CIVIL PROCEDURE BACK TO BASICS 82: PLEADING MITIGATION OF LOSS

One surprising aspect of the defendant’s argument in Tejani v Fitzroy Place Residential Ltd & Anor [2020] EWHC 1856 (TCC) was the assertion that the particulars of claim were defective because the claimant did not plead a failure to mitigate loss.  This argument, one assumes, was based on the previous wording of the rules. The previous rules were always nonsensical in any event, to the extent that the Court of Appeal noted that they were not observed.

 

THE DEFENDANT’S ARGUMENT IN TEJANI

Leading counsel for the defendant argued that the particulars of claim were liable to struck out because of a failure to plead to matters relating to mitigation of loss.

 Thirdly, he argues that Mr Tejani pleaded no details of the steps taken to mitigate his losses. Mr Blaker contends that the pleader should have set out the efforts made to market the apartment for sale and to find a tenant. Further, he asserts that Mr Tejani should explain the advice that has been obtained from selling or letting agents.

THE JUDGE’S RESPONSE

“… there is no merit in the complaint that Mr Tejani did not plead the steps that he had taken to mitigate his losses. On analysis, Mr Blaker was again seeking evidence, but in any event it is of course for the Defendants to plead and prove any alleged failure to mitigate loss. Mr Tejani was under no obligation to plead anything about the issue in his Particulars of Claim, unless he sought damages for additional losses incurred in a reasonable attempt to mitigate his loss.”

WHAT THE RULES SAY

The rules were changed on the 6th April 2020. The 113th update to Practice Direction Amendments made a small but  important change to the rules relating to mitigation of loss. This part of the Practice Direction sets out those matters which must specifically be set out in teh particulars of claim if relied on.  The amendment in 2020.

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

This means that the rule now reads that a claimant must plead facts relating to mitigation expenditure, as explained by the judge in Tejani.  There is no obligation for a claimant to plead to matters relating to mitigation of loss, apart from any mitigation expenditure.

 

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”

WEBINAR ON MITIGATION OF LOSS

I am presenting a webinar on deductions from damages and mitigation of loss in personal injury cases on the 11th August 2020.  Details are available here.