Mitigation of Loss: The Duty to Mitigate

There is a phrase that an insurer frequent relies on when seeking to unsettle a claimant. Where the insurer perceives the building of a claim by the injured claimant, which may not be sustainable, you can be assured that a letter will arrive from the insurer, including the familiar phrase, “your client has a duty to mitigate their loss”. It always makes me smile, because the insurer is wrong. The purpose of this short article is to clarify what the law says about mitigation of loss and to provide some practical examples of how the law has been applied. I also hope to furnish some practical advice along the way.

The Duty to MitigateThe insurer will say the claimant has a duty to mitigate their loss. That is not the law. There is no absolute legal duty for a claimant to mitigate their losses. The position was succinctly set out by Sir John Donaldson M R in In Sotiros Shipping Inc v Sameiet Solholt ([1983] 1 Lloyd’s Rep), when he stated:”A plaintiff is under no duty to mitigate his loss, despite the habitual use by lawyers of the phrase “duty to mitigate””. However, it does not follow the claimant can do nothing, perhaps spending the rest of his working life watching daytime television. To do so would be perilous, as the judgement goes on with the following: “He is completely free to act as he judges to be in his best interests. On the other hand, a defendant is not liable for all losses suffered by the plaintiff in consequences of him so acting.”

Therefore, whilst it is for the claimant to decide, quite freely, what he will do following injury, if he does so without careful reflection on its consequences, he may find himself out of pocket. So what is the claimant to do? The claimant is required to act reasonably. Whether he has done so is a matter of fact, not law.

The law gives the benefit of the doubt to the claimant, as illustrated in Banco de Portugal v Waterlow and Sons Limited [1932] AC 452. Lord Macmillan said: “It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency”.

Consequently, it follows that in seeking to reduce a loss, when a claimant makes the wrong choice (with hindsight) it does not automatically follow that his claim will be reduced on the grounds that he has failed to mitigate his losses. Helpfully Laws L J said in Samuels v Benning [2002] EWCA Civ 858, “…it is settled law that the onus of proving that a claimant failed to mitigate his damage lies on the Defendant to show that the claimant ought, on the facts, reasonably to have pursued some course of action which he did not in order to mitigate his loss”.

There are two areas arising out of personal injury litigation, which frequently give rise to arguments over mitigation of loss, those being medical treatment and loss of earnings.

Medical TreatmentDefendants will seize upon the claimant’s decision not to undergo surgery. However, in Steele v Robert George and Co (1937) Limited [1942] A. C. 497 Viscount Simon L.C. spoke of “the onus which rests on the employer of proving that the refusal (to undergo medical treatment) was unreasonable”. A similar view was expressed in Richardson v Redpath Brown and Co Limited [1944 A.C 62. A more recent practical application of the principle is found in Geest PLC v Monica Lansiquot [2002] UKPC 48 .

In Geest the claimant worked as a shipping manager. She slipped and fell, sustaining a prolapse at L4/5. Conservative treatment was advised. However, following little improvement she consented to a decompression procedure, although the consultant had also advised that in the event of failure he would recommend a discectomy, with possible fusion of the spine. Lansiquot showed some improvement following the decompression but suffered a relapse. Her consultant talked about a discectomy or perhaps a more conservative approach. The claimant then sought the advice of a rheumatologist, who advised surgery was the best option. However the claimant was not keen on further surgery so elected for the conservative approach.

Unfortunately her condition did not improve so surgery was explored again. The consultant said it was the only option; it may provide relief but had no guarantee. Nevertheless in most cases the procedure did relieve pressure and eradicate pain. The claimant gave evidence that she was not keen, had considered further surgery but had decided against it. She had reached the decision carefully and with deliberate decision.

The Court of Appeal held the Claimant had not acted unreasonably. The Judicial Committee of the Privy Council upheld the decision. The burden was on the Defendant to show the claimant had acted unreasonably. An important practical point to note from this was that the claimant gave evidence on the issue and was able to explain how she had reached her decision. Therefore, if the defendant alleges failure to mitigate in similar circumstances, the claimant must explain their actions and the basis of their decision. This should be set out in the witness statement, not left to trial in the hope that counsel can deal with it. The claimant should meet the allegation head on in their written evidence. The second practical point to make is that when a defendant makes an allegation of failure to mitigate, the claimant should not engage in correspondence. The case will not be won or lost in correspondence, but in evidence, whether at trial or an alternative forum for resolution.

If the claimant engages in war by correspondence, there is a risk that they are simply providing bullets for the defendant to fire later, with potential devastating consequences at trial. Therefore, once the allegation is raised, the claimant should focus their energies on defeating the allegation by preparing the evidence. Another example concerning medical treatment is in Edmonds v Lloyds TSB Group PLC [2004] EWCA Civ 1526.

