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 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  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:
WHAT THE JUDGES SAY
HOW IS THIS ALLOWED TO GO ON?
DOES THE DEFENDANT HAVE ANY OBLIGATION TO PLEAD LOSS?
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.
A CONTINUING DISGRACE