Vella v Institute For Independent Business

In a contractual damages claim, the defendant bears the burden of showing that the claimant failed to mitigate loss. The issue is whether the claimant took all reasonable steps to reduce the loss, assessed on the evidence. An appellate court should not disturb findings of fact and credibility where the lower court was entitled to reach them. Nor should it reopen a later trial on the basis of a discovery ruling that was not appealed. Where contractual terms require only limited activity and impose no exclusivity, there may be no duty to seek alternative income or give credit for income received; that point was assumed rather than finally decided.

The Institute appealed from an order of His Honour Judge Marr-Johnson, who had upheld District Judge Lipton’s refusal to reduce damages awarded to Mr Vella. The original trial had resulted in judgment for Mr Vella following the termination of a business consultancy arrangement and a related income guarantee. A further hearing was directed on mitigation, although the issue had not originally been pleaded or argued. The district judge found that Mr Vella had taken all reasonable steps to obtain alternative income and made no reduction. The appeal concerned the adequacy and fairness of the hearing, the relevance of undisclosed bank statements, the approach to employment and mitigation, and whether the damages order included costs.

Lord Justice Mantell gave the substantive judgment. Lord Justice Tuckey and the Vice-Chancellor agreed.

1. Appeal dismissed. The appellant had received a fair hearing before His Honour Judge Marr-Johnson. The transcript showed a courteous and fair-minded attempt to identify the issues and determine them on the available evidence.
2. Although the court expressed considerable doubt that any duty to mitigate arose under the agreements, it proceeded on the assumption that such a duty applied. The contractual arrangements appeared to require only limited weekly activity and did not require Mr Vella to work exclusively under the scheme. On that assumption, the appellant bore the burden of showing that he had failed to take all reasonable steps to mitigate his loss.
3. The district judge had heard and accepted Mr Vella’s evidence. The judge was entitled to find that he was an honest witness and that his efforts to obtain employment or other income were reasonable. His Honour Judge Marr-Johnson was therefore entitled to uphold that factual conclusion. The Court of Appeal could see no proper basis for reaching another conclusion.
4. The refusal to order production of bank statements had not deprived the appellant of a fair hearing. The documents were irrelevant to the issues left for determination. In any event, if the earlier discovery decision had been wrong, the proper course was to appeal it at the time. The later trial had proceeded on the basis that the order was valid, and it would have been wrong to undo that basis on a subsequent appeal.
5. The submission that the award of £29,568 included costs within a finite total was without merit and was rejected. The appeal was dismissed with costs.

• Court of Appeal (Civil Division). The appeal was dismissed with costs.
• Mayor's and City of London County Court. His Honour Judge Marr-Johnson upheld District Judge Lipton’s decision refusing to reduce the damages.
• Mayor's and City of London County Court. District Judge Lipton found that Mr Vella had taken all reasonable steps to mitigate his loss and left the damages unchanged.
• Mayor's and City of London County Court. His Honour Judge Byrt had entered judgment for Mr Vella, with a subsequent mitigation issue considered at the defendant’s request.