COURT OF APPEAL OVERTURNS DECISION TO STRIKE OUT “UNMANAGEABLE” COURT PROCEEDINGS
In Municipio De Mariana & Ors v BHP Group (UK) Ltd & Anor  EWCA Civ 951 the Court of Appeal overturned a decision to strike out a claim. The Court doubted whether an action could ever be described as unmanageable”. In any event unmanageability does not, of itself, amount to an abuse of process.
“We have considerable doubts as to whether proceedings can ever truly be said to be “unmanageable”. But putting that question to one side, unmanageability does not fall within any of the abusive mischiefs identified in the authorities. It does not amount to a misuse of the court process in a manner that would be manifestly unfair to the parties, nor would it bring the administration of justice into disrepute among right-thinking people.”
THE CASE AT FIRST INSTANCE
202,600 individual and institutional claimants are bringing proceedings arising from the collapse of the Fundão dam in Brazil. The defendants do not deny substantive liability but argued that the proceedings should be struck out or stayed as an abuse of the process of the court. One issue was whether the claimants could obtain full redress in Brazil.
The judge considered the defendants’ argument that the issue of proceedings in the English and Welsh courts amounted to an abuse of process. That argument was accepted. Bringing a multi-party action of this type, on this scale, when there were already proceedings taking place in Brazil, amounted to an abuse and the action was struck out on those (and other) grounds.
THE DEFENDANTS’ SUCCESSFUL APPEAL
The Court of Appeal overturned the decision to strike out the case.
For the reasons discussed below, we have reached the conclusion that the Judge’s decision to strike out, alternatively stay, the proceedings for abuse of process was flawed in a number of respects and wrong. In particular:
(1) the fact that a claim properly advanced is said to be “unmanageable” does not as such make it an abuse;
(2) in any event, the Judge’s conclusion that the proceedings were “irredeemably unmanageable” is not sustainable;
(3) the Judge was wrong to rely on forum non conveniens factors as part of his analysis on abuse of process;
(4) whilst a properly arguable claim may in principle be abusive if it is (clearly and obviously) pointless and wasteful, the Judge’s error in relation to the manageability of the litigation infected his conclusion on whether that was the case here; his reasoning that there was nothing to be gained by the claimants in the English courts was premised fundamentally on his (unjustified) view that their claims here were unmanageable;
(5) the Judge failed properly to analyse the position of the 58, and the consequences of their position for other claimants; he treated the claimants as a single indivisible group against whom the application must succeed or fail altogether, rather than treating the application as constituting an application against each claimant, with the position of each claimant or group of claimants being considered individually.
Accordingly, it will fall to us to decide afresh whether the claims should be struck out (or stayed) for abuse of process, and in particular whether the defendants have discharged the burden of establishing that the proceedings are clearly and obviously pointless and wasteful.
Unmanageability was not the basis of the defendants’ application before the Judge. Their application was based on the contention that the litigation was abusive for being pointless and wasteful (and/or by reference to Henderson principles and/or collateral attack). The evidence relied on in support of the application asserted that the claimants were already entitled to full redress for damage suffered as a result of the dam collapse under TTAC/GTAC. It was said that the most that the claimants could achieve after many years of litigation in England was exactly the same as that to which they were entitled in Brazil. The litigation in England would impose a massive burden on the parties and the court system, and there was no benefit to the claimants in bringing their claims in England, let alone one which could justify the cost.
However, it is clear that the Judge found the proceedings to be abusive, first and foremost, for “irredeemable unmanageability”. This was his key conclusion; whilst he later went on to “step … back”, unmanageability was, in his judgement, a sufficient basis for a finding of abuse without more. Thus, at para. , he referred to the proceedings as being “abusively” unmanageable, stating at paras.  and , that he was “entirely satisfied that these claims would be not merely challenging but irredeemably unmanageable if allowed to proceed”. The proceedings were “not practically workable”, and even if they were, would still have “a very significantly deleterious impact indeed upon the scarce resources of the English courts”. His conclusion at para. , namely that it had clearly been proved that the claims amounted to an abuse of the process of the court, was reached before and independently of any consideration of the question of the availability of full redress in Brazil. As he stated in terms when refusing permission to appeal, his finding of irredeemable unmanageability was “the point of central importance to which all other considerations [were] of secondary significance”.
Against that background, two questions arise:
(1) whether unmanageability of otherwise properly mounted viable litigation is a proper ground for a finding of abuse of process as a matter of principle; and
(2) whether in any event the Judge was correct to find that the litigation was “irredeemably unmanageable”.
