In Município de Mariana v BHP Group (UK) Ltd & Anor [2026] EWCA Civ 1319, the Court of Appeal upheld an award of pre-judgment interest on costs to CFA-funded claimants who had paid their solicitors nothing. A contingent liability to pay a success fee that compensates solicitors for providing services on credit was enough to engage CPR 44.2(6)(g). The decision matters to any receiving party funded on deferred terms.
Background
The claims arose from the collapse of the Fundão Dam in Brazil in November 2015, with some 450,000 claimants seeking compensation from BHP. After a Stage 1 trial, O’Farrell J found BHP liable [2].
The judge ordered BHP to pay 90% of the claimants’ Stage 1 costs on the standard basis, £43 million on account, and pre-judgment interest at 1% above base rate on the total recoverable costs from 1 August 2023 until 26 January 2026 [3]. That start date was the date at which half of the fees were incurred [28].
The claimants were represented by Pogust Goodhead under CFAs. It was common ground that they did not have to fund their costs until they succeeded, when they would owe base costs and a success fee [5]. The firm was itself funded by a corporate debt facility to which its clients were not party [15].
Costs Issues Before the Court
BHP appealed the interest award on two grounds: that the court had no power to award pre-judgment interest on costs on account of a potential liability to pay a success fee, and that, if it had, the power should not have been exercised in the claimants’ favour [4].
Sir Geoffrey Vos MR treated the scope of CPR 44.2(6)(g) as the primary question, to be answered before considering whether section 58A(6) of the Courts and Legal Services Act 1990, as interpreted in Hirachand v Hirachand, prevented the award [10, 39].
The Parties’ Positions
BHP argued that pre-judgment interest could be awarded only where the receiving party was out of pocket or had borrowed money to fund its costs, relying on Jones v Secretary of State for Energy and Climate Change [7]. It also argued that the award contravened section 58A(6), because it was made only on the basis of future contingent success fees [5].
The claimants accepted that they had to be, in some sense, out of pocket. They said they were, because they were contingently obliged to compensate their solicitors for late payment of fees through the success fee or part of it [9]. They also said that Hirachand had nothing to do with pre-judgment interest on costs [8].
The Court’s Decision
Sir Geoffrey Vos MR dismissed the appeal, with Zacaroli LJ and Cockerill LJ agreeing [55, 56]. He held that BHP’s second argument came first logically, because the primary question concerned the scope of the power in CPR 44.2(6)(g) [10].
Reviewing the authorities, he noted that Nova Productions Ltd v Mazooma Games Ltd (No 2) recognised a broad discretion not confined to cases out of the norm [31], and that Fosse Motor Engineers Ltd v Conde Nast and National Magazine Distributors Ltd held the power could be exercised where insurers funded the litigation [32]. Jones confirmed that the discretion is at large and requires a general appraisal of what is reasonable between the parties [34].
The unusual funding mechanism in this case had not been considered in any of the cases the court was shown [35]. Sir Geoffrey Vos MR said: “There is, however, nothing in the wording of CPR Part 44.2(6)(g) or elsewhere to suggest that such interest can only be awarded if the receiving party has actually expended money on costs or has borrowed money to pay such costs.” Such a rule would fetter the discretion [36].
The claimants owed nothing unless their claims succeeded, but then became liable for base costs and a success fee. It was not in dispute that the success fees could be assumed to include some element of compensation for the credit provided [37]. BHP had accepted that success fees under CFAs generally involve an element of compensation for funding costs by solicitors [16].
Sir Geoffrey Vos MR endorsed Akenhead J’s approach in Fosse, holding that an application “should not normally entail a minute examination of the funding mechanism” [37]. It was clear in this case, and would be clear in many cases, that the receiving parties were obliged to compensate for the time value of the money used to fund their costs, here through the success fee [37].
He concluded that the power provides a broad discretion to compensate for the loss of the time value of money. It covers a receiving party kept out of its money, and one itself liable to compensate someone else, whether its solicitors, an insurer or a third-party funder, for legal services provided on credit [38].
That left section 58A(6). Sir Geoffrey Vos MR did not accept that Hirachand made it impossible to award interest on the facts of this case. Hirachand had nothing to say about the scope of CPR 44.2(6)(g) or its interaction with section 58A(6) [45].
The irrecoverability of success fees and funding costs did not mean that pre-judgment interest on costs was prohibited just because a receiving party had agreed to pay a success fee. Such a rule would interfere with the broad discretion and be unjust to funded parties in a large number of situations. The award was compensatory, but it was not the award of the success fee itself, nor awarded to pay that fee [46].
The concern in Lord Justice Jackson’s report, that recoverable success fees removed any incentive to negotiate smaller ones, did not apply; the availability of interest had no influence on the success fee here [50]. The contingent liability “is merely a trigger to enable interest to be claimed”, and the amount reflects what funding would reasonably have cost the class of persons to which the claimants belong, not the value of the success fee [51].
BHP said nothing in oral argument on its discretion ground. The judge was entirely right to exercise her discretion as she did [53].
Practical Implications
For receiving parties funded under CFAs, or by insurers or third-party funders, the absence of any payment or borrowing is not of itself an answer to an application for pre-judgment interest on costs. The application should be framed around the party’s own liability, even if contingent, to compensate someone else for providing legal services on credit [38].
Evidence should identify that liability, for example a success fee that is, at least in part, compensation for deferred payment. A minute examination of the funding mechanism should not normally be needed, but here the funding element of the success fee was accepted by BHP, and a receiving party should be ready to show it if disputed [16, 37].
The rate should be argued by reference to what funding would reasonably have cost the relevant class of litigant, not the size of the success fee [51]. The judge’s approach of 1% above base rate from the date by which half the fees were incurred was left undisturbed [3, 53].
Paying parties will gain little from arguing that the receiving party is not out of pocket, or that the award is a disguised success fee. Arguments on the exercise of the discretion remain available, since BHP did not pursue that ground and the court framed its section 58A(6) conclusion by reference to the facts of this case [45, 53].
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