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Reasonable Mitigation Obligations: Involves Duty to Avoid Unnecessary Losses or Damages
Question: What is the duty to mitigate damages in Canadian law?
Answer: The duty to mitigate requires individuals to take reasonable steps to minimize losses after a breach or wrongdoing. This doctrine applies across various legal areas such as tort, contract, and employment law. Should a party neglect this obligation, it may suffer a reduction in the recovery of damages, as the law views self-inflicted losses from inaction as the claimant's responsibility rather than the wrongdoer’s (see Southcott Estates v. T.C.D.S.B., [2012] 2 S.C.R. 675). To inquire how Askew Paralegal Services can assist you in understanding and navigating the complexities of mitigation, connect with us today.
The Duty to Mitigate Including the Standard of Efforts to Do So
In a conscientious society, reasonably minded persons prefer to avoid waste; and accordingly, the law imposes the principle of mitigation, being a duty to mitigate, upon a harmed party. This doctrine in law requiring efforts to mitigate applies to all matters of law including tort law, contract law, employment law, construction law, among other legal issues.
The Law
The Supreme Court very well explained the duty to mitigate within the case of Southcott Estates Inc. v. Toronto Catholic District School Board, [2012] 2 S.C.R. 675, whereas the court said:
[23] This Court in Asamera Oil Corp. v. Seal Oil & General Corp., 1978 CanLII 16 (SCC), [1979] 1 S.C.R. 633, cited (at pp. 660-61) with approval the statement of Viscount Haldane L.C. in British Westinghouse Electric and Manufacturing Co. v. Underground Electric Railways Company of London, Ltd., [1912] A.C. 673, at p. 689:
The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.
[24] In British Columbia v. Canadian Forest Products Ltd., 2004 SCC 38 (CanLII), [2004] 2 S.C.R. 74, at para. 176, this Court explained that “[l]osses that could reasonably have been avoided are, in effect, caused by the plaintiff’s inaction, rather than the defendant’s wrong.” As a general rule, a plaintiff will not be able to recover for those losses which he could have avoided by taking reasonable steps. Where it is alleged that the plaintiff has failed to mitigate, the burden of proof is on the defendant, who needs to prove both that the plaintiff has failed to make reasonable efforts to mitigate and that mitigation was possible (Red Deer College v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324; Asamera; Evans v. Teamsters Local Union No. 31, 2008 SCC 20 (CanLII), [2008] 1 S.C.R. 661, at para. 30).
[25] On the other hand, a plaintiff who does take reasonable steps to mitigate loss may recover, as damages, the costs and expenses incurred in taking those reasonable steps, provided that the costs and expenses are reasonable and were truly incurred in mitigation of damages (see P. Bates, “Mitigation of Damages: A Matter of Commercial Common Sense” (1992), 13 Advocates’ Q. 273). The valuation of damages is therefore a balancing process: as the Federal Court of Appeal stated in Redpath Industries Ltd. v. Cisco (The), 1993 CanLII 3025 (FCA), [1994] 2 F.C. 279, at p. 302: “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.” Mitigation is a doctrine based on fairness and common sense, which seeks to do justice between the parties in the particular circumstances of the case.
Accordingly, mitigation requires the minimizing of harm. Failure to minimize the harm is a failure to mitigate and may reduce sums that a wrongdoer owes to the person harmed whereas when a failure to mitigate occurs, it is the person who was harmed and failed to reasonably minimize loss that caused some of the harm. Simply said, where the Defendant does something wrong resulting in harm to the Plaintiff, the Defendant is responsible only for the portion of the harm that arises directly due to the wrongdoing of the Defendant and where a portion of the harm occurs or accrues because the Plaintiff failed to minimize that harm, the Plaintiff is at blame for the portion of the harm.
Conclusion
A Plaintiff (or Defendant within a counterclaim) is required to mitigate by taking reasonable steps to keep losses at a minimum. Where a Plaintiff fails to reasonably take steps to minimize losses, it is the inaction of the Plaintiff rather than the wrongdoing of the Defendant that caused such losses. Where failure to mitigate is alleged by the Defendant, it is the Defendant who holds the duty to prove that the Plaintiff failed to mitigate and that a reasonable opportunity to mitigate was available; furthermore, the duty upon the Plaintiff is to take reasonable steps in the effort to mitigate rather than take steps to perfectly mitigate and a Defendant is unable to use the vision of hindsight to argue what the possible opportunities to mitigate were available to the Plaintiff. Again, the duty is to act reasonably without expectations of perfection.
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