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ISSUE 20 : July 2014

liabilities
A FARADAY NEWS L ETTER COVERI NG L I ABI L I TY I SSUES
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THIS PUBLICATION IS
COPYRIGHTED. All the information
which is contained herein has been
very carefully researched
and compiled. Nevertheless, no
responsibility is accepted for
accuracy, completeness or up-to-
dateness. In particular, this
information does not constitute
legal advice and cannot serve as a
substitute for such advice.
Welcome to our latest edition, which includes all
our normal features. This edition covers how the
courts interpret vicarious liability; civil procedure
post-Mitchell; Corporate Manslaughter and the
latest update on insurance contract law reform.
THE FARADAY EL/PL TEAM
01
General Liability
In this Issue
Page 01
Introduction
Page 01 - 03
General Liability
Page 04 - 05
Civil Procedure
Page 06 - 10
Insurance
store and asked the Defendants
on-duty employee at the store (the
employee) if it was possible to print
off some documents on a USB stick
the Claimant was carrying. The
employee responded in an abusive
and racist manner. The employee
followed the Claimant to his vehicle,
partly entered the vehicle and
physically assaulted the claimant
on the petrol station forecourt.
Upholding the Judgment of
the lower court, the Court of
Appeal held that the Defendant
was not vicariously liable for the
employees conduct.
The Court considered whether the
connection between the assault and
the employment was sufciently
close to make it fair and just to hold
Vicarious liability
in two recent cases
shows contrasting
approaches of
the court
Mohamud v WM Morrison
Supermarkets [2014] EWCA
Civ 116
Supermarket has no vicarious
liability to customer attacked by
member of staff - This recent Court
of Appeal decision conrms that in
certain circumstances an employer
will not be vicariously liable for
the actions of their employee. The
Defendant is a large supermarket
chain. The case in question involved
a convenience store within a petrol
station. The Claimant entered the
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the Defendant vicariously liable for
the employees actions. The Court
held that this was not the case even
though: a) the employee had carried
out the attack during the course
of his employment, b) the assault
happened on the defendants
premises, and c) the employee was
required to interact with customers
as part of his job.
The Court held that the employee
had gone outside the scope of
his employment and the assault
on the Claimant did not arise out
of what the employee had been
employed to do. The employees
duties in regards to interacting
with customers were in fact fairly
limited and involved no element of
keeping order or exerting authority
as there would be, for example, if
he was employed as a doorman or a
ticket inspector. Further, the Court
was of the view that the employees
actions in attacking the Claimant
took place purely for reasons of his
own and were in no way directed
towards advancing the Defendants
interests.
Cox v Ministry of Justice [2014]
EWCA Civ 132
Ministry of Justice vicariously
liable for injuries caused by paid
working prisoner - In contrast
to its decision in Mohamud, the
Court of Appeal, overturning the
decision of the High Court, held
that the Defendant in this case was
liable for the conduct of a prisoner
paid to undertake catering work
at a prison. The Claimant was the
catering manager of the prison and
was injured in an accident caused
by the negligence of the prisoner
who was working under her
supervision. The Claimant suffered
serious injury when the prisoner
dropped a sack of foodstuffs he
was moving on to the Claimants
back when attending to a delivery of
supplies to the kitchen.
The High Court found that the
Claimants injuries were caused by
the prisoners negligence and the
Court of Appeal did not dispute
this nding.
The Court of Appeal held that
there was a sufciently close
proximity between the wrongdoing
and the relationship between
the Defendant and the prisoner.
As such, the Court held that the
Defendant was vicariously liable
for the employees actions.
The structure of the prison was
such that a prisoner was under a
duty to follow the rules of the prison
and was under the Defendants
control. Therefore, the relationship
between the prisoner and the
defendant was akin, if not closer,
to an employer/employee situation.
