid has received, by way of insurance or otherwise, any sum to recoup him, in whole or in part, for such loss, the compensation otherwise payable to him under this Act shall, if exceeding such sum, be reduced by the amount thereof, and in any other case shall not be paid to him, and the payer of such sum shall be entitled to compensation under this Act in respect of the sum so paid in like manner as if he had sustained the said loss, and any policy of insurance given by such payer shall continue in force as if he had made no such payment, and where such person was recouped as aforesaid otherwise than by payment of a sum, this enactment shall apply as if the value of such recoupment were a sum paid.
    3 Mode of awarding compensation
    (1) Claims for compensation under this Act shall be made to the compensation authority of the police area where the injury, stealing or destruction took place, and such compensation authority shall inquire into the truth thereof, and shall, if satisfied, fix such compensation as appears to them to be just.
    (2) A Secretary of State may from time to time make, and when made, revoke and vary regulations respecting the time, manner, and conditions within, in, and under which claims for compensation under this Act are to be made, and all such claims not made in accordance with such regulations may be excluded. Such regulations may also provide for the particulars to be stated in any claim, and for the verification of any claim, and of any facts incidental thereto, by statutory declarations, production of books, vouchers, and documents, entry of premises, and otherwise, and may also provide for any matter which under this act can be prescribed, and for the compensation authority obtaining information and assistance for determining the said claims.
    4 Right of action to person aggrieved
    (1) Where a claim to compensation has been made in accordance with the regulations, and the claimant is aggrieved by the refusal or failure of the compensation authority to fix compensation upon such claim, or by the amount of compensation fixed, he may bring an action against the compensation authority to recover compensation in respect of all or any of the matters mentioned in such claim and to an amount not exceeding that mentioned therein, but if in such action he fails to recover any compensation or an amount exceeding that fixed by the compensation authority, he shall pay the costs of the compensation authority as between solicitor and client…
    7 As to claimants in the case of churches, public institutions & c.
    For the purposes of this Act—
    (a) where a church or chapel has been injured or destroyed, or any property therein has been injured, stolen, or destroyed, the churchwardens or chapelwardens, if any, or, if there are none, the persons having the management of such church or chapel, or chapel, or the persons in whom the legal estate in the same is vested; and
    (b) Where a school, hospital, public institution, or public building, has been injured or destroyed, or any property therein has been injured, stolen, or destroyed, the persons having the control of such school, hospital, institution, or building, or the persons in whom the legal estate in the same is vested;
    shall be deemed to be the persons who have sustained loss from such injury, stealing, or destruction, and claims may be made by any one or more of such persons in relation both to the building and to the property therein, and payment to any such claimant shall discharge the liability of the compensation authority to pay compensation, but shall be without prejudice to the right of any person to recover the compensation from such payee."
  9. In relation to the first preliminary issue, the Court is concerned with section 2 of the 1886 Act and specifically with whether the gang of youths who broke into, looted and set fire to the Warehouse were "persons riotously and tumultuously assembled together" within the meaning of sub-section (1). The second preliminary issue also engages other sections of the 1886 Act and in determining that issue it will also be necessary to examine later in the judgment the preamble to the original Act (now repealed) and various Regulations made under the Act.
  10. Legal framework to the first preliminary issue

