A common principle in English law is that of mitigation. This means that in cases involving a claim for damages, the person who has suffered the loss for which compensation is being sought is expected to take reasonable steps to minimise that loss.
Recently, a case involving landlords and tenants in Hampshire showed that the duty to mitigate one’s loss is not absolute.
The tenants were a professional firm which rented offices from the landlords. When they decided to cease practising, the tenants vacated their offices and stopped paying the rent due under the lease. The landlords took no steps to repossess or re-let the property and sued the tenants for the unpaid rent.
The tenants argued that by not instructing estate agents to find a new tenant, the landlords had failed to mitigate their loss. However, the Court of Appeal could not accept their argument.
The Court considered that had the landlords repossessed the property, their claim would have been (at least in part) a claim for damages. In that case they would have been compelled to mitigate their loss. However, what they did instead was simply to sue the tenants for the unpaid rent, which was not an unreasonable action to take and which (crucially) was not a claim for damages, but for the payment contractually due under the lease. The tenants were therefore liable for the balance of the unpaid rent under their lease.
This case has implications for landlords and for tenants. Tenants who wish to vacate premises before the end of their lease would be well advised to negotiate the surrender of the lease with their landlords, or at least agree a strategy for finding a new tenant.
Landlords faced with tenants who vacate their premises in similar circumstances should consider carefully whether they should repossess the premises or sue for the unpaid rent. Normally, this will be a practical decision based on the likelihood of being paid even if successful in the claim and the ease of re-letting the premises.