Further, the Court held that the
defendant took the benet of
assigning a prisoner to catering
work as it consequently did not have
to pay for external employees,
and as such it also should take
the burden.
General Liability
Johnson v Warburtons Limited
[2014] EWCA Civ 258 (CA)
Employer not liable for injury
sustained by employee falling down
stairs - The Claimant was a lorry
driver employed by the Defendant.
Whilst driving along the motorway,
the Claimant heard a noise in
the back of the lorry and realised
something in the load had toppled
over. Concerned about safety, the
Claimant pulled over and entered
the back of the lorry to check
the load. On exiting the lorry, the
Claimant slipped on the stairs,
fell into an embankment and
sustained injuries.
The Court of Appeal, upholding
the decision of the lower court and
dismissing the appeal, held that
the Defendant was not liable in
negligence for the Claimants injury,
notwithstanding the fact there
was no risk assessment or formal
training in place.
The Court held that the stairs
were not inherently dangerous
and indeed that they had been
exemplied by the Health and Safety
Executive as examples of good
practice. It was held that training
to use the stairs was not necessary
because the need to take care was
obvious and that using stairs was
a matter for common sense as
opposed to formal training. It was
also held that the absence of a risk
assessment was irrelevant as such
an assessment was unnecessary
for such a simple task.
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Vann & Ors v Ocidental-Companhia
De Seguros SA [2014] EWHC
545 (QB)
No contributory negligence for
claimants hit by car whilst on
holiday - The Claimants were on
holiday in Portugal; they left a
restaurant and crossed a road to
their parked car. The Claimants
were hit by a car and consequently
both Claimants sustained serious
injuries. The second Claimant died
from his injuries a few days later.
The First Claimant and the Second
Claimants estate brought a claim
for damages against the Defendant
insurer. The Defendant denied
liability and alleged contributory
negligence submitting that the
Claimants had been under the
inuence of alcohol.
The High Court held that the
Defendant was liable as the insured
driver of the car had been driving
too fast around a bend. The Court
held that there was no contributory
negligence as the Claimants had
crossed the road in a safe manner
and had not been under the
inuence of alcohol.
Orzechowska v ABF Plc (t/a
Speedbike) [2014] EWHC 495 (QB)
Personal injury claim from
accident at work dismissed - The
Claimant worked on the production
line of a bakery owned by the
Defendant. Whilst leaving her work
station the Claimant stepped down
and tripped over a pipe which was 6
inches in diameter and 18 inches off
the ground.
The claim was dismissed at both
rst instance and also on appeal, on
the basis that the pipe was obvious
and the Claimant could have easily
avoided it.
It was held that the pipe was not
an obstruction in accordance with
regulation 12(3) of Workplace
(Health, Safety and Welfare)
Regulations 1992. A two stage test
was considered; rstly was there
an article, obstruction or substance
present which may have caused
the claimant to fall? If so, secondly,
was it reasonably practicable for the
Defendant to do anything to reduce
or eliminate the risk? It was held
that the claim did not satisfy the
rst limb of the test in that the pipe
was at such a distance from the
chair and was so obvious that it did
not present a real risk of tripping.
As such it was not necessary to
consider the second limb and the
claim was dismissed.
Anthony Phee v James Gordon and
Others [2011] CSOH 181
Golf claim settles before reaching
the Supreme Court - In August
2007, at Niddry Castle Golf Club
in Scotland, the Claimant golfer
lost an eye after being hit by a ball
struck by a second golfer (the First
Defendant). The golfer brought a
claim against the First Defendant
and the owners and operators
of Niddry Castle Golf Club (the
General Liability
Second Defendants) for damages
arising out of personal injury.
The Claimant maintained that his
injuries were the fault of the First
Defendant, but that there had also
been a breach of duty by the Second
Defendants and as such they were
partly responsible for his injuries.
Damages of 400,000 were awarded
in the golfers favour. The Court
ruled that the First Defendant was