In this case, it was suggested the claimant would benefit from a series of cortisone injections for her back injury, which would be given under general anaesthetic. It was anticipated by the medico legal expert that with these injections the symptoms would settle over a period of 6 months. The claimant consulted with her GP, who was less confident. Beyond the GP, the claimant also spoke to friends, who had similar injections. She then returned to her consultant who could not guarantee success. As a consequence she decided not to proceed with the injections. The defendant raised questions of the expert, who opined there was a 50% chance of significant improvement, 30% chance of temporary improvement and 20% risk of no improvement.

The claimant lost at trial but succeeded in the Court of Appeal. Gage L J identified 50% as not being high. Further, there was a 50% risk of little or no improvement. The views of the doctors were relevant. The GP did not recommend the treatment and the consultant respected the claimant’s decision. Like the Geest case, there was good evidence as to how and why the claimant reached their decision.

An explanation is always going to be important and thus if a claimant cannot properly explain their decision, they may find themselves at the wrong end of a judgment. Unfortunately, even if they can explain their decision, this will not necessarily avoid a finding of failure to mitigate. A case that is better known for the issue of alleged fraud, but is also relevant to this issue of mitigation, is the case of Noble v Owens [2008] EWHC 359 (QB). Following serious injury the claimant was left with urinary incontinence. Treatment was available subject to preliminary examination. However, the claimant was uninterested in proceeding as he felt had he had more than his fair share of surgical intervention generally and was concerned about contracting MRSA again.

This was a case where the claimant gave a clear explanation for this decision and thus based on previous authority one would have expected the defendant’s allegation of failure to mitigate, to fail. However, Field J was against the claimant. It was accepted there was a risk attached to the general anaesthetic, but the risks were low and the treatment was only mildly invasive. The claimant was also considered to be unreasonable in refusing to wear a Convene. Consequently, an explanation will not always suffice if, as in this case, the risks arising from medical treatment are minimal. Decisions will always be fact sensitive. A final (but slightly different) example of medical treatment can be found in Eagle v Chambers [2003] EWCA Civ 1526, where the issue was one of rehabilitation. The dispute was whether the Defendant should pay for an expensive course of rehabilitation at a brain injury rehabilitation centre. The evidence was that the claimant was likely to benefit but it would not make a material difference to the overall cost of care. The Defendant opposed it on the ground of cost. The court found that the rehabilitation was appropriate and a proper mitigation step in the circumstances.

Loss of EarningsAll the following cases are fact sensitive, although the theme of good evidence to explain the claimant’s action, is frequently central to the outcome. In Butler v Thompson [2005] ECA Civ 864 the claimant teacher sustained a serious brain injury but was still able to seek alternative employment. She worked part time in a souvenir shop.

She was to be paid £2,000 pa but by her own admission could probably work a few more hours, equivalent to £3,500. On appeal it was held that her loss would be determined by this figure, rather than what she was earning. It is a case that demonstrates that whilst the burden (of failure to mitigate) is on the defendant, the claimant may be the one who provides the evidence and thus acts as a warning to claimants to thoroughly prepare and to consider the consequences of the evidence to be put before the court. In Ronan v Sainsbury’s Supermarkets [2006] EWCA Civ 1074 the Court of Appeal had to consider whether a student should have mitigated his losses by remaining at work rather than pursue a university education.

At the time of his serious accident the claimant had been studying a one year foundation course at art college, with a view to going to university. The course finished about six months post-accident. The claimant decided not to go to university but to work for Abbey National. He did well but had to take time off for protracted surgery and rehabilitation. He had complications, including a bout of depression. Three years post-accident he decided not to return to the bank but to go to university to study sports rehabilitation and injury prevention. By the date of trial he had completed his degree and was planning a career in teaching.

The defendant contended the claimant’s loss of earnings was due to his voluntary decision for a career change and not a consequence of the accident. He had made a choice. The Court of Appeal held the claimant’s decision not to abandon his studies towards a qualification upon which he had embarked (before the accident) could not be characterised as an unreasonable failure to mitigate his loss. The Claimant’s decision making process had been clear, intelligible and fully supported by evidence. A contrast can be found in the next case. In Samuels v Benning [2002] EWCA Civ 858 the claimant vehicle recovery driver sustained serious injuries, which prevented him from returning to his pre accident employment.

He therefore commenced a period of academic study, at Anglia Polytechnic University, to study for a BA in Humanities. The judge was critical of this step, not because it lacked intrinsic or educational merit but because it was wholly unrealistic, for this particular claimant. He said the claimant was not in the real world, when taking account of his injuries, which would impact on the range of opportunities following his injury. They consisted of a serious head injury, causing headaches, PTSD, memory loss and concentration, as well as back pain and limited mobility. The Court of Appeal upheld the appeal. A claimant cannot be forced to take an unattractive job because of the accident. It is always fact sensitive but a claimant cannot be forced to undertake a job that he finds unfulfilling.