As to the first question, Mr Gibson, at least orally, did not seek to defend the Judge’s finding of abuse by reference to unmanageability. He was right not to do so. We have considerable doubts as to whether proceedings can ever truly be said to be “unmanageable”. But putting that question to one side, unmanageability does not fall within any of the abusive mischiefs identified in the authorities. It does not amount to a misuse of the court process in a manner that would be manifestly unfair to the parties, nor would it bring the administration of justice into disrepute among right-thinking people. The Judge (at para. ) quoted Lord Bingham’s description of abuse in Barker (at para. ): “a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process”. As noted at para.  of the PTA Judgment, this was not an apt description for the question of unmanageability upon which he was relying. Equally, as identified above, the mere fact that the litigation would place a significant burden on the courts could not be an independent basis for a finding of abuse.
Here the claimants are bringing properly arguable claims against the defendants in this jurisdiction as of right. Even if the proceedings were unmanageable due to complications arising out of parallel proceedings in Brazil, or because of other procedural complexities, that would not mean that the court process was being misused, whether vexatiously, oppressively or otherwise. It would mean only that the court processes were not capable of meeting the challenge posed by the proceedings. The remedy might be a procedural stay as part of an exercise of case management powers; but the proceedings would not be abusive.
Such an approach is entirely consistent with the decision in Mastercard v Merricks  UKSC 5,  1 WLR 1033, in the context of collective proceedings. At para.  Lord Briggs stated:
“The incompleteness of data and the difficulties of interpreting what survives are frequent problems with which the civil courts and tribunals wrestle on a daily basis. The likely cost and burden of disclosure may well require skilled case-management. But neither justifies the denial of practicable access to justice to a litigant or class of litigants who have a triable cause or action, merely because it will make quantification of their loss very difficult and expensive…”
For the avoidance of doubt, we would not rule out a finding of abuse of process as a matter of principle by reference to unmanageability if, for example, a claimant had deliberately made the litigation unmanageable with vexatious consequences for the defendant, thus misusing the court process. But there is no suggestion of that here, nor could there be. The MPOC is well-structured, coherent and entirely digestible; it clearly set out the facts relied upon, the causes of action and the relief claimed.
As to the second question, the Judge’s conclusion that the proceedings here were (clearly and obviously) “irredeemably unmanageable” is not sustainable. In the first place, no such conclusion could be reached safely at such an early stage of the proceedings. The Judge’s criticisms of the claimants’ position (at paras. -) are unfair. The claimants provided the court with clear illustrations of case management options. It was unreasonable to expect more definitive proposals at such an early stage of proceedings. The precise nature and scope of the issues between the parties had yet to be identified. The proper time for considering how to manage would be at a case management conference before the assigned judge. Significantly, by that stage the parties, represented by sophisticated litigators experienced in the field, would have been obliged fully to co-operate in putting forward case management proposals. Those could have included, for example, a proposal that the issue of indirect polluter strict liability be tried preliminarily, or that the control basis of such liability be determined first. A trial of such a preliminary issue would not appear to require the involvement of any evidence from any individual claimants; rather it would turn on the defendants’ knowledge, control and conduct, and the scope of the dispute on these aspects of the claim would be apparent from the defendants’ responsive pleading to the MPOC. Were liability to be established, generic causation and quantum issues could be identified and tried. The outcomes of quantum trials on individual selected test cases could be used to inform settlement of individual cases across the board.
Lloyd v Google LLC  UKSC 50;  3 WLR 1268, a case involving a class representative action, does not assist the defendants. There (at paras. -) Lord Leggatt performed a high level overview of the different methods of redress available in group actions, collective proceedings and representative actions. At para.  he identified that GLO proceedings, which are “opt-in”, required quantum of loss to be proved in each individual case. Where the loss in each case was small, eligible individuals might be less likely to opt in, and the litigation might be rendered uneconomic. But he did not suggest that the use of group litigation for claimants with low-value claims who had opted in was in some way unmanageable, let alone abusively so. And of course, a number of the claimants in these proceedings have high-value claims.
The Judge was influenced significantly by what he considered to be the complications arising out of the existence of parallel proceedings in Brazil, and what he described to be an “acute” risk of “unremitting cross-contamination” of proceedings. There is a question, addressed below, as to whether the risk of inconsistent judgments was a legitimate consideration at all. Beyond that, the Judge identified the complications and the risk of cross-contamination in general terms. He did not, at least on the face of the Judgment, carry out the scrupulous analysis necessary to found a conclusion that such potential complications clearly and obviously rendered the proceedings unmanageable.