70% responsible for the accident,
as he should have appreciated that
every golfer, irrespective of his
abilities, could make bad shots.
The Court held that the Second
Defendants were 30% liable for
the Claimants injuries as they had
failed to erect proper warning signs
at appropriate places around the
golf course. The Second Defendants
appealed and whilst the parties
were awaiting a response from the
Supreme Court as to whether it
would hear the case, an out of court
settlement was reached.
This case highlights the potential
nancial consequences for players
of the accidents which can occur
whilst golng, and emphasises the
need for golf course operators to
ensure that adequate signage and
safety precautions are taken to
protect golfers and others on
the course.
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The post Mitchell landscape - The
Courts are still nding their way in
the post Mitchell landscape and as
such, recent judicial consideration
of procedural breaches has led to
contrasting decisions.
Utilise TDS Limited v Davies and
Others [2014] EWHC 834
Claimant limited to recovering
court fees following two trivial
breaches - The Claimant was
required by a Court order to (i) le a
cost budget and (ii) notify the Court
of the results of negotiations. The
Claimant failed to notify the Court
of the results of the negotiations
and also led the cost budget 41
minutes late. Consequently, the
Claimant was limited to recovering
court fees only. The High Court
dismissed the appeal of the
decision not to grant relief from
sanctions. The Court held that,
viewed in isolation, missing the
deadline for ling the cost budget
by 41 minutes was in itself a
trivial breach. However, the Court
considered this breach alongside
the Claimants non-compliance with
the obligation to notify the court of
the results of negotiations.
The Court held that the combination
of two breaches along with a lack of
explanation for both breaches was
sufcient to refuse the application
for relief. The Court effectively
decided to aggregate two trivial
breaches to create a non-trivial
breach, which would require a good
reason for relief to be granted.
Medical Supplies and Services
International Limited v Acies
Engineering Limited & Anor [2014]
EWHC 1032 (QB)
Strike out of claim for breach of
an unless order no relief from
sanctions granted - The Claimant,
a manufacturer of medical
equipment, brought a claim alleging
that the defendants had wrongly
used its condential information.
The Court made an order including
directions as to how certain
documents on the claimants list for
disclosure should be produced for
inspection. The order also extended
the time in an earlier unless order
for inspection of documents. The
earlier unless order provided that
the claim would be struck out if the
claimant failed to comply with the
disclosure obligations in the unless
order. The claimant failed to comply
with both orders. The defendant
consequently obtained a default
costs certicate.
The Court held that there had
been a breach of an unless order
and consequently the claim was
struck out. Following Mitchell, the
Court considered that it was not
appropriate to grant relief from
sanctions in these circumstances.
The Court held that the Claimants
breaches were not trivial; inspection
had still not been provided and
the original order had provided
for inspection nearly one year
previously. The Court also held
that the claimant did not have a
Civil Procedure
good reason for failing to provide
inspection of a large number of
documents. Further the Court
took into account the fact that the
application for relief had not been
made promptly.
Hallam Estates Limited v Stainer
& Baker [2014] EWCA Civ 661
Court of Appeal stresses that
parties should not refuse to agree
reasonable extensions of time
- The Court of Appeal, presided
over by Jackson LJ, granted relief
from sanctions by overturning the
decision of the lower court that
refused such relief.
The Claimant had lost litigation
and was ordered to pay costs. The
Defendant served its bill and the
Claimant sought an extension
of time from the Defendant to
prepare the Claimants points of
dispute. The Defendant refused
this extension and so the Claimant
applied to Court, on the last day,
for the extension. The costs Judge
granted the extension on paper.
However, this was overturned by the
High Court who directed a default
costs certicate be issued.
On appeal, the Court of Appeal