  11. Before considering the facts in relation to the incident at the Warehouse, it is helpful to look at the rationale for the imposition upon the police of responsibility to compensate the victims of riots under the 1886 Act and earlier legislation. This involves looking briefly at some decisions of Lord Mansfield and then at the limited number of modern cases which have considered the meaning of the phrase: "persons riotously and tumultuously assembled together".
  12. The responsibility to provide compensation to those injured by riot which is imposed upon the defendant and other police authorities under the 1886 Act as amended was originally imposed from ancient times on the local inhabitants where the riot took place. The rationale for imposing the obligation on the local inhabitants was explained in graphic terms by Lord Mansfield in Radcliffe v Eden (1776) 2 Cowp 485 (a case under the Riot Act 1714 which imposed strict liability on the inhabitants of the hundred where riot damage was done) at 488 in these terms:
  13. "To encourage people to resist persons thus riotously assembled, and to reward those, who, by doing their duty, shall have incurred their resentment, the same law has made a further provision, that as the trespassers are to be hanged, the country shall pay the damages; and this, by way of inducement to the inhabitants to be active in suppressing such riots, which it is their duty to do; and which being made their interest too, they are more likely to execute. This is the great principle of the law, that the inhabitants shall be in the nature of sureties for one another. It is a very ancient principle; as old as the decennaries by Alfred…"
  14. This principle, that the hundred was put in the place of the trespassers, that is the rioters, was reiterated by Lord Mansfield in Mason v Sainsbury (1782) 3 Doug 61 at 64. Willes J and Buller J delivered concurring judgments. As Rix LJ pointed out in Yarl's Wood Immigration Ltd v Bedfordshire Police Authority [2009] EWCA Civ 1110; [2010] QB 698 at [39], in considering these old cases, the hundred's liability is strict and does not turn on blame or negligence. Rix LJ goes on to consider various 20th century cases under the 1886 Act, specifically the decision of the Court of Appeal in Pitchers v Surrey County Council [1923] 2 KB 57, which was of particular relevance to the issues in the Yarl's Wood case, but of less relevance to the issues in the present case. Of more relevance to the issues in the present case are two later cases under the 1886 Act, the decision of Lyell J in JW Dwyer Ltd v Metropolitan Police District Receiver [1967] 2 QB 970 and the unreported decision of the Court of Appeal in DH Edmonds Ltd v East Sussex Police Authority (15 July 1988), which concern the phrase in section 2 of the 1886 Act: "persons riotously and tumultuously assembled together" and, in particular what the word "tumultuously" adds to "riotously" in that phrase.
  15. Since all parties rely upon these decisions, it is necessary to look at them in some detail. It is important to note in relation to both cases that, at the time that the events under consideration occurred, the common law offence of riot required only three or more persons to be gathered together. The statutory offence of riot under the Public Order Act 1986 (in force at the time of the Edmonds decision but not at the time the events in question took place) requires twelve or more persons to be gathered together. It follows that, if the facts of either case occurred today, there would not be enough persons involved to constitute a riot, so that the 1886 Act would have no application.
  16. Dwyer concerned a raid on a jeweller's shop in East London by four armed robbers. At about 9.35 in the morning the shop opened for business. A regular customer came in to the jewellery department and when she was there, a man rushed into the department. At the same time three other men came in through a side door leading to the pledge department. All four men were hooded and armed with iron bars. The staff and the regular customer were threatened and immobilised behind the counter whilst the men raided the safe. The manager's wife who lived above the shop came downstairs and was also made to sit behind the counter. The men took all the jewellery which they could and carried it to a waiting van outside, then made their escape. As the learned judge found at 976, although there was a commotion within the shop the whole incident happened without attracting the attention of anyone outside, so there was no great uproar.
  17. The principal submission of counsel for the plaintiffs was that "tumultuous action" is an essential ingredient of riot so that once a riot is proved the word "tumultuously" adds nothing and is mere surplusage, alternatively that "riotously and tumultuously" should be read as "riotously or tumultuously". The learned judge rejected these arguments, holding at 979F that the word "tumultuously" added an additional concept to what is required before compensation can be allowed under the 1886 Act. He held that the interpretation that the words "riotously and tumultuously" were cumulative in effect was supported by the history of the legislation. Before considering that history, he asked himself what concepts arose in one's mind when the noun, adjective or adverb "tumult", "tumultuous" or tumultuously" are applied to an assembly and decided as follows at 979G-980A:
  18. "I would not attempt to give a full definition of any of those words, but it seems to me that all of them bring a certain impression to one's mind. When those words are applied to an assembly of persons, the impression is that the assembly should be of considerable size; that it should be an assembly in which the persons taking part are indulging in agitated movement; an excited, emotionally aroused assembly; excitement or emotion common to the members of the assembly; and generally, though not necessarily, accompanied by noise. I agree with the submissions which have been made, that it is a question of degree whether any assembly of people can properly be said to be acting tumultuously."
  19. He then went on at 980B-G to consider the historical context of compensation for victims of riot:
  20. "I now turn to consider both the meaning of the words and the question as to whether the words "riotously and tumultuously" from their history are to be read as cumulative requirements, differing in character. Until very recently the victims of crime had, in general, no claim to be compensated for the injury they suffered as a consequence of the crime. Compensation for loss caused by a riot was a special case. This raises the question: Why was it made a special case? If a crowd of people collect in angry and threatening fashion this should become obvious to the local forces of order, and it would then become their duty to prevent the crowd from becoming a riot. This is a duty which has been recognised for centuries, and which until the 19th century was put upon the local administrative area, the hundred or wapentake, or whatever name it might be called; and there was a duty upon them to compensate for damage which was done by persons assembled riotously and tumultuously. The Act of 1886, in fact, did no more than modernise the mode of obtaining compensation and transferred the burden from the inhabitants of the hundred or wapentake to the local police authority. There is nothing secret or furtive about a crowd of people who are acting riotously and tumultuously. It seems to me that the right to compensation from public funds was given because public authority had failed to protect the public who were menaced by a threat which was, or ought to have been, obvious to the forces of law and order as they existed from time to time. In my judgment, the word "tumultuously" was added to "riotously" for the specific reason that it was intended to limit the liability of compensation to cases where the rioters were in such numbers and in such state of agitated commotion, and were generally so acting, that the forces of law and order should have been well aware of the threat which existed, and, if they had done their duty, should have taken steps to prevent the rioters from causing damage."
  21. He concluded at 980G-981A that, applying those criteria, the claim under the 1886 Act failed. Although there was commotion and no doubt some noise in the shop, the activities of the robbers did not attract attention outside. They were few in number and the whole activity was on too small a scale to be properly described as a "tumult". The same conclusion was reached in Edmonds where the judgment of Lyell J in Dwyer was approved and applied by Kenneth Jones J and the Court of Appeal (Kerr LJ, with whom Balcombe LJ and Sir Roualeyn Cumming-Bruce agreed).
  22. That case concerned a smash and grab raid in August 1984 by three or four armed men on the plaintiff jewellers' shop in the Lanes district of Brighton. The gang drove up stealthily in a van to the end of the lane. Two men wearing balaclavas armed with sledgehammers and a third man in sunglasses and a woolly hat wielding an industrial nail gun, to give the impression it was a real firearm, got out and came rushing up the lane. They were making a tremendous noise, described by witnesses as a "war cry" and as "like an army running up the lane". There were people in the lane shouting and screaming that it was a raid and that the men had a gun, a situation described by one witness as "turmoil and chaos and people being hysterical". The men with sledgehammers used them to smash the strong plate glass window of the shop. Inside the shop, the staff were hysterical and screaming. The men ran off with a large quantity of jewellery. In the van which was abandoned were found another sledgehammer and nail gun, suggesting a fourth man had been involved.
  23. In the Court of Appeal, Kerr LJ summarised the picture given by the evidence in these terms:
  24. "One can see how the scene began and what it involved until the men ran away. It obviously began with the men stealthily driving up in a van and getting out. From that moment onwards they were undoubtedly shouting; there was a reference to war-cries and noise intended to frighten the bystanders. There was then more noise when they used the sledge-hammers on the window. But the main noise undoubtedly came from the terrified spectators. So it was, the judge said, a scene of great commotion; I think he used the word 'chaos'."
  25. The Court of Appeal, as had the judge, rejected the plaintiffs' argument that in so far as "tumultuous" involves noise, which they held it undoubtedly did to some extent, it was sufficient if the assembly caused bystanders to behave tumultuously, in the sense of making a lot of noise. As Kerr LJ held (at p.4 of the transcript) whatever conduct or effect is involved in the adverb "tumultuously" must relate the persons assembled together [i.e. the rioters], not the bystanders.
  26. The principal argument advanced by the plaintiffs' counsel was that whilst "tumultuously" must be taken to add something to "riotously" the judge had erred in holding that one matter which it added was an increase in numbers sufficient to constitute a riot. He submitted that "tumultuously" added nothing except some form of commotion or noise, given that on the authorities, a riot can take place without any noise. In addressing that submission, Kerr LJ considered first of all the meaning of "tumultuous" (at p.5 of the transcript):
  27. "It is interesting, contrary to what I had thought, that the derivation of 'tumult' … is evidently unconnected with 'multitude'. The word comes from 'tumulus' a mound in one sense, or a swelling in another sense and in the etymological dictionary it is defined as 'excitement, uproar, agitation'. But when one comes to the Oxford English Dictionary one finds that 'tumultuous' is defined as 'Full of tumult or commotion; marked by confusion and uproar; disorderly and noisy; violent and clamorous; turbulent'. If one then goes to the definition of the word 'tumult'… one finds the first definition… is… 'Commotion of a multitude, usually with confused speech or uproar; public disturbance; disorderly or riotous proceeding.' Rightly or wrongly-apparently etymologically wrongly, but I would say rightly as a matter of common usage nowadays-the connotation of 'multitude' or 'crowd' or 'mob' or of a large number of people, has been introduced into the meaning of 'tumultuous' and 'tumult'. That is certainly how I would construe it as a matter of first impression."
  28. Kerr LJ then held that that approach was borne out by the analysis of Lyell J in Dwyer, which he adopted, describing the judgment as admirable. He concluded, as had Lyell J and Kenneth Jones J that: "'tumultuously' added something more than mere noise to the minimum assembly of three people required [at common law] to constitute a riot". He then went on to consider the additional factor identified by Lyell J in Dwyer that the police should have been alerted by the riotous and tumultuous assembly. Counsel for the plaintiffs submitted that that factor was satisfied, because there was a great deal of noise. Kerr LJ rejected that submission in these terms (at p.6 of the transcript):
  29. "After all, this was not a case of a crowd which had assembled and which should have attracted the attention of the police by its very presence. On the contrary. These robbers drew up in a van quietly and then stormed out, no doubt making a good deal of noise, but in the minimum time possible; and they then vanished as quickly as they could. The whole nature of the raid was one of furtiveness at the beginning, and then surprise and speed of departure thereafter. In my view that is far from a 'riotous and tumultuous assembly'."
  30. Both those cases demonstrate that the obligation of the police authorities to compensate victims of riots under the 1886 Act only arises where it can be said that the notional responsibility of the police to protect the public against rioters is engaged, in other words where the "riotous and tumultuous assembly" manifests itself in such a way that the police ought notionally to have been aware of it and to have prevented it, even though the obligation is a strict one and not dependent upon establishing fault. In other words, it is irrelevant whether the police could or should have in fact stopped the assembly, what matters is whether it was sufficiently manifest i.e. "riotous and tumultuous" that, albeit notionally, the police ought to have prevented it. In both cases, the Courts were at pains to emphasise that, for the police to have that notional responsibility, the assembly must be of some considerable size and that part of what "tumultuously" conveys is the concept of a multitude of people, more than the minimum of three required for the common law offence of riot.
  31. As noted above, the common law offence of riot was abolished by the Public Order Act 1986 section 1 of which substituted a statutory offence of riot in these terms:
  32. "(1) Where 12 or more persons who are present together use or threaten unlawful violence for a common purpose and the conduct of them (taken together) is such as would cause a person of reasonable firmness present at the scene to fear for his personal safety, each of the persons using unlawful violence for the common purpose is guilty of riot.
    (2) It is immaterial whether or not the 12 or more use or threaten unlawful violence simultaneously.
    (3) The common purpose may be inferred from conduct.
    (4) No person of reasonable firmness need actually be, or be likely to be, present at the scene.
    (5) Riot may be committed in private as well as in public places.
    (6) A person guilty of riot is liable on conviction on indictment to imprisonment for a term not exceeding ten years or a fine or both."
  33. Section 10(1) of the Public Order Act provides that "riotous" and "riotously" in the 1886 Act are to be construed in accordance with section 1 of the Public Order Act. In other words, compensation under the 1886 Act will not be payable save in cases where the "persons riotously and tumultuously assembled together" are at least twelve in number and have a common purpose. It follows that the interpretation in Dwyer and Edmonds of "tumultuously" as envisaging an assembly of some considerable size, clearly in part motivated by a desire to ensure that groups of three or four armed robbers as in those cases would not fall within the statute, is no longer of such significance as it was at the time the cases were decided. Nonetheless the correct interpretation of the phrase "persons riotously and tumultuously assembled together" cannot turn upon the change in the definition of the offence of riot and the word "tumultuously" still envisages a substantial crowd of people, not least because of the continuing validity of the rationale for imposing the obligation on the police authority to pay compensation under the 1886 Act, that the police ought notionally to have prevented the riot in question.
  34. The continuing validity of that rationale is demonstrated by the litigation arising out of the riot on 14 February 2002 by detainees at the contracted-out immigration detention centre at Yarl's Wood in Bedfordshire, operated on behalf of the Home Office by Yarl's Wood Immigration Ltd ("YWIL") but run by agreement of the Home Secretary under a sub-contract with Group 4 Security ("GSL"). Almost half the premises were destroyed by fire and millions of pounds of damage resulted. YWIL and GSL brought claims for compensation under the 1886 Act from the Bedfordshire Police Authority ("BPA"), in whose geographical area the centre is located. Those claims were declined and litigation ensued in the Commercial Court. BPA succeeded in defeating the claim by YWIL and GSL before Beatson J at first instance, essentially on the basis that the 1886 Act confers rights on private citizens in relation to their property, not on those who are themselves responsible for maintaining law and order at the property, as were the claimant companies. That decision was reversed on appeal, the Court of Appeal deciding that the words "any person" in section 2(1) of the 1886 Act were without restriction and encompassed a person or entity with public law duties for order within the detention centre: Yarl's Wood Immigration Ltd v Bedfordshire Police Authority [2009] EWCA Civ 1110; [2010] QB 698.
  35. In addition to those proceedings, BPA had brought a claim against its liability insurers to determine whether any obligation it was under to pay YWIL and GSL compensation under the 1886 Act was a sum which BPA "may become legally liable to pay as damages for accidental damage to property arising out of the business" of BPA under the terms of BPA's liability insurance. Walker J and the Court of Appeal held that the obligation to pay compensation under the 1886 Act was a "liability to pay damages" within the meaning of the insurance policy: Bedfordshire Police Authority v Constable [2009] EWCA Civ 64; [2009] 2 All ER (Comm) 200.
  36. In Constable Longmore LJ referred to the rationale for the obligation to pay compensation under the 1886 Act as being the notional responsibility of the police to control riots. At [11] –[12] he said:
  37. "11. In the course of his judgment, the judge concluded that the obligation of the police authority to pay compensation under the 1886 Act stemmed from the idea that the local police were responsible for failing to control riots within their area. Although the obligation to pay compensation was a strict liability (in the sense that it did not matter whether or not the police had neglected their duty or that, however diligent they may have been, the riot could not have been prevented and damage would inevitably have occurred) the reason why that strict liability was imposed on the police authority rather than on the community at large, whether the local authority or central government, was due to the notional responsibility of the police who had the duty of preserving law and order. The judge buttressed this conclusion by reference to the original liability of the hundredors for preserving law and order pursuant to the Statute of Winchester of 1285 and subsequent statutes, but for present purposes it is only necessary to note that one of the main purposes (if not the main purpose) of the 1886 Act was to transfer the obligation to pay compensation from the hundred to what was then called the "police rate" of the "police district" in which the relevant property had been damaged. Since the Police Acts 1994 and 1996 these phrases have become the "police fund" and the "police area" respectively.
    12. Happily for non-historians the notional responsibility of the police has been repeated in modern authority and it is sufficient to refer to [Dwyer]…"
  38. Longmore LJ went on to cite with approval the analysis of Lyell J in Dwyer and the Court of Appeal in Edmonds. Later in his judgment at [26], he returned to this rationale for the obligation to pay compensation under the 1886 Act, in concluding that the police authority was "liable to pay [that compensation] as damages":
  39. "Once one appreciates that the reason for the 1886 Act placing the burden of paying compensation to the victims of riot damage on the police authority is that the police are responsible for law and order and that they are (notionally) in breach of that responsibility, it seems to me, as an English lawyer, that compensation payable is a sum which the police authority is "liable to pay as damages". The fact that the application is first made to the police authority and that the right to make a claim only arises after rejection (or receipt of a suggested amount which is alleged to be too low) does not make any difference to this conclusion. The situation is not dissimilar to that of an insurer who first has to consider a claim; he is still liable to damages (for breach of contract) if he wrongly rejects a claim or offers too low a sum."
  40. At first instance in Yarl's Wood Beatson J considered that the decision of the Court of Appeal in Constable resolved the distinction drawn by the parties between the obligation under the 1886 Act as a "no fault compensation scheme" and it being a strict or notional duty to prevent riot, in favour of the latter. However, in the Court of Appeal, Rix LJ was unimpressed by that distinction, saying at [54]:
  41. "In my judgment, however, the distinction which has been argued, and the stress which has been placed by the parties' submissions on the choice between the rationalisations, are not particularly helpful to the process of statutory interpretation which has to be undertaken. I can see no useful distinction for present purposes whether the 1886 Act is described as providing for no-fault compensation or as providing for liability premised on the notional responsibility of the police to maintain law and order. The police undoubtedly have a real and not merely notional responsibility for law and order (and within that responsibility a duty to deal with and if they can prevent riot) and there is no need for the 1886 Act to acknowledge that. What it seems to me is more significant for present purposes is that such a responsibility in terms of the 1886 Act is a strict one, however that is described: strict, notional, or not dependent on fault, blame or breach. What is the rationalisation of such a liability, obligation or duty? It seems to me that what Lord Mansfield had to say about that question, so much closer to the origin of the first Riot Act 1714, still retains pertinence, expressing as it does the common sense of the matter. It is for the sake of the party whose property has been damaged, it is to encourage the inhabitants (now the police force) of the locality, but including the party injured himself, all to assist in the preservation of the peace, it is to share the burden both of keeping the peace and of the misfortune of loss or injury. Moreover, as is so often the case with strict liability, it is because those who are liable to compensate are also regarded by the law as standing in the shoes of the wrongdoers themselves (as, for instance, in the case of the vicariously liable), in part because their obligation, their strict obligation, is to prevent what has happened happening."
  42. In my judgment, looking at the jurisprudence as a whole, which is the approach Rix LJ advocated in Yarl's Wood at [56], the following characteristics of the assembly of persons are required if they are to be "persons riotously and tumultuously assembled together" within the meaning of the 1886 Act so that the relevant police authority is liable to provide compensation:
  43. (1) There must be a riot within the meaning of section 1 of the Public Order Act 1986. I will return later in the judgment to deal in more detail with why that requirement is satisfied in this case. Whilst this point was not formally conceded on behalf of the defendant, Mr Grodzinski QC did not advance any positive case that it was not. His submissions on this issue focused on whether the group was "tumultuously" assembled.

    (2) The assembly must be of some size, certainly more than three or four persons. It is for another case than the present whether, provided there are twelve or more (as now required to constitute a riot) this aspect of the concept of a "tumult" or of persons assembled "tumultuously" will be satisfied, but certainly it was satisfied in the present case, given that there were in the region of twenty to twenty five people.

    (3) Of more significance in the present context, the persons assembled must be acting in an agitated, excited, volatile manner, usually (in the light of Edmonds) also making a noise, rather than acting stealthily, so that it can be said that their riotous behaviour could, at least notionally, have been prevented by the police. However, Edmonds is not authority for the proposition that unless the crowd is making a tremendous noise, they cannot be riotously and tumultuously assembled together if other indicia of a riotous and tumultuous assembly are present. The real touchstone is that there must be some "public" element to the behaviour, what Mr Crane QC for the insurer claimants described as a perceived or palpable threat of a riot to which the police could, notionally, have responded.

    (4) Those cases where the courts have held that the victims of riot are entitled to compensation under the 1886 Act are ones which involve the rioters engaging in wanton damage to property or, as Mr Crane QC put it, where the rioters exhibit an animus towards the property in question and are not simply looting in order to steal. Examples are Pitchers where the Canadian soldiers went on a violent rampage damaging and looting the shops in the camp and Yarl's Wood where the detainees set fire to and otherwise caused serious damage to the detention centre and property in it.

