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

Summary

This was the consequentials hearing after the Stage 1 trial of the mass claim brought against two mining group companies over the collapse of a dam in Brazil. The Stage 1 judgment had found the defendants liable under Brazilian law. The court now dealt with the claimants' costs and the defendants' application for permission to appeal.

The claimants, having won at Stage 1, sought an immediate costs order, a large payment on account and interest. The defendants said any costs order should wait until after the Stage 2 trial, that any payment on account was far too high, and that they should have permission to appeal the Stage 1 findings.

Mrs Justice O'Farrell made an immediate costs order in the claimants' favour, with a payment on account of £43 million and interest on costs, though the payment was stayed pending any appeal. She refused permission to appeal, leaving the defendants to renew that application to the Court of Appeal.

Background and facts

The proceedings arise from the collapse of the Fundao dam in Brazil. Following the Stage 1 trial, the court had held the defendants strictly liable as polluters under the Brazilian Environmental Law and liable in fault under the Civil Code, and had made a series of findings on limitation and on the settlement agreements, in the judgment reported at [2025] EWHC 3001 (TCC).

At the consequentials hearing the claimants put their Stage 1 costs at £189 million and sought a payment on account of £113.5 million, together with pre-judgment interest and an immediate detailed assessment. The defendants resisted an immediate order and the level of everything sought, and applied for permission to appeal on nine grounds.

The issue

The court had to decide whether to make an immediate costs order or defer it to Stage 2, the scope of any order and any reduction for issues the claimants lost, the level of any payment on account and whether to award interest, whether to order detailed assessment at once, and whether the defendants should have permission to appeal.

The decision

Mrs Justice O'Farrell treated the claimants as the successful party at Stage 1 and made an immediate order, rather than waiting for Stage 2. She reduced the claimed costs to reflect items attributable to the wider proceedings and to funding and insurer issues, allowed the claimants 90 per cent to reflect issues on which they had lost, and took a cautious percentage for the payment on account, arriving at £43 million:

"Taking the above matters into account, I consider that a reasonable sum on account of costs is £43 million."Mrs Justice O'Farrell DBE, paragraph 42

By agreement, that payment was stayed pending determination of any permission to appeal, applying the approach to stays in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065. She awarded pre-judgment interest on costs at one per cent above base rate from the date half the fees had been incurred, following Jones v Secretary of State for Energy and Climate Change [2014] EWCA Civ 363, holding that the claimants' funded arrangement, under which they would bear success fees out of any damages, did not deprive them of that entitlement. She declined to order an immediate detailed assessment, which would be complex, protracted and disruptive.

On the appeal, she held that the nine grounds had no real prospect of success and that there was no other compelling reason for an appeal, the Stage 1 judgment being a decision on issues of Brazilian law established as fact:

"For the above reasons, permission to appeal is refused."Mrs Justice O'Farrell DBE, paragraph 75

The defendants were given an extended period to seek permission from the Court of Appeal.

Practical implications

A successful party can obtain costs after one stage of a split trial. Where liability or other discrete issues are tried first, the winner of that stage need not wait until the whole case ends. The court can make an immediate costs order for that stage, subject to detailed assessment and to a reduction for issues lost.

Payments on account are set cautiously and can be staged down from the sum claimed. The court works from the costs properly attributable to the stage, strips out items belonging to the wider proceedings or to funding, applies any percentage reduction for issues lost, and then takes a conservative proportion for the payment on account.

Funded claimants can still recover interest on costs. A claimant who pays nothing up front but will bear success fees out of any damages has a contingent liability for the cost of funding. That can justify pre-judgment interest on costs, so a funding arrangement does not by itself defeat an interest claim.

Detailed assessment may be deferred where it would disrupt a continuing case. Where the costs are very large and bound to be challenged, an immediate detailed assessment can be complex and disruptive, and the court may leave it until the proceedings conclude even though a discrete costs order has been made.

Municipio de Mariana and others v BHP Group (UK) Limited and BHP Group Limited [2026] EWHC 73 (TCC), Technology and Construction Court, Mrs Justice O'Farrell DBE. Judgment handed down 19 January 2026. Stage 1 judgment: [2025] EWHC 3001 (TCC).