The recent case of Thai Airways International Public Company Ltd v KI Holdings Co Ltd [2015] EWHC 1250 held that when assessing damages, a claimant must account for any financial benefit received as a result of taking reasonable steps to mitigate its loss. However, the defendant bears the burden of proving that a benefit exists.

Thai Airways had contracted with Koito for the supply of economy class seats for some of its planes. However, in breach of contract, Koito had delivered some of these seats late, and others not at all, meaning that Thai Airways could not use some of its planes.

In order to mitigate its loss, Thai Airways leased additional planes from a third party and purchased some alternative seats from another party.  These seats were more expensive, but because there were lighter, this resulted in fuel savings for the airline.

The Commercial Court held that any profits made from operating the leased planes over the profitsThai Airways would have earned had the contract been performed, had to be taken into account when undertaken an assessment of damages, and that as part of this assessment, the fuel savings from using lighter seats over their economic life also had to be taken into consideration. However,Koito had to prove any derived benefit from the steps taken in mitigation, such as being required to prove the difference in weight differential between the two different types of seats.  

The case shows the importance of taking into account not just the loss incurred but also the benefits you have received in mitigating your loss when calculating damages for a breach of contract claim. As the burden for proving any benefit lies with the defendant, it is important to seek disclosure of all relevant documentation relating to any perceived benefit and, where appropriate, to consider seeking expert evidence on the same.

http://www.bailii.org/ew/cases/EWHC/Comm/2015/1250.html