The question left open at the end of our last update has now been answered. In Lawrence and Others v Associated Newspapers Limited, Mr Justice Nicklin has handed down his ruling on costs following the dismissal of the privacy claims brought by Baroness Lawrence of Clarendon OBE, Prince Harry, the Duke of Sussex, Sir Elton John, Sadie Frost and the other claimants against the publisher. The outcome is significant: Associated Newspapers’ costs will be assessed on the indemnity basis, and the claimants have been ordered to make a payment of £9,544,355 on account of those costs by 28 August 2026. 

Why Indemnity Costs Were Ordered 

Mr Justice Nicklin found that the litigation had been pursued in a way that took it, in his words, well outside the norm of civil proceedings, describing the claimants’ conduct as unreasonable to a high degree. He pointed to a number of factors including the breadth of the allegations originally pleaded, the seriousness of claims made against named individuals, and the claimants’ continued pursuit of allegations after the evidential position had shifted significantly, particularly following the withdrawal of cooperation by private investigator Gavin Burrows, whose evidence had underpinned much of the claimants’ case. 

Notably, the court was careful to distinguish this from a finding of dishonesty: Nicklin J did not find that any of the claimants had acted dishonestly. The order for indemnity costs was based squarely on the unreasonableness of how the litigation was conducted, rather than on any suggestion of bad faith. This is a useful distinction in Carl v Limbani, which addressed costs sanctions where a party’s conduct was found to be dishonest. Together the two cases illustrate that a sufficiently serious degree of unreasonableness may justify indemnity costs, even without a finding of dishonesty. A costs order of this kind does not necessarily carry any finding of dishonesty against the party being penalised. 

Can the Court Impose a Cap on Indemnity Costs? 

The judgment also considered whether the court has jurisdiction to impose a retrospective ceiling on the costs recoverable under an indemnity costs order. The claimants sought a cap of approximately £18 million to £20 million, given the scale of Associated Newspapers’ claimed costs. 

Nicklin J accepted that the court has jurisdiction in principle to impose a limit on costs recoverable under an indemnity costs order. However, he declined to impose a cap in this case. The court was not satisfied that there was a sufficiently principled basis for selecting a particular figure, and considered that detailed assessment would provide the appropriate mechanism for determining which costs were ultimately recoverable. 

The decision is therefore important for costs practitioners dealing with substantial departures from approved budgets. An indemnity costs order does not necessarily prevent the court from considering whether a ceiling is appropriate, but any such cap must have a sufficiently principled and evidential basis. 

The Interim Payment 

The £9,544,355 interim payment breaks down as 60% of ANL’s incurred, pre-budgeted costs, and 90% of its budgeted costs, reflecting the greater confidence a court will generally have in figures that have already been through the costs budgeting process. This sits very close to ANL’s original request of £9,950,624.37, and well above the £8 million the claimants had proposed at the earlier hearing. 

Nicklin J declined to impose a cap on Associated Newspapers’ total recoverable costs. Associated had reported incurred costs of approximately £34.48 million, substantially exceeding its approved costs budget, but the court was not satisfied that there was a sufficiently principled evidential basis on which to select a specific ceiling. Instead, the eventual recoverable costs will be determined through detailed assessment.  

Because the costs will be assessed on the indemnity basis rather than the standard basis, the proportionality test applicable to standard-basis assessment will not operate in the same way. This increases the potential significance of the gap between the claimants’ available insurance cover and Associated Newspapers’ claimed costs, although the amount ultimately recoverable remains subject to detailed assessment. 

What Happens Next 

The interim payment is due by 28 August. If the parties cannot agree the amount ultimately recoverable, Associated Newspapers’ costs will proceed to detailed assessment, where the work undertaken, time recorded, fee-earner levels, hourly rates, duplication and the reasonableness of the costs claimed will be scrutinised. 

A timetable has also been set for the claimants to seek permission to appeal the original July judgment, and the costs decision itself, with any application due 2 October. 

The Practitioner Takeaway for this Update in Lawrence v Associated Newspapers Costs 

For costs lawyers and costs draftsmen, this ruling reinforces a point worth keeping in mind whenever indemnity costs are in play: a sufficiently serious degree of unreasonableness, assessed cumulatively across the conduct of a case rather than as a single incident, can justify indemnity costs without any need to establish dishonesty. Where a client’s litigation conduct includes maintaining serious allegations after the evidential picture has moved against them, this judgment is a clear illustration of the costs consequences that can follow. 

The judgment also demonstrates that a court may have jurisdiction to impose a ceiling on indemnity costs, but a proposed cap must be supported by a principled and evidential basis; where it is not, detailed assessment remains the appropriate safeguard. 

Speak to Greener Costs Today 

If you need advice on indemnity costs arguments, costs budgeting, or detailed assessment following a costs order of this kind, contact Greener Costs’ costs lawyers and costs draftsmen on 01204 263047 or info@greenercosts.co.uk.