Município de Mariana and Others v BHP Group plc (Formerly BHP Billiton plc) and Another  Costs LR 97
 Costs LR 97
Payments on account under CPR 44.2(8) in failed group action litigation falling outside the general run of cases.
Município de Mariana and Others
BHP Group plc (Formerly BHP Billiton plc) and Another
 Costs LR 97
Neutral Citation Number:  EWHC 146 (TCC)
High Court of Justice, Technology and Construction Court, Queen’s Bench Division, Business and Property Courts Liverpool sitting in Manchester
29 January 2021
group litigation, payments on account
In a group action in which the 202,600 claimants had failed in their claims for damages arising from the collapse of the Fundão Dam in Brazil, and the court had ordered them to pay the defendants’ costs on the standard basis, the issue for the judge was to work out what sum should be ordered to be paid on account under CPR 44.2(8). The defendants sought 60% of their total costs, that sum after discount being £9,640,168.58. The claimants contended for 30% being £4,820,084. The court took into account what would have been allowed in “the general run of cases” and observed that that this had not been a case in the general run. Accordingly a lesser sum should be ordered, which would be 50%, being £8m to be paid within 14 days.
Only those paragraphs relating to costs have been reproduced here.
Barnes v Time Talk  BLR 331
BCCI v Ali (No 4) 149 NLJ 1222
Budgen v Andrew Gardner Partnership  EWCA Civ 1125
Excalibur Ventures LLC v Texas Keystone Inc  EWHC 566 (Comm)
Fulham Leisure Holdings v Nicholson Graham & Jones  EWHC 2428 (Ch)
Gollop v Pryke (29 November 2011, unreported) (Warren J)
HLB Kidsons (a Firm) v Lloyds Underwriters  3 Costs LR 427;  EWHC 2699 (Comm)
Kastor Navigation Co Ltd and Another v Axa Global Risks (UK) Ltd and Others; The “Kastor Too”  4 Costs LR 569;  EWCA Civ 277;  2 Lloyd’s Rep 119
Município De Mariana and Others v BHP Group plc and Another  EWHC 2930 (TCC)
Scholes Windows v Magnet (No. 2)  ECDR 266
Travellers’ Casualty v Sun Life  EWHC 2885 (Comm)
1. The claims in this case were brought by some 202,600 individuals and corporate entities each of which is alleged to have suffered loss as a result of the collapse of the Fundão dam in Brazil on 5 November 2015. It is believed (at least in terms of the number of parties involved) to have been the largest action ever brought in an English court.
2. On 9 November 2020, I acceded to the defendants’ application to strike out all of these claims on the ground that they amounted to an abuse of the process of the court. The full background to the litigation is set out in paras 15 to 46 of the substantive judgment to be found at Município De Mariana and Others v BHP Group plc and Another  EWHC 2930 (TCC) and no purpose would be served by rehearsing that narrative here.
3. That decision has generated a number of ancillary issues between the parties relating to permission to appeal and costs which it is the purpose of this judgment to resolve. It had not been my original intention to set out my reasons for refusing permission to appeal in a formal judgment but, having received representations from the parties on this matter, I was satisfied in the particular circumstances of this case that there may at least be some merit in adopting this unusual course.
72. Three issues arise for determination:
(i) Are the defendants entitled to an order that the claimants should pay all or, alternatively, only a proportion of the costs of the action?
(ii) What sum should the claimants be ordered to pay on account of such costs?
(iii) What disclosure should the claimants be ordered to make regarding the funding of the litigation?
73. I propose to deal with each in turn.
The Costs Order
74. The claimants concede that the defendants are entitled to their costs of and occasioned by the action but contend that only 50% of these should be awarded on the grounds that the defendants have only succeeded on some but not all of the grounds they relied upon. The sums at stake are, potentially, very high. Subject to detailed assessment, the defendants total claim for costs incurred is in the sum of £16,066,947.64.
75. The claimants’ stance, broadly stated, is based on the contention that the defendants were not successful on all of the issues raised upon their applications. In this regard, and also with respect to the other issues relating to costs, I have considered carefully the matters set out in the tenth witness statement of Mr Goodhead the central points of which I will outline but the details of which I will not repeat in this judgment.
