The Cost of Fame - Prince Harry & Others ordered to pay £9.5m interim and face substantial costs claim of over £34m
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Costs have increasingly reached mainstream headlines, with the BBC, Reuters, Sky News, The Guardian, and others all reporting on the High Court Judgment addressing how costs will be dealt with in this high-profile privacy case. Seven Claimants, including Prince Harry, Elton John, and Liz Hurley, saw their claims against Associated Newspapers Limited dismissed.
The High Court had three main ancillary costs issues to address in Various Claimants v Associated Newspapers [2026] EWHC 2207 (KB):
1) Whether costs should be awarded on the standard or indemnity basis.
The answer was yes (indemnity basis). The High Court’s view was that this reflected the manner in which the claims had been brought, pleaded, pursued, maintained, and publicly advanced. In short, the conduct of the litigation was outside the norm. It was a cumulative effect. Further, the Claimants failed to adequately “reassess the scope and strength of their case as the litigation developed”. It was also noted that the Claimants sought to rely on witness evidence which they ought to have known was seriously compromised. Conduct was unreasonable to a high degree.
2) Whether there is jurisdiction to impose a cap or limit on the costs to be recovered if an indemnity costs order were made.
It was held that the Court does have the power to impose a cap or limit on costs, including on an indemnity basis but the existence of such a power does not mean it should be exercised. 3 points of principle were examined by the court chiefly that:
1) a cap can’t be imposed because costs appear to be high, this would be to pre-empt without evidence, matters that are for assessment.
2) An indemnity basis assessment has protections for the paying party as costs unreasonably incurred or unreasonable in amount would not be allowed; and
3) There needs to be a rationale behind any capped figure. The court declined to impose a cap.
3) The sum to be paid by the Claimant on account of costs.
The Claimants accepted that the Defendant was entitled to 90% of its approved budgeted costs. There was a dispute as to how to treat the pre-budget (incurred) costs. The Claimants submitted that the appropriate figure was 40%, whilst the Defendant sought 65%. The High Court ultimately ordered 60% of the pre-budget costs, taking into account the substantial work undertaken pre-budget, the careful scrutiny required at assessment, and the indemnity costs order. The Claimants were ordered to pay £9,544,355 by 28 August 2026
The case highlights how courts will approach an indemnity costs award and the requirement for conduct to be "outside of the norm". Further, it clarifies that while there is jurisdiction to impose a cap on costs under CPR 44.2, this should be exercised with caution. Finally, a high interim payment will be ordered where there is a Costs Budget (90% of budgeted costs), but the court will still exercise caution regarding pre-budget costs. An indemnity costs order will see a higher interim granted for non-budgeted costs, but the court will still consider what sum is reasonable, having regard to what would be the likely recovery at assessment.
Indemnity Costs
Costs are to be assessed on one of two bases: standard or indemnity. On a standard basis assessment, the burden of proof of reasonableness is upon the party claiming costs. On an indemnity basis, the burden of proof is on the party paying the costs. This distinction is significant: any doubt on a standard basis assessment is resolved in favour of the paying party, whereas on an indemnity basis, doubt is resolved in favour of the receiving party. It is therefore advantageous to a party receiving or claiming costs to have them assessed on an indemnity rather than a standard basis.
Another pertinent feature in this matter was that the claim was subject to Costs Budgeting. An indemnity costs order has the effect of displacing the Costs Budget, prospectively removing the ceiling on any costs claim. Here, it transpired that the Defendant had overspent beyond the Costs Budget. The Claimants sought to argue that this pointed to a failure of transparency and that this should be taken into account.
Why did this matter? The Defendant’s costs up to July 2026 were nearly £34.5m, whereas their Costs Budget had been drawn at £19.8m and approved at £13.3m.
Mr Justice Nicklin summarised the requirements for an indemnity costs order:
“The authorities express the test in slightly different formulations, but the central requirement is the same: there must be some conduct, or some circumstance, which takes the case out of the norm. The discretion is wide and must be exercised by reference to all the circumstances. Where conduct is relied upon, it need not attract moral condemnation; unreasonableness may be sufficient. But the authorities also emphasise that the hurdle is a high one. The conduct or circumstances must be outside the ordinary and reasonable conduct of proceedings. In deciding whether to order costs on the indemnity basis, the Court can have regard to an aggregation of factors in deciding whether unreasonable conduct has been demonstrated.
[…]
The authorities recognise that indemnity costs may be justified where a claim is speculative, weak, opportunistic or thin; where serious allegations, including dishonesty or serious impropriety, are pursued aggressively and fail; where the allegations are the subject of extensive publicity, particularly where courted by the unsuccessful party; or where the litigation is conducted on a very wide and unjustified canvas. Those categories are not closed. They are illustrations of the underlying question: whether, looking at the case in the round, the conduct or circumstances were outside the norm.”
