Suffered a financial loss and want to sue? You have the duty to mitigate.

By Merovitz Potechin on Tuesday September 29, 2020.

When you suffer a financial loss that gives rise to a claim, there is an obligation on you to try and minimize your losses. This is referred to as the duty to mitigate. A common question is, does the duty to mitigate extend to an obligation to sue all potential parties who may be responsible for the loss you incurred? The following examples will help explain.

The Duty to Mitigate

In Ontario, you have a duty to mitigate your loss. Simply put, if you have a reasonable option available to you to reduce your losses, you should exercise that option. Generally, you will not be able to recover for those losses which could have been avoided by taking reasonable steps. Here is an example:

A cyclist scrapes the door of your car, scratching the paint. You could go and fix the paint at a cost of $500.00. You choose not to fix the door right away and instead, wait for a year. By that time, the whole door is rusted, and you need to replace the entire door, at a cost of $2000.00.

You then sue the cyclist for $2000.00 because the door would not have rusted if it were never scratched. However, the Court will likely find that you ought to have taken reasonable steps to mitigate your damages by getting it fixed earlier, at the lower cost of $500. Your failure to mitigate resulted in $1500.00 in extra damages, and therefore you will only be awarded $500.00.

Although the above is a straightforward example, sometimes the question of “what is a reasonable step” to mitigate, is a complex question.

Who to sue?

Taking the cyclist example and expanding on it, assume that two people are riding a tandem bicycle and they scratch your car door. Who should you sue? If you only sue one person of the two, can that person claim that you failed to mitigate your damages by not suing the other?

The short answer is no. You are entitled to choose who you want to pursue a claim against and failing to choose one over the other is not a failure to mitigate.

One situation exists, however, where the failure to sue a different party may result in a Court finding you failed to mitigate. This is when the defendant can show that if you had sued the other party the total amount of damages would have been less. This is best illustrated by another example:

 An Ontario Court found that a Plaintiff failed to mitigate their damages when they did not take legal action against a third party – a retailer – to stop them from selling their trademark infringing goods.

Had the Plaintiff taken legal action against the third-party, their total damages against the main Defendant (the infringer) would have been less. Not suing that third-party lead to a higher total amount of loss and the Court found the Plaintiff ought to have mitigated their damages by suing the third-party, rather than the infringer.

The Courts will likely find a duty to mitigate does not exist where the amount of the claim is the same and the question is merely “which party to sue”. However, if you could have reduced your total amount of loss by suing a different party, then the Courts may find you failed to mitigate your losses.

If you have suffered damages and are unsure of who to sue, or how to reasonably mitigate your losses, contact one of our experienced litigation lawyers at Merovitz Potechin LLP.