Briefing 07 February 2017

Conduct of Claimant can lead to reduced damages

Author:

Tom Sandeman

Associate
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Summary and implications

Two cases decided within the past year have highlighted that the actions or conduct of claimants can play a significant role in affecting the measure of damages awarded by the courts. In the cases considered in this article, both claimants, although technically successful in their causes of action, were awarded damages that were significantly less than expected.

Mitigation of loss

In Bacciottini and anr v Gotelee and Goldsmith (a firm) [2016] EWCA Civ 170, the claimant had purchased a property for £600,000 for the purposes of redevelopment. However, the claimant’s solicitor had failed to advise him that there was a planning restriction affecting the property, which would prevent the development that the claimant was planning to carry out.

The claimant brought a claim for negligence and was awarded £250 in damages. The claimant appealed on the basis that he believed he was entitled to £100,000 – the estimated difference in value between the property with and without the planning restriction.

However, the Court of Appeal upheld the High Court’s decision. The claimant was entitled only to £250: the cost of an application to the local authority to remove the restriction. The court held that, in making the application, the claimant had mitigated his loss, which he had been under a duty to do. The property was no longer burdened by the restriction and therefore the claimant had suffered no more loss than the cost of the application. Any higher award of damages would represent over-compensation.

One of the claimant’s arguments in the trial was that the case was one of “capital loss” rather than “ongoing loss”, meaning that the loss to the claimant should be fixed on the date of purchase of the property. On this basis, the claimant claimed that damages should be assessed at the date of purchase and that any subsequent action, including mitigation, was irrelevant.

The court categorically dismissed this argument, confirming that the general rule that damages are assessed at the date at which the damage occurred is a starting point only and should not be applied mechanistically. The importance of taking into account a claimant’s mitigation of his own loss when awarding damages was therefore reinforced.

Conduct of claimant

In FlyMeNow Limited v Quick Air Jet Charter GmbH [2016] EWHC 3197 (QB), the claimant, an aircraft charter company, was successful in its claim in defamation against the defendant German aviation company. The defamatory material in question was an email, circulated by the defendant to a list of contacts from an aviation industry conference, which warned recipients “against doing business with” the claimant because it was “not able to pay outstanding amounts” owed to the defendant.

The court found that the email was defamatory and that the defendant could not rely on the defence of justification. Although there was evidence that the claimant was “operating on a knife edge”, it could not be proved that it was actually insolvent. In this respect, the claimant was successful.

However, the court ordered that damages be awarded to the claimant of just £10. The reason for such a nominal amount was the claimant’s conduct in dealing with the defendant. In particular, the claimant had failed to pay the defendant’s invoices and had lied repeatedly to the defendant about the reasons for non-payment, “fobbing it off with a series of dishonest excuses”. The claimant’s own “disgraceful” conduct had therefore played “a significant role in causing the defendant to publish the untrue allegation of insolvency”.

Summary

Claimants should take note of the circumstances in which an award for damages, following an apparent win in court, may not deliver the financial benefits expected and bear in mind this risk when approaching and conducting litigation.

Of course, a claimant is under a duty to mitigate its loss and may be penalised heavily in costs if it is found to have failed to do this. However, it is clear that any mitigation will also be taken into account in relation to damages: a party will not be allowed to recover more than the loss it has suffered.

Poor conduct on the part of a claimant, either before or once proceedings are anticipated, is also very likely to reduce the level of damages awarded. Claimants should be aware of the risk of unreasonable or dishonest behaviour coming before a judge in court and ensure that business operations are conducted with this in mind.