[…]
The principle I derive from these authorities is that serious allegations, especially allegations of dishonesty, fraud, bad faith or commercially unacceptable conduct, must be advanced and maintained with particular care. If such allegations are advanced without proper foundation, maintained unreasonably, abandoned without explanation, publicised, or deployed as part of an improper litigation strategy, those matters may be powerful factors in the overall assessment. But they do not create an automatic entitlement to indemnity costs; the Court must exercise its discretion by reference to all the circumstances. “
Mr Justice Nicklin was careful to consider and raise points of caution when it came to consider whether to make an order for costs on an indemnity basis:
Whether conduct was reasonable or not has to be considered by reference “to what was known, or ought reasonably to have been appreciated at the relevant time”.
A serious allegation failing is not enough, the question is whether such an allegation was reasonably advanced and maintained, and whether the manner in which it was pursued took the case out of the norm.
The conduct of those the party has chosen to engage or enlist in the litigation may also be taken into account.
The fact that the litigation is very wide, expensive or complex does not, in isolation, justify indemnity costs.
Procedural conduct will be taken into account, it is for the court to consider the seriousness of any breach, its effect on the litigation and whether it caused additional costs or unfairness.
The court may have regard to the effect of publicity, particularly taking account of the potential reputational harm and strain caused by serious allegations.
Indemnity costs does not require dishonesty, bad faith or an abuse of process. The question is whether the conduct “judged objectively and in context, was sufficiently unreasonable, or whether the circumstances were sufficiently unusual, to take the case outside the norm”.
When considering costs the court is not confined to the findings in the substantive action. Where it is appropriate the court can make further findings for costs purposes.
A consequential hearing was not a second trial and the court must be cautious to go “materially beyond the findings in the substantive judgment”.
The fact a party did not apply to strike out the claim or seek summary judgment is not necessarily an answer to an application for indemnity costs.
Previous costs orders may be relevant when considering the final costs order.
The court must take account of the conduct of both sides.
The court must consider the scope of the order, it may be appropriate to limit indemnity costs to a particular feature of a case or time period.
The parties’ respective positions were summarised thus:
86. Associated’s submission, in short, was that this was not merely a case in which serious claims failed. It was a case in which very grave allegations were advanced on an exceptionally wide canvas, with extensive publicity, in reliance in significant part on compromised or unsupported evidence, and were then pursued through disclosure, witness evidence and trial in a shifting and unpleaded fashion without appropriate withdrawal or reassessment. It submitted that each of these features had force, and that their cumulative effect clearly took the case out of the norm.
87. The Claimants’ submission, in short, was that they brought genuine claims in good faith, that no Claimant had been found dishonest, that there were real generic findings concerning Associated’s use of TPIs, that some article-specific allegations had real evidential force, that Associated had itself advanced serious allegations that were not upheld, that many procedural episodes had already been dealt with in costs, and that the Court should not use the consequentials hearing to conduct a second trial or to make wide new findings. They accepted liability for costs, but submitted that standard basis assessment, not indemnity costs, was the just order.
The High Court ultimately decided that the appropriate order was one for indemnity costs. It found this on the basis that:
The Claimants had deliberately framed their case exceptionally wide and it contained speculative elements.
There was a failure to reassess or withdraw unfounded allegations. This was particularly relevant where there had been no admissions of widespread wrongdoing.
There was reliance on severely compromised evidence all the way to trial.
The case at trial shifted from that of the pleaded case.
The case was launched with high-profile publicity.
Mr Justice Nicklin held that:
“In my judgment, the cumulative effect of these matters takes the case well outside the norm. The conduct was unreasonable to a high degree. The just order is that the Claimants pay Associated’s costs of the action, save where costs orders have already been made, to be assessed on the indemnity basis.”
Should there be a cap where there is an indemnity costs order?
The High Court next turned to the question as to whether the court had power to impose a limit or ceiling on the amount recoverable following detailed assessment where there was an indemnity costs order.
It was held that “the Court does have jurisdiction, in principle, to make an order that costs otherwise subject to assessment should be subject to a quantified ceiling or “cap”.” Such discretion could be found in the “breadth of CPR 44.2”.
Mr Justice Nicklin stated:
“the Court has power, in an appropriate case, to order that costs be assessed, including on the indemnity basis, subject to a quantified ceiling. But the existence of the power is only the beginning of the inquiry. The power is a broad discretionary one, and it must be exercised in accordance with principle. It should not be used to avoid the ordinary process of assessment, nor to impose an arbitrary figure in place of the evidence-based scrutiny that is the function of the Costs Judge.”