76. The starting point is CPR 44(2) which provides insofar as is material:
“44.2— Court’s discretion as to costs
(1) The court has discretion as to –
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order …
(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; …”
77. As to the proper approach to the application of these rules to the circumstances of any given case, the guidance given by Gloster J (as she then was) in HLB Kidsons v Lloyds Underwriters  EWHC 2699 (Comm) requires no further embellishment:
“10. The principles applicable as to costs were not in contention. The court’s discretion as to costs is a wide one. The aim always is to ‘make an order that reflects the overall justice of the case’ (Travellers’ Casualty v Sun Life  EWHC 2885 (Comm) at para 11 per Clarke J). As Mr Kealey submitted, the general rule remains that costs should follow the event, i.e. that ‘the unsuccessful party will be ordered to pay the costs of the successful party’: CPR 44.3(2). In Kastor Navigation v Axa Global Risks  2 Lloyd’s Rep 119, the Court of Appeal affirmed the general rule and noted that the question of who is the ‘successful party’ for the purposes of the general rule must be determined by reference to the litigation as a whole; see para 143, per Rix LJ. The court may, of course, depart from the general rule, but it remains appropriate to give ‘real weight’ to the overall success of the winning party: Scholes Windows v Magnet (No. 2)  ECDR 266 at 268. As Longmore LJ said in Barnes v Time Talk  BLR 331 at para 28, it is important to identify at the outset who is the ‘successful party’. Only then is the court likely to approach costs from the right perspective. The question of who is the successful party ‘is a matter for the exercise of common sense ‘: BCCI v Ali (No 4) 149 NLJ 1222, per Lightman J. Success, for the purposes of the CPR, is ‘not a technical term but a result in real life’ (BCCI v Ali (No 4) (supra)). The matter must be looked at ‘in a realistic … and … commercially sensible way’: Fulham Leisure Holdings v Nicholson Graham & Jones  EWHC 2428 (Ch) at para 3 per Mann J.
11. There is no automatic rule requiring reduction of a successful party’s costs if he loses on one or more issues. In any litigation, especially complex litigation such as the present case, any winning party is likely to fail on one or more issues in the case. As Simon Brown LJ said in Budgen v Andrew Gardner Partnership  EWCA Civ 1125 at para 35: ‘the court can properly have regard to the fact that in almost every case even the winner is likely to fail on some issues’. Likewise in Travellers’ Casualty (supra), Clarke J said at para 12:
‘If the successful claimant has lost out on a number of issues it may be inappropriate to make separate orders for costs in respect of issues upon which he has failed, unless the points were unreasonably taken. It is a fortunate litigant who wins on every point.’”
78. In the circumstance of this case, there can be no doubt that the defendants were the successful parties and it is against this background that I must approach the issue of costs.
79. The first ground upon which the claimants urge me to depart from the general rule is that during the course of the hearing the defendants elected to narrow the basis upon which they sought to present their case with respect to the application of Article 34.
80. In short, the defendants had relied upon about 70 group actions (referred to as CPAs) progressing in Brazil as giving rise to the risk of inconsistent decisions in England and Brazil. As I noted in the judgment at para 55:
“For the purposes of this case, BHP plc, during the course of the hearing, narrowed its case so as to identify the 155bn CPA (of which the Priority Axes and Local Commission Proceedings were to be treated as part) as the sole action upon which it relies for the purposes of Article 34. I did not consider it necessary in reaching my central conclusions to determine the controversial issue as to whether the Priority Axes and Local Commission Proceedings formed part of the 155bn CPA. There remains no need for me therefore to consider the status of these, the other CPAs or legal proceedings.”
81. In my view, this was a pragmatic and welcome decision. I am thoroughly unpersuaded that it should redound to the defendants’ disadvantage on the issue of costs.
82. In particular, the defendants had always presented the 155bn CPA as a proper and freestanding basis upon which the court could make a finding about inconsistent judgments which, if successful, would render the consideration of the other CPAs unnecessary.
83. The defendants’ decision to focus exclusively upon the 155bn CPA was not because it had become clear that reliance upon the other CPAs would have been doomed to failure but that by distilling the thrust of their contentions the court would thus be best equipped to deal with the point proportionately. This was, as I considered at the time, a helpful step. It is not one which is apt to attract adverse costs consequences.
