Prince Harry, Elton John ordered to pay Daily Mail £9.54 million

Prince Harry, Sir Elton John and five other high-profile figures must pay the Daily Mail's publisher an initial £9.54 million in legal costs by August 28, after losing their High Court privacy case and facing a final bill that could reach £34.5 million.

The cumulative effect of these matters takes the case well outside the norm. The conduct was unreasonable to a high degree.

Mr Justice Nicklin set out the order in a costs ruling handed down on Friday, Aug. 21, more than a month after he dismissed the group's privacy claims against Associated Newspapers Limited, publisher of the Daily Mail, the Mail on Sunday and MailOnline. The interim payment is a first installment toward the publisher's legal costs, not a final figure.

What the order requires

The court ordered the group to pay £9,544,355 by 4 p.m. on August 28, according to a published summary of the judgment.

The seven claimants are Harry, John, John's husband and film producer David Furnish, the actors Sadie Frost and Liz Hurley, former MP Sir Simon Hughes, and the anti-racism campaigner Baroness Doreen Lawrence. They had accused the publisher of unlawful information-gathering, including what their case described as abhorrent criminal activity and gross breaches of privacy, all of which Associated Newspapers strenuously denied.

Liability is split. Each claimant is severally liable for the costs attributable to their own case, and jointly and severally liable with the others only for the costs common to all seven. The court was told earlier in the proceedings that their combined after-the-event insurance cover stands at £16.2 million, well below the publisher's total claim, leaving a shortfall the group may have to meet themselves.

Nicklin dismissed the underlying case on July 7, ruling that the public figures had failed to prove their allegations.

The indemnity basis

Nicklin rejected the claimants' request to have costs assessed on the standard basis and instead ordered the stricter indemnity basis sought by Associated Newspapers. That approach, unusual in English civil litigation, lets a winning party recover a broader range of costs and does not require it to show that every expense was strictly proportionate.

The indemnity basis does not lift the requirement that costs be reasonable. Associated Newspapers must still show that what it spent was reasonably incurred and reasonable in amount. What changes is that proportionality no longer caps what it can recover, and any doubt about a figure is resolved in the publisher's favour.

Explaining the indemnity order, the court said the case had been made outside the ordinary and reasonable conduct of civil proceedings. Nicklin criticized the group for building its case on what he called an unjustifiably wide canvas, citing the breadth of the case, the gravity of the allegations against named individuals, the pursuit of those claims without adequate evidence, and the way some were presented at trial.

Nicklin found the group's conduct unreasonable to a high degree, noting that not a single serious allegation of criminality had been voluntarily withdrawn despite the lack of evidence to sustain many of them. He described that as an improper and undisciplined way to handle such grave charges. The court stressed that it had not found any of the claimants had acted dishonestly.

A £34.5 million bill

Associated Newspapers told the court its costs of defending the case ran to about £34.5 million, or roughly $47 million, as at July 9. Nicklin called that figure exceptionally high and said costs of that order were unprecedented in the Media and Communications List, adding that an indemnity order was not a blank cheque and that unreasonable costs would still be disallowed at the assessment stage.

The judge said the sum gave rise to real concerns about whether all of the costs claimed had been reasonably incurred and were reasonable. Even so, the court declined to cap what the publisher could recover, saying a detailed assessment by a specialist costs judge would be a better route to resolving any dispute over the amount.

How much the claimants must ultimately pay was not decided by the ruling; the issue before the court was the basis on which costs should be assessed, not the amount recoverable. If the figure is not agreed, it will be settled separately by a costs judge, the judgment summary states.

Andrew Fremlin-Key, a media and information disputes partner at the law firm Withers, told CNN that any detailed assessment of the costs claim would be a painful and, ironically, costly process, and that he would not envy the judge deciding a final figure. Associated Newspapers, he said, would need to justify its costs in detail.

In July, the court rejected the attempt to prove the claims by broad inference where there remained a realistic lawful source for the information, and where article-specific evidence did not show it must have been obtained unlawfully. The court also set an October 2 deadline for any application to appeal both the July judgment and the costs ruling.

What Harry told the court

Harry, 41, flew from the United States to give evidence in person in January and became visibly emotional at one point, telling the court the Mail titles had "made my wife's life an absolute misery." Dozens of witnesses testified during the trial, among them current and former Associated Newspapers journalists and executives who denied any illegal activity.

His claims rested on 14 articles published between 2001 and 2013 that his lawyers said had caused him great distress and had no meritorious public interest.

Costs still to be settled

The £9.54 million due by August 28 covers only part of what Associated Newspapers is seeking. The publisher's full claim of £34.5 million, roughly $47 million, remains subject to assessment, and the amount the seven will ultimately owe beyond the interim payment, which equals about $13 million, has not been fixed.

If Associated Newspapers were to recover its claim in full, which the court has neither decided nor capped, the gap above the £16.2 million of insurance cover would be about £18.3 million. The costs judge will set the recoverable figure.

Reaction to the ruling

An Associated Newspapers spokesperson called the decision another overwhelming victory for the Mail and its journalism, and described the judgment as a devastating critique of an attempt to destroy a newspaper and the reputations of its journalists, editors and executives. Throughout the case, the company said its journalism had relied on lawful reporting methods, a position echoed by the journalists and executives who testified.

After the July judgment, Harry and Baroness Lawrence issued a joint statement calling the outcome "a complete and obvious whitewash, but sadly not altogether unexpected." Both had given evidence during the trial. Nicklin declined to treat that statement as a factor supporting indemnity costs, noting it was made on behalf of only two of the seven.

Sir Simon Hughes said he was disappointed and surprised that the publisher's recoverable costs had not been limited, and was considering whether to appeal the costs judgment.

Gavin Burrows, the private investigator whose witness statement the claimants had relied on before he disowned it mid-trial, told The Daily Beast after the ruling that the case should not have gone ahead. Beyond Hughes, none of the seven has said publicly whether they will appeal before the October 2 deadline, and the timetable for any challenge runs alongside the separate fight over how much they must eventually pay.

What comes next

If the parties cannot agree on the total, a costs judge will determine how much of the £34.5 million the claimants must pay, in a separate assessment that Associated Newspapers will have to support with detailed evidence. The interim £9.54 million falls due first, at 4 p.m. on August 28.