Bedfordshire Police Authority v Constable
| Jurisdiction | England & Wales |
| Judgment Date | 20 June 2008 |
| Date | 20 June 2008 |
| Court | Queen's Bench Division (Administrative Court) |
High Court, Commercial Court, 2008 Folio 27
Walker J
C Edelman QC and A Burns (instructed by Eversheds LLP) for the Police Authority; G Kealey QC and A Wales (instructed by Reynolds Porter Chamberlain LLP) for the syndicate
Whether liability under the Riot (Damages) Act 1886 fell within the ambit of the public liability section of a police authority's insurance policy
By the Riot (Damages) Act 1886 police authorities are liable for theft or destruction of certain types of property in their area caused by "any persons riotously and tumultuously assembled together".
The Police Authority and Chief Constable together took out insurance for the period 1 April 2001 to 31 March 2002 under policies which were in 2 layers. The primary layer ("the Underlying Policy") was insured by ARC and included public liability cover for amounts up to £2M. A Lloyd's syndicate insured the Authority on an excess layer ("the Excess Policy") which included public liability cover for amounts greater than £2M million and up to £38M. The Excess Policy and Underlying Policy were intended to insure the Authority and its employees, and the Chief Constable and police officers reporting to the Chief Constable, against public liability for "accidental" injury or damage falling within the extent of the cover. They provided for an indemnity in respect of "all sums which the ASSURED may become legally liable to pay as damages... for ... (b) accidental DAMAGE to PROPERTY ...occurring within the Geographical Limits during the Period of Insurance arising out of the BUSINESS".
On 14 February 2002 an outbreak of violence at the Yarls Wood Detention Centre within the Authority's police area, along with a fire which broke out during the course of the violence, was associated with various types of injury to or theft or destruction of property. Claims were made against the Authority under the 1886 Act in respect of damage to property that occurred in the course of the violence. ARC accepted that any liability on the part of the Authority to meet these claims fell within the Underlying Policy. The syndicate declined to accept that this was so as regards the Excess Policy.
The syndicate accepted that the claims were for "accidental" damage, on the basis that the damage in question was not intentionally caused by the assured. However the syndicate denied that these claims were within the extent of the cover. This was because (1) liability under the 1886 Act was not for "damages"
within the meaning of the policy which covered only liability to pay damages to members of the public for actionable wrongs committed by the assured, typically tortious liability, (2)(a) the liability only arose if the accidental damage arose out of the business (as opposed to the legal liability to pay arising out of the business), and (2)(b) the damage resulting from the violence did not arise out of the business.
The Authority sought a declaration that the syndicate was obliged to provide an indemnity against any liability to pay compensation under the 1886 Act.
Introduction
1. Ever since 1886 each police authority, or the statutory body responsible for its funds, has been under a liability for injury to or theft or destruction of certain types of property in its area caused by "any persons riotously and tumultuously assembled together". The words quoted currently appear in the Riot (Damages) Act, 1886 ("the 1886 Act"). They echo words used in the Riot Act of 1714 ("the 1714 Act"), best known for its enactment of the proclamation to be read by a justice commanding those assembled to disperse. Under s6 of that Act a similar liability was imposed on the hundred (an ancient subdivision of the county), or on a city or town where such city or town either was a county of itself or was not within any hundred. That liability was confirmed with certain revisions in the Remedies against the Hundred (England) Act 1827 ("the 1827 Act"), before being replaced in 1886 - initially by special statutory provision for the Black Monday riot in London on 8 February that year, and later more generally by the liability imposed on police authorities under the 1886 Act.
2. A Home Office consultation paper of July 2003 recorded concern that such a liability may be inappropriate to modern conditions. Any such concern has not so far led to any further statutory reform, and police authorities remain under a liability which has its origins in the tumultuous times when George I ascended to the throne. The broad question in the present case is whether that liability falls within the public liability section of a policy of insurance taken out by the claimant ("BPA").
