THE RIDICULOUS RULES ABOUT PLEADING MITIGATION OF LOSS: DOES THE RULES COMMITTEE JUST NOT LISTEN (OR JUST NOT CARE)?

The previous post in this case on the judgment in Pepe’s Piri Piri Ltd & Anor v Muhammad Ali Junaid Food Trends Ltd (Now Dissolved) & Ors[2019] EWHC 2769 (QB) highlights the problems posed by one of the most ridiculous rules that exist.  The, frankly fairly stupid, Practice Direction about the pleading of mitigation of loss.   It is a disgrace that this issue has not been addressed.

THE PIRI PIRI CASE

The case involved a claimant needing to obtain relief from sanctions to adduce further witness and expert evidence because, very late in the day, the defendant’s expert report made a number of observations about the claimant’s failure to mitigate loss.

HOW COULD THIS HAPPEN?

This late gathering of additional evidence to deal with a new issue runs against all the principles of modern litigation.  The aim is that the parties know, at the earliest possible state, precisely what the issues are so that the evidence is concentrated on these issues.

This scenario comes about because of the nonsense in Practice Direction 18.

 PRACTICE DIRECTION 16

Practice Direction 16 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.”

THE FACT THAT IT IS NONSENSE HAS BEEN RECOGNISED FOR A LONG TIME

In Zurich Insurance Plc -v- Umerji [2014]  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 Reply.”

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:

 “Paragraph 8.2 (8) of the Practice Direction to Pt 16 of the CPR imposes an obligation upon a claimant to specifically set out: “any facts relating to mitigation of loss or damage”.When looking at this direction for the first time (Woolf reforms (8) (1999) 143 SJ 234, 12 March). I was critical of this, describing it as “ridiculous in the extreme”. It ran totally contrary to Lord Woolf’s proposals. In his interim report, Lord Woolf considered imposing a specific obligation on the defendant to plead matters such as mitigation of loss. I thought it was an obvious mistake that would soon disappear. However, the Practice Direction remains in place. It is worth reviewing just how wrong it is.The proposal in the Woolf Interim Report is clearly the correct approach since the burden of proof in establishing mitigation of loss is on the defendant. Curiously there is no obligation on the defendant to plead mitigation of loss, although the interim report said a specific obligation would be imposed.”

(You can see the article here) )

WHAT THE JUDGES SAY

There is not,  to my knowledge, a single case where a judge has held that there is an obligation on a claimant to plead how it mitigated loss.  Indeed the Privy Council was quite clear on this point inGeest Plc v Lansiquot [2002] UKPC 48 where the defendant raised a point on mitigation of loss during the course of an assessment of damages hearing.

This assessment proceeded without any pleading and without any evidence beyond the plaintiff’s affidavit and oral evidence. This is not unusual. Many such assessments proceed in a relatively informal manner. The object is to ascertain the plaintiff’s medical history since the accident and to assess the plaintiff’s continuing symptoms and long-term prospects, with a view to putting a money value on the plaintiff’s pain and suffering,  loss  of amenity and financial  loss . Had there been pleadings, however, it would have been the clear duty of the company to plead in its defence that the plaintiff had failed to mitigate her damage and to give appropriate particulars sufficient to alert the plaintiff to the nature of the company’s case, enable the plaintiff to direct her evidence to the real areas of dispute and avoid surprise (see Bullen & Leake & Jacob’s Precedents of Pleadings, 14th ed (2001), vol 2, page 1103, paragraph 71-13; Rules of the Supreme Court, Order 18 rule 12(1)(c), Order 18 rule 8(1)(b); The Supreme Court Practice1999 (published September 1998), vol 1, paragraphs 18/7/4, 18/7/11, 18/8/2, 18/12/2, 18/12/13). In this instance, no complaint was made by the plaintiff’s leading counsel when counsel for the company advanced this argument, perhaps because he had been warned in advance, and no point was taken in the Court of Appeal or before the Board on the procedure adopted. It should however be clearly understood that if a defendant intends to contend that a plaintiff has failed to act reasonably to mitigate his or her damage, notice of such contention should be clearly given to the plaintiff long enough before the hearing to enable the plaintiff to prepare to meet it. If there are no pleadings, notice should be given by letter.”