McCague Borlack LLPLitigation Boutique, GLOBAL Litigation Law Firm

 

 

 

Articles and Publications

September 2016

Mitigation: Loss Control & Failure to Prevent

Marie-Pier Couturier
Marie-Pier Couturier,
Associate Lawyer

 

By Marie-Pier Couturier

First presented at a Client Subrogation Seminar.

Introduction

Mitigation is a common law doctrine based on fairness and common sense. As a general rule, a plaintiff will not be able to recover losses that could have been reasonably avoided.1

While a plaintiff bears the burden of proving the fact that he has suffered a loss and the quantum of that damage, the defendant bears the onus of proving, on a balance of probabilities, that:

  1. the plaintiff has failed to make reasonable efforts to mitigate and;
  2. that mitigation was possible.2

That doctrine of mitigation has been clearly stated in Red Deer College v. Michaels, [1976] 2 S.C.R. 324, where Laskin C.J. said, at p. 331:

If it is the defendant's position that the plaintiff could reasonably have avoided some part of the loss claimed, it is for the defendant to carry the burden of that issue, subject to the defendant being content to allow the matter to be disposed of on the trial judge's assessment of the plaintiff's evidence on avoidable consequences.3

Requirements to Mitigate

The general rule is that a plaintiff bears no obligation to mitigate, however, damages can be reduced if the plaintiff failed to take reasonable steps to mitigate his losses.4 For instance, the duty for mitigation may not apply when the injured party does not have the financial resources to reduce the damages.

A party that unreasonably fails to mitigate their losses reduces the quantum of damages to the extent that mitigation would have avoided the loss.5 For instance, if the plaintiff's actions partially avoided the loss, then a partial reduction of the damages is justifiable. If the plaintiff takes reasonable steps to mitigate his losses, he may recover the costs and expenses incurred in mitigation of damages.

The valuation of damages is therefore a “balancing process” as the Federal Court of Appeal stated in Redpath Industries Ltd. v. Cisco (The): “The Court must make sure that the victim is compensated for his loss; but it must at the same time make sure that the wrongdoer is not abused.”6

The requirement to take steps to mitigate losses is one such responsibility and it is argued by a party seeking justice in the particular circumstances of the case.

Mitigation in Property Damage Claims

The plaintiff's duty to mitigate can apply to events leading up to the loss and post loss depending on the circumstances of each case. In any event, the general principle is that the duty to mitigate applies to claims for breach of contract and tort.

A plaintiff's duty to mitigate damages in tort or breach of contract cases was further explained by Justice Wilson in Janiak v. Ippolito, [1985] SCJ No. 5 (QC) at para 33:

The principle to be applied with respect to the mitigation of damages in the case of tort is clear. The plaintiff is "bound to act not only in his own interests, but in the interests of the party who would have to pay damages, and keep down the damages, so far as it is reasonable and proper, by acting reasonably in the matter". "If any part of his (the plaintiff's) damage was sustained by reason of his own negligent or unreasonable behaviour, the plaintiff will not be recouped as to that part." However, "the question what is reasonable for the plaintiff to do in mitigation of damages is not a question of law, but one of fact in the circumstances of each particular case, the burden of proof being upon the defendant". The authorities show that once the plaintiff has "made out a prima facie case of damages, actual or prospective, to a given amount", the burden lies upon the defendant to prove circumstances whereby the loss could have been diminished. Not only must the defendant discharge the onus of showing that the plaintiff could have mitigated his loss if he had reacted reasonably, but he must also show how and to what extent that loss could have been minimized.7

...the obligation of a plaintiff is to act prudently and take the reasonable steps to not create additional damages.

In summary, the obligation of a plaintiff is to act prudently and take the reasonable steps to not create additional damages. However the plaintiff is not required to take extraordinary steps or all possible steps to mitigate the loss.

i) Pre-Loss Events

In contract and tort actions, failing to mitigate signifies that a party has not taken the necessary actions to prevent additional damage to its property. For example, what often starts as an undetected leak can quickly spread throughout the property and make detection extremely difficult. To mitigate losses, the home owner should be taking steps for early detection.