The facts
3. BPA is the police authority for Bedfordshire. The Chief Constable of Bedfordshire ("the Chief Constable") has operational responsibility for policing in Bedfordshire under the Police Act 1996 ("the 1996 Act"). The Chief Constable is appointed by and reports to BPA, which under s6 of the 1996 Act is required to secure the maintenance of an efficient and effective police force in Bedfordshire. BPA and the Chief Constable together took out insurance for the period 1 April 2001 to 31 March 2002 under policies which were in 2 layers. The primary layer ("the Underlying Policy") was insured by the American Re-Insurance Company ("ARC") and included public liability cover for amounts up to £2 million. The defendant is the active underwriter of Syndicate 386 at Lloyd's ("the Syndicate"). The Syndicate insured BPA on an excess layer ("the Excess Policy") which included public liability cover for amounts greater than £2 million and up to £38 million. A dispute has arisen between BPA and the Syndicate as to whether and if so to what extent a potential liability of BPA under the 1886 Act would give rise to a valid claim by BPA under the Excess Policy. These proceedings have been brought in order to resolve that dispute. For this purpose the defendant is sued on his own behalf and on behalf of all other members of the Syndicate.
4. The alleged liability of BPA under the 1886 Act concerns an outbreak of violence which began at the Yarls Wood Detention Centre ("Yarls Wood") on 14 February 2002. Yarls Wood was operated under a contract with the Secretary of State by a private company. The violence, along with a fire which broke out during the course of the violence, was associated with various types of injury to or theft or destruction of property. I shall refer to property owners who made claims against BPA under the 1886 Act in this regard as "the Yarls Wood Claimants", and to their claims as "the Yarls Wood Claims". ARC has accepted that, subject to the terms and conditions of the Underlying Policy, a liability on the part of BPA to meet the Yarls Wood Claims falls within that policy. The Syndicate has declined to accept that this is so as regards the Excess Policy. The Excess Policy expressly gives cover for sums which BPA becomes legally liable to pay in respect of damage insured in accordance with the terms of the Underlying Policy, but it is not contended by BPA that the Syndicate is under any obligation to adopt such stance as may be taken on the Underlying Policy by ARC. An action has been brought against BPA by the Yarls Wood Claimants; this is expected to come to trial shortly.
The issues
5. It is common ground that the Excess Policy and Underlying Policy were intended to insure BPA and its employees, and the Chief Constable and police officers reporting to the Chief Constable, against public liability for "accidental" injury or damage
falling within the extent of the cover. The Syndicate accepts that the Yarls Wood Claims are claims for "accidental" damage, on the basis that the damage in question was not intentionally caused by the assured. However the Syndicate denies that these claims are within the extent of the cover. For the purposes of the present trial the parties formulated 6 issues on the basis of alternative hypothetical facts. As argument proceeded however it became clear that I would not need to refer to hypothetical facts and that only 2 issues arose. I shall call them Issue 1 and Issue 2. Both concern words in the Underlying Policy which limited cover. I set out the relevant indemnifying clause with the words in question italicised:
The COMPANY will indemnify the ASSURED in respect of all sums which the ASSURED may become legally liable to pay as damages... for ... (b) accidental DAMAGE to PROPERTY ...occurring within the Geographical Limits during the Period of Insurance arising out of the BUSINESS.
[Words in block capitals were defined in the General Definitions section of the Underlying Policy; for convenience they appear later in this judgment with only the initial letter in capitals.]
6. Issue 1 concerns the words "legally liable to pay as damages". The Syndicate contends that such sums as BPA may be legally liable to pay under the 1886 Act are not payable as damages within the meaning of the Underlying Policy. BPA says that they are. The issue thus is as to what the policy means when it says "legally liable to pay as damages" and whether a legal liability under the 1886 Act falls within that meaning. Issue 2 concerns the words "arising out of the Business". The Syndicate contends that they mean that accidental damage to property is covered only if that damage arises out of "the Business" as defined in the Underlying Policy. Here there are 2 sub-issues. Sub-issue 2(1) is whether the words "arising out of the Business" apply to the initial phrase "sums which the Assured may become legally liable to pay" (as BPA contends) or the later phrase "accidental damage" (as the Syndicate contends). Sub-issue 2(2) arises if BPA is wrong on sub-issue 2(1). In that event BPA contends, but the Syndicate denies, that the damage which is the subject of...
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