considered the test to be applied
to an in-time application for an
extension of time. The Court of
Appeal held that the test was still
the furtherance of the overriding
objective and the decision in
Mitchell did not apply to such an
in-time application. The Court
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held that there was therefore no
reason to interfere with the ordinary
discretion of a costs Judge. Jackson
LJ explained that all parties, and
Judges, should be willing to agree
reasonable extensions of time
provided that they do not imperil
hearing dates or otherwise
disrupt proceedings.
Lakatamia Shipping Co Limited v
Nobu Su & Ors [2014] EWHC
275 (Comm)
Relief from sanctions granted
to defendant who had missed
deadline for disclosure by minutes
- The Defendants of a claim for
approximately US$45 million
successfully obtained relief from
sanctions by the Commercial Court.
The Defendants breached an
unless order when they missed the
deadline for disclosure of its list of
documents by 46 minutes. Previous
extensions of time for disclosure
had been granted. The Defendants
subsequently applied, and were
granted, relief from sanctions.
The Court found that the there was
no good reason for the breach but
granted the relief on the basis that:
1. the breach was trivial, 2. the
deadline was narrowly missed; and
3. the application for relief had been
made promptly.
In assessing whether the breach
was trivial, the Court considered
Mitchell and ruled that this was
the type of case in which relief
will usually be granted, and did
so. The Court also considered the
Defendants breach to be trivial as
it had caused no prejudice to the
Claimant, who had itself failed itself
to serve any list.
Norcross & Newfund Investments
Limited v Constantine & Husser
(QB) (Comm) (Unreported)
Service of a claim form at
Defendants last known address
not good service - The Defendants
were the personal representatives
of a deceased businessman against
whom the Claimants had brought
a claim. Prior to the death of the
businessman, the Claimants served
a claim form on him at an Essex
address. The businessman failed
to acknowledge service and default
Judgment was entered.
The Defendants applied to set aside
the default Judgment on the basis
that service of the claim form was
defective because the Claimants
had previously been notied that
the businessman had moved
abroad and had been out of the
jurisdiction for a number of years.
The Defendants argued that the
claimants therefore were on notice
that the businessman no longer
resided at the Essex address.
Civil Procedure
The Claimants contended that
they had validly served the claim
form, as the Essex address was the
businessmans last known address
and they had been entitled to take
the view that there was no reason
to believe that he no longer
resided there.
The Court held that the test as to
whether there was reason to believe
a Claimant lived at a particular
address was objective. On the
facts, the Court held that third
party information had indicated
that the businessman no longer
resided at the Essex address and
that the claimants had failed to
take reasonable steps to ascertain
the businessmans address in
accordance with the Civil Procedure
Rules. Accordingly, the Court held
that the service of the claim form
was defective and the default
judgment was set aside.
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Insurance Contract
Reform update
Bill to reform business insurance
contract law could be introduced
into 2014 - 2015 Parliamentary
session - Since 2006 the Law
Commission of England and Wales
and the Scottish Law Commission
have been engaged in a joint
project to reform the law of
insurance contracts.
The work has argued that the
statutory provisions governing the
law are in many ways outdated,
uncommercial and in need
of reform.
The rst stage of the review
covered consumer insurance and
resulted in the Consumer Insurance
(Disclosure and Representations)
Act 2012.
The second phase of the review is
dealing with business insurance
and the Commissions have recently
published a draft Insurance
Contracts Bill (the Bill) setting
out draft legislation which covers
business insurance and some
aspects of consumer insurance not
dealt with in the 2012 Act.
The Commissions have indicated
that they hope that a Bill will be
introduced into the 2014 2015
Parliamentary session.
The draft clauses for inclusion in
the Bill cover the following:

