Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653
Contract; remedies for breach; damages; mitigation of loss.
Facts: MAN Automotive supplied a large commercial vehicle to Burns. The vehicle supplied was defective. The defects became apparent after a year, but Burns persisted in trying to use it and, by doing so, accumulated substantial operating losses in the process. Burns sued for damages to compensate for lost profits calculated over the four years during which the vehicle would have been expected to have a useful operating life.
Issue: Had the plaintiff taken appropriate steps to mitigate the loss suffered?
Decision: A plaintiff is not required to take steps to mitigate loss if the plaintiff does not have the necessary means to do so.
Reason: In discussing the need to mitigate loss, Gibbs CJ said (at [7], [8]):
"the appellant was bound to take all reasonable steps to mitigate the loss and one course open to him to mitigate the damage... was to have the engine reconditioned or to buy another to replace it. However, his impecuniosity [lack of money] prevented him from taking that course. The question arises whether the appellant is debarred from claiming such part of the damages as is attributable to his failure to take the necessary steps in mitigation, when he was unable to take those steps because of his lack of means. That question must be answered in the negative ... [A] plaintiff's duty to mitigate his damage does not require him to do what is unreasonable and it would seem unjust to prevent a plaintiff from recovering in full damages caused by the breach of contract simply because he lacked the means to avert the consequences of the breach."