Background
Baroness Lawrence, Elizabeth Hurley, Sir Elton John, David Furnish, Sir Simon Hughes, Prince Harry and Sadie Frost Law brought claims against Associated Newspapers Limited. Following an 11-week trial, the High Court dismissed their claims in a main judgment delivered on 7 July 2026.
The claimants accepted that they were required to pay Associated’s costs and make a payment on account. The consequential hearing concerned whether those costs should be assessed on the standard or indemnity basis, whether any indemnity-costs award could and should be capped, and the amount of the interim payment.
The Court’s Holding
Mr Justice Nicklin ordered the claimants to pay Associated’s costs on the indemnity basis. Considering the litigation as a whole and the cumulative effect of the relevant circumstances and conduct, the court concluded that the case crossed the high threshold of being outside the ordinary and reasonable conduct of proceedings.
The court held that CPR 44.2 gives it jurisdiction in principle to impose a quantified ceiling on assessed costs, including costs assessed on the indemnity basis. It nevertheless refused to impose the claimants’ proposed £18–£20 million cap. Although Associated’s stated costs of more than £34 million appeared exceptionally high and raised real concerns, the court lacked the evidence needed to select a principled, non-arbitrary ceiling. Reasonableness would instead be tested through detailed assessment.
The court ordered a payment on account of £9,544,355, payable by 28 August 2026. That sum comprised 90% of Associated’s approved budgeted costs and 60% of its incurred pre-budget costs, without finally allocating the payment between individual and common costs.
Key Takeaways
- Indemnity costs require conduct or circumstances outside the norm; failed claims or serious allegations do not automatically satisfy that test.
- The High Court may cap assessed costs retrospectively under CPR 44.2, even on the indemnity basis, but any ceiling must rest on a principled evidential foundation.
- Indemnity assessment is not a blank cheque: costs that were unreasonably incurred or are unreasonable in amount remain irrecoverable on detailed assessment.
Why It Matters
The judgment provides substantial guidance on indemnity costs in complex, high-profile litigation, including the relevance of cumulative conduct, serious allegations, publicity, procedural failures and the conduct of a party’s lawyers or witnesses.
It also confirms a rarely considered power to cap recoverable costs after proceedings have concluded, while emphasizing that concern about a very large costs claim alone cannot justify an arbitrary ceiling. Here, scrutiny of Associated’s unprecedented costs claim was left to the specialist costs-assessment process.