Fair presentation (disclosure

and representations) in business
insurance;

Warranties;

Damages for late payment of

claims;

Insurers remedies for fraud;

Good faith; and

Contracting out.
If enacted, the Bill would make
signicant changes to these areas
of insurance contract law and would
have major implications for the
insurance market.
Mesothelioma claims
update
Government announces changes
to payment of success fees and
ATE insurance premiums in
mesothelioma claims - Following
the Governments Reforming
Mesothelioma Claims consultation
launched in July last year, it has
been concluded that claimants to
mesothelioma claims will lose the
current protection from the Legal
Aid, Sentencing and Punishment
of Offenders Act 2012. This means
that insurers will no longer have
to pay success fees and ATE
insurance premiums; these will
instead become deductible from
a Claimants damages. The effect
of this will be that mesothelioma
Insurance
claims will be brought in line with
the changes already introduced to
all other personal injury claims,
including other asbestos related
disease claims.
Avoidance
Savash v CIS General Insurance
Limited [2014] EWHC 375 (TCC)
Insurers entitled to avoid
policy following a fraudulent
exaggeration household claim.
Consideration of innocent /
reckless fraudulent conduct by
insured - The Claimant insured
made an insurance claim under his
household insurance policy for loss
and damage to property following
an alleged burglary. The Claimant
had acquired the property from his
father but neither the Claimant nor
his father occupied the property.
The Defendant insurers declined
cover on the basis that the claim
was fraudulent and supported
fraudulent devices; the Defendant
insurers contended that the
property was unoccupied, and
therefore not covered, and in any
event the burglary had been staged
in a fraudulent attempt to renovate
the property.
The Court held that there had in fact
been a burglary. However, the claim
presented to the Defendant insurers
by the Claimant had been grossly
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exaggerated in order to gain more
from the claim and as such, the
Defendant insurers were entitled
to avoid the policy.
The Court also considered
the possibility of the Claimant
innocently passing on to the
Defendant insurers a fraudulent
claim created by a third party, i.e.
his father. It was ultimately held
that this was not the case.
However, it was accepted that
if the Claimant had recklessly
adopted and pursued deliberately
exaggerated claims then he would
be guilty of fraudulent devices as
such recklessness would amount
to civil fraud. The Court took this
further and suggested that even if
the Claimant had no knowledge of
his fathers fraud in relation to the
exaggerated insurance claim, the
Claimant would still be liable
for the consequences of his
fathers actions.
Health & Safety
and Environment
R v Sellaeld; R v Network Rail
Infrastructure Limited [2014]
EWCA Crim 49
Court of Appeal upholds signicant
nes imposed for breach of health
and safety and environmental
protection legislation - These two
appeals against sentence were
heard together as both concerned
the appropriate level of nes for
large companies in non-fatal cases.
Sellaeld was ned 700,000 for
offences arising out of the disposal
of radioactive waste, despite the
fact there were no deaths caused
and that no deliberate intent or
harm had been caused. An early
guilty plea was also entered.
Network Rail was ned 500,000
after a car was struck by a train
at an unmanned railway crossing.
Again no deaths were caused and
an early guilty plea was entered.
In both cases it was argued that
the nes were excessively large
given that there had been no
fatalities. The Court of Appeal
dismissed the appeals and held
that nes for breaches of health
and safety and environmental laws
should be large enough to bring
the message home to managers
and shareholders and ensure
that companies provide a safe
Insurance
environment for employees and
members of the public.
Further, the Court of Appeal said
that there should be no ceiling
on the extent of the ne that can
be imposed and the nancial
circumstances of the company,
its corporate structure and prots
should be considered when
assessing the appropriate value
of nes.
Corporate
manslaughter
First acquittal under new offence
- PS & JE Ward Limited was the
fourth company to be charged
with corporate manslaughter in
November 2012. It was acquitted by
jury after a trial which commenced
on 24 March 2014.
PS & JE Ward Limited ran a ower
nursery where a Polish worker was
killed. The worker had been driving
a tractor when its metal hydraulic
lift came into contact with overhead
cables causing an electric shock
that killed the worker.
At trial, the prosecution alleged
that there had been a succession
of health and safety issues
which amounted to corporate
manslaughter. The prosecution
argued, amongst other things, that:

