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Municipio de Mariana v BHP Group (UK) Ltd & Anor
Factual and Procedural Background
The appeal arose from long-running proceedings concerning the collapse of a dam in Brazil in November 2015. Approximately 450,000 claimants seek compensation from the Appellants for alleged losses. [1]
After a Stage 1 trial, the High Court held the Appellants liable under Brazilian law and ruled that the claims were not time-barred. The Appellants were ordered to pay 90% of the claimants’ Stage 1 costs, including pre-judgment interest at 1% above the UK base rate from 1 August 2023 to 26 January 2026, and a substantial payment on account of costs. [2][3]
The Appellants appealed the award of pre-judgment interest on costs. The Court of Appeal heard the appeal and dismissed it. [4][5][6]
Legal Issues Presented
- Whether CPR Part 44.2(6)(g) empowered the court to award pre-judgment interest on costs where the claimants had not directly paid their legal costs but were contingently liable to pay success fees. [4][7][8]
- Whether such an award was prohibited by section 58A(6) of the Courts and Legal Services Act 1990, as amended by LASPO 2012, or by the reasoning in Hirachand v. Hirachand. [9][10][11][12]
- If the power existed, whether the court should exercise its discretion to award interest in the claimants’ favour. [4][5]
Arguments of the Parties
Appellants’ Arguments
- The Appellants argued that Hirachand v. Hirachand prevented success fees from being recovered directly or indirectly, and that the interest award impermissibly compensated the claimants for potential future success fees. [9][13][14][15]
- They submitted that pre-judgment interest could be awarded only where the claimants had been out of pocket or had borrowed money to fund their costs. [16][17]
- They also relied on the former CPR provision restricting recovery of the part of a success fee relating to postponed payment of legal fees. [18][19][20]
Claimants’ Arguments
- The claimants argued that Hirachand did not address pre-judgment interest on costs and did not restrict the broad discretion under CPR Part 44.2(6)(g). [21]
- They accepted that interest concerned compensation for being out of pocket, but submitted that their contingent liability to compensate their solicitors through success fees satisfied that requirement. [7]
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Hirachand v. Hirachand [2024] UKSC 43, [2025] AC 599 | Success fees are costs and cannot be recovered through substantive relief or a prohibited costs order. | Distinguished because it did not address CPR Part 44.2(6)(g) or its interaction with section 58A(6). [10][22][12] |
| Jones v. Secretary of State for Energy and Climate Change [2014] EWCA Civ 363, [2014] 3 Costs LO 541 | The interest discretion is broad and compensates for loss of the use of money or borrowing costs. | Applied as the governing statement of general principles. [17][23][24] |
| Various Claimants v. Mercedes-Benz Group AG [2024] EWHC 695 (KB) | Description of funding arrangements used in group litigation. | Provided indirect evidence concerning the solicitors’ funding arrangements. [25] |
| Hunt v. RM Douglas (Roofing) Ltd [1990] 1 AC 398 | Post-judgment interest on costs runs from judgment, rather than detailed assessment. | Used in explaining the historical treatment of interest on costs. [26] |
| Hunt v. RM Douglas (Roofing) Ltd (1988) 85(3) LSG 33, (1987) 137 NLJ 1133 | Funding costs were not part of recoverable litigation costs. | Supported the distinction between funding costs and pre-judgment interest. [27][28] |
| McPhilemy v. Times Newspapers Ltd (No 2) [2001] EWCA Civ 933, [2002] 1 WLR 934 | Interest on costs may address unfairness caused by the general rule against interest on costs before judgment. | Supported the compensatory purpose of the power. [29] |
| Bim Kemi AB v. Blackburn Chemicals Ltd [2003] EWCA Civ 889, [2004] 2 Costs LR 201 | Interest may be awarded where a party has paid solicitors and lost the use of its money. | Considered alongside the broader authorities on the discretion. [30][24] |
| Douglas v. Hello! [2004] EWHC 63 (Ch), [2004] 2 Costs LR 304 | Application of the principle concerning money paid to solicitors. | Referred to as supporting authority. [30] |
| Nova Productions Ltd v. Mazooma Games Ltd (No 2) [2006] EWHC 189 (Ch), [2006] RPC 15 | The discretion is broad, not exceptional, and must take account of all circumstances and the overriding objective. | Relied upon to reject a narrow restriction on eligibility for interest. [31][32] |
