Failure to mediate and the duty to mitigate loss

Clyde & Co (Neil Jamieson and Tom White) acted for Mr and Mrs Plant in separate proceedings.

The claimant brought a claim for professional negligence against its solicitors (the defendant) following its purchase of a property from Mr and Mrs Plant. That claim succeeded and one issue in this case was whether the claimant had failed to mitigate its loss. Following the purchase, Mr and Mrs Plant had commenced proceedings (seeking a declaration that the claimant's deposit was forfeit) and the claimant had counterclaimed for the return of its profit plus damages. That action had settled but the defendant argued that the claimant was not entitled to recover the full costs of those proceedings from it because the claimant had failed to mitigate its loss by mediating the dispute with Mr and Mrs Plant at an earlier stage.

The duty to mitigate is a duty not to expose a contract breaker or tortfeasor to additional expense by reason of the claimant not doing what it ought reasonably to have done. Here, the counterclaim/defence run by the claimant were intended to reduce the amount of the claim eventually brought by the claimant against the defendant. The judge concluded that: "it is not open to the defendants then to second guess the judgment of the claimant's advisers after the event as to how they should have conducted the litigation other than perhaps in very clear and obvious circumstances. Had it been the case that [the claimant] was refusing to mediate in the face of advice from its solicitors that it should do, or perhaps if it could be shown that there was an outright refusal to mediate from an early stage in the litigation, then the failure to mediate might constitute a breach of the duty to mitigate. However, there is no evidence that [the claimant] was refusing to take the advice it was given from its' solicitors or that [the claimant's] solicitors were refusing outright to mediate. Notwithstanding that in the end the case was settled with relative ease, the correspondence after the exchange of witness statements did not suggest that this was likely".

Echoing caselaw on whether costs should be awarded because of a failure to mediate, the judge accepted that the fact that a party believes it has a strong case is not sufficient reason in itself to refuse to mediate. However, here, both parties had agreed to delay mediation and had agreed that the prospect of a mediation succeeding earlier on was too low to justify the cost of such a mediation.

Accordingly, there had been no failure to mitigate.