There is force in the claimants’ submission that a proper analysis, including by reference to the positions of the different classes of claimants, does not bear out his findings.
(1) None of the claimants and neither of the defendants is a party to the 155bn CPA. In the event of any generic sentence being pronounced, individual claims would need to be brought in separate proceedings.
(2) Contrary to the Judge’s understanding, the degree of overlap with the Brazilian proceedings is relatively limited, if it arises at all, so far as can be ascertained at present and so far as can be established by the defendants, upon whom the burden lies on this issue. We address the degree of overlap between the action and the 155bn CPA in greater detail at paras - below in the context of article 34.
(3) None of the claimants is seeking “identical remedies” in Brazil to those sought in England, so far as the current evidence shows, and the Judge was wrong to find that many of them were (at para.  of the Judgment).
(4) Significantly and in any event, the 155bn CPA had been stayed since March 2017. It was common ground before the Judge that any stay was unlikely to be lifted for a further two years (at the date of the hearing before him). There is an issue as to whether it remains stayed today, but it is common ground that the NJC negotiations continue. As set out above, Mr Calluf Filho’s view is that the NJC negotiations are not likely to continue beyond mid-2022 if not completed by then, but this remains a matter of uncertainty.
(5) Any trial thereafter would be a minimum of two to four years away (and, on the claimants’ expert evidence much more than that – a decade or more). Further, the evidence of Professor Rosa and Dr Janot, which cannot be discounted for these purposes, is that there will never be a trial of liability leading to a generic sentence in the 155bn CPA. Further, there is uncertainty as to whether or not any sentence would involve a determination of the liability of the Brazilian Companies, and as to the scope of any decision on causation, quantum and in kind relief in any event.
(6) The majority of the claimants are not seeking any remedy in any proceedings in Brazil, and none of them is seeking any remedy against the defendants in Brazil.
(7) The vast majority of claimants who have recovered damages have only received very modest sums in respect of moral damages for interruption to their water supply. They will give credit for those sums.
(8) Compensation under the (optional) Renova scheme is not the product of any judicial decision but rather an extra-judicial settlement. Equally, for example, redress under the (optional) Novel System does not involve any adjudication of legal rights under Brazilian law.
The position of the 58 is particularly striking when considering unmanageability. The fact that they are only a very small proportion of the total number of claimants – 0.03% – is not to the point; their claims are financially significant, and in any event, as we expand upon below, an individual approach to claimants is required. The terms of TTAC exclude their redress from its scope. It is clear that the 13 large businesses included within the 58 could not benefit from any generic sentence in the 155bn CPA. It is uncertain whether any of the remaining 58 could in principle benefit from any such sentence, and clear that for the most part they could not do so because the MPF is not seeking a generic sentence which would cover large parts of their losses. Broadly speaking, therefore, there is no risk of a conflicting 155bn CPA judgment so far as they are concerned.
The Judge nevertheless found that to allow the claims of the 58 to proceed in England would give rise to an acute risk of irreconcilable judgments and “in a broader sense, conflicting developments in the parallel jurisdictions”. He stated that “many of the municipalities and utility companies stand to benefit from the Renova programmes of infrastructure and environmental works”. It is difficult to see how this potential benefit of remedial works would create an abusive risk of irreconcilable judgments or conflicting developments. He also stated that the 58 could bring claims outside the scope of the CPAs. But the fact remains that whilst a few have done so, most have not, and the English court could not require them to do so, as we discuss further below.
In summary, the risk of unmanageability, or as the Judge put it “utter chaos”, due to the existence of proceedings in Brazil is not clear and obvious, whether by reference to the claimants as a whole, or, as is in fact required, considering their position on an individual basis. As the claimants rightly recognise, it may be that “down the line” some individual claims may need to be reviewed in the light of any releases signed by particular claimants, or possibly by reference to Henderson principles. It is not possible on the evidence before us to identify with any particularity whether such issues will arise, and if they do, by reference to which claimants. If they do, they can be addressed individually, or by category of claimant. The potential for such issues arising in due course cannot be said to make them abusive on the grounds that the claims are unmanageable.
For these reasons, there was no proper basis for the Judge’s finding that the proceedings were abusive on the basis of irredeemable manageability, both as a matter of principle and on the facts.