84. It will often be the case that a party may perfectly reasonably present both a primary and an alternative case on any given issue to a court and, for legitimate and pragmatic reasons, elect to limit its reliance to the former as the hearing progresses. Of course, where, for example, the alternative case is seen to have been unmeritorious from the start then adverse consequences may well follow. However, where, as here, it has been abandoned as an act of pragmatism which lightens the burden on the court then it would normally be inappropriate to deter such a procedural choice. As it happened, the defendants did not need to succeed on the alternative argument because they were successful on their central contention. The defendant did not lose the alternative argument. I simply did not have to consider its merits.
85. Furthermore, at least some work was necessary on the broad range of CPAs to assist the court in understanding the background to the claims in Brazil in general and to provide a useful context for the abuse application. In the scheme of things, I am satisfied that the expenditure on this issue, although by no means insignificant in absolute terms, was, in relative terms, modest.
86. In conclusion, I am satisfied that it would be wrong to penalise the defendants in costs for the work done in this area.
87. The second ground relied upon by the claimants relates to the issue as to whether there was a legal obligation on the part of Renova and the Brazilian companies to make full redress under the TTAC/GTAC. This was a heavily fought-over issue between the parties but one which it became unnecessary for me to resolve because I was satisfied, in the light of my other findings in favour of the defendants that the matter was academic. The issue was not, however, determined against the defendants and it was entirely reasonable for them to expend costs in meeting the claimants’ case on the point. It would be wrong to make an adverse costs order against them in these circumstances.
88. Finally, the claimants seek to argue that the success of the defendants on the Article 34 issue was based on a “wait and see” rather than a consolidation basis and so they should face an adverse costs consequence in respect of the latter. It must be remembered, however, that the determination of the Article 34 issue was, in itself, already an academic exercise as a result of the claimant’s failure on the abuse of process point. In the event, I did not find that consolidation was neither a jurisprudential nor practicable possibility but that the issue had been rendered otiose by the claimants’ firm intention not to commence proceedings against the defendant in Brazil in any event. Paragraphs 208–218 of the judgment set out my reasoning. Ultimately, the defendants were successful in surmounting all of the necessary hurdles to win on the Article 34 issue and, in the circumstances of this case, there arises no justification for penalising them in costs by reason of the route by which such success was achieved.
89. In my view, the claimants did not even come close to establishing any basis upon which the general rule in CPR 44(2) should be displaced. The defendants will therefore be awarded their costs of the action to be the subject of detailed assessment.
Interim Payment on Account
90. 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.”
91. The defendants seek an interim payment in the sum of £9,640,168.58 which represents 60% of the total costs of the action which they have incurred.
92. The claimants do not dispute the fact that a sum on account of costs falls to be awarded but contend that the reasonable sum in this case should be £2,410,042.15. This figure is based upon the assumption that the court would award the defendants only half of their costs. I have ruled that the defendants are entitled to the whole of their costs and so the conceded figure falls to be doubled to £4,820,084.30 before any further analysis comes into play. This sum amounts to about 30% of the defendants’ estimate.
93. The proper approach to assessment is set out in the notes at 44.2.12 in the White Book 2020 which provides:
“Necessarily, 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. In a case of any complexity, the evidence and submissions arguably relevant to that exercise may be extensive. The court has to guard against the risk that it may be drawn into costly and time-consuming ‘satellite’ litigation. There is no rule that the amount ordered to be paid on account should be the ‘irreducible minimum’ of what may be awarded on detailed assessment (Gollop v Pryke (Warren J)). The relevant authorities were reviewed in Excalibur Ventures LLC v Texas Keystone Inc  EWHC 566 (Comm), (Christopher Clarke LJ), where the judge concluded that what is ‘a reasonable sum on account of costs’ will have to be an estimate dependent on the circumstances, the chief of which 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. The judge explained (paras 23 and 24) that a reasonable sum would often be one that was an estimate of the likely level of recovery subject, 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 determining whether to order any payment and its amount, account needs to be taken of all relevant factors including the likelihood (if it can be assessed) of the claimants being awarded the costs that they seek or a lesser and if so what proportion of them; the difficulty, if any, that may be faced in recovering those costs; the likelihood of a successful appeal; the means of the parties; the imminence of any assessment; any relevant delay and whether the paying party will have any difficulty in recovery in the case of any overpayment.”