    Factual analysis

  44. Before I set out my detailed findings of fact I should deal with what might be described as an overall issue of principle as to the relevance of the August 2011 riots generally to the issues I have to decide. I agree with Mr Grodzinski QC that merely seeking to place this incident in the wider context of civil disorder across London (or indeed the country as a whole) in the period 6-10 August 2011 does not advance the claimants' case. That is because the focus of section 2 of the 1886 Act is on whether the specific "house, shop or building…or property therein has been injured, stolen or destroyed, by any persons riotously and tumultuously assembled together". The fact that other property elsewhere in London, or even elsewhere in Enfield, was destroyed or damaged by rioters (and that the owners of such other property might have a perfectly valid claim under the 1886 Act) does not, without more, mean that the requirements of the section are satisfied in relation to the Warehouse. Were it otherwise, any burglary committed by professional criminals during the August riots, whilst police resources were at full stretch dealing with rioters and looters, might well satisfy the requirements of the section, which would plainly be absurd.
  45. However, the civil disorder in Enfield itself which preceded this particular incident seems to me to be of assistance in determining whether this incident satisfies the requirements of section 2 of the 1886 Act in two related respects. First, to the extent that there is evidence that members of the same local gang, the Get Money Gang ("GMG"), also apparently known as the Black Gang, were involved in both the incidents of rioting or violent disorder in Enfield Town on the previous night of Sunday 7 August and this incident at the Warehouse on 8 August, that must, in my judgment, cast some light on whether they were "tumultuously" assembled at the Warehouse. Whilst Mr Grodzinski QC is no doubt right that the issue of whether the group who attacked the Warehouse were "riotously and tumultuously assembled together" is an objective one, not dependent as such on their state of mind or their motive, nevertheless whether they were in a state of agitation or heightened excitement when they were attacking the Warehouse so as to be acting "tumultuously" does need to be considered, at least in part by reference to the civil disorder in Enfield the previous night, a fortiori since there is evidence that members of the GMG were involved in that disorder.
  46. Second, it was clearly the perception of the local community (both businesses and members of the public) during the day of 8 August that the rioting and violent disorder which had occurred on the previous night in Enfield Town was going to resume that night and some reports to the police were to the effect that this would involve the GMG. I agree with Mr Crane QC that this evidence demonstrates the palpable threat of further destruction of and damage to commercial property which corresponds with the rationale behind the statute and its predecessors as identified by Lyell J in Dwyer and approved by the Court of Appeal in Edmonds, that there exists a threat to which, notionally, the law enforcement agencies could have responded.
  47. Furthermore, the fact that one is looking at whether notionally or objectively the police could have responded and is not in any sense engaged in any analysis of the actual actions of the police or any criticism of them, particularly given that, on any view, they were over stretched at the time, is a complete answer to the submission made by Mr Grodzinski QC that, in assessing the extent to which there was a palpable threat, the court should only look at what was actually reported to the police before the incident took place. I do not accept that submission: since the question of whether the police could have responded is a notional and objective one, the court is entitled to and should look at all the evidence of what members of the public saw and heard before the incident in assessing whether there was a palpable threat to which the police could notionally have responded, including intelligence received by the police after the incident.
  48. The civil disorder in Enfield Town on the night of 7/8 August seems to have culminated in an attack on Barnard Jewellers on the corner of Grove Road West and Hertford Road at about 01.40 hours on 8 August 2011 when a group of about 15-20 youths in dark clothing described by the police as "mostly IC3" (police shorthand for people of black Afro-Caribbean or African ethnic origin) lifted the shutter up and broke the window by throwing bricks at it. They took various items of jewellery on display and made off. One of two youths arrested at the scene was subsequently charged.
  49. As 8 August wore on, the police received a number of calls from business people and other members of the public, expressing concern about rumours that were circulating that what had happened in Enfield on the night of 7 August would be repeated that night. Thus, one caller said that: "word on the grapevine is it's gonna happen in Enfield again tonight as the job was not done properly". Another caller at about 16.00 hours advised that there were "a lot of rumours going round that youths are planning to hit Ponder's End and the Hertford Road tonight" and that all the local shop keepers were closing up early because of the rumours.
  50. Whilst it is correct that both Ponder's End and the Hertford Road are a little distance from the Warehouse, some of the rumours and concerns did relate to the possibility of rioting in the area of the Warehouse and the Premier Inn hotel adjacent to it. Thus, Holly Charles, one of the claimants' witnesses (who in the event was not required for cross-examination so her evidence is unchallenged) worked at the Inn on the Park bar and restaurant which formed part of the Premier Inn. Her evidence was that she and a colleague heard rumours, via Facebook and Blackberry Messenger, that the riots were going to move from Enfield Town to Enfield Island Village. A school friend of hers had heard the same rumours and contacted Ms Charles to ask if she was safe, because the friend was worried that the riots might take place near the Premier Inn. Ms Charles informed her manager, who closed the restaurant slightly earlier than usual and locked the back doors. Furthermore, the security guard employed at the Warehouse, Edward Mireku, (whose witness statement was put in under the Civil Evidence Act 1995 as he was unwilling to give evidence), was asked by Sony's Security Manager, John Rapley, to work overnight at the Warehouse on the night of Monday 8 August 2011 as a precaution because of the riots elsewhere in London in the previous days. This reflects a concern that the Innova business park where the Warehouse is situated might be attacked.
  51. For a period of an hour or so from 16.00 hours, there were a number of reports made to the police of a large group of youths congregating menacingly in the Hertford Road/Turkey Street area of Enfield. One report described a group of 30 to 40 youths looking as if they were converging on Barclays Bank. Another report at around the same time was of 30 youths wearing hoodies and baseball caps, some on bikes. At about 16.40 a bus driver reported about 20 youths grouping at the junction of Hertford Road and Turkey Street. Some 20 minutes later, two Police Community Support Officers saw a large group of youths congregated on two benches near Greggs Bakery on the junction of Hertford Road and Turkey Street, whom they recognised as members of the GMG, with whom they had dealings almost on a daily basis. The youths were mainly in dark clothing. It seems to me that in all probability, these reports were all related to the same group and they were indeed members of the GMG.
  52. At 18.14 there was a call to the police from a member of the public who lived in Aldridge Avenue, just over the river from Enfield Island Village, who said that where she lived there was a gang who called themselves the GMG and she believed they were going to be attending the riots. There was a load of them on bikes, evidently a reference to her having seen youths who were members of the gang riding around on bikes at that time. At 21.18 there was another call from Aldridge Avenue, in all probability from the same lady, who said she had called earlier about 20 youths being gathered, but they had all left now. She was concerned due to recent activities.
  53. Information was received after the incident from a lady who lived in Punchard Crescent in Enfield Island Village. She had walked home from a friend's house with her sister across the fields from the Premier Inn adjacent to the Warehouse. At about 21.45, on the junction of Manton Road and Punchard Crescent, she saw a large group of 15 to 20 youths gathered, aged between 17 and 20, some younger. About ten of them she recognised as being from the Village: they were black, mixed race and Somali and she recognised them as members of the Black Gang. The other youths in the group were strangers to the Village whom she did not recognise.
  54. This was confirmed by a report to the police the day after the incident from another member of the public who had seen a group of 15 youths congregating on the corner of Punchard Crescent who were black, Somali or mixed race and members of the Black Gang. They were all in predominantly dark clothing, some wearing bandanas or balaclavas. Some were on bikes. They were all talking among themselves and using their phones, apparently to organise more people to attend and head over to the Innova business park where the Warehouse is situated. The informant overheard one of the youths saying on his phone and to others in the group: "Everyone doing stuff at their own ends" which the informant explained meant that local youths were grouping together to attack local premises, to "get rich" and out-do rival gangs.
  55. In fact, as was confirmed by Detective Superintendent Hibberd (the officer in charge of this incident from 15 August 2011) in his oral evidence, police intelligence after the incident was that the attack on the Warehouse was carried out by members of the GMG joined by members of at least one other gang from Chingford, the Chingford Hall gang. That youths from outside the immediate area joined the local group is borne out not only by the report at 21.45 referred to above but by another report of a group of 8 or 9 youths, 4 of them on bikes, being seen at about 23.00 going along an alleyway off Thorneycroft Avenue and then joining a larger group of youths on the playground at Manton Road. Another report, also at about 23.00, was of a large group of 20 or so congregating on the playground just off Manton Road, some of whom were members of the GMG.
  56. At about 23.15 Daniel Thomas and his mother Marina were driving over the bridge to Enfield Island Village on Smeaton Road. They both subsequently gave statements to the police. Mr Thomas said he saw a group of 10 to 15 youths, all in dark hoodies with their faces covered in scarves and bandanas, running along the pavement on the brow of the bridge and into the little car park by the gate into the fields. One of them was carrying a baseball bat and one a metal pole. His mother's evidence was slightly different. She reported a smaller group of about 6 walking rather than running over the bridge, all in dark clothing and hoodies, one of them carrying an iron bar and another a sledge hammer.
  57. The difference in what they recalled seeing is not surprising, given that she was driving, that they cannot have seen the group for long and that there was obviously a tense atmosphere at the time. Another intelligence report from a member of the public at 00.22 hours on 9 August was of having seen a group of about thirty hooded males carrying sticks congregating on the fields off Smeaton Road at 23.20. What the evidence of the Thomases and that intelligence report demonstrate is that, contrary to submissions made by Mr Grodzinski, there is no question of the youths who attacked the warehouse having operated by stealth under cover of darkness. Given that the group seen by Mr Thomas, his mother and the other member of the public was clearly the same group as attacked the Warehouse half an hour or so later, whilst it may be something of an exaggeration to say that they demonstrated what Mr Crane described as "brazen indifference" to being seen by members of the public, they were clearly not trying to hide what they were doing. There was, in my judgment, a palpable threat of violence towards property by a group of youths who were behaving, when they gathered on the playground and as they moved towards the business park, in an agitated and volatile manner.
  58. The group crossed the fields by the footpath to the stile on Mollison Avenue, then crossed the road, possibly reaching the door at the south end of the west side of the Warehouse through the car park of the Premier Inn which is located about a hundred metres or so south of the Warehouse. At 23.40 the night manager of the Premier Inn made a 999 call reporting about four boys in hoodies walking around the bar area. This was at about the same time as the group were smashing their way into the Warehouse and it seems likely that these boys were associated with those who were attacking the Warehouse. Their presence in the bar area of the hotel is again evidence of an absence of stealth.
  59. Police reports after the incident confirm that the attack was perpetrated by the GMG and other gangs. Mr Hibberd's own report about the incident stated that intelligence suggested some of the group were affiliated with the GMG. They all wore gloves and masks, bandanas or hoodies. There were 20 to 25 of them aged between 12 and 20. The police Progress Review in July 2012 said the attack was by the GMG and the Chingford Hall gang in lesser numbers.
  60. The attack itself is captured on CCTV from the Warehouse. Whilst that CCTV is silent, it still gives a good flavour of the nature of the attack. A number of the group attacked the glazed entrance door, kicking it and hitting it with whatever implements they had, which presumably included the baseball bats and sledgehammers described by the Thomases, as well as a shovel and garden hoe later found abandoned at the scene. Apart from one person in the group who seemed to be wearing a white or pale coloured balaclava or bandana and who stood relatively still whilst the door was being battered in, (suggesting he may have been the ringleader of the group), the others were moving around in what appears to have been an excited and agitated manner, whilst some of the group were attacking the door. Once the door was breached, the group (including the apparent ringleader) swarmed into the building instantly. The attack began at 23.37 and the group broke in just over a minute later.
  61. The breaking into the door of the Warehouse caused a smashing sound which was heard by staff at the Premier Inn. Chris Cass (whose statement was put in under the Civil Evidence Act 1995 because he was unwilling to give oral evidence) was outside in the bin yard, a smoking area which is on the side of the hotel premises closest to the Warehouse, when he heard the sound of forceful smashing of glass. He went back into the restaurant to tell staff to shut the blinds and lock up the building. Holly Charles was also outside in the bin yard with her colleague Rachel when she heard a crashing sound from the direction of the Warehouse. She immediately thought it could be rioters looting the Warehouse. She was worried because she wasn't sure what was going on. She went inside and told another member of staff, Thomas Thompson (whose statement was also put in under the Civil Evidence Act 1995 because he was unwilling to give oral evidence), who went over to have a look. He found the glazed entrance door on the west side of the Warehouse, near the truck entrance, smashed. There were seven to ten BMX and mountain bikes on the ground at the truck entrance. He saw two black youths standing outside, whom he estimated to be about twelve years old. One of them was holding a wine bottle which he thought had petrol in it, a home-made petrol bomb. When the youth saw Mr Thompson, he put the bottle down in the road. Mr Thompson said to the two youths that the police had been called and they might want to make a move. They thanked him. In the event, that petrol bomb was left at the scene.
  62. The CCTV footage from cameras inside the Warehouse shows the group running down the aisles between the stacking, looting items which they can be seen carrying off. Two of the group lit and threw petrol bombs into the stacking before they all left the building. The first petrol bomb was thrown at 23.40.20, so about a minute and a half after they gained access. Mr Thompson describes at least fifteen youths running out of the Warehouse through the broken door and possibly the adjacent broken glass panel. They were all carrying items looted from the Warehouse, a couple of them were holding boxes and one had a handful of game controllers. Another had a handful of goods which he dropped as he tried to get on a bike. The exit of the group from the Warehouse is also caught on the external CCTV camera. It is not possible to see all the youths carrying goods as described by Mr Thompson, but it may be that they were hiding items under their clothing.
  63. Mr Thompson describes the group as between fifteen and twenty five in number, with an average age of about fifteen, the oldest about seventeen. They were all wearing coverings such as bandanas over their faces, which they pulled up when they saw him. One of them, whom he describes as the only one of the group who was not black, being of mixed race or Turkish, said to him in an aggressive manner: "What the fuck are you looking at?" Another one of the group running out of the Warehouse ran beside Mr Thompson and punched him on the side of the head, slightly dazing him. His evidence is that when the larger group of youths came out of the Warehouse he felt intimidated and when the youth spoke to him aggressively he was scared. He also thought more of them were going to hit him but they ran off. He saw them heading south down Solar Way towards the roundabout.
  64. Mr Grodzinski QC pointed out that, in his witness statement to the police given two days after the incident, Mr Thompson does not mention feeling intimidated or scared and that mention of this only appears in the statement given to Dr Neil Sanders of Dr JH Burgoyne & Partners LLP the forensic investigators instructed by the insurer claimants. However, although that statement was not signed until 14 September 2011, it was prepared in draft by Dr Sanders following a meeting with Mr Thompson on 10 August 2011 and a clarificatory telephone conversation on 15 August 2011. In Dr Sanders' handwritten notes of that telephone conversation, he refers to Mr Thompson saying he "felt intimidated" and "was scared". It was not suggested to Dr Sanders in cross-examination that Mr Thompson had not said this or that Dr Sanders had put words in his mouth. Dr Sanders' evidence is that he had asked Mr Thompson on the telephone how he felt because it had been suggested to him that it might be important to establish how witnesses felt at the time of the incident. I see no reason not to accept as genuine Mr Thompson's sense of intimidation and fright.
  65. In his statement, Mr Mireku, the security guard, describes how, at the time the incident occurred, he was engaged in a patrol of the building which had commenced at about 23.30 when the other staff and security officers had left the Warehouse. As he was checking a rest room right at the other end of the building from where the looters broke in, he heard loud banging noises like hammering. Shortly thereafter, the intruder alarm went off inside the building. Mr Mireku says he was instantly very scared, as he knew someone must have entered the building. In order to escape, he went to the nearest exit in the opposite direction to where the noises were coming from, which was a fire escape door next to loading bay 10. That door was locked with a break-glass bolt lock but could also be opened with a key. To save time he broke the glass rather than searching through his keys.
  66. Having left the building Mr Mireku made his way to the gatehouse (which was on the south side of the Warehouse) intending to look at the CCTV screens there. As he came round the south east corner of the building, he saw five or six people in the distance running away from the Warehouse, down the pavement on Solar Way. He did not want to be seen by them in case they attacked him, so he hid in some bushes along the perimeter of the yard and took off his high visibility jacket. He called the police on his mobile phone, that call being timed at 23.44 hours. He then went over to the main gate which he opened with a key in order to reach the drivers of two G&D tractor units which were parked in the yard ready to pick up trailers first thing next morning. He had noticed these units when he locked up the gatehouse at 23.20. Since the curtains were drawn on the cabins of both he had assumed the drivers were asleep inside. When he approached the units after the incident he banged on the sides of the cabins to alert the drivers.
  67. Mr Grodzinski QC makes the perfectly valid point that the drivers do not seem to have been alerted previously by any noise, suggesting that the group was not making a great deal of noise, but acting stealthily. However that point is somewhat contradicted by the fact that both Ms Charles and Mr Mireku heard the noise of the gang smashing into the building, in both cases from further away than the tractor units were located. Furthermore, as Mr Mireku thought, the drivers may have been asleep and therefore slept through the rumpus which was going on outside.
  68. The departure of the group from the scene was also observed by staff at the Premier Inn. Holly Charles describes how, very soon after she had heard the crashing sound from the Warehouse, which was evidently the youths breaking into the Warehouse, she heard another crashing sound and she went outside through the bin yard into the car park to see what was going on. She saw about ten teenagers, some wearing hoodies, running away from the Warehouse (albeit she says they did not seem to be in a hurry). They ran in front of the Premier Inn along Solar Way towards Ordnance Road. Some of them were carrying boxes and dropping things everywhere.
  69. Mr Cass describes how, after he had warned staff to shut the blinds and lock the restaurant, he went out to the gate to see what was happening. He saw a group of about fifteen youths running towards him from the direction of the Warehouse carrying white boxes. Two of the group were on BMX bikes. One of the youths at the back of the group slipped on the grass area near where Mr Cass was standing and Mr Cass abused him roundly, from which it appears that he at least did not feel intimidated. The youth got up and ran off. The evidence of these witnesses indicates how short a period of time the whole incident took and this is borne out by the CCTV footage, which demonstrates that it lasted around three minutes.
  70. The CCTV footage from inside the Warehouse also shows the fire taking hold within the building within a matter of minutes of the petrol bombs being lit and thrown. That is also borne out by Ms Charles' evidence, which is that within a few minutes of the youths running away, Mr Thompson returned to the hotel. They could see that the Warehouse was on fire and there was a lot of smoke. They went inside the restaurant for safety reasons and she called the fire brigade. Within ten minutes of them first seeing the fire, the whole building went up in flames. The first police officers on the scene were in fact a mobile patrol from the Hertfordshire Police who had seen the flames from the other side of the M25. The Metropolitan Police arrived at 23.59. When the police and fire brigade arrived, the hotel was evacuated because of concerns the fire might spread to the hotel. There were explosions from the Warehouse. In the event the fire did not spread and the guests were safely back in the hotel by 5 in the morning of 9 August 2011. Sergeant Andrew Davison was one of the Metropolitan Police officers first on the scene. He gave oral evidence at the trial. His unchallenged evidence was that when he arrived there was no evidence of disorder in the surrounding area or of debris on the roads or footpaths.
  71. In the immediate aftermath of the incident, there was understandably concern in Enfield Island Village that the group which had set fire to the Warehouse might move on to other targets. At 00.34 hours on 9 August 2011, a resident of the Village made a 999 call to the police saying that a neighbour had received a message on Blackberry Messaging that the group of youths who had set fire to the Warehouse were now going to "do" the Tesco in Enfield Island Village. At 01.14 there was another 999 call reporting that a large group of youths was trying to break into Tesco and set bins on fire. However, two police units attended and saw a number of youths milling around but no fire or damage, so that ultimately further incidents did not occur and the group of youths appears to have dispersed. In any event, I agree with Mr Grodzinski QC that subsequent events or incidents cannot inform whether or not this incident at the Warehouse qualifies for compensation under the 1886 Act.
  72. For the first week after the incident, it was investigated by the Major Crime Unit based at Edmonton Police Station as part of Operation Withern, the Metropolitan Police code name for the August riots in London. During that time, six suspects were arrested, three of whom lived in Enfield Island Village. With the exception of one of those arrested who was a local man in his late twenties who it turned out had been incorrectly identified and had a valid alibi, these suspects were all youths who, according to police intelligence, were members of the GMG. The police intelligence was also that key members of the GMG were based in Enfield Island Village.
  73. The first suspect was a member of the GMG who was arrested at an address in Enfield Island Village on 9 August 2011, both for arson (the incident) and for violent disorder in Enfield Town on 7 August. Two further relevant arrests for suspected arson were made on 10 August 2011. One of the suspects lived in Enfield Island Village and the other elsewhere in Enfield. Both were members of the GMG. One of them was also arrested for violent disorder. The next relevant arrest was of another member of the GMG who lived in Enfield Island Village who handed himself in at Edmonton Police Station on 11 August 2011, as he had been named as a suspect by others. The fifth relevant arrest on 13 August 2011 was of another member of the GMG who lived elsewhere in Enfield.
  74. According to a report dated 13 August 2011 headed "CCTV Strategy Burglary and Arson" prepared by DS Tony Killeen, the officer in charge of the investigation at Edmonton Police Station, the police had information that suspects for the attack on the Warehouse had been involved in the violent disorder in Enfield Town on 7 August. Part of the strategy was therefore to look at CCTV footage from the Tesco in Enfield Island Village.
  75. From 15 August 2011, responsibility for investigation of the incident was transferred from the local police to SO15 Counter Intelligence Command with Detective Superintendent Neil Hibberd as senior investigating officer, at which stage the incident was designated Operation Waypoint. Mr Hibberd gave oral evidence at the trial. Much of the cross-examination of Mr Hibberd explored the various calls to the police and criminal intelligence reports which I have already summarised above and many of which speak for themselves. He was not able to add very much useful evidence to what emerges from those documents. He described the GMG and similar gangs as a chaotic, disorganised criminal network whose intentions are not long-term and who lived in different premises across different London boroughs. He confirmed that, although members of the GMG who were suspected of being responsible for the attack on the Warehouse had been arrested, as set out above, there was insufficient evidence to charge any of them, so that this crime remains unsolved.
  76. One matter on which Mr Hibberd placed some emphasis in his evidence was the motive of the group for taking petrol bombs with them that evening. An individual, H, who was interviewed by the police as a witness on 30 August 2011, said that the day after the incident two males had offered to sell him computer games. He asked where they had come from and the two males bragged about how they had come from the Warehouse and, when they were breaking in, one of the group had cut his leg on the window so the place was covered with blood. They had set fire to the building in order to destroy any forensic evidence. Mr Hibberd understandably relied upon this information as demonstrating that the group had taken the petrol bombs with them in order to hide any forensic evidence such as DNA which might incriminate them. Mr Hibberd said that he believed that with the offending history of the GMG, their forensic capability and knowledge of police tactics, the petrol bomb was "a tool they could take along to give them that added insurance that they would not leave any footprint".
  77. Notwithstanding Mr Hibberd's belief and what H told the police he had been told, I find it very difficult to accept that the motive of the group for taking petrol bombs with them was to avoid an eventuality which may or may not have occurred, that one of them would get cut or tear his clothing and thus leave DNA. That suggests far more forensic awareness than one would expect this chaotic criminal network to have and a level of sophistication in avoiding detection, which is completely contradicted by the fact that they left one of the petrol bombs behind when they ran away from the scene. That had a piece of old tee-shirt as a wick which might well have produced DNA implicating one or more people in the group. In the event, a full DNA profile of a particular suspect was obtained from the wick, but the Crown Prosecution Service decided there was insufficient evidence to prosecute him because the transient nature of the gang meant the tee-shirt could have been left at a number of different premises and possibly ripped up in his absence.
  78. In my judgment, it is much more likely that the group took petrol bombs with them not to cover their tracks forensically, as Mr Hibberd believed, but to use them to set fire to the Warehouse and destroy or damage it and its contents. Even if Mr Hibberd is right in his belief that the group took the petrol bombs to cover their tracks forensically, their intention was still to set fire to the building and in one sense, their reason or motive for doing so is irrelevant. However, as I say, I consider it much more likely that their motive was one of wanton destruction or damage and thus an animus towards the property.
  79. Summary of counsel's submissions on first preliminary issue

