£189m Spent, £43m on Account: The Cost of Commercial Litigation (Municipio de Mariana v BHP Group (UK) Ltd & anor [2026] EWHC 73 (TCC).

Municipio de Mariana v BHP Group (UK) Ltd & anor [2026] EWHC 73 (TCC)

Rob Hammond is a commercial barrister at Gatehouse Chambers who was instructed for Pt.20 Defendant, Vale at an earlier stage in this litigation. To see his profile, click here.

Introduction

The High Court’s recent judgment in Municipio de Mariana v BHP Group sits firmly in the context of exceptionally large and expensive commercial group litigation. It is a reminder that, even in the most complex cases, orthodox costs principles apply with full force and thorough evidential preparation is the difference between meaningful interim recovery and heavy discounts.

The judgment follows a liability trial in proceedings arising from the Samarco dam collapse in Brazil. The claimants sought recovery of £189m in costs for the liability trial alone, together with a substantial payment on account; pre-judgment interest on costs; and an immediate detailed assessment. O’Farrell J’s decision provides a detailed and practical exposition of how the court will approach, inter alia:

1. Payments on account of costs;
2. Interest on costs, and
3. The timing of any detailed assessment.

Payments on Account of Costs: A Cautious, Evidence-Driven Approach

The starting point was uncontroversial. CPR 44.2(8) creates a presumption that a paying party should pay a reasonable sum on account where costs are ordered subject to detailed assessment. However, “what amounts to a reasonable sum will depend on all the circumstances” [32]. On that point, O’Farrell J adopted Clarke LJ’s guidance in Excalibur Ventures [2015] EWHC 566 (Comm), at [23]:

“the chief [factor] is that there will, by definition, have been no detailed assessment and thus an element of uncertainty, the extent of which may differ widely from case to case as to what will be allowed on detailed assessment. Any sum will have to be an estimate. A reasonable sum would often be one that was an estimate of the likely level of recovery subject, as the costs claimants accept, to an appropriate margin to allow for error in the estimation. This can be done by taking the lowest figure in a likely range or making a deduction from a single estimated figure or perhaps from the lowest figure in the range if the range itself is not very broad.”

In cases where costs budgeting has occurred, Mellor J’s judgment in Lifestyle Equities CV v Royal County of Berkshire Polo Club Ltd [2024] Costs LR 449, provides a recent example of the approach:

• One starts by estimating the costs that would be awarded on detailed assessment. That must take into account the impact of CPR 3.18 (costs budgeting on the standard basis) [57(iii-v)];
• In Thomas Pink v Victoria’s Secret [2015] Costs LR 463, 90% of the budgeted costs should be awarded, to reflect the “vagaries of litigation and things that might occur”. That approach has been followed in other reported cases [57(vi-vii)];
• The above guidance does not hold for incurred costs recorded by a Precedent H [57(x)]. Those have not been approved by the court: a greater discount is due to reflect that lack of pre-approval, as per Cleveland Bridge v Sarens [2018] EWHC 827 (TCC).
• Mellor J therefore applied the percentages of 90% for budgeted costs and 80% for incurred costs [64]. He then made deductions to a round figure, seemingly on the basis that the exercise is “not an exact science.”

In the present case, however, costs had not been budgeted. The exercise of estimating costs due to the Claimants therefore relied more heavily on the quality of the evidence led by them as to their costs. In that respect, their costs schedule was described as providing only “a very high-level overview” [33]. Tables of solicitor rates and hours were “not linked to the tasks carried out by those individuals or the dates on which work was carried out” [36]. The workstreams summary was similarly criticised as “at a very high level and not cross-referenced”, and “fees for counsel [were] identified as lump sums for each individual for the whole period up to 2025”. This created “great difficulty for the court in ascertaining the costs associated with any phase of the litigation” [37].

While recognising the scale and complexity of the litigation, the court was clear that “the costs are extraordinarily high and the level of detail provided very limited” [38]. Accordingly, the “paucity of information” justified a “very cautious approach” to any award of costs on account [38].

Separately, the court also scrutinised recoverability. Large categories of book-building and administration costs, running to £117m, were characterised as costs of the overall proceedings, not the liability trial [40-41]. Having stripped out unrecoverable elements and applied a 10% issue-based reduction, O’Farrell J concluded that a reasonable payment on account was 60% of the potentially recoverable costs, or £43m [42].

Interest on Costs: Evidencing Deprivation, Not Just Entitlement

The Claimants also sought pre-judgment interest on costs, at 1% above base. CPR 44.2(6)(g) confers a broad discretion to award interest on costs, but the Defendants argued there was no entitlement because the claimants had not actually paid their legal costs yet.

The court rejected any purely formalistic approach, citing Sharp LJ in Jones v Secretary of State for Energy and Climate Change [2014] EWCA Civ 363, in which the purpose of interest was reiterated as being “to compensate a party who has been deprived of the use of his money, or who has had to borrow money to pay for his legal costs”. The Court’s relevant discretion is “at large”, and involves a “general appraisal” of what is reasonable [50].

Crucially, even though the Claimants had not funded the litigation directly (given their solicitors funding of the action via direct investment into their firm) they faced a contingent liability to pay success fees and funding costs out of any damages they recovered. That was sufficient as “a liability for costs, albeit a contingent liability at this stage” [51].

On that basis, O’Farrell J exercised her discretion to award interest at the “commercial rate of 1% above base rate”, accepting the “pragmatic and proportionate” submission that interest should run from the date on which roughly half the fees had been incurred [52].

Timing of Detailed Assessment: Resisting Disruption Mid-litigation

Finally, the Claimants sought immediate detailed assessment of their liability trial costs under CPR 47.1. O’Farrell J reaffirmed the general rule: costs are not to be assessed until the conclusion of proceedings. The Court nonetheless retains a discretion to order an earlier assessment of costs, which may be appropriate where discrete issues have been determined. It will, however, be unwilling to make such an order where doing so “would be lengthy, costly and disruptive to the proceedings” [55].

Although discrete issues had been decided, this was not an apposite case in which to exercise discretion. O’Farrell J stressed that the assessment would inevitably be “complex and protracted”, involving disputes over recoverability, attribution of costs to the liability trial, and proportionality [56]. An immediate assessment would be “disruptive to the proceedings” at a time when the parties were already facing the “very heavy burden” of preparing for the second phase of trial [56]. Accordingly, detailed assessment will await the litigation’s conclusion [58].

Practical Takeaways for Commercial Litigators

Evidence Matters: High-level schedules may suffice for informal budgeting estimates, and pragmatic submissions may be persuasive as to the rate of interest on any costs awarded. However, they are unlikely to justify a substantial payment on account, especially absent cost-budgeting, where the Court faces greater uncertainty as to final costs.

Interest Not Confined to Money Spent: Contingent liabilities that are suitably certain in nature (e.g. funding costs or success fees pursuant to established agreements) can justify pre-judgment interest. Parties should nonetheless be ready to explain how and when the economic burden in question will arise.

Complex Proceedings Preclude Immediate Assessment: Where heavy proceedings are ongoing, the costs and complexity of which are substantial, courts will be very reluctant to sanction assessments that distract from the substantive litigation. This is especially the case where the same lawyers have conduct of both the substantive and costs proceedings.

Article by Rob Hammond