94. At first blush, the sum spent by the defendants on costs would appear to be extremely high. I commented in my substantive judgment that I had witnessed a forensic arms race. I must certainly bear this consideration in mind as a factor which introduces greater than usual breadth of argument over the proper assessment of an interim award. A breakdown of the bill is set out in paras 34 to 85 of the ninth witness statement of Efstathios Michael to which is appended a detailed schedule of costs. No purpose would be served by rehearsing the contents here. Suffice it to say that the general picture painted by the accumulation of primary facts therein identified is a plausible one.
95. On the other hand, the following points can validly be made:
(i) The scale of the litigation was unique involving as it did nearly a quarter of a million claimants;
(ii) The claimants did not comprise a homogenous group but were made up of individuals, small businesses, large businesses, members of the indigenous Krenek community, municipalities, churches and utility companies all claiming different and wide ranging remedies;
(iii) The applicable law was that of Brazil and much of the relevant documentation was in Portuguese;
(iv) The state of the many and various parallel proceedings in Brazil was extremely complex and necessarily involved a major investigation. These proceedings did not remain static but were subject to significant developments over the period leading up to the hearing which gave rise to inevitable additional expenses involved in tracking a moving target;
(v) The defendants faced vast volumes of material from the claimants in response to the applications and, at least to some extent, were justified in descending to some level of precautionary detail in order to deal with it;
(vi) The potential value of the claims in the event of success may have been in the region of several billion pounds;
(vii) The costs of litigating the substantive claims, in the event that the application to strike out had been unsuccessful, would have been extremely high;
(viii) The figure claimed by the defendants relates to the costs of and occasioned by the action and not simply the applications.
96. It is also appropriate for me to note that although the claimants have mounted focused attacks on particular areas of the defendants’ expenditure, they have chosen not to reveal the headline figures in their own costs bill. This, of course, they are fully entitled to do although it inevitably means that the court is likely to be more circumspect about the overall weight to be applied to the challenges applied to narrower fronts. It is to be noted that the claimants have pointed out that over 1,000 lawyers and paralegals were involved in investigating, considering and pleading the claims and a team of nearly 50 English barristers were deployed on the case. Of course, the magnitude of the work involved in making claims, as opposed to responding to them is likely to be greater but these statistics are, at least, illustrative of the scale of the conflict.
97. I have, once again, taken into account the matters relied upon by Mr Goodhead in his tenth witness statement and, in all the circumstances, I am satisfied that the interim payment should be assessed at a lower percentage of the claimed costs than would usually be the case in the general run of cases. This case is not in the general run. In the exercise of my discretion, I would award 50% of the total bill thereafter modestly rounded down to give a figure £8,000,000. This sum is to be paid by 4.00 pm on 12 February 2021.
98. There are outstanding issues relating to the disclosure of documentation and information from the claimants relating to the funding of the claims.
99. In particular, the defendants are understandably concerned that over a period of two weeks the claimants were in breach of an order of the Court of Appeal (relating to an aborted challenge to one of my rulings in the course of the hearing) to pay the defendants’ costs in the sum of £30,000. The defendants are worried that this delay, together with the claimants’ under-particularised suggestion that they may need more than 14 days in which to make an interim payment on account of costs greater than that which they had conceded in November last year, raise doubts over the claimants’ professed ability to meet the bill in due course.
100. In the circumstances, I am minded to revisit any issues of disclosure and the provision of information which may remain outstanding between the parties in the light of this judgment for further consideration after 12 February 2021. I will entertain further representations from the parties as to whether such consideration should be on paper or by way of an oral hearing.
Charles Hollander QC (before August 2020), Graham Dunning QC (after August 2020), Nicholas Harrison, Jonathan McDonagh, Zahra Al-Rikabi, Elizabeth Stevens, Ibar McCarthy, Gregor Hogan, Anirudh Mathur and Russell Hopkins (instructed by PGMBM, a trading name of Excello Law Ltd) appeared for the claimants.
Charles Gibson QC, Shaheed Fatima QC, Daniel Toledano QC, Nicholas Sloboda, Maximilian Schlote, Stephanie Wood and Veena Srirangam (instructed by Slaughter and May) appeared for the defendants.