Riot Compensation Ruling Could Affect Cases

The Court of Appeal has ruled that businesses whose property is damaged in a riot can recover “consequential” losses stemming from such an incident, meaning that the legal position of businesses burnt and looted in the August 2011 riots and those damaged in future riots could be affected.

It used to be believed that compensation payable by the police under the Riot Act was limited to physical damage but, in the case heard this week, which was that of the destruction of an Enfield-based warehouse owned by Sony in the London riots of 2011, London’s Mayor Boris Johnson has been ordered to meet compensation claims of almost £75m, which also cover financial losses caused by the building’s destruction.

Describing the fire, which raged for 10 days and totally destroyed the warehouse, as “the largest arson in Europe”, the Appeal Court judges dismissed Mr Johnson’s challenge to an earlier ruling, which referred to legislation first passed 300 years ago.

A High Court judge ruled last year that insurers and the owners of uninsured property were entitled to compensation from the Mayor, who as head of the Mayor’s Office for Policing and Crime, is responsible for London’s policing issues. At the time, Sony’s insurers had claimed more than £62.8m.

However, the judges this week have gone further and said that the Mayor is also liable for consequential losses, such as loss of profit and loss of rent, which the claimants put at £11.4m.

Insurers have welcomed the ruling, as insurers and uninsured claimants will now be able to recover business interruption losses suffered as a result of the 2011 riots and also for such damage in the future. However, on the back of the ruling, the Government has said it may now consider seeking changes to the legislation to limit losses recoverable under the Act.

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Mackrell Turner Garrett Solicitors in London