the worker had received no

training to drive the tractor;
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despite the fact that the company

employed individuals from Poland
the health and safety literature
had not been translated into
Polish and, as such, the worker
had relied on translations from
other English speaking workers;

the warning signs that said

Danger of Death had been
obscured by trees; and

The company had rejected a free

health and safety advice visit in
relation to the pipes laid below
the power lines.
This is the rst corporate
manslaughter case in which
directors of a company have not
faced charges in a personal capacity
for gross negligence manslaughter
or health and safety offences. It
remains to be seen, given this
acquittal, whether regulators
will revert to charging directors
alongside companies.
First construction sector
company convicted of corporate
manslaughter - Cavendish
Masonry, a stone masonry rm,
was found guilty of corporate
manslaughter by trial at Oxford
Crown Court on 22 May 2014
following the death of a worker who
was crushed by a 2-tonne limestone
block during a lifting operation
carried out during the renovation of
a 1,200 acre residential estate.
The prosecution criticised the rms
decision not to use xings to secure
the limestone block, especially
given that it was top-heavy and of
a non-uniform shape. Also, the
dangers had been highlighted by an
architect. The prosecution alleged
that no real thought or planning had
gone into the operation and the rm
did almost nothing to ensure that
the lifting operation was carried
out safely.
The jury concluded that the rm
had committed a gross breach of
its duty of care in failing to ensure
there was proper management,
organisation and planning of the
project. Sentencing is due to take
place on 3 July this year.
Another corporate manslaughter
acquittal - MNS Mining, a mine
owner and operator, and its
manager have been acquitted of
corporate manslaughter following
the deaths of four miners.
MNS Mining is the owner of
the Gleision mine. Miners had
been given orders to connect
two parts of the mining pit to
improve ventilation. Following a
controlled explosion in the mine,
approximately 3,000 cubic metres
of water ooded the mine tunnels
causing the death of four
miners and the manager to
suffer critical injuries.
The prosecution said the manager
had been warned about the
existence of the underground
water which later ooded the mine,
had negligently ordered for the
Insurance
controlled explosion to go ahead
and had allowed miners to work
less than 100 metres away from the
explosion site in breach of mining
regulations. However, the case for
the defence was that the manager
had conducted three separate
safety inspections of the area and
had concluded that there was no
water present.
The defence submitted that given
that the manager knew he would be
in the mine when the explosion took
place, it would have made no sense
for him to knowingly risk his own
life. Further, a geological expert
submitted that it was probable
that the water collected after the
manager had inspected the area
and that the water had come from
another part of the mine.
This case does little to shed the
light on the link between senior
management and that of corporate
liability for death. Following
the verdict, a civil claim has
been brought on behalf of the
victims families.
HSE Fee for
Intervention Scheme
Report published following the
Triennial Review of the HSE
criticises Fee For Intervention
Scheme - The Fee For Intervention
Scheme (FFI Scheme) is a cost
recovery scheme operated by
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the Health and Safety Executive
(HSE), which came into force in
October 2012. Under The Health
and Safety (Fees) Regulations 2012.
The FFI Scheme makes businesses
and companies who break health
and safety laws liable for recovery
of HSEs related costs, including
inspection, investigation and taking
enforcement action. From October
2013 the HSE started to charge
124 for each hour of work where
they identify a material breach.
A material breach is when, in the
opinion of the HSE inspector, there
is or has been a contravention of
health and safety law that requires
them to issue notice of that opinion
in writing to the responsible
business or company.
The Triennial Review of the HSE,
launched in April 2013, held a wide
review of the form and functions of
the HSE. The Report of this review
was released in January 2014 and
its comments on the HSE in general
are positive, deeming the regulator
as still valid and t for purpose.
However, the Report has criticised
the FFI Scheme describing the
Scheme as a dangerous model in
