Prince Harry Legal Costs Update: £9.54m Interim Payment Ordered

The scale of the Prince Harry legal costs dispute has become clearer after the High Court ordered the Duke of Sussex and six other claimants to make an interim payment of £9.54 million towards the Daily Mail publisher’s costs.

The costs decision follows the dismissal of the claimants’ allegations of unlawful information gathering against Associated Newspapers Limited (ANL). More significantly from a costs perspective, the court has now determined that much of ANL’s costs should be assessed on the indemnity basis.

For ARC Costs, the latest judgment provides a useful real-world example of three important costs issues, such as payments on account, indemnity costs and the fact that even an indemnity costs order does not give a receiving party a blank cheque.

Why are Prince Harry and the other claimants facing a legal bill?

The underlying High Court proceedings were brought by seven high profile claimants, including the Duke of Sussex, Sir Elton John, his husband David Furnish, Doreen Lawrence, Sadie Frost, Liz Hurley and former Liberal Democrat MP Simon Hughes.

They alleged that Associated Newspapers, publisher of the Daily Mail, Mail on Sunday and MailOnline, had engaged in unlawful information gathering. Following an 11-week trial, Judge Mr Justice Nicklin dismissed all of the claims in July 2026.

That substantive judgment meant the focus then shifted to legal costs and, in particular, how much of the successful defendant’s expenditure should ultimately be paid by the claimants. ANL reported total costs of approximately £34.5 million.

However, this does not mean Prince Harry and the other claimants have automatically been ordered to pay £34.5 million.

What is the £9.54m interim payment?

The High Court has ordered an interim payment of approximately £9.54 million, payable towards ANL’s costs. The claimants had argued for an interim figure of just over £7.9 million.

A payment on account of costs is not necessarily the final amount payable. It allows a successful party to receive part of the costs to which it is expected to be entitled without having to wait for the conclusion of negotiations or detailed assessment. This can be particularly important in substantial litigation, where resolving the final costs position may itself take considerable time.

The £9.54 million therefore represents an interim costs payment rather than the final legal bill.

Why did the High Court order indemnity costs?

Perhaps the most significant development is the decision that, except where different costs orders have already been made, the Daily Mail publisher should have its costs assessed on the indemnity basis. Indemnity costs are not automatically awarded simply because litigation fails.

Mr Justice Nicklin considered the circumstances and conduct of these proceedings sufficient to take them outside the ordinary course of civil litigation. Among the matters identified were the breadth of the allegations, their substantially inferential and speculative origins, serious allegations made against numerous individuals and the failure to reassess aspects of the case as the evidence developed.

The court was particularly critical of allegations that remained in issue despite, in its view, no longer being realistically maintainable. It is important to note that the court did not find that any of the claimants had acted dishonestly.

What does the indemnity basis actually mean?

There is sometimes a misconception that an indemnity costs order means the successful party receives 100% of whatever it spent. This is not the case however.

On the standard basis, costs must be both reasonable and proportionate, and doubts are generally resolved in favour of the paying party.

On the indemnity basis, proportionality does not apply in the same way and doubts about reasonableness are resolved in favour of the receiving party. However, costs that were unreasonably incurred or are unreasonable in amount can still be disallowed. This distinction could become extremely important here.

ANL’s £34.5m costs could still face significant scrutiny

Despite making the indemnity costs order, Mr Justice Nicklin reportedly described the approximately £34 million claimed by Associated Newspapers Limited ANL as “excessive”, “striking” and largely unexplained. The judge nevertheless declined to impose a cap on the amount recoverable.

If the parties cannot agree the final figure, the costs will therefore need to be considered through the detailed assessment process.

For costs professionals, this is arguably where the case becomes even more interesting.

The receiving party starts from the advantageous position of having an indemnity basis order. But it may still need to justify substantial elements of a very large costs claim.

Hourly rates, time spent, counsel’s fees, expert or other disbursements, duplication and whether expenditure was reasonably incurred could all potentially become relevant depending on what is contained within the claim.

Why £34.5m does not necessarily mean £34.5m will be recovered

This is an important distinction in any high-value costs dispute. The amount a law firm invoices its client, the amount included within a Bill of Costs and the amount eventually recovered from an opponent are not necessarily the same.

The court’s order establishes the basis upon which the costs should be assessed. It does not remove the assessment process itself.

This is something ARC Costs regularly encounters when dealing with substantial Bills of Costs. Even where liability for costs has been determined, there can remain significant disagreement over the amount that should actually change hands.

With tens of millions of pounds potentially at stake, relatively small percentage reductions can translate into very substantial sums.

What about the claimants’ insurance?

The High Court was previously told that the claimants collectively had legal expenses insurance providing around £16.2 million of cover.

With ANL’s claimed costs substantially exceeding that figure, there is the possibility of a significant shortfall depending upon the amount ultimately assessed and the precise insurance arrangements.

The costs consequences are therefore potentially substantial for the Prince Harry and the other claimants personally.

Reports surrounding Prince Harry and Meghan may continue to attract much of the wider media attention, but from a legal costs perspective the important issue is now the assessment of ANL’s claimed expenditure and the extent to which it can ultimately be recovered.

What Happens next?

The £9.54 million order is only an interim payment, so it shouldn’t be confused with the final costs liability. With claimed costs of around £34.5 million, there could still be a substantial assessment exercise ahead if the parties cannot agree.

The indemnity basis puts ANL in a stronger position as receiving party, particularly because proportionality does not apply in the same way. But that doesn’t mean that every pound spent is recoverable. Costs must still have been reasonably incurred and be reasonable in amount, which could be particularly significant given the judge’s comments about the overall level of expenditure.

The immediate consequence is the £9.54 million payment on account. The much bigger question is the final amount of legal costs that ANL will recover.

If agreement cannot be reached, a costs judge may ultimately have to scrutinise the expenditure and determine what is recoverable on the indemnity basis.

For ARC Costs, this is precisely why specialist costs expertise becomes particularly important in high-value litigation. An order establishing liability for costs may only be the beginning of the process.

ARC Costs regularly acts in substantial costs disputes, including half-million-pound-plus Bills of Costs, detailed assessments, Points of Dispute and Replies, costs budgeting and indemnity costs issues.

The latest Prince Harry legal costs ruling demonstrates just how significant that final stage of litigation can become. Even after an 11-week High Court trial and a decisive judgment on the underlying claims, millions of pounds can remain in dispute over one fundamental question on how much should the losing party actually pay?

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