There were three important points of principle:
A cap can’t be imposed simply because costs appear high. The court must be careful not to duplicate, or pre-empt without evidence, matters that properly fall for assessment.
A paying party retains protection, even under an indemnity costs order. Costs which are unreasonably incurred or unreasonable in amount would not be allowed. In short, an indemnity assessment “is not a blank cheque”.
If a cap is put in place then the court has to be able to explain why a particular figure was chosen. The High Court stated that there was a danger any figure would become just an impression of what the court considered to be too much. In short, a cap could be vulnerable to criticism that it is arbitary.
The High Court declined to impose a cap.
It was accepted that the costs claim appeared high (nearly £34.5m as of July 2026) and also accepted this was a significant departure from the approved £13.3m budget. However, the court also reflected that there may be justifications for why the budget had been exceeded.
On rejecting the cap the High Court found that:
There was a lack of evidence on which to base a cap.
There was a risk of unfairness if a cap was imposed.
The limit of indemnity of the Claimants’ ATE did not justify substituting a detailed assessment with an unparticularised ceiling.
Potential difficulties on assessment was not a valid legal basis to bypass the detailed assessment process.
The Claimants were safeguarded by a rigorous, evidence-based detailed assessment before a costs judge.
Payment on Account of Costs
The final question turned to the level of payment on account.
The Claimants accepted that the payment on account of costs should include 90% of the Defendant’s budgeted costs but there was a lack of agreement over how to treat the pre-budgeted costs (incurred costs).
The Defendant sought 65% of its incurred pre-budget costs, the Claimant proposed 40%.
The High Court adopted the oft-repeated principles when considering the approach to the payment on account of costs:
“186. […] I accept that the payment-on-account exercise is necessarily broad brush. It is not an assessment of costs and the Court is not required to identify the irreducible minimum that will be recovered. The question is what sum is reasonable, taking account of the likely recovery on detailed assessment and the uncertainties inherent in that process.”
The High Court then considered the appropriate order to make:
187. I accept that the Court’s earlier budgeting decisions are relevant context. They demonstrate that very substantial reductions were made to Associated’s estimated costs, and they explain why the Claimants say caution is required. But I do not accept that the same percentage reduction should simply be applied to incurred pre-budget costs for the purpose of a payment on account. The exercise is different. At the budgeting stage the Court was dealing with estimates of future costs. The pre-budget incurred costs now in issue were incurred in responding to very wide and serious allegations, before the Court had imposed the later case-management structure and before the issues had been narrowed. The statements of case and disclosure work undertaken in that period was substantial and, at least in broad terms, explicable by reference to the very wide generic case then being advanced. Those matters do not determine the sums recoverable on assessment, but they are relevant to what is a reasonable sum on account.
188. Equally, I do not accept Associated’s submission that 65% should be ordered simply because it falls within a range sometimes seen in cases involving unbudgeted costs. This was highly unusual litigation. Associated’s costs are exceptionally large. The detailed assessment will require careful scrutiny of the reasonableness of the work done, the time spent, the level of fee earners deployed, hourly rates, duplication, and whether the costs claimed were reasonably incurred and reasonable in amount. Those matters would usually justify a substantial margin for the uncertainties of assessment.
189. However, the fact that I have ordered the costs to be paid on an indemnity basis is a relevant factor when determining the appropriate sum for payment on account. Doing the best I can on the material presently available, I consider that the reasonable sum on account is £9,544,355. Rounded down to the nearest pound, that figure comprises 90% of Associated’s approved budgeted costs, namely £4,669,127.10, and 60% of Associated’s incurred pre-budget costs, namely £4,875,228.24. The selection of 60%, rather than the 65% sought by Associated, reflects that substantial margin and the prima facie concerns I have identified about the scale of Associated’s overall costs, while also recognising that costs have been ordered on the indemnity basis.
190. I do not regard it as appropriate to determine, for the purpose of this interim payment, any final division between Individual Costs and Common Costs. The payment will therefore be ordered as a global payment on account, without prejudice to the parties’ rights on detailed assessment (including Associated’s right to apply for further payments on account) or any later determination of allocation.
191. I order that payment on account be made by 28 August 2026. That is the date I indicated at the conclusion of the hearing. The Claimants and their advisers have been on notice, since the hearing, that this would be the date for payment on account.”
It has been an expensive exercise for the Claimants and the costs litigation may well rumble on as was seen in the high profile Wagatha Christie case where the court was asked to look at discrepancies between the costs claim and the Defendant’s costs budget. That claim ultimately settled before any Detailed Assessment.
We are always happy to talk any aspect of costs. If you have any issues or concerns over the court fee changes then please get in touch for an informal chat - call 01482 534567 or email info@carterburnett.co.uk