Riot Compensation Bill

Lord Pannick Excerpts

Friday 26th February 2016 Lords Chamber

[Lord Pannick (CB)]

My Lords, I thank the noble Lord, Lord Trefgarne, for introducing this Bill, which is a welcome reform, so far as it goes, of a very odd area of English law. My interest in the subject derives from having argued a case in the Supreme Court last month on behalf of the London Mayor’s Office for Policing and Crime resulting from the 2011 riots. The issue was whether the 1886 Act, which this Bill would repeal, permits recovery for consequential losses to the property owner, such as loss of profits and loss of rent. Judgment in that case is awaited. Clause 8 would exclude almost all consequential loss, but I will say no more on that subject.

A bit of history might assist noble Lords. Statutory compensation for riot damages has its origins in the Riot Act 1714, which was enacted to address the widespread riots which occurred on the accession to the throne that year of George I. The 1714 Act made the “hundred”—that is, the local inhabitants—liable for property damage caused by persons who were, as the statute said, and as the 1886 Act repeats, “riotously and tumultuously assembled”. As the noble Lord mentioned, one merit of this Bill is that it will remove such antiquated language. The 1886 Act transferred the liability to local police authorities.

The 1714 Act is the origin of the phrase “reading the Riot Act”, because Section 1 required the local justice of the peace to approach the rioters, as the Act says,

“as near to them as he can safely come”,

and,

“with a loud voice command”,

that, in the words of the statutory proclamation, the King wished them to disperse. If they refused, under the Act, any officer of the law assisting the justice of the peace and other authorities would have no liability for “killing, maiming or hurting” any of the rioters.

The Act also made the local inhabitants liable for any damage to buildings caused by the rioters. The 18th century judgments of Lord Mansfield and other judges explained that the liability of the local inhabitants was designed to encourage them to take action to stop the rioting. That statutory liability has persisted even though, in 1886, the obligation to pay compensation was transferred from local inhabitants to police authorities, which need no inducement to take action against rioters.

The Bill perpetuates an anomaly, because there is no statutory right to compensation in the event of a natural disaster, such as flooding, or in the event of an epidemic. Other public bodies, such as hospitals, have a liability only if negligence can be proved. Under the riot compensation law, the police are liable to pay large sums of compensation whether or not they are at fault. That is particularly striking because the general common-law rule, which was confirmed by the Supreme Court last year in the case of Michael, is that the police generally owe no liability in negligence for failing to prevent serious crime, even if they are at fault. I represented the police forces in that case.

The anomaly is even more strange because the independent Kinghan review, which was conducted on behalf of the Home Office in 2013 to examine the application of the 1886 Act, found that there is no comparable statutory scheme in other countries. Indeed, the anomaly is even worse because the 1886 Act allows insurance companies to claim compensation for sums which they pay out, despite the fact that they have charged premiums to cover the risk. This Bill will perpetuate that right for insurance companies.

The Kinghan review found that many people were concerned that, without this statutory scheme, people might find it difficult to obtain insurance to cover riot damage in some parts of the country, but in this respect Kinghan proceeded on the basis of concern rather than any hard evidence. The Minister may be able to enlighten the House. Is there any hard evidence that this statutory scheme is actually required because people would be unable to obtain insurance against riot damages?

For all these reasons, I am doubtful that we should be perpetuating the legal anomaly of statutory compensation for riot damage. As the noble Lord, Lord Trefgarne, said, the Bill will limit the compensation to £l million per claimant, but should there be any special right to compensation at all in this area alone?

If Parliament is to retain this statutory scheme, we need to consider the details of its content, and there are some odd features about it. Since 1714, when this statutory scheme was first enacted, the compensation has been confined to property damage. The exclusion of any compensation for personal injuries caused by a rioter is anomalous but is understandable because, in practice, the victim can nowadays claim under the criminal injuries compensation scheme.

However, there is a very important arbitrary distinction in the 1886 Act which is maintained in this Bill in relation to property damage. The statutory compensation is confined to damage to real property—a house or other building—and to any personal property contained within that building. So I am not entitled under the 1886 Act, and I will not be entitled under the Bill, to compensation if a rioter damages my property on the highway. If a rioter comes into my house and smashes my computer, I will be entitled to compensation, but if I am walking home along my street and a rioter grabs and smashes my computer, I have no right to compensation under the Bill. I ask the Minister: why is that?

The Bill extends liability a little way: it will allow for compensation claims for some vehicles on the highway and it will allow compensation for property on land being used for the purposes of a business, but what is the justification for otherwise distinguishing between damage to property done in a building and damage done on the highway? I cannot think of any rationale for such a distinction. There is the same riotous conduct and the same damage. The only possible rationale is a wish to limit the scope of compensation, but the distinction is simply perverse.

I want to mention three other provisions in the Bill. I welcome Clause 1(6) which will exclude compensation for a riot in a prison or similar facility. This provision is necessary to reverse the effect of the decision of the Court of Appeal in the case of Yarl’s Wood Immigration Ltd. The claimants, who maintained and operated an immigration detention centre under contract with the Home Office, applied for compensation under the 1886 Act after it was destroyed in a riot. The Court of Appeal said that in principle compensation was available under the 1886 Act. The Bill is right to remove any such liability. If a company is responsible for a prison or other secure unit, it should bear responsibility for preventing a riot, and it should not be able to claim compensation if a riot occurs on its watch.

I am concerned about Clause 8(3), which will allow the Secretary of State power to make regulations setting out factors to be taken into account in deciding on claims. These matters should, in principle, be in primary legislation so we can debate them and, if necessary, amend them. I appreciate that detail can be in regulations, but surely the principles should be set out in primary legislation. The 1886 Act is more detailed in this respect. Section 4 expressly states some of the factors to be taken into account: any failure by the claimant to take reasonable precautions to protect their property and any provocation offered by them to the rioters.

Finally, I want to mention Clause 9, which will allow a claimant who is dissatisfied with the award of compensation to have both a right of review, which I understand to mean an internal appeal, and a right to appeal, which I understand to mean a right to take the case to court. Again, the detail is to be left to regulations to be made by the Secretary of State. A point of principle arises. I do not see why a claimant should enjoy a de novo appeal right to a court. The decision on the compensation claim is an administrative decision by a public body, and if the claimant is aggrieved by that decision after a review they should be left to their remedy by way of judicial review requiring them to show that the claim has been assessed by an unfair procedure or in breach of the requirements of the statute or in some arbitrary manner.

I hope at least some of these comments are of value to the noble Lord, Lord Trefgarne, and to the Minister.