  80. Many of the rival submissions on the first preliminary issue have already been addressed in the earlier sections of the judgment dealing with the legal framework and the factual analysis, so that it is only necessary to summarise those submissions here.
  81. The submissions of Mr Crane QC for the insurer claimants can be summarised as follows:
  82. (1) The incident undoubtedly qualified as the criminal offence of riot under section 1 of the Public Order Act 1986 in that (i) there were twelve or more persons present together; (ii) those persons used or threatened unlawful violence for a common purpose, namely the breaking into, looting and destruction of the Warehouse; (iii) that violence or threatened violence was such as would cause a person of reasonable firmness present at the scene to fear for his personal safety. Although this is an objective test, as confirmed by section 1(4) in that no such person need in fact be present at the scene, in the present case, the evidence of Mr Mireku and Mr Thompson of fear or intimidation confirmed that this element of the offence was satisfied and (iv) under section 1(5) riot can be committed in private as well as public places, confirming that the looting and petrol bombing within the building could constitute a riot.

    (2) There was a perceived and palpable threat of unlawful violence against property on 8 August 2011, as summarised in my findings of fact above, including the gathering of the youths on the playground on the Enfield Island Village in the evening, to which the law enforcement agencies could notionally have responded, so that the principal rationale for the provision of compensation under the 1886 Act was satisfied.

