Consequential Losses Now Recoverable Under the Riot (Damages) Act

In a landmark decision applying to properties in England and Wales, on 20 May, the Court of Appeal reversed a ruling that prohibited recovering consequential losses from the police after a riot. The High Court had previously ruled that businesses could reclaim damages for property, stock and other physical damage from the police under the Riot (Damages) Act 1886 (the Act), but not consequential losses, such as loss of profit and loss of rent.

This Court of Appeal ruling expands compensation payable under the Act beyond just physical damages; compensation under the Act now encompasses consequential losses for the first time.

This is welcome news to insurers of the Sony warehouse in Enfield, which was completely destroyed during the 2011 riots, resulting in Europe’s largest-ever arson attack. The Enfield insurers initially sought over £60 million in damages, and estimates for the additional consequential losses are around £11.4 million.

This decision will likely create a renewed interest on the part of insurers pursuing previously denied damages under the Act. However, industry insiders caution that this does not signal a compensation free-for-all, since police remain entitled to ‘fix’ an amount of compensation they deem ‘just’.