The Duke of Sussex and his co-claimants could be millions of pounds out of pocket after losing their privacy case against the publishers of the Daily Mail, the high court in London heard.
The seven claimants, who include Prince Harry, Doreen Lawrence and Elton John, sued Associated Newspapers Limited over allegations of unlawful information gathering.
Their claims were dismissed in their entirety by Mr Justice Nicklin on 7 July and now their insurance may not cover the costs incurred by ANL in defending the case.
In a two-day hearing beginning on Wednesday to determine how costs should be paid, the court heard there was a shortfall between the £16.2m insurance cover the claimants had, and ANL’s reported costs of £34.5m.
Lawyers for ANL say the claimants should pay its costs on an indemnity basis, under which the losing party covers the other side’s costs without the need to show that those costs are proportionate.
ANL is asking for an interim £9,950,624.37 payment. The claimants have offered an £8m interim payment.
Antony White KC, for ANL, argued that the claimants’ conduct justified costs on an indemnity, rather than standard, basis, and said the allegations were “of the broadest scope and utmost seriousness”.
They alleged misconduct including “serious wrongdoing amounting in many cases to criminal conduct” against no fewer than 77 journalists, editors and executives, although only 23 were involved in the claims. Some allegations were unceremoniously abandoned at trial “without any apology or even acknowledgment”.
White said the legal action was part of a “campaign” to demonstrate ANL had “misled the Leveson inquiry”, using high-profile individuals to persuade the government to implement the second part of the inquiry.