| Powell v. Herefordshire Health Authority [2002] EWCA Civ 1786, [2003] 3 All E.R. 253 | Authority supporting the broad discretion concerning interest on costs. | Cited through Nova Productions. [33] |
| Fosse Motor Engineers Ltd v. Conde Nast and National Magazine Distributors Ltd [2008] EWHC 2527 (QB), [2009] 3 Costs LR 377 | Interest may be awarded where litigation is funded by insurers, without minute examination of funding. | Supported a broad, practical approach to funding arrangements. [34][35][36] |
| Fattal v. Walbrook Trustees (Jersey) Ltd [2009] 4 Costs LR 591, [2009] EWHC 1674 (Ch) | Pre-judgment interest on costs is not exceptional and is primarily compensatory. | Supported the conclusion that the discretion was not confined to unusual cases. [37][32] |
| F&C Alternative Investments Ltd v Barthelemy (No. 3) CA [2013] 1 WLR | Relevant considerations for assessing the rate of interest. | Referred to in the statement of principles adopted by the High Court. [23] |
| Fiona Trust & Holding Corporation v Privalov [2011] EWHC 664 (Comm) | Authority concerning the assessment of interest. | Referred to in the High Court’s summary of applicable principles. [23] |
| Nosworthy v. Royal Bournemouth & Christchurch NHS Foundation Trust [2020] EWHC B19 (Costs) | Funding costs are not recoverable as costs, but interest rules may mitigate their effect. | Supported the distinction between funding costs and interest on costs. [38][39] |
| Simcoe v. Jacuzzi UK Group plc [2012] EWCA Civ 137, [2012] 1 WLR 2393 | A broad approach should be taken to the date from which interest runs; detailed examination should generally be avoided. | Supported the distinction between interest and recovery of funding costs. [40][41][42] |
| Marbrow v. Sharpes Garden Services Limited [2020] EWHC B26 (Costs) | Former CPR provisions concerning funding elements of success fees. | The court held that those provisions did not affect the separate power to award pre-judgment interest. [20][43] |
| Musst Holdings v. Astra Asset Management [2026] EWHC 1599 (Ch) | Relied upon by the Appellants in support of their submission concerning indirect recovery of success fees. | The court did not accept that the authority altered the distinct analysis under CPR Part 44.2(6)(g). [15][12] |
Court's Reasoning and Analysis
The Court first treated the scope of CPR Part 44.2(6)(g) as the primary issue. It held that the rule confers a broad discretion to compensate for loss of the time value of money, including where the receiving party is liable to compensate another person for legal services provided on credit. [44][8][36]
The claimants’ conditional fee arrangements meant that they were not required to pay costs unless successful, but would then owe base costs and success fees. The court accepted that the success fees could include compensation for the solicitors’ funding costs. [45][46]
The court rejected the proposition that interest could be awarded only where money had actually been paid or borrowed. Such a limitation would improperly fetter the broad discretion created by CPR Part 44.2(6)(g). [32][47]
The court distinguished an award of pre-judgment interest from an award of a success fee. Interest compensates for the time value of money and is not awarded for the purpose of paying the success fee itself. [12][48][49]
Although Hirachand prevented recovery of success fees through substantive relief or a prohibited costs order, it did not consider CPR Part 44.2(6)(g). The statutory prohibition therefore did not prevent an interest award merely because the claimants might ultimately pay success fees. [22][50][51][12][48]
The court also rejected the argument based on the former CPR provision concerning funding elements of success fees. That provision was subject to the court ordering otherwise and did not govern pre-judgment interest on costs. [19][20][43]
Finally, the court held that the High Court had properly exercised its discretion by awarding interest at 1% above base rate from the date when half of the fees had been incurred. The Appellants did not pursue their separate challenge to the discretionary exercise in oral argument. [52][5]
Holding and Implications
The appeal was dismissed. The Court of Appeal upheld the order awarding pre-judgment interest on costs under CPR Part 44.2(6)(g). [5][6]
The direct effect was that the claimants retained the interest award despite their costs being funded through conditional fee arrangements and their potential liability for success fees. The judgment’s stated implication is that the court may compensate for the time value of money where legal services were provided on credit, without awarding or indirectly recovering the success fee itself. [36][48][49]
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