    (3) The fact that the group went equipped with and used petrol bombs in the attack demonstrated an animus towards the property, the malicious destruction of property, which is the paradigm case for which this Act and its predecessors (which speak of "felonious destruction of property") provides compensation.

    (4) The behaviour of the group when gathering on the playground, moving towards the business park and during the incident itself was frenetic, volatile and agitated. It was also in no sense furtive.

    (5) Taking points (2) to (4) above together, the requirement that the group be "tumultuously assembled together" is amply satisfied in this case.

  83. Mr Pritchard on behalf of the claimants in HQ12X03420 supported and adopted those submissions. He emphasised that, contrary to the defendant's submissions, the evidence and, in particular, the CCTV evidence shows forcefully that the Warehouse was destroyed by a group of agitated and emotionally aroused youths who had assembled on Enfield Island Village before moving on to the Warehouse. They then used force and implements to break in to the Warehouse, which made a racket and then looted and deliberately threw petrol bombs to destroy the Warehouse.
  84. On behalf of the defendant, Mr Grodzinski QC identified seven key factors which he submitted when taken cumulatively meant that the incident did not constitute a riotous and tumultuous assembly:
  85. (1) As Dwyer and Edmonds demonstrate, a planned criminal enterprise to steal from commercial premises will not easily satisfy the requirements of the statute. He submitted that the group here may well have coordinated their activities by mobile phone or blackberry messaging, but whether they did or not, this was a planned raid on the Warehouse, just like the raids on jewellers' shops in those two cases.

    (2) The approach of the group to the Warehouse across the fields was not brazen and should properly be characterised as furtive. The Court should discount the evidence of the four hooded youths in the bar who may or may not have been part of the same group.

    (3) This was a break-in on a quiet industrial estate where there was no likelihood of opposition, let alone of wide scale confrontation with the police or others. Whilst Mr Grodzinski QC accepted that this element of confrontation is not a mandatory requirement of riotous and tumultuous assembly, he submitted it is a hallmark of such behaviour which was conspicuously absent here.

    (4) The whole incident took place very quickly, all in some three minutes and twenty seconds. Again, whilst Mr Grodzinski QC accepted there is no minimum prescribed time for which an incident must last before persons are riotously and tumultuously assembled together, the longer a crowd is assembled acting in an agitated hostile way, the more likely it can be said that their presence and conduct are such that law enforcement agencies ought to have been aware of their presence.

    (5) The mere fact that there was frenetic, volatile and agitated activity outside the Warehouse in the short period before the group gained access to the building is not enough to qualify as persons riotously and tumultuously assembled together, any more than it was in Edmonds.

    (6) In contrast to Edmonds, where the staff of the shop and the public were clearly terrified by the actions of the gang, here there is limited evidence of anyone being intimidated or scared.

    (7) The only noise made by the group appears to have been them smashing into the Warehouse which on the basis of Edmonds would not be enough to constitute riotous and tumultuous assembly.

  86. So far as the use of the petrol bombs is concerned, Mr Grodzinski QC submitted that the motive of the group for using them was irrelevant, since the test whether the group were "riotously and tumultuously assembled together" is an objective one. Alternatively, if motive was of any relevance, the motive was to obliterate forensic evidence. Whilst the test whether persons were "riotously and tumultuously assembled together" is an objective one, I consider that petrol bombing and destroying the property amounts objectively to wanton damage to and animus towards the property, whatever the subjective motive. Alternatively, if subjective motive were relevant, as I have held at [63] above, the motive for the petrol bombing was simply destruction of property, not obliteration of forensic evidence.
  87. Analysis and conclusions on the first preliminary issue

  88. In my judgment, the group of youths who attacked, looted and set fire to the Warehouse were "persons riotously and tumultuously assembled together" within the meaning of the 1886 Act, for the following reasons. First, there is no doubt that the elements of the statutory offence of riot were satisfied in this case. There were more than twelve youths present, using or threatening unlawful violence, which by section 8 of the Public Order Act 1986 includes violence towards property. Furthermore, by section 1(2) it is immaterial whether the twelve or more use or threaten unlawful violence simultaneously. In my judgment, even if not all the gang were smashing down the door or throwing petrol bombs, the others by their presence were threatening unlawful violence or, putting it another way, they were all engaged together in the joint enterprise of breaking into the premises and looting and destroying them, even the two twelve year olds Mr Thompson encountered outside, who were presumably some sort of lookout.
  89. Objectively, the conduct of the group in smashing down the door, running through the Warehouse looting and then setting fire to it was such as would have caused a person of reasonable fortitude present at the scene to fear for his personal safety. For the purposes of the offence of riot, it would be irrelevant whether any such person was present or not and, so far as what went on inside the building is concerned, a riot can take place in private as well as in public. However, in fact there is evidence from Mr Thompson and Mr Mireku (neither of whom there is any reason to suppose were other than of reasonable fortitude) of having feared for their personal safety. The fact that Mr Cass does not seem to have been scared does not alter the position. He only saw the youths as they were running away.
  90. Second, as I have already found in [42] and [45] above, the behaviour of the group of youths was agitated and volatile when they were gathering on the playground, as they were moving towards the business park and when they were attacking the Warehouse. The incident itself, as revealed on the CCTV footage, was a frenetic, agitated, chaotic process, with some youths almost dancing around outside whilst others were smashing their way into the building with a variety of implements, then a large group swarming into the building once entry was achieved. They then looted some of the contents but only so much as they could carry (in some cases more than they could carry since there is evidence of items dropped outside), not returning to loot more, since rather than simply empty the building of its contents, they set fire to it.
  91. It was no doubt a planned raid, in the sense that in all probability, the youths gathering on the playground in the hours before the incident were calling others on phones or by Blackberry messenger to join them in the attack, but this was hardly a systematic burglary in the way the raids in Dwyer and Edmonds were. Had it been, despite the age of the gang of youths, one might have expected them to have used more sophisticated tools to effect entry to the Warehouse and to have stolen a vehicle in which to load as much of the contents of the Warehouse as the vehicle would carry. Furthermore, the behaviour of the group throughout the period when they were gathering on the playground, when they were moving towards the Warehouse, when they were smashing down the door, when they were looting and setting fire to the Warehouse and when they were making their escape, some of them dropping what they had looted, can properly and objectively be described as the behaviour of an agitated, excited and volatile group, not the behaviour of a gang of professional thieves.
  92. As for Mr Grodzinski QC's seventh point about there having been insufficient noise to amount to a tumult, there was undoubtedly noise from the smashing down of the door, heard by the Premier Inn staff and by Mr Mireku. Whilst there is no direct evidence of any loud talking or shouting and the CCTV has no soundtrack, it seems to me, looking at the footage of the group moving around frenetically and in an agitated manner outside the building as they are forcing an entry, that it is unreal to suppose that there was not some talking or shouting. In any event, even if there was no other noise than the smashing down of the door, as I have already said at [28(3)] above, Edmonds is not authority for the proposition that, unless the crowd or mob is making a tremendous noise, they cannot be "persons riotously and tumultuously assembled together", if other indicia of riotous and tumultuous assembly are present, as they are in the present case.
  93. Third, on 8 August 2011, there was undoubtedly a perceived or palpable threat of rioting in Enfield and specifically in the vicinity of Enfield Island Village and the Innova business park, both in terms of what local people feared and the rumours flying about and in terms of the conduct of the gang or gangs of youths who came together that night. In contrast to the armed robbers in both Dwyer and Edmonds, who appeared by stealth as if from nowhere and committed the crimes in a matter of minutes, the evidence is that these youths were openly gathering on the playground up to two hours before the incident, some of them recognised by local people as both residents of the Village and members of the Get Money Gang or Black Gang (see [38] to [40] above). They were making no attempt to hide what they were doing. They then moved quite openly through the Village and over the bridge before turning right into the fields to go to the business park. I reject Mr Grodzinski QC's suggestion that they were acting furtively at any stage: the route over the fields was simply the quickest way to the Warehouse.
  94. Leaving entirely to one side the concerns of local people during that day and the rumours spreading (which did to an extent prove accurate), I consider that the fact that the group was gathering quite openly on Enfield Island Village some two hours before the incident and was then seen moving towards the business park fifteen minutes or more before the incident, demonstrates the palpable threat of a riot to which the police could, notionally, have responded and prevented what happened. It is no part of the application by the Court of the test under the 1886 Act to examine the actual conduct of the police, let alone criticise it, especially given that, during that period of the August riots, the police were undoubtedly at full stretch in terms of resources. However, objectively, the conduct of this group during the time they gathered on the playground for some two hours was such that, had the police attended, they could have dispersed the group and prevented the incident occurring. On the basis that the rationale for the provision of compensation under the 1886 Act is that the law enforcement agencies could notionally have responded, that test is satisfied here.
  95. Furthermore, the fact that the group was openly gathering and plotting on the playground for up to two hours before the incident is a complete answer to Mr Grodzinski QC's fourth and fifth points. In my judgment, the behaviour of the group from the time they were gathering on the playground onwards, was such that the police ought to have been aware of their presence and could have prevented the incident which eventually occurred, even if that incident took place very quickly, in just over three minutes.
  96. Fourth, whatever the true motive for the use of petrol bombs to set fire to the Warehouse, objectively, the use of petrol bombs evidences wanton violence towards the property damaged or destroyed. This wanton violence towards property is a hallmark of riotous and tumultuous behaviour and is a paradigm example of the situation where the victims of the damage or destruction should qualify for compensation under the 1886 Act, as in Pitchers and Yarl's Wood. The facts and circumstances of the present case are much closer to those cases than to Dwyer and Edmonds, both essentially professional robberies of jewellery shops by a small gang, where any damage to property was incidental to the real purpose of the attack, which was to steal as much as possible. In stark contrast to those cases, here the gang set out with the means for burning down the Warehouse, which they duly did.
  97. The second preliminary issue: introduction

  98. The second preliminary issue raises the issue of principle whether consequential losses such as loss of profit and loss of rent are recoverable under section 2 of the 1886 Act and, if so, on what basis. In 2012 Folio 1025, the claimants' claim includes £1.6 million in respect of loss of rent. In 2012 Folio 975, the claim includes £9,884,009.81 for profit lost through destruction of Sony DADC's distribution equipment, including the costs of mitigation. In HQ12X03420, the claim includes a claim for loss of profit as a result of the destruction of trading stock which caused a dislocation of the claimants' business.
  99. Submissions on the second preliminary issue

