After the flood

In Municipio de Mariana & Others v BHP Group PLC and BHP Group Ltd [2021] EWHC 146 (TCC) the High Court struck out a claim, brought in England by more than 200,000 Brazilian claimants in relation to the collapse of the Fundao Dam in Brazil in 2015. The case is believed (at least in terms of the number of parties involved) to have been the largest action ever brought in an English court.

In brief, the existence of parallel proceedings concerning the same matters in Brazil rendered the English proceedings an abuse of process.

Focusing on two aspects of the matter, relevant to costs:

Issues based order

The unsuccessful claimants conceded that the defendants were entitled to their costs, but contended that only 50% should be awarded on the grounds that the defendants succeeded on some but not all of the grounds they relied upon.

The Court set out the applicable principles citing Gloster J (as she then was) in HLB Kidsons v Lloyds Underwriters [2007] EWHC 2699 (Comm) which, the Court said, “requires no further embellishment”.  It is well-worth considering paragraphs 10 and 11 of the HLB Kidsons judgment in full. In summary:

  • The court’s discretion as to costs is wide;
  • The aim is to “make an order that reflects the overall justice of the case”;
  • The general rule is that costs should follow the event – i.e. the unsuccessful party will be ordered to pay the costs of the successful party;
  • who is the “successful party” must be determined by reference to the litigation as a whole; the question of who is the successful party “is a matter for the exercise of common sense”; success is “not a technical term but a result in real life”;
  • There is no automatic rule requiring reduction of a successful party’s costs if he loses on one or more issues; and
  • In any litigation, especially complex litigation, any winning party is likely to fail on one or more issues in the case.

The claimants argued that the defendants, in the course of the proceedings, narrowed the basis on which they presented their case. This related to a re-focussing on the parallel actions progressing in Brazil (giving rise to the risk of inconsistent decisions in England and Brazil). However, the Judge commended the defendants’ decision to narrow the focus, as the defendants’ arguments were made out without requiring a greater cross-section of parallel actions. The Judge said that the narrowed focus came about not because the actions in the wider-focus were doomed to fail – rather, the defendants were “distilling the thrust of their contentions [so that] the Court would thus be best equipped to deal with the point proportionately”.

The Judge further said that often a party may reasonably present both a primary and an alternative case, and, for legitimate reasons, elect to limit its reliance to the former as the matter progresses. Where an alternative case is abandoned by a party as an act of pragmatism, which lightens the burden on the court, then no adverse costs should befall that party.

The defendants were entitled to their costs per the general rule in CPR 44(2) – “that the unsuccessful party will be ordered to pay the costs of the successful party”.

Interim payment on account

The court considered the matters relevant to an interim payment on account. CPR 44.2(8) provides “Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so”.

The defendants sought an interim payment of c. £9.6m (being 60% of their costs). The claimants contended that the reasonable sum should be c. £2.4m (based in part on the assumption, subsequently found to be erroneous, that the court would award the defendants’ only half of their costs by way of an Issues based order).

Noting the guidance in the White Book that “the determination of “a reasonable sum” involves the court in arriving at some estimation of the costs that the receiving party is likely to be awarded by the costs judge in the detailed assessment proceedings or as a result of a compromise of those proceedings” and noting that this is not “the “irreducible minimum” of what may be awarded on detailed assessment” but “would often be … an estimate of the likely level of recovery subject, to an appropriate margin to allow for error in the estimation” the court assessed the interim payment at “50% of the total bill thereafter modestly rounded down to give a figure [of] £8,000,000” being “a lower percentage of the claimed costs than would usually be the case in the general run of cases”.