In Morris v Richards [2003] EWCA Civ 232 a seriously injured radiographer could not return to her pre-accident job but was successful as a marketing manager, earning more than her pre accident occupation. However, she did not enjoy her new role and after 7 months resigned. At the date of trial she was unemployed. The Defendant argued failure to mitigate. On appeal the Court of Appeal said the proper place to start was to state the defendant was to blame for the injuries and that this had caused her to lose her job for which she had trained. It was a fact sensitive decision and the Court of Appeal upheld the judgement in favour of the claimant.

It would be wrong to judge her harshly. However, not every claimant who relinquishes a financially rewarding position post-accident, is going to find a court sympathetic, as we will read in a moment. In Froggatt v LEP International [2002] EWCA Civ 600 the claimant, following injury was not able to return to his pre-accident work. The employer did not have light work and would not take him back.

Therefore the claimant applied for alternative work, but was unsuccessful and could not undertake retraining as technically, he was still in work, because he remained on the employer’s books. By doing so he secured his pension provision. The defendant failed to show the claimant had acted unreasonably in not seeking alternative work. In Abbs v Somerfield PLC [2010] EWHC 735 (QB), the 56 year old plumber was injured so that he could not return to work. He had worked on his own throughout his life and had an ingrained reluctance to work with or for others. Additionally, he had no relevant skills including, IT skills and had a reluctance and inability to change.

His age further militated against his wish to find further employment. The court found on the detailed evidence that Mr Abbs was not unreasonable in refusing to look for alternative employment. In many cases where an injured claimant cannot return to his pre accident role, one would anticipate significant criticism if that claimant does not show an enthusiasm for finding alternative work. However, this case demonstrates that where it is wholly unrealistic, through a combination of age, personality and transferable skills, the defendant will not succeed with the mitigation of loss argument. The case of Connor v Bradman and Co Ltd [2007[ EWHC 2789 (QB) is better known for the issues arising out of the Ogden Tables. However, it is also worth a read on the issue of mitigation of loss, as the court restated the position that a claimant does not have to seek work which he is not suited to, nor that for which he does not possess the requisite skill and experience, just as in Abbs. The defendant contended that the Claimant’s decision to become a taxi driver was the result of a failure to mitigate his loss and that, instead, the Claimant should have explored with Saab (his pre accident employer) ways in which he might stay working for that organisation after his knee replacement surgery.

The principal difficulty with this argument was that, as the evidence demonstrated, the range of jobs available at Saab was limited. The Claimant was and had always been a mechanic. He liked working with cars. He did not believe that he had the aptitude to be a salesman, and in particular he said that he could not deal with the stress that they habitually suffer. He smiled wryly at the suggestion that he could work in the offices for Saab: his evidence made clear that the claimant was not a natural office worker. There was no evidence of any alternative employment within Saab. The Claimant has spent all his working life in and around motor cars. He liked driving and the accident had not put him off driving. It was deemed a very sensible decision on his part to conclude that, once he could no longer be a mechanic, he would be best suited to being a taxi driver.

Accordingly, the court did not accept that there had been any failure to mitigate on the part of the claimant. He was not obliged to seek alternative employment to which he would not be suited and for which he had no obvious aptitude or experience. He was obliged to find alternative employment which he could reasonably do. However, if a claimant following injury has the opportunity and takes a different job, but later gives that up, he may found to have acted unreasonably. This was illustrated in the case of Dudney v Guaranteed Asphalt Ltd [2013] EWHC 2515(QB). At the time of the accident, the claimant was a lead worker, but due to the left arm injury he was unable to return to his pre accident role. The defendant found alternative work, in a supervisory capacity, office based, which resulted in a modest sum lost in earnings. About two years post accident, the claimant was made redundant but decided to start his own roofing business. The defendant argued failure to mitigate, as the claimant had not sought general roofing work or supervisory work, for which he was able. The judge accepted the claimant had continuing symptoms in his hand, but that those symptoms did not prevent the claimant from doing heavy manual or general roofing work. The claimant also accepted, when put to him, that he could do the work of a roofing supervisor.

However, this was not what the claimant wanted to do in life. He had been a lead worker and was now deprived of that work. Gore H H J said it was telling that the claimant upon redundancy had a choice: to be a roofing supervisor or be his own boss. He chose the latter “and that was entirely his personal choice”. Therefore, “To the extent that he has lost income, he has lost it by his choice to be, as was put to him, his own boss…” The consequences for the claimant were significant and illustrate the perils of, perhaps, not adopting a realistic view of the financial consequences, when deciding upon work following injury. Conclusion The law is clear in that there is no absolute duty to mitigate and as indicated, claimants should not seek to argue the issue in correspondence. However, they should reflect on their circumstances and whatever the issue under attack, should ensure there is good evidence before the court to explain the course or decision taken. If a claimant fails to do so, then they run the risk of the defendant succeeding in their failure to mitigate argument. Good evidence, in statements, documents and experts reports is essential for success.

Malcolm Underhill September 2013

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