Update on claims made under the Riot (Damages) Act 1886 arising from incidents in Central London between Saturday 6th August and Tuesday 9th August 2011 (inclusive)

Report: 9
Date: 8 December 2011
By: Director of Legal Services on behalf of the Commissioner

Summary

At the expiry of the time-limit for filing claims following incidents in 28 London Boroughs the MPA under the provisions of the Riot (Damages) Act 1886 (‘RDA’) has received approximately 3,500 claims at an estimated total value of £250m plus as many claims are still to be unquantified.

A. Recommendation

That Members

1. note this update report; and
2. consideration to be given to an appeals process

B. Supporting information

1. The RDA provides that compensation authorities (for the Metropolitan Police district this means the MPA) are strictly liable for certain losses caused by riot. Those rights are defined within the RDA in the following terms:

“Where a house, shop, or building in a police area has been injured or destroyed, or the property therein has been injured, stolen or destroyed, by any persons riotously and tumultuously assembled together, such compensation as herein-after mentioned shall be paid out of the police fund of the area to any person who has sustained loss by such injury, stealing, or destruction; but in fixing the amount of such compensation regard shall be had to the conduct of the said person, whether as respects the precautions taken by him or as respects his being a party or accessory to such riotous or tumultuous assembly, or as regards any provocation offered to the persons assembled or otherwise”

2 The RDA extends to providing that where insurers have settled claims in respect of riot damages which otherwise could have been claimed under the RDA, they can reclaim the payments from the compensation authority.

3. During the period from 8 September 2011, since the last report was submitted to the committee, the MPA and MPS have dedicated resources to ensure that systems are in place to consider claims. Computer systems have been developed to record the claims, claims logged and duplicates removed and systems developed to retrieve police information as to the nature of incidents in respect of which claims are made.

4. The methodology and processes being used to consider claims meet the criteria of the RDA and have been reviewed by the Audit Commission and MPA Internal Auditors.

5. The auditors will continue to be involved in the process.

6. The MPS (on behalf of the MPA) are considering claims (under £500,000) on an individual basis, both as to whether the loss was caused by a riot (as legally defined) and as to the amounts payable. Where claims have been identified that do not fall within the terms of the Act (e.g. personal injury, damage to vehicles (unless garaged within damaged buildings), business interruption) letters are being sent to claimants explaining that the claim cannot be paid.

7. Loss adjusters were appointed by the Home Office to provide reports to police authorities in relation to uninsured claims. Separate Loss Adjusters have been appointed by the MPA/MPS to assist in considering insured claims, especially those of higher value or where there are complex issues to determine.

8. There are a large number of claims that have not been completed, for example by the claimants providing information as to the sums claimed or evidence in support. Claimants or their representatives have been sent a letter to complete the claim within 28 days. If this is not possible claimants have been asked to supply a timeline for their claim to be complete.

9. The present funding structure is that any uninsured claim or any uninsured part of an insured insurance claim (e.g. excess or under-insurance) will be funded by the Home Office. The funding of insured claims is unresolved - see paragraph 11 below.

10. The present position on the basis that not all claims have been completed by provision of information about the value of the damage or loss (it anticipated that when completed claims are received that the compensation figure will rise to £250m) is:

• Uninsured, Under-insured and Excess claims – Total: £16,916,894 (The breakdown of the number of claims is:
  £0-£1,000=2,834;
  £1,001-£5,000=195;
  £5,001-£15,000=24;
  £15,001-£50,000=90;
  £50,001-£100,000=33;
  £100,001-£250,000=19;
  £250.001-£499,999=4;
  over £500,000=7
• Insured claims – Total: £208,088,390
  (The breakdown of the number of claims is:
  £0-£1,000=1,765;
  £1,001-£5,000=590;
  £5,001-£15,000=373;
  £15,001-£50,000=306;
  £50,001-£100,000=107;
  £100,001-£250,000=72;
  £250.001-£499,999=50;
  over £500,000=43

11. Discussions between MPA/MPS representatives and the Home Office are continuing in respect of funding as the MPA do not have the reserves to meet the cost of these claims.

12. The first offers of settlement will be made in week commencing 21 November, and payments made thereafter as soon as acceptance forms are returned. It is anticipated that the first payments will be made during December 2012.

13. DLS are forecasting that by 31 March 2012, 50% of claims between £0-£50,000 and 10% of claims over £50,000 will be processed. Priority is being given to dealing with claims from uninsured claimants over reimbursement to insurance companies.

14. Messages posted on the MPA/MPS internet sites will be regularly reviewed and updated if necessary.

15. Members may want to give further consideration to the appeals process.

C. Other organisational and community implications

Equality and Diversity Impact

1. This report outlines the processes for dealing with claims arising from the August riots and as such there are no equality or diversity issues. However at a local level these processes will need to be supported by targeted reassurance messages to ensure that all affected communities are made aware of and are able to access information to allow them to make claims in a timely manner.

Consideration of Met Forward

2. The resolution of these claims is a statutory obligation under the RDA. However, where it is justified to do so, based on evidence obtained, claims shall be repudiated.

Financial Implications

3. In normal circumstances these types of claim costs and the costs associated with processing them would be covered by DLS budgets and the MPS Third Party Provision. In this instance the exceptional nature of the event and the cost of processing and paying the claims mean that there are not sufficient funds within these budgets. As set out above a Special Grant Claim has been submitted to the Home Office requesting full reimbursement for all additional costs associated with the Riot Damages Act. It will be necessary for the MPS to undertake additional short term borrowing to manage cashflow between payment and any additional grant receipt. This will incur borrowing costs currently estimated at 1.5% of the sum borrowed.

Legal Implications

4. The MPA is under a legal duty to pay properly formulated RDA claims but also to take reasonable steps to ensure that claims that do not fall within the terms of the Act are not paid.

5. The MPA delegated the decision as to whether an incident was a riot and if so the agreement of the award of compensation to the Commissioner (acting through DLS) for claims with a value up to £500,000

6. The MPA delegated the decisions to the Commissioner (acting through DLS) to reject claims where they do not fall within the terms of the RDA.

Environmental Implications

7. There are no environmental implications arising directly from this report therefore no decision with the environmental implications is sought.

Risk (including Health and Safety) Implications

8. Risk factors will be assessed and reported to the MPA as appropriate.

D. Background papers

None

E. Contact details

Report author: Edward Solomons, Director of Legal Services and Franca Oliffe, Assistant Director (Management & Support) Directorate of Legal Services, MPS

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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