  100. The starting point of the argument of Mr Crane QC that consequential losses are in principle recoverable as part of the compensation payable under section 2 of the 1886 Act is that the liability on the defendant to pay compensation under the 1886 Act is in the nature of a strict liability in tort sounding in damages. In support of that proposition, Mr Crane QC relies upon [26-27] of the judgment of Longmore LJ in Constable, that is the paragraph I have already quoted at [26] above and the paragraph which follows, which is in these terms:
  101. "27. It may be objected that the concept of responsibility in the previous paragraph is different from and an extension to the concept of "some breach of duty or obligation" as used by Sir Wilfrid Greene MR in Hall v Young. But it is not. Torts of strict liability are based on the concept of responsibility. As a matter of language it is somewhat unnatural to say that the land owner in Rylands v Fletcher, the common carrier or the innkeeper are in breach of duty when their obligation is to be strictly answerable because of the responsibility inherent in their respective positions. But it cannot be doubted that their liability is a liability in damages and that sums paid by them are sums which they are "legally liable to pay as damages". The same applies to statutes which give rise to strict liability such as the Air Navigation Act 1920 and the Animals Act 1971. The Riot (Damages) Act is no different."
  102. This analysis was referred to and approved by the Court of Appeal in Yarls's Wood. At [51-52] of his judgment, Rix LJ said:
  103. "51. Bedfordshire Police Authority v. Constable (arising out of the riot at Yarl's Wood) continues the modern authorities. There the issue was whether the Authority's obligation under the 1886 Act to compensate property owners for riot damage was covered by its liability insurance policy which insured it in respect of sums which it "may become legally liable to pay as damages for accidental damage to property" (emphasis added). The decision at first instance by Walker J to the effect that cover existed was considered by Beatson J, but this court's decision upholding Walker J had not yet then occurred. This court referred (at paras 11/14) to the concept of the "notional responsibility of the police to preserve law and order in their locality", as stated in Dwyer and approved in Edmonds and as agreed by the defendant insurers, and then proceeded to what was in essence a matter of construction of the contractual words "legally liable to pay as damages". This court concluded that the statute's strict notional responsibility could be regarded as a liability to pay damages, by analogy with either the obligation of insurers to indemnify, which lies for breach of contract, or with torts of strict liability (at paras 24/27).
    52. In my judgment, the decision of this court is not in the least surprising, indeed it is not altogether easy to understand the insurers' contrary argument (advanced as it happens by reference to an English authority as to the effect of a French law: see at paras 21/24). It appears to be based on the concept that the proper analogy for the liability to compensate under the 1886 Act is that it is in the nature of an expense or dues."
  104. Mr Crane QC submits that, once it is recognised that the liability to pay compensation under the Act is akin to a strict liability in tort sounding in damages, the compensation payable should reflect the measure of damages under the English law of tort for physical damage to property, unless there is something in the wording of the Act which limits the damages or compensation recoverable. He submits that there is no such restrictive wording in the 1886 Act. Section 2 of the Act speaks of compensation being payable to any person "who has sustained loss by such injury, stealing or destruction [of the premises or property therein]" (my emphasis). He contends that these are words of causation, demonstrating that the compensation is for loss caused by that injury, stealing or destruction of the premises or property, not compensation for the injury, stealing or destruction.
  105. This distinction between compensation for the loss caused by the injury etc and compensation for the injury etc is one which Mr Crane QC submits has been recognised for a very long time in authorities on the 1886 Act and its predecessors. He relied upon the judgment of Lord Loughborough in the Court of Common Pleas in Wilmot v Horton (1781) cited in a footnote to the report of the judgment of the Court of King's Bench in Hyde v Cogan (1781) 2 Douglas 699. Those were both cases where claims were made under the Riot Act 1714 by property owners whose properties in Middlesex were damaged or destroyed in the so-called Gordon Riots in June 1780. Section VI of the Riot Act provided that the hundred was liable "to yield damages to the person or persons injured and damnified by such demolishing or pulling down wholly or in part [that is demolishing or pulling down of any building]. In Wilmot v Horton the plaintiff claimed damages against the inhabitants of the Ossulston hundred for the destruction of his house, furniture and garden. It was admitted that he was entitled to damages for the destruction of the fabric of the house but denied that the Act entitled him to damages for the destruction of the furniture and the damage to the garden. The Court held that the plaintiff was entitled to recover all his loss.
  106. Lord Loughborough's reasoning to that effect was as follows:
  107. "This statute, though penal in a great part of its provisions, and though, perhaps, there is something of a penal nature in transferring the action from the party committing the felony to the hundred, yet, with respect to the party injured, must be considered as remedial. Antecedent to this statute, and till the trespass was turned into a felony, there is no doubt that, against the actors and their abettors, the party injured would have been entitled to recover damages for all his loss. In lieu of that remedy, which can no longer be had, it was thought better to substitute an action against the hundred, in analogy to the ancient policy of the kingdom, by which the men of each district were bound to maintain peace and order, and to answer for the violation of them within that district. The Act does not say that damages shall be yielded for the injury done to the fabric of the house, but, by the demolishing or pulling down of the house; and it seemed to be admitted in the argument that, if the destruction of the furniture in the house were the necessary consequence of the demolition of the house itself, the plaintiff would be entitled to recover the full amount of his loss. …But will not the principle extend likewise to those damages which, though not the necessary consequence of the felony committed, yet are clearly the immediate effect of that cause? If, in order to destroy the walls, the mob break down the wainscoting and the glasses, or if by driving a beam or joist against the wall to throw that down, they break a glass fixed against the wainscot, it would be strange to argue that such destruction, not being a necessary, but only an immediate consequence of demolishing the house, should not be repaired by this action. The case might be different as to consequences that are neither necessary nor immediate: if, for instance, one set of rioters had broken in on the 7th of June and destroyed the house, leaving the goods in it, and the next day, another party had come to the house so left, and robbed it of the furniture."
  108. Mr Crane QC relied upon that case not only for the distinction Lord Loughborough drew between damages caused to the victim of the riot by the damage or destruction of the building and the narrower concept of damages for the injury to the building, but also for its recognition that, so far as the victim of the riot is concerned the Riot Act and, by parity of reasoning, the successor statutes culminating in the 1886 Act, are intended to be remedial, in other words that in that case the hundred and in this case the police authority are liable to indemnify the victim in respect of all his loss. He relies upon a similar recognition that the Riot Act was a remedial not a penal law by Aston J in Ratcliffe v Eden (1776) 2 Cowp 484 at 487-8.
  109. Mr Crane QC points out that this distinction between compensation for loss caused by damage to the building or arising from damage to the building in a riot and the narrower concept of compensation for the loss of or injury to the building is recognised in the recent Scottish case of St Mary's Kenmure v East Dunbartonshire Council [2012] CSOH 198; [2013] SLT 285, a decision of Temporary Judge Morag Wise QC in the Outer House of the Court of Session. That case concerned a claim by the owners and operators of a residential secure unit following a riot by the inmates. The claim included a claim for loss of revenue and was made under section 10 of the Riotous Assemblies (Scotland) Act 1822, the relevant statute in force in Scotland, the 1886 Act not applying to Scotland. Section 10 provides as follows:
  110. "10. Provision for recovering damages sustained in Scotland.
    In every case where any damage or injury shall be done to any church, chapel, or building for religious worship, or to any house, shop, or other building whatsoever, or any fixtures attached thereto, or any furniture, goods, or commodities therein, by the act or acts of any unlawful, riotous, or tumultuous assembly of persons, or by the act or acts of any person or persons engaged in or making part of such unlawful, riotous, or tumultuous assembly, the party injured or damnified thereby shall be entitled to recover full compensation for the loss or injury, by summary action against the council (being a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994) within whose area the loss or injury shall have been sustained; which action shall and may be brought before any competent court in Scotland" (my emphasis).
  111. The learned judge decided that the words "loss or injury" in the underlined passage related back to "damage or injury" to the building at the beginning of the section and that therefore damages were only recoverable for physical loss of and damage to the building and property, not for consequential losses. At [47] her reasoning was as follows:

