No reduction in the municipality's liability for damages after a house fire

A municipality had rented a private residence, which was sublet for use in the resettlement of refugees. A fire broke out in the residence, and the parties agreed that the municipality was liable for the loss under the lease agreement.

The case before the Supreme Court concerned whether the municipality’s liability for damages, approximately NOK 5.2 million, should be reduced. The claim against the municipality was brought as a recourse claim by the homeowner’s insurance company, which had covered the loss under the home insurance policy.

The Supreme Court concluded that there was no basis for mitigation, and the liability for damages was not reduced.

The starting point for assessing damages is that the injured party is entitled to compensation for their financial loss. Mitigation may only be considered when full liability would be unreasonably burdensome for the liable party. The scope for mitigation is narrow and intended for situations where normal loss assessment, based on an overall evaluation, results in a particularly disproportionate outcome. The recoverability of the loss may be relevant, but is not decisive.

Based on factors including the size of the loss and the municipality’s financial capacity, the Supreme Court found no grounds to reduce the municipality’s liability.

The judgment provides guidance on the conditions for mitigation of liability under section 2-14 of the Tenancy Act.

Read the judgment from the Supreme Court (Norwegian only) (PDF)

Areas of law: Contractual liability. Mitigation. Section 2-14 of the Tenancy Act.

Key paragraphs: 45–47

Justices: Østensen Berglund, Steinsvik, Hellerslia, Lund, Poulsen