Município De Mariana v BHP Group (UK) Ltd & Anor [2026] EWHC 73 (TCC)
In this case, the Claimants had succeeded at trial on a preliminary issue and were awarded an interim payment on account of costs of £43 million. However, the assessment of costs was deferred until the conclusion of the overall case.
The Court had to determine whether interest could be awarded on costs, when those costs were not payable to the Solicitor until the successful conclusion of the claim.
The Defendants’ Position
The Defendants objected to the Claimants’ application for interest on costs. Their argument was that since the Claimants had not paid any legal fees or disbursements, and were not out of pocket at this stage.
The Legal Framework
CPR 44.2(6)(g) gives the court discretion to award interest on costs from or until a specific date, including a period before judgment. The rationale for awarding interest, as explained in Jones v Secretary of State for Energy and Climate Change [2014] EWCA Civ 363, is to compensate a party who has been deprived of the use of their money or has had to borrow to fund litigation.
The Judgment and Key Principles
Mrs Justice O’Farrell determined that, although the Claimants had not yet paid out costs, they had incurred a liability. If and when damages are paid, the Claimants will have to pay their Solicitor out of those damages. The fact that the Solicitors and funders had shouldered the risk of non-payment did not mean the Claimants were not ultimately liable.
The Judge determined that the Claimants should be compensated for the funding expenses incurred, which required payment from their damages. On this basis, the court exercised its discretion and awarded pre-judgment interest on costs at 1% above the base rate, calculated from the date when half the fees were incurred (1 August 2023).
Summary
The judgment confirms that even where payment is contingent on success, interest can be awarded on the liability incurred. This decision reflects the evolving realities of litigation funding and ensures that compensation for funding expenses is not arbitrarily withheld due to the timing or structure of payment.
Helen Appleby is an Associate in Clarion’s Costs and Litigation Funding Team and can be contacted at helen.appleby@clarionsolicitors.com or on 07774 045105.