Prince Harry Legal Bill Update: Daily Mail Seeks Indemnity Costs After High Court Victory

Earlier this month, we looked at why Prince Harry and the other claimants in the unlawful information gathering litigation against Associated Newspapers could face a substantial legal bill following the dismissal of their claims.

The case has now entered its next phase, with Associated Newspapers asking the High Court to go one step further by awarding its costs on the indemnity basis rather than the standard basis.

Whilst the court has not yet ruled on that application, the hearing provides an interesting insight into the arguments that can persuade a court to depart from the usual costs rules.

A reminder of the original judgment

The underlying proceedings were brought by seven claimants, including Prince Harry, Sir Elton John, Baroness Lawrence and Sadie Frost, against Associated Newspapers, publisher of the Daily Mail, Mail on Sunday and MailOnline.

Following an 11-week trial, Mr Justice Nicklin dismissed all claims of unlawful information gathering, concluding that the claimants had failed to establish that the information relied upon had been obtained unlawfully.

As the successful party, Associated Newspapers became entitled to recover its legal costs, subject to any assessment or agreement between the parties.

The latest hearing concerns how those costs should be assessed.

What is the Daily Mail seeking?

Associated Newspapers is asking the High Court to order that its costs be assessed on the indemnity basis.

It is also seeking an interim payment on account of costs of almost £10 million, pending the final assessment of its overall legal costs.

According to submissions made during the hearing, the publisher’s total legal costs exceeded £34 million, significantly surpassing its approved costs budget.

Whether those costs are ultimately recoverable, and to what extent, will depend upon the court’s decision and any subsequent assessment.

Why are indemnity costs significant?

Most successful litigants recover their costs on the standard basis.

Under a standard basis assessment, the court considers whether costs were reasonably incurred and proportionate, with any doubt generally resolved in favour of the paying party.

An assessment on the indemnity basis is considerably more favourable to the receiving party.

Although indemnity costs do not guarantee full recovery, the proportionality test is applied differently and any reasonable doubt is usually resolved in favour of the receiving party.

In practice, this often results in a higher level of costs recovery.

Why is the publisher seeking indemnity costs?

Associated Newspapers argues that this was not ordinary litigation.

Its legal team submitted that the proceedings involved exceptionally serious allegations against dozens of individuals, including allegations of criminal misconduct, without sufficient supporting evidence.

The publisher further argued that:

• the allegations were pursued on an extremely broad basis;
• the claimants failed to reassess the strength of their claims following disclosure;
• further allegations were added as the litigation progressed;
• the overall conduct of the proceedings took the case outside the norm.

These are precisely the types of arguments that commonly arise in applications for indemnity costs.

Whether the court ultimately accepts them remains to be seen.

Conduct remains central to costs

From a costs perspective, the application reinforces an important principle.

The question is no longer who won the litigation, as that has already been decided.

Instead, the court must consider whether the conduct of the litigation justifies a departure from the usual costs rules.

Courts may consider factors such as:

• whether allegations were properly evidenced;
• whether parties acted reasonably throughout proceedings;
• compliance with procedural obligations;
• whether litigation was conducted proportionately;
• whether unnecessary costs were incurred.

These issues frequently arise in substantial commercial and High Court litigation and often become as significant as the substantive dispute itself.

Why this matters beyond the Prince Harry case

Although this is a high-profile dispute involving well-known public figures, the principles are relevant to any complex litigation.

Applications for indemnity costs are not confined to media cases.

They regularly arise in commercial disputes, professional negligence claims, shareholder litigation and other High Court proceedings where one party alleges that the other’s conduct has taken the litigation outside the ordinary course.

The case also highlights the importance of costs strategy throughout proceedings.

Decisions made during litigation, particularly those concerning disclosure, pleadings, settlement and the continuation of claims, can have significant consequences once the court comes to consider costs.

Robert Collington’s commentary

Robert Collington, Costs Lawyer at ARC Costs, comments:

“The underlying judgment determined who won the litigation. This latest hearing is about something entirely different; whether the conduct of the proceedings justifies an indemnity costs order. That distinction is important because indemnity costs are awarded only where the court considers there is good reason to depart from the usual approach.”

He continues:

“Large-scale litigation increasingly involves detailed arguments about costs after the substantive issues have been decided. As this case demonstrates, costs strategy should never be viewed as an afterthought. The way litigation is conducted can have a substantial financial impact long after judgment has been handed down.”

How ARC Costs can help

At ARC Costs, we regularly advise solicitors and law firms on complex costs disputes, including applications for indemnity costs, costs budgeting, Bills of Costs, Points of Dispute, Replies and detailed assessment proceedings.

The Prince Harry litigation is another reminder that, in high-value disputes, the costs phase can become almost as significant as the trial itself. Obtaining specialist costs advice throughout proceedings can help parties manage risk, maximise recovery and respond effectively when complex costs issues arise following judgment.

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