Comberg v VivoPower International Services Ltd & Anor

Mitigation of wrongful-dismissal loss is assessed by reference to the benefit actually received and any concomitant tax liability. Where a claimant has arranged affairs so that no tax is payable on receipt, and future taxation depends on an elective remittance, the credit is ordinarily for the gross receipt. The court will not base the calculation on speculative future conduct.

Evidence tendered after judgment has been handed down in draft may be admitted where necessary to do justice, but late evidence which opens a substantial new inquiry may be excluded by the principle of finality. For costs, the recipient of the judgment sum may be the successful party even if substantial claims failed. An issue-based deduction requires a broad assessment of justice, common costs and the significance of the unsuccessful issues.

The claimant had succeeded in the underlying wrongful-dismissal proceedings against the defendants. This consequential judgment determined the treatment of consultancy receipts obtained through a Guernsey company when calculating mitigation, and several costs issues.

The claimant contended that mitigation should be calculated net of United Kingdom tax because he intended eventually to remit the money to the United Kingdom. The defendants contended that the gross receipts should be credited and opposed the admission of late evidence concerning projected future taxation and expenditure.

The court also determined which party was successful, whether costs should be apportioned by issue, whether conduct justified indemnity costs, and the appropriate payment on account.

1. Mitigation and tax. Where mitigation receipts are not subject to tax, credit is given for the gross sums. If a real and presently relevant tax liability reduces the benefit, credit may be given for the net sum. Here, the consultancy receipts were received tax-free in Guernsey, only £10,000 had been remitted to the United Kingdom, and there was no obligation to remit the balance. The claimant’s stated future intention was elective and speculative. The gross receipts therefore represented the benefit by which the loss had been mitigated, save that £2,000 tax paid on the £10,000 remittance was allowed.
2. Late evidence and finality. The court considered the additional evidence substantively, but held that, if it could have affected the result, it would have been too late to admit it. Proper investigation would have required further disclosure, expert evidence and cross-examination. Finality in litigation prevented the reopening of a substantial new issue after draft judgment.
3. Costs. The claimant was the successful party because the wrongful-dismissal and deferred-remuneration claims were the dominant parts of the litigation and he recovered a substantial sum. Failure on other claims did not automatically justify an issue-based order. Nevertheless, the failed contract-term fee, listing-fee and related quantum-meruit claims were discrete and significant. A broad-brush deduction was appropriate.
4. Conduct and orders. The defendants’ unsuccessful misconduct allegations were not unreasonable to a high degree and did not justify indemnity costs. The claimant was awarded 80% of his costs on the standard basis, excluding costs of the mitigation-tax issue after 10 September 2020. A payment on account of £950,000 was ordered.

The judgment concerned consequential matters following [2020] EWHC 2438 (QB). No appeal history is stated.