Município De Mariana v BHP Group (UK) Ltd & Anor

In a split trial, the court may make an immediate costs order for a liability stage even though substantial damages remain undecided, particularly where the stage resolved the principal liability issues. The order should be confined to costs properly attributable to that stage and may be reduced to reflect discrete issues on which the successful party failed. A payment on account must be a cautious estimate of likely recovery after allowing for uncertainty, reasonableness and proportionality. Pre-judgment interest on costs may compensate a party for contingent funding liabilities. Detailed assessment should ordinarily await the conclusion of the proceedings where an immediate assessment would be complex and disruptive. Permission to appeal requires a real prospect of success or another compelling reason.

The judgment concerned consequential matters following the Stage 1 liability trial in claims arising from the collapse of the Fundão dam in Brazil. The claimants had obtained findings on strict liability, fault-based liability, limitation and the standing of municipal claimants, but individual and group damages remained for Stage 2.

The court determined the appropriate scope and reduction of the Stage 1 costs order, the amount payable on account, pre-judgment interest, the timing of detailed assessment, and the defendants’ application for permission to appeal the Stage 1 judgment.

1. Costs. The claimants were the successful parties on the significant Stage 1 liability issues. Applying CPR 44.2, the court made an immediate costs order rather than deferring costs until Stage 2. The order was limited to the costs of and incidental to the Stage 1 Trial.
2. The claimants failed on discrete alternative issues concerning Article 927 of the Civil Code, Articles 116 and 117 of the Corporate Law, and aspects of settlement agreements and releases. The court allowed a proportionate 10% reduction, ordering the defendants to pay 90% of the Stage 1 costs. The post-collapse conduct issue was disregarded because it was peripheral and consumed negligible resources.
3. Payment on account. Under CPR 44.2(8), the payment had to be a reasonable estimate pending detailed assessment. The court excluded sign-up and collateral costs, allowed further reductions for funding and insurer issues, and adopted a cautious approach because the evidence was high-level and the claimed costs were extraordinarily large. The reasonable payment on account was £43 million.
4. Interest and assessment. The court awarded pre-judgment interest on costs at 1% above base rate from 1 August 2023 to the costs order, recognising the claimants’ contingent liability for funding expenses. Detailed assessment was deferred until conclusion of the proceedings because it would be complex, protracted and disruptive to preparation for Stage 2.
5. Permission to appeal. The defendants’ criticisms that the Stage 1 judgment failed to engage with issues or give adequate reasons had no real prospect of success on a fair reading of that judgment. There was no other compelling reason for an appeal. Permission was refused, with an extension of 28 days to apply to the Court of Appeal.

The judgment was a consequential hearing following the Stage 1 Trial judgment, [2025] EWHC 3001 (TCC). Permission to appeal from this court was refused, but the defendants were given 28 days to seek permission from the Court of Appeal.