Mitigation of Loss

Was a tribunal wrong to reduce compensation for failure to mitigate on a percentage basis?

Yes, held the EAT in Edward v Tavistock and Portman NHS Trust.

The Claimant appealed against a number of tribunal findings, including the finding that the Claimant had failed to mitigate his losses, and its consequent decision to reduce compensation for loss of past earnings by 50%.

The EAT found that the tribunal failed to direct itself on the principles of mitigation including the reasonableness of the Claimant’s failure to mitigate. The EAT noted that it could not be assumed that the tribunal held the correct legal test in mind when reaching its conclusions. In respect of the discount applied by the tribunal, the EAT found that the correct consideration when discounting compensation for a failure to mitigate is that in Gardiner-Hill v Roland Berger Technics Ltd, i.e., when, on the balance of probabilities, would alternative work have been found with any discount applied from that point onwards. The EAT noted that a percentage reduction, analogous to a loss of a chance approach, may be appropriate in circumstances where there was insufficient evidence before the tribunal on which to assess the balance of probabilities, but this was not such a case.

The EAT remitted the question of mitigation and past loss to the Tribunal for a rehearing along with some reminders as to the applicable legal tests on mitigation noting:

1. The burden of proof is on the respondent at all times.
2. The tribunal should consider: (a) what steps was it unreasonable for the claimant not to have taken? (b) when would those steps have produced an alternative income? (c) What amount of alternative income would have been earned?
3. The tribunal should make a finding based on a broad evaluation of all the available evidence and should not strive for a false appearance of precision; the tribunal is entitled to use its judgment to fix a suitable point in time from which to calculate any reduction.

Thanks to Olivia Selley of Harcus Parker for preparing this case summary.