THE IMPACT OF FAILURE TO MITIGATE DAMAGES ON A CLAIM FOR COSTS: CLAIMANT’S COSTS CONFINED TO SMALL CLAIMS TRACK

I am grateful to Simon Fisher, Costs Lawyer at DWF Costs Ltd, for sending me a copy of the decision of District Judge Matthews in Messenger -v- Zenith Insurance (3rd July 2019). A copy of the transcript is available here. Alan Messenger – Slough CC – Judgment – 20190703 – V FINAL

THE CASE

The claimant brought a claim for credit hire costs following an accident. His claim for personal injury had been dealt with separately.

THE DAMAGE TO THE CLAIMANT’S VEHICLE

The damage could have been repaired by replacing a lamp at a cost of £230 (excluding VAT) plus a figure (possibly £300) in relation to storage charges.

The claimant hired a vehicle for 337 days.  He argued that he could not afford the repair costs and hired the car for some 11 months.

The claimant accepted the defendant’s offer to settle in relation to the hire claim, which had been pleaded in excess of £40,000.  The consent order provided that the defendant would pay the claimant’s reasonable costs of the action on the standard basis. The order also stated “neither party is prevented from raising any issues relating to conduct, if relevant, in the detailed assessment proceedings.”

The question the judge had to decide was whether the claimant had failed to mitigate his loss and, if so, whether this was relevant conduct and the effect of that conduct on the costs order.

FAILURE TO MITIGATE LOSS

The District Judge made a clear finding that the claimant had failed to take reasonable steps to mitigate his loss.

I am quite satisfied and find as fact, based on the documents to which I have been
referred and which are in the claimant’s trial bundle and which are attached to his own
witness statements, that the claimant has failed to mitigate his loss by taking up the sensible
option which he wanted of undertaking the temporary repair for £230 plus VAT and his
failure also to pay the modest storage charges, which I am satisfied, looking at his bank
statements, looking at the credit entries that were in that account each and every month, albeit
of varying amounts, that it was a straightforward matter for him to have taken that option
through to its logical conclusion. And bring to an end, as a consequence, his own personal
liability to discharge a much higher obligation of credit hire charges, which were escalating
at the rate pleaded in the particulars of claim and were, as far as I can recall, something in the
region of £75 or so per day

THE EFFECT OF A FAILURE TO MITIGATE LOSS ON THE CLAIM FOR COSTS

The judge then went on to consider the impact of the finding of a failure to mitigate on the claimant’s claim for costs.
What is the consequence of that finding? A failure to mitigate the loss. A finding
which is of adverse conduct and highly relevant conduct to the issue of costs. May I remind
myself that my duty is to assess costs which are reasonably incurred and reasonable in
amount and proportionate. I have considered, in addition to the submissions, the points
raised in the points of dispute by the cost lawyers who prepared those documents, for which I
am grateful. It seems to me clear beyond per adventure that had the claimant taken up that
option, any claim for hire charges would have been well within the small claims track
alternative regime. Yet this case progressed to a multi track cost budgeting, albeit agreed,
CCMC and further protracted litigation.
33. In my judgment, it follows that, in general terms, all the costs that have been incurred
relating to hire beyond the end of May 2012, in the sense of any obligation upon the claimant
to pay, have been unreasonably incurred, because of his failure to mitigate this loss. The
claimant was aware of his own circumstances. He was aware of his own finances and both
he and Accident Exchange had entered into a contract which included the obligation upon the
claimant, which I have described, of taking reasonable steps to keep the rental period to a
minimum.
34. So in my judgment, the starting point for assessment of costs in this particular case
must be that this costs here should be on the basis, at least as a starting point, of the small
claims track costs provisions. But it is conceded by both counsel that it is open to me to look
at particular items, if necessary, of expenditure which can perhaps satisfy the test of
reasonableness and proportionality in the context of this particular case. So unless there is
something that I have not covered in this judgment, that brings my ex tempore judgment to
an end.