NEW RULE CHANGES: THE RULES WILL NOW GET IT RIGHT ON PLEADING MITIGATION OF LOSS: A SMALL CHANGE THAT TOOK FAR TOO LONG

The 113th update to Practice Direction Amendments makes a small but  important change to the rules relating to mitigation of loss.  In short it puts the position right and stops the Practice Direction being the shambles it was before.  This change is long overdue. coming 21 years too late. The obligation on a claimant to plead facts relating to mitigation was most probably introduced by error in the first place, it directly contradicted what was said in the Woolf report about pleading.

 

THE CHANGE

The change is to Practice Direction 16.

“In paragraph 8.2(8), for “mitigation of loss or damage” substitute “a claim for
mitigation expenditure”.”

THE OLD RULE

This only makes sense if you consider the existing rule which puts the burden on a claimant to plead “(8) any facts relating to mitigation of loss or damage.”

THE OLD RULE WAS ALWAYS NONSENSE

The burden of proof in establishing a failure to mitigate loss lies on the defendant.   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 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”

The “old” rule didn’t help claimants or defendants.  It put claimants in an impossible position, it often led to defendants overlooking the point that the legal burden rested on them to prove mitigation of loss.

IT HAS TAKEN SOME TIME TO PUT THIS RIGHT

Six years after the Zurich case this position has now been put right.  In the interim (and before that) I have not been over-polite about this rule which, on its face, attempted to reverse the legal principles involved.

(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) )
The titles of the posts that criticised this rule give a clue.

This is what I wrote in 2019

“It is truly remarkable that, with all the amendments made to the Civil Procedure Rules, this anomaly has not been corrected.  The Woolf Report clearly envisaged that the duty to plead a failure to mitigate loss would lie with the Defendant.  At present a Practice Direction exists which everyone ignores (now with the Court of Appeal’s tacit blessing). If if were enforced it would make pleading Particulars of Claim highly technical and virtually unworkable. Further it does not reflect the law. It does reflect badly on the Rules Committee that it has not been corrected.”