Mitigating in property damage actions can be a simple as removing fallen trees or branches from your property, covering damage parts of your property with tarps to prevent further damages, turning off your electricity to prevent a fire, turning off your water to stop a leak, drying out your home, etc. Depending on the extent of damage, you may need to retain a plumber, engineer, electrician, restoration company, contractor or other professional in order to mitigate those losses.

In addition, basic maintenance can also prevent a loss and reduce damages. For example, if you have an old tree in your backyard, one you know that has a disease or is dead, and it falls on your neighbour's house, you could be liable for the damages caused because you did not mitigate, or prevent damage, by removing the tree before it fell.

In the case of defective workmanship, consideration should be given to any parties who had an obligation to inspect such workmanship.This can include architects or engineers, construction managers, municipal inspectors, administrative authorities, etc. Although these parties often had no part in directly causing the loss, they may have been in a position to discover the defective workmanship which ultimately caused the failure, and can be held liable for this.

ii) Post-Loss

After a loss has occurred, a number of parties are responsible for mitigating the loss, such as emergency and security personnel, and those responsible for automatic mitigation systems such as sprinklers. In the event that the immediate response to the loss is not as effective as expected, there may be available avenues to pursue these parties for failure to properly respond to the loss. While actions as against emergency services such as fire departments can be difficult to succeed in, actions as against security companies, and parties responsible for the design and construction of fire suppression systems can be very lucrative. Unfortunately, this class of subrogation target will often not be held liable for the full extent of the loss, as they ultimately did not cause it. However, when more direct targets are not available, or have insufficient insurance coverage, pursuing these targets can greatly increase the recovery potential.

The Claims Adjuster's Duty to Mitigate

It is fair to say that everyone has a common law duty to mitigate their damages following a property loss. The duty to mitigate is also extended to claims adjusters following a loss.

The initial investigation following a loss is crucial.

The initial investigation following a loss is crucial. Mitigation requires for an adjuster to take the necessary steps to secure emergency and restauration services immediately after a loss and these services must be performed at an effective cost rate. When a fire loss or water loss occurs, immediate and appropriate action will help reduce further damages to the property and facilitate an efficient return to normalcy.

A defendant can reduce damages of the action by arguing that the plaintiff and the claims adjuster did not act promptly and reasonably in attempt to mitigate damages following the loss. The duty to mitigate following a loss can extend to the duty to effectively analyze the cause of the loss, providing prompt and accurate repairs services to a property and effectively monitoring and adjusting the claim.

Conclusion

We must keep in mind that if a claim appears excessive, a defendant will likely blame the insurer for running up unnecessary costs and the Court may reduce the quantum of damages if they could have been reduced or prevented.

There is no formula that can be used to assess the duty to mitigate in every matter. In any event, it is important to consider mitigation and how it might be applied to the circumstances of each case in order to assess how damages might be awarded.


1 Asamera Oil Corp. v. Sea Oil & General Corp., [1979] 1 S.C.R. 633, at p. 660.
2 Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, p.4.
3 Janiak v. Ippolito, [1985] SCJ No. 5 (QC) at para 32

4 Janiak v. Ippolito, [1985] 1 S.C.R. 146, at pp. 166-67; Darbishire v. Warran, [1963] 1 W.L.R. 1067 (C.A.), at p. 1075.
5 Andros Springs v. World Beauty, [1970] P. 144 (C.A.), at p. 154 (per Lord Denning)
6 [1994] 2 F.C. 279, at p. 302
7 Janiak v. Ippolito, [1985] SCJ No. 5 (QC) at para 33 ( quoting Buczynski v. McDonald (1971), 1 S.A.S.R. 569, Walters J., at p. 573)


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