need of urgent review. In particular,
the Report suggests that the
presence of such a Scheme has
the potential to damage the HSEs
relationship with companies and
undermine the integrity of the HSE
as a regulator.
The Report calls for further
consultation of the continued
operation of the FFI. In particular,
it has been recommended that
unless the link between nes and
funding for the HSE can be removed
or it can be shown that the benets
outweigh the detrimental effects
then the FFI Scheme should be
phased out.
Arcwood Recycling Limited
Director of recycling company
disqualied and jailed for
breaching environmental permit -
The director of Arcwood Recycling
Limited was jailed for ten months
and disqualied from being a
company director for 8 years for
breaching his environmental permit
and polluting the Derbyshire canal.
The company was ned and ordered
to pay costs.
Arcwood Recycling Limited, a
recycling rm based in Derbyshire,
had been storing stockpiles of
wood in breach of its environmental
permit. The permit contained a
condition preventing waste being
stored for more than 3 months.
Environment Agency ofcers had
repeatedly expressed concerns
about the way in which the site was
managed and in particular had
highlighted that too much wood
was stored for the site to operate
properly. A Compliance Assessment
Report was then sent to the
company detailing the companys
environmental permit breaches.
Despite this, the company continued
to store the stockpiles of wood.
Insurance
A re subsequently broke out in
the companys wood waste site.
The re burnt for two months and
took re-ghters nine days to
extinguish. Consequently, gallons
of contaminated water entered the
neighbouring Derbyshire canal
causing pollution and damage to
over 6km of the waterway.
The Environment Agency spent
a week de-oxygenating the canal
and protecting wildlife at a cost of
approximately 200,000.
The case was brought jointly by
The Environment Agency and
Derbyshire Fire and Rescue
Service and both the director
and the company pleaded guilty
to numerous breaches of the
Environmental Permitting (England
and Wales) Regulations 2010.
The Court noted that the director
and the company had ignored
repeated warnings from both
the Environment Agency and the
Derbyshire Fire and Rescue Service
about the risks posed by storing
excessive quantities of wood on
the site. In addition to the general
environmental damage, the Court
also took into consideration the
substantial sh killed by the
pollution, the huge clean-up
costs and the harm suffered
by neighbouring businesses. In
mitigation, the Court took into
account the early guilty pleas and
the fact there were no fatalities.
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Riot Damages Act
Mitsui Sumitomo Insurance Co
(Europe) Limited, Royal Sun and
Alliance Insurance plc and others
v The Mayors Ofce for Policing
and Crime [2014] EWCA Civ 682
The Court of Appeal rules that
consequential losses caused by
the 2011 riots are recoverable.
During the 2011 riots in London,
a Sony distribution centre was
looted and set on re in what
has been described as one of the
largest arson attacks ever seen
in Europe. The Mayors Ofce
for Policy and Crime (MOPAC)
originally declined to compensate
insurers for property damage and
business interruption losses under
the Riot (Damages) Act 1886 (the
Act). Consequently, insurers of
the distribution centre brought a
claim to recover approximately 60
million of indemnied losses and 4
million of uninsured losses suffered
by the owners of stock held at the
distribution centre.
The Commercial Court ruled
that insurers were entitled to
compensation from MOPAC for
the physical loss caused by the
arson attack but were not entitled
to any consequential damages for
business interruption losses.
On appeal, the Court of Appeal
overturned the decision of the
Commercial Court, holding
that insurers were entitled to
consequential business interruption
losses in addition to property
damage losses, thus clarifying
the position on recoverability of
damages under the Act. The Court
of Appeal held that the Act should
not be construed restrictively
Insurance
and it covers all heads of loss
compensable under English law
for damages and it does not
specically exclude consequential
losses. However, the Court also
held that, when xing the level
of compensation under the Act,
the compensator should give
consideration to what is just and
can take into account the conduct
of the person whose property has
been damaged.
In November 2013 an independent
review of the Act was issued but no
further action has been taken.
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