  112. "The starting point on this issue must again be the words of the statute. Before any claim can be made there must be "...damage or injury...to any ...building...". The person who may claim is "the party injured or damnified thereby.". The entitlement is to "...full compensation for the loss or injury...". The key issue is whether the use of the definite article "the" means that the loss or injury must relate back to the description of damage or injury done to the building. In my view the argument that claims for loss or injury under section 10 are limited to physical damage is a sound one for the following reasons. First, the language of the provision can be contrasted with statutes allowing for compensation for "any damage done" or "any loss or damage". The loss that can be claimed is limited, it is not any loss arising from damage caused by riotous assembly."
  113. Mr Crane QC relies upon these authorities to submit that there is no equivalent limitation in the wording of the English statute and that in principle what is recoverable as compensation under section 2 of the 1886 Act is whatever damages would be recoverable as a matter of the English law of tort. His primary position is that loss of rent and loss of profit were recoverable in tort at the time of the enactment of the 1886 Act. Loss of rent was clearly recoverable in tort (as is accepted by the defendant)-see Rust v Victoria Graving Dock (1887) 36 Ch D 113. In support of his case that loss of profit on a profit earning chattel was recoverable in tort in 1886 Mr Crane relied upon the decision of Sir Francis Jeune P in The Kate [1899] P 165. That was a case of a ship totally lost in a collision with the defendants' ship, whilst on the ballast leg of a charterparty. The issue was whether in a case of total loss as opposed to partial loss of a ship without a cargo, the plaintiffs could recover only the market value of the ship at the time of the loss (as the defendants contended) or the profit lost under the charterparty as well (as the plaintiffs contended). The defendants relied upon the decision of Dr Lushington in The Columbus (1849) 3 Wm. Rob. 158 as establishing a rule of law in the Admiralty Court that in cases of total loss, account should not be taken of freight or profit under the charterparty.
  114. The President rejected that submission, concluding that what had influenced Dr Lushington was the difficult and speculative character of the assessment of such loss of profits in the case before him. He also made the point at p. 172 that although Dr Lushington confined the damages in the case of a total loss to the market value of the vessel at the time of the loss, he did not intend to exclude that where the vessel was under a profitable value at the time of the loss, the fact of the charter could be taken into account in computing the market value of the vessel and hence in enhancing that value so that as the President said: "If this element of value be admitted, a restitutio in integrum might, no doubt, by this process be effected". He went on to conclude at pp. 173-4 that in The Northumbria (1869) LR 3A&E 6 Sir Robert Phillimore had taken a different view of the practice of the Admiralty Court from that taken by Dr Lushington. Sir Robert Phillimore had concluded that in cases of a total loss of the vessel with cargo on board, freight she would have earned was taken into account and the value of the vessel was calculated at what would have been the end of the voyage on the basis that the freight really represented the interest on the use of the vessel during the period between the collision and her arrival in port at the end of the voyage. Where there was no cargo on board, Sir Robert Phillimore awarded interest on the value of the vessel from the date of the collision.
  115. The President points out that this difference in views of the practice of the Court is more apparent than real:
  116. "Dr Lushington indicates that the value of the vessel is to be taken at the time of the collision, which does not, as I have above suggested, exclude a fact such as the existence of a profitable charter from being allowed to enhance the value of the vessel at that time. Sir Robert Phillimore states that the value should be taken as at the end of the voyage, and therefore lets in freight or interest as an additional compensation. The result of the two calculations in figures should be practically identical. ….. I think, therefore, that the proper measure of damage in this case is the value of the vessel at the end of her voyage, plus the profits lost under the charterparty..."(pp. 174-5)
  117. Accordingly, the claimants' case was that the law of tort as it stood at the time that the 1886 Act was enacted recognised the recoverability of consequential losses such as the loss of rent and loss of profits claimed in the present case. However, Mr Crane QC submitted that, even if he were wrong about that, it did not matter, because on the correct construction of section 2, the compensation recoverable was whatever compensation was recoverable under English law as it now stood for tortiously inflicted damage to property, irrespective of the fact that the law on the scope of what was recoverable had changed since the enactment of the 1886 Act.
  118. In support of that construction of the statute he relied upon a passage from the speech of Lord Bingham in R (on the application of Quintavalle) v Secretary of State for Health [2003] UKHL 13; [2003] 2 AC 687 at 695, cited with approval at [38] of the judgment of the Temporary Judge in St Mary's Kenmure:
  119. "There is, I think, no inconsistency between the rule that statutory language retains the meaning it had when Parliament used it and the rule that a statute is always speaking. If Parliament, however long ago, passed an Act applicable to dogs, it could not be interpreted to apply to cats; but it could properly be held to apply to animals which were not regarded as dogs when the Act was passed but are so regarded now...
    More pertinent is the guidance given by the late Lord Wilberforce in his dissenting opinion in Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800. The case concerned the Abortion Act 1967 and the issue which divided the House was whether nurses could lawfully take part in a termination procedure not known when the Act was passed. Lord Wilberforce said, at p.822 ;-
    '....when a new state of affairs, or a fresh set of facts bearing on policy, comes into existence, the courts have to consider whether they fall within the parliamentary intention. They may be held to do so, if they fall within the same genus of facts as those to which the expressed policy has been formulated. They may also be held to do so if there can be detected a clear purpose in the legislation which can only be fulfilled if the extension is made. How liberally these principles may be applied must depend upon the nature of the enactment, and the strictness or otherwise of the words in which it has been expressed. The courts should be less willing to extend expressed meanings if it is clear that the Act in question was designed to be restrictive or circumscribed in its operation rather than liberal or permissive'."
  120. Mr Crane QC submitted that, once it is recognised that, in arriving at the compensation payable under the 1886 Act, the assessment of the market value of a profit-earning chattel such as a ship at the date of its loss can include an enhanced element to reflect the profits that it could otherwise have earned, it would be anomalous if consequential losses were not recoverable as an element of the compensation.
  121. The primary position adopted by Mr Grodzinski QC on behalf of the defendant is that, on the correct construction of section 2(1) of the 1886 Act, particularly when read in conjunction with the preamble, which, although now repealed, the claimants accept is a permissible aid to construction, the compensation payable is limited to physical damage to the building or other property and does not encompass consequential losses such as loss of profits.
  122. The preamble to the 1886 Act as originally enacted (repealed by the Statute Law Revision Act 1898) provided as follows:
  123. "Whereas by law the inhabitants of the hundred or other area in which property is damaged by persons riotously and tumultuously assembled together are liable in certain cases to pay compensation for such damage, and it is expedient to make other provision respecting such compensation and the mode of recovering the same…"
  124. Mr Grodzinski QC submits that the words "such damage" are clearly referring back to the damage to the property, in other words to the physical damage and that the reference to compensation for such damage indicates the same narrow approach to the heads of damage recoverable as was adopted by the Temporary Judge in the Scottish case of St Mary's Kilmure. He submits that the words of section 2(1) are to be read consistently with the preamble, in other words the compensation for the loss sustained "by such injury, stealing or destruction" is limited to compensation for the physical damage suffered and does not extend to consequential losses such as loss of profit. Further, he submits that approach is supported by other provisions of the 1886 Act, specifically section 7 which, although a deeming provision, indicates that claims by the victims of a riot may be made "in relation to" the building or property therein, those words "in relation to" being in context narrow words indicating that claims are essentially limited to physical damage.
  125. He then contends that, if that construction of the Act is correct, it is not necessary to look further and have regard to the Regulations made under the 1886 Act in construing the statute. However, in the event that the Court considered that the meaning of the 1886 Act was ambiguous, he submits that it is permissible to look at the various Regulations made under the 1886 Act as an aid to construction of the statute and specifically as to the scope of the compensation provided. The 1886 Act itself was enacted on 25 June 1886. The first Regulations made by the Home Secretary, as contemplated by section 3(2), as to the time, manner and conditions within, in and under which claims for compensation were to be made, were made on 28 July 1886 and published in the London Gazette on 3 August 1886. Despite the suggestion by Mr Grodzinski QC, in reliance on a somewhat oblique reference by the Home Secretary, in an exchange in the House of Commons with the MP for Preston, recorded in Hansard for 28 May 1886, to any Regulations not simply being published in the London Gazette, that these Regulations were laid before Parliament before they were published, it remains wholly unclear whether they had been laid before Parliament. It seems to me that the safest and fairest approach is to proceed on the basis that they were not.
  126. Regulation 2 provided that any claim was to be delivered to the relevant police authority within 14 days of the riot, which Mr Grodzinski QC submitted was a short time scale, inconsistent with claims being made for loss of profits or other consequential losses which would take a much longer time to compute. Regulation 5 stated that the claim should state separately the sums claimed for four categories of claim: destruction of premises, injury to the premises, injury to property on the premises and theft or destruction of property on the premises. There was no scope for stating or estimating loss of profit or other consequential losses.
  127. In support of the defendant's case that the heads of loss recoverable did not include such consequential losses, Mr Grodzinski QC also relied upon the amended Regulations made in 1894 which, apart from extending the maximum time for making a claim to 42 days, provided by Regulation 3 that all claims were to be made in a prescribed form as appended to the Regulations. Appended to those Regulations were schedules setting out the prescribed form for each of the four categories of claim set out in Regulation 5 of the 1886 Regulations, with columns for the cost of replacement or repair but no columns for consequential loss of any description. Similar Schedules were appended to the Regulations as further amended in 1921. He submitted that these Regulations all demonstrate that, on its true construction, the 1886 Act simply does not provide compensation for any heads of consequential loss.
  128. The reliance by the defendant on the 1886 Regulations as amended led to a dispute as to the admissibility of those Regulations as an aid to construction of the 1886 Act. Although the claimants placed some muted reliance in their written submissions on a statement by Viscount Dilhorne in Jackson v Hall [1980] AC 854 at 884 that rules made in the exercise of a statutory power cannot be relied on as an aid to the construction of a statute, ultimately the claimants accepted (quite rightly) that the applicable legal principles are as stated by Lord Lowry in Hanlon v The Law Society [1981] AC 124 at 193-4:
  129. "A study of the cases and of the leading textbooks…appears to me to warrant the formulation of the following propositions:
    (1) Subordinate legislation may be used in order to construe the parent Act, but only where power is given to amend the Act by regulations or where the meaning of the Act is ambiguous.
    (2) Regulations made under the Act provide a Parliamentary or administrative contemporanea expositio of the Act but do not decide or control its meaning: to allow this would be to substitute the rule-making authority for the judges as interpreter and would disregard the possibility that the regulation relied upon was misconceived or ultra vires.
    (3) Regulations which are consistent with a certain interpretation of the Act tend to confirm that interpretation.
    (4) Where the Act provides a framework built on by contemporaneously prepared regulations, the latter may be a reliable guide to the meaning of the former…."
  130. That analysis has been specifically applied and approved subsequently by the highest appellate court. First, in British Amusement Catering Trades v Westminster City Council [1989] 1 AC 147 at 157-8 Lord Griffiths (with whom the remainder of the House of Lords, which included Lord Lowry, agreed) rejected the view of the Court of Appeal that Jackson v Hall precluded reliance on the relevant regulations in construing the statute and reaffirmed and applied Hanlon. Second, in Deposit Protection Board v Dalia [1994] 2 AC 367 at 397, Lord Browne-Wilkinson (with whom the remainder of the House of Lords agreed) positively endorsed Hanlon and said that regulations can be used as an aid to construction of an Act but "only where the regulations are roughly contemporaneous with the Act being construed".
  131. Third, in Scottish & Newcastle v Raguz [2008] UKHL 65; [2008] 1 WLR 2494, Lord Scott (with whom Lord Hoffmann and Lord Brown agreed) accepted at [28] that regulations made more or less at the same time as the Act being construed (the Act was enacted in July 1995 and the regulations were made in November 1995) could form part of the contextual background against which the section he was considering should be construed, referring to a passage at p706 of Bennion's Statutory Interpretation 5th edition. That passage states that delegated legislation is "persuasive authority" as to the legal meaning of the provisions of the relevant Act. Finally, Lord Lowry's analysis was adopted and approved by the Supreme Court in R (A) v Security Service [2009] UKSC 12; [2010] 2 AC 1: see per Lord Hope at [40].
  132. Despite some suggestion by the claimants to the contrary, I accept that the 1886 Regulations are roughly contemporaneous with the 1886 Act and so can be taken into account in construing the Act if its provisions are ambiguous. The claimants also submitted that, because it cannot be said that the Regulations were laid before Parliament before they were made, they could not be relied upon as an aid to construction. I agree with Mr Grodzinski QC that this submission overstates the position and that it is not a pre-condition to reliance upon the Regulations that Parliament should have considered the Regulations at the time that the Act was passed. This is implicit from Raguz where the Regulations were made four months after the Act was passed.
  133. It is also explicit from the judgment of Laws J (as he then was), whose experience in this area is considerable, in R v Secretary of State for the Home Department Ex parte Mehari [1994] QB 474. In that case the relevant issue for present purposes was whether the Statement of Changes in Immigration Rules (1993) was a legitimate aid to construction of the Asylum and Immigration Appeals Act 1993. Counsel for one of the applicants in the case contended that it was not, because the time had not yet passed within which Parliament might disapprove it under section 3(2) of the Immigration Act 1971. In rejecting that contention, Laws J said this at 486A-C:
  134. "[Counsel for the applicant] does not dissent from the proposition that if the time for Parliamentary disapproval had passed, I could have regard to the paragraph: and this is surely right. In my judgment, the fact that that time has not yet passed goes perhaps to the weight I should attach to the paragraph, but cannot constitute an absolute bar against my taking it into account. At present the paragraph has legal effect for the administration of immigration control, and does so in the context of the Act of 1993. There is manifestly no kind of presumption that Parliament will strike it down. Its position is analogous to, though not identical with, that of a statutory instrument which may be prayed in aid to construe main legislation, where it is clear that the two are intended to form an overall code; I do not think that in such a case the court would have to disregard entirely the statutory instrument on the ground only that it still remained open to Parliament to strike it down by negative resolution."
  135. Accordingly, although, as I have said above, the Court should proceed on the basis that the 1886 Regulations were not laid before Parliament before they were made, that is no basis for disregarding them and the correct approach is that, if the statute itself is ambiguous, the Court can have regard to the 1886 Regulations in construing the 1886 Act. Although I accept that the court should exercise a degree of caution given the absence of any evidence that the Regulations were ever laid before Parliament, that is counterbalanced by the fact that there has never been any suggestion that those Regulations are ultra vires.
  136. However, despite the reliance by the defendant on the 1894 and 1921 Regulations and the Schedules setting out prescribed forms of claim form which do not include provision for consequential losses, those Regulations cannot begin to be described as roughly contemporaneous with the 1886 Act. Although in Pharmaceutical Society v Storkwain [1986] 1 WLR 903 at 908-9, Lord Goff of Chieveley (with whom the other members of the House of Lords agreed) was prepared to "draw support from" an order made twelve years after the statute he was construing, the better view in the later cases, such as Dimond v Lovell [2000] QB 216 at [48] per Sir Richard Scott V-C and Deposit Protection Board v Dalia [1994] AC 367 at 397 per Lord Browne Wilkinson, is that Regulations made some years after the statute in question should not be taken as a guide to what Parliament intended by the language used in the Act. That approach seems to have been approved by Lord Hope in R (A) v Security Service at [41-42]. In those circumstances, it seems to me that it would be inappropriate to place any reliance on the 1894 or 1921 Regulations in construing the 1886 Act. By parity of reasoning, the fact that in the immediate aftermath of the August 2011 riots on 11 August 2011 the Home Secretary made the Riot Damages (Amendment No 2) Regulations 2011 repealing the parts of the 1921 Regulations setting out the prescribed claim form cannot provide any guidance as to what Parliament intended when the 1886 Act was enacted.
  137. Mr Grodzinski QC also relied upon the fact that on the various occasions over 125 years since the 1886 Act was enacted when it or Regulations made under it have been considered by the legislature, Parliament did not seek to suggest that the heads of compensation proscribed in the Regulations were too restrictive. He submitted that taking the Act and Regulations together, they had a settled meaning which excludes compensation for consequential losses, so that in effect the Court should not disturb that meaning by adopting the purposive approach to a nineteenth century statute which the claimants were advocating. He relied in this context upon the judgment of Lord Phillips PSC in Bloomsbury International v Sea Fish Industry Authority [2011] UKSC 25; [2011] 1 WLR 1546 at [56-61].
  138. Those submissions essentially led into his submissions as to the status of the obligation of the police authority under the 1886 Act to compensate the victims of a riot. This was in answer to Mr Crane QC's case that the liability to pay compensation under the Act is akin to a strict liability in tort sounding in damages, so that the compensation payable should reflect the measure of damages under the English law of tort for physical damage to property, unless there is something in the wording of the 1886 Act which limits the damages or compensation recoverable. Mr Grodzinski QC's primary position is of course that the wording of the Act does limit the compensation recoverable and excludes consequential losses, but he also submits that, even if the obligation on the police authority can be said to be akin to a strict liability in tort, what is recoverable under the 1886 Act is not defined by reference to damages recoverable in the law of tort but, under section 3(1) of the Act, such compensation as appears to the police authority to be just.
  139. Mr Grodzinski QC submits that this section gives the relevant police authority a broad discretion as to what compensation to award, albeit a discretion which is to be exercised in a quasi-judicial manner. He relies upon the judgments in the Court of Appeal in Yarl's Wood, in particular Rix LJ at [63] who said that one of the matters to be taken into account in construing the Act was that:
  140. "The compensation to be fixed is such as "appears" to the authority to be "just". The authority (and presumably the court too, but we are not concerned with that wrinkle) is therefore entitled to take a broad view of what the claimant is entitled to. That is emphasised by the proviso to section 2(1) which requires that regard shall be had to the conduct of the claimant, of which examples such as (lack of) precautions, complicity, and provocation are given, but the statute ends generally with "or otherwise". Therefore, the assessment of quantum is not a mere matter of valuation of the lost or damaged property. It is a global assessment which takes account of the claimant's conduct in the broadest sense."
  141. Aikens LJ makes a similar point in his judgment at [89]:
  142. "To my mind, that provision [the second half of section 2(1)] makes it clear that, when compensation is claimed against the police authority, then it is entitled to take into account that the "person" claiming it was a public authority and had responsibility (whether sole or shared) for law and order in the public building or public institution where the riotous assembly occurred and which resulted in injury, destruction or damage to the building or property within it. This view is reinforced by the terms of section 3(1), because that provides that when a claim is made to the compensation authority, it has to inquire into the truth of the injury, stealing or destruction. The compensation authority has, if satisfied, to "…fix such compensation as appears to them to be just". That gives a broad discretion, although it must doubtless be exercised in a quasi – judicial manner. But the "just" result may be that the compensation is reduced to nil, because the "person" claiming is a public authority with responsibility for law and order in the public building or public institution where the injury, stealing, or destruction took place."
  143. Essentially picking up the point that Aikens LJ makes there, Mr Grodzinski QC submits that the broad discretion conferred on the police authority by the Act includes taking into account the conduct of the victim as elaborated in the second half of section 2(1) in effect to reduce the compensation that might otherwise be payable. Thus, this is a provision that anticipates the Law Reform (Contributory Negligence) Act 1945 by some sixty years and entitles the authority to take into account what would now be categorised as contributory negligence at a time when under the law of tort as it then stood, contributory negligence either broke the chain of causation, in which case no damages at all were recoverable or, if it did not, was regarded as wholly irrelevant. He submits that this is a further indication that the scheme for compensation under the 1886 Act is not and was never intended to be identical to an award of damages in tort.
  144. As for the legislative history upon which Mr Crane QC relied, Mr Grodzinski QC pointed out that it was common ground in St Mary's Kilmure (see p 306E of the report) that section 9 of the Riot Act 1714 which applied in Scotland only permitted recovery for physical damage and there is nothing in section 6 (applicable in England) or elsewhere in the statute to suggest that a wider scheme of damages applied in England. Wilmot v Horton was not authority for that proposition: it simply established that damages were also recoverable for damage to the property in the building proximately caused by the damage to the building.
  145. In answer to Mr Crane QC's submission in reliance on Lord Bingham's speech in Quintavalle that Parliament intended that the compensation available would be assessed by reference to the common law of damages in tort as it stood from time to time, Mr Grodzinski QC submitted that it was one thing, as Lord Bingham said, for a statute that says it covers all dogs to cover a new breed of dog unknown at the time the statute was passed. It is quite another to say that Parliament intended to allow for unlimited expansion of the scope of compensation available depending on how the common law stood from time to time. As Mr Grodzinski QC said, that would be a surprising surrender of the legislative process.
  146. Analysis and conclusions on second preliminary issue

