"Extraordinarily High" Costs With "Paucity Of Information" Result In £43 Million Payment On Account

Background

On 14 November 2025, the court handed down its judgment following the Stage 1 Trial of this substantial group litigation concerning liability for the collapse of the Fundão dam in Brazil [§1]. The claimants, including the Município de Mariana and numerous other individuals and entities, succeeded on key issues including strict liability under Brazilian Environmental Law, fault-based liability under the Civil Code, limitation/prescription, and the standing of the Municipalities [§2, §17]. The defendants, BHP Group (UK) Ltd and BHP Group Limited, were unsuccessful on those core points.

A consequentials hearing was listed to determine matters arising from that judgment [§3]. The parties were unable to agree on costs, leading to the need for the court’s determination on several consequential issues.

Costs Issues Before the Court

The court was required to determine five principal matters following the Stage 1 Trial judgment [§3]. The claimants applied for: (i) an order that the defendants pay their costs of the whole proceedings up to the conclusion of the Stage 1 Trial, including consideration of scope and any reduction for issues lost; (ii) a payment on account of those costs; (iii) pre-judgment interest on costs; and (iv) an order for a detailed assessment of costs to proceed forthwith. In response, the defendants applied for permission to appeal the substantive judgment and, in relation to costs, argued that no immediate order should be made or, if one was made, that it should be limited in scope and amount.

The Parties’ Positions

The claimants’ position was that they were the successful parties in the Stage 1 Trial and were therefore entitled to their costs [§4]. They sought an order for the defendants to pay their costs of the whole proceedings to date, quantified at approximately £189 million. They requested a payment on account of 60% of that sum, equating to £113.5 million [§27]. The claimants also sought pre-judgment interest on costs at a commercial rate of 1% above base from 1 August 2023, the date at which half the fees were incurred, arguing they had a contingent liability to funders that should be compensated [§47]. They further applied for an immediate detailed assessment of their Stage 1 Trial costs and the costs of earlier jurisdictional challenges ordered by the Court of Appeal [§53].

The defendants’ primary position was that no immediate costs order should be made; any decision on costs should be deferred until after the Stage 2 Trial when the overall success of the litigation would be clearer [§6]. If the court was against them on that point, they argued that any costs order should be limited to the costs of the Stage 1 Trial only, not the entirety of the proceedings. They submitted that the claimants’ costs should be subject to a significant percentage reduction to reflect the issues on which the defendants had succeeded, namely: strict liability under Article 927 (sole paragraph) of the Civil Code; liability under Articles 116 and 117 of the Corporate Law; and certain issues regarding settlements and releases [§19]. The defendants said the payment on account sought was “outrageously high” [§6] and “shockingly excessive” [§28], and pointed to the disparity between the parties’ costs (£189m vs £125m) as raising proportionality concerns [§39]. They opposed any award of pre-judgment interest, arguing the claimants had not paid costs upfront and were not out of pocket [§48].

The Court’s Decision

The court granted the claimants a costs order but on terms more limited than they had sought. Applying the principles in Weill v Mean Fiddler Holdings Ltd [2003] EWCA Civ 1058 and Langer v McKeown [2021] EWCA Civ 1792, the judge held it was appropriate to make an immediate costs order in respect of the Stage 1 Trial, as the claimants had obtained substantial findings on key liability issues [§13–§17]. However, the scope of the order was confined to the costs “of, and incidental to, the Stage 1 Trial” [§18]. The court rejected the argument that the claimants were entitled to the costs of the whole litigation to date, as that would presume ultimate success for all claimants, which remained to be determined.

On the issue of a percentage reduction, the court accepted the defendants’ submissions that the claimants had lost on discrete issues [§19–§24]. The failed claims under Article 927 (sole paragraph) of the Civil Code and the Corporate Law, along with certain points on settlements, had required separate expert evidence and court time. The post-collapse conduct point was discounted as “negligible” in terms of costs incurred [§23]. The court held that a fair and proportionate reduction to the claimants’ recoverable Stage 1 Trial costs would be 10% [§24].

The court then turned to the contentious issue of the payment on account. There had been no costs budgeting for the Stage 1 Trial [§33]. The claimants’ evidence of costs was found to be at a “very high level” with a “paucity of information”, making a “very cautious approach” necessary [§38]. The judge noted the huge disparity between the parties’ costs and expressed concern over reasonableness and proportionality [§39].

Critically, the court held that substantial costs related to claimant sign-up, processing, and call centre operations were not recoverable as part of the Stage 1 Trial costs. Applying Motto v Trafigura Ltd [2011] EWCA Civ 1150 at [104]–[114] and Weaver v British Airways plc [2021] EWHC 217 at [41]–[51], the court held that it was necessary to separate sign-up and collateral costs from subsequent legal advice and assistance [§40]. If recoverable at all, such costs would form part of the costs of the overall proceedings, rather than the Stage 1 Trial.

Stripping out those costs and making further adjustments for funding and insurer-related disbursements, the court arrived at a working figure of approximately £80 million for the purpose of the payment on account calculation [§41]. Applying the 90% recovery rate to this figure yielded approximately £72 million. Adopting a cautious 60% estimate for the payment on account, the court ordered £43 million [§41–§42]. The order for this payment was stayed pending the determination of any application for permission to appeal [§46].

On pre-judgment interest, the court exercised its discretion under CPR 44.2(6)(g) to award interest, applying the principles from Jones v Secretary of State for Energy and Climate Change [2014] EWCA Civ 363 [§50]. Although the claimants had not funded the litigation directly, they faced a contingent liability to pay success fees from any damages awarded, representing a funding cost that reduced their ultimate recovery [§51]. The court awarded interest at 1% above base rate from 1 August 2023, the date by which half the fees were incurred — an approach the court described as “pragmatic and proportionate” — up to the date of the costs order [§52].

The court refused the claimants’ application for an immediate detailed assessment of costs, adhering to the general rule in CPR 47.1 that assessment should await the conclusion of proceedings [§54]. The judge found that an assessment would be “complex and protracted” and would be “disruptive” to the preparation for the Stage 2 Trial [§56].

Finally, the court refused the defendants’ application for permission to appeal [§73–§75]. Having reviewed the nine detailed grounds, which largely alleged a failure by the trial judge to engage with key issues and provide adequate reasons, the court held the appeal had “no real prospect of success” [§73]. The judge provided a reasoned rebuttal of each ground [§64–§72], concluding that the substantive judgment had adequately addressed the critical issues and evidence. There was “no other compelling reason” for the appeal to be heard [§74]. Permission was refused, though the defendants’ time to apply to the Court of Appeal was extended by 28 days [§76].