PLEADING MITIGATION OF LOSS: WHY THE PRACTICE DIRECTION IS (ALMOST ALWAYS) WRONG AND THE RULES ARE A SHAMBLES
It is well established law that the burden of proving a failure to mitigate loss lies with the defendant. It is for the defendant to establish that the claimant failed to act reasonably. Somewhat surprisingly a Practice Direction in the Civil Procedure Rules apparently puts an obligation on the claimant to particularise a failure to mitigate loss. As the Court of Appeal recently observed this “requirement” is almost universally ignored. However it remains of relevance in credit hire cases.
THE PRACTICE DIRECTION
Practice Direction 18 sets out matters that must be set out in the Particulars of Claim.
!8.2 The claimant must specifically set out the following matters in his particulars of claim where he wishes to rely on them in support of his claim:
(1) any allegation of fraud,
(2) the fact of any illegality,
(3) details of any misrepresentation,
(4) details of all breaches of trust,
(5) notice or knowledge of a fact,
(6) details of unsoundness of mind or undue influence,
(7) details of wilful default, and
(8) any facts relating to mitigation of loss or damage.”
A STRANGE REQUIREMENT: AND WRONG IN LAW
On the face of it this the requirement to plead facts relating to mitigation of loss is strange. The claimant does not have the burden of proof. Further the claimant is unlikely to know the issues that will be in dispute until a defence and counter-schedule is filed. In Zurich Insurance Plc -v- Umerji  EWCA Civ 357 the Court of Appeal observed, in a note to the judgment, that
“Para. 8.2 (8) of the Practice Direction reads rather oddly in the light of the well-established principle that the burden of proof on the issue of mitigation is on the defendant (see McGregor on Damages, 18th ed., para. 7-019); and we were told by both counsel that in this field it is not generally observed. I can see that it is hard on a claimant to expect him to anticipate and rebut points made about avoidable loss: it seems obviously preferable that he should plead his primary loss, wait and see what criticisms are made, and then if necessary plead to those criticisms by way of ReplyBut the position is different in the case of a claim for expenditure reasonably incurred in mitigation of the primary loss. In such a case the claimant should plead his case as to reasonableness, including any assertion of impecuniosity: see para. 37 below”
IT IS FOR THE DEFENDANT TO PLEAD AND PROVE A FAILURE TO MITIGATE LOSS
There is a strong argument that this particular Practice Direction is ultra vires if it is viewed as attempting to change substantive law. There is no doubt at all that the burden is on the Defendant to plead and prove a failure to mitigate loss.
(Here is what I wrote in the Solicitors Journal in June 2003 on this very issue:
12.2 Where the claim is for personal injuries and the claimant has included a schedule of past and future expenses and losses, the defendant should include in or attach to his defence a counter-schedule stating:
(1) which of those items he –
(b) disputes, or
(c) neither agrees nor disputes but has no knowledge of, and
(2) where any items are disputed, supplying alternative figures where appropriate.
It may be that the argument to provide “alternative figures” is an obligation to set out the losses that the Defendant states should have been incurred if the claimant had mitigated his loss. However this obligation is often not complied with.