  147. In my judgment the answer to the second preliminary issue is ultimately a short one: on the correct construction of the statute as a whole, the compensation payable is limited to physical damage to the relevant premises or property in it and does not extend to consequential losses such as loss of profit or loss of rent. This is made absolutely clear by the preamble, which though now repealed, is admissible as evidence of what Parliament intended and in which the reference to "compensation for such damage" is clearly limited to physical damage to the premises or property therein. Despite Mr Crane QC's ingenious argument for a wider interpretation of "loss by such injury, stealing and destruction [of the building or property therein]" in section 2(1) to encompass consequential losses, whilst I accept that the word "by" is dealing with causation, in my judgment it tells one nothing about what "loss" is covered. However, when the various provisions of the statute as enacted are read together, specifically the preamble, section 2 and section 7, it is clear that compensation is limited to physical damage.
  148. The words "in relation both to the building and to the property therein" in section 7 are expressly and in their context referring to damage to the building or the property in it. They do not have some wider meaning, despite Mr Crane QC's reliance on my judgment in El Nasharty v J Sainsbury Plc [2004] 1 Lloyd's Rep 309 at [16-17]. That case concerned the completely different context of the use of the phrase "in relation to" in arbitration clauses and was not purporting to lay down some immutable rule as to the meaning of that phrase in all contexts.
  149. I agree with Mr Grodzinski QC that, in construing the 1886 Act, the claimants can gain no assistance from the legislative history. There is nothing in the words "shall be liable to yield damages to the person or persons injured or damnified by such demolishing or pulling down [of the building] in whole or in part" in the Riot Act 1714 which begins to suggest that the damages recoverable extended beyond physical damage and nothing in the Act which indicates that the position in England was any different to that in Scotland where section 9 clearly limited the damages recoverable to the repair of physical damage. Wilmot v Horton is certainly not authority for such a broad approach. That case simply decided that the damages recoverable included for damage to property or furniture inside the building proximately caused by the destruction of or damage to the building. The case was not purporting to deal with consequential damages and the idea that Lord Loughborough somehow anticipated the present issue by two hundred and twenty five years is fanciful.
  150. Furthermore, Mr Crane QC's submission, on the basis of that case, that the words "damages…by", because of the use of the word "by", would have encompassed consequential losses, would lead to a very odd result in terms of the legislative history. The subsequent Remedies against the Hundred Act 1827 in section 2 expressly enacted what Wilmot v Horton had decided, that the compensation recoverable included for damage to the furniture or other goods in the building. However that section refers to compensation for the damage done, which, on the basis of the distinction which Mr Crane relies upon between "for" and "by", would mean that whereas the 1714 Act had potentially covered consequential losses on the authority of Wilmot v Horton, the 1827 Act did not, an odd result given that the 1827 Act clearly enacted that damages were recoverable for loss of the furniture, the very point Wilmot v Horton had decided. Furthermore, if the distinction between "for" and "by" does have the significance for which Mr Crane QC contends, the effect of the use of the words "loss by such injury" etc in the 1886 Act was to restore the recoverability of consequential losses apparently taken away by the 1827 Act. Yet the 1886 Act did that without any hint in the provisions of the Act that it was extending the losses recoverable to include consequential losses.
  151. Notwithstanding Mr Crane QC's submissions and somewhat contrary to the analysis of the Temporary Judge in the Scottish case of St Mary's Kilmure, I suspect that the switch from "shall be liable to yield damages to the person or persons injured and damnified by such demolishing" etc in the 1714 Act to "shall be liable to yield full compensation to the person or persons damnified by the offence…for the damage so done" etc in the 1827 Act, then to "compensation …shall be paid out…to any person who has sustained loss by such injury, stealing or destruction" in the 1886 Act, is more a question of change of linguistic style rather than a deliberate change of wording to reflect an intention to provide broader scope of compensation. It is also noteworthy that the draftsman of the 1886 Act is not consistent, as section 7 talks of "the persons who have sustained loss from such injury, stealing or destruction" rather than by such injury etc, suggesting that the word "by" was not intended to have any particular significance other than indicating the need for causation.
  152. Accordingly, I consider that it is clear from the wording of the statute that compensation is only provided for physical damage and not for consequential losses. Because the wording is clear and not ambiguous, it is not strictly necessary or appropriate to have regard to the wording of the 1886 Regulations. However, as I have already indicated earlier in the judgment when discussing the law on the admissibility of Regulations as an aid to construction, if the wording of the statute were ambiguous, it would be permissible to have regard to these Regulations passed only a few months after the 1886 Act. The Regulations make it quite clear that the loss which is to be compensated is only physical loss and damage, hence the limited categories of claim set out in Regulation 5. That conclusion is also reinforced by the short period of fourteen days prescribed for bringing a claim in Regulation 2, which is inconsistent with an entitlement to claim for consequential losses which would invariably take a longer period both to eventuate and to be computed. Thus, if the statute were ambiguous, the Regulations are consistent with a narrow interpretation of what damage is recoverable and, in accordance with Lord Lowry's third principle, confirm that interpretation.
  153. That analysis is not affected by the claimants' case that the liability to pay compensation under the Act is akin to a strict liability in tort sounding in damages, for a number of reasons. To begin with, although Mr Crane QC emphasised this point in his submissions, it is striking that, in neither of the two decisions of the Court of Appeal arising out of the Yarls's Wood incident, did the Court of Appeal reach a definitive decision that the liability under the 1886 Act was actually a liability in tort. Indeed, as Rix LJ pointed out in Yarl's Wood at [51], the analogy drawn by the Court of Appeal in Constable was with either the obligation of insurers to indemnify where breach of the obligation sounds in damages for breach of contract or with torts of strict liability. Although it is not necessary in the present case, any more than it was in those cases, to reach a final decision as to which analogy is more apt, if I had to decide the point, I would conclude that the scheme of compensation under the 1886 Act is analogous to a form of statutory insurance, which is how the claimants' counsel themselves described it at the time of the interlocutory hearing where the preliminary issues were ordered. As Mr Grodzinski QC submitted, there are certain similarities to other statutory compensation schemes, such as the Law Society Compensation Fund.
  154. Once the analogy with insurance generally and with other such compensation schemes is recognised, there is nothing in the slightest bit surprising or alarming in the compensation provided excluding consequential losses. After all, most insurance policies will not cover consequential losses without an express provision to that effect and the suggestion that consequential losses should be recoverable under the Law Society's compensation scheme was rejected in emphatic terms by Watkins LJ in the Divisional Court in R v Law Society ex parte Reigate Projects Limited [1993] 1 WLR 1531 at 1543G-H. Furthermore, contractual limitation clauses excluding loss of profits or other consequential losses are commonplace.
  155. Furthermore, I agree with Mr Grodzinski QC that, on its true construction, the 1886 Act is providing a self-contained regime of compensation which has a number of aspects which might be described as alien to the general law of tort and the award of damages in tort. Thus, section 3(2) provides for the Home Secretary to make regulations, for example as to the period in which claims are to be made, originally fourteen days, and although now forty two days, still very short compared with limitation periods in general. Then, section 3(1) provides that the compensation authority is to award what it regards as just. Although, as Aikens LJ said in Yarl's Wood the discretion thereby given is to be exercised in a quasi-judicial manner, there is a discretion nonetheless as to what compensation is awarded.
  156. At the time that the 1886 Act was enacted, the provisions of section 2(1) were completely different from the basis upon which damages would have been awarded in tort, which suggests that it was never intended that the compensation authority simply assessed what the damages would have been at common law and awarded those. The fact that, with changes in the law of contributory negligence, the approach of the Courts in cases of tort is now closer to the approach under section 2(1) does not detract from that point. Without deciding the point which the Court of Appeal said in Yarl's Wood that it did not need to decide (see [90] of the judgment of Aikens J) as to whether the power of the court is a narrow one limited to reviewing the reasonableness of the decision of the compensation authority or the court has a wider power to fix the compensation de novo irrespective of what the compensation authority has decided (although I agree with Mr Crane QC that the decision of the Divisional Court in Kaufman provides support for the wider power), I cannot see any basis for saying that the approach of the court should somehow be different from that of the compensation authority, in the sense that somehow the court has a wider discretion than the authority as to what compensation is "just".
  157. Even if, contrary to my view, the correct analogy is not with insurance but with torts of strict liability, there will be circumstances in which either the persons who can recover in tort or the damages recoverable will be limited. That is essentially the point which Walker J was making in Constable at [104(ii)]. Furthermore, as Mr Crane QC accepted, the conclusion that the compensation payable should reflect the measure of damages under the English law of tort for physical damage to property, would not follow if there were something in the wording of the Act which limited the damages or compensation recoverable. For the reasons I have set out, on its correct construction, the 1886 Act does limit the compensation recoverable to physical damage and does not encompass consequential losses.
  158. Because, for the reasons I have set out, the compensation payable under the 1886 Act was never intended to reflect damages which would have been awarded in tort, it is not strictly necessary to consider Mr Crane QC's submissions that consequential losses such as loss of profits were recoverable in tort in 1886. However, if the point were relevant, I would agree with him that the better view, based on the judgment of Sir Francis Jeune P in The Kate, is that loss of profits from charterparties terminated by total loss in a collision were recoverable by the time of the 1886 Act. However, the short answer to his submission is that it was never intended by Parliament, on the correct construction of the statute, to equate the compensation payable with damages recoverable in the law of tort. As for his point that it would be anomalous if the compensation did not include loss of profits, in circumstances where the assessment of the market value of profit earning property might include an element of uplift for anticipated profits, the answer to that point is that, whilst such an uplift might be made in an appropriate case in assessing the market value of the relevant property in order to determine the "just" compensation under the 1886 Act, the 1886 Act does not provide compensation for consequential losses as a free standing head of claim such as is claimed in the present case.
  159. As for Mr Crane QC's alternative submission that the 1886 Act provides compensation by reference to damages in tort as they are recoverable at common law from time to time, I agree with Mr Grodzinski QC that this involves a somewhat heterodox approach to statutory interpretation. Clear words would be required for the statute to have that effect and, on any view, such wording is completely absent here.
  160. Summary of conclusions

  161. It follows that, in my judgment, the answers to the two preliminary issues which fell to be determined are:
  162. (1) The losses claimed (in so far as proved and subject to my conclusion on Issue 2) do arise out of the injury to and destruction of the Warehouse and injury to, theft of or destruction of property within the Warehouse, by persons riotously and tumultuously assembled together within the meaning of section 2(1) of the 1886 Act.

    (2) Consequential losses are not in principle recoverable pursuant to section 2(1) of the 1886 Act, at least as a free-standing head of claim such as is made in the present case.


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URL: http://www.bailii.org/ew/cases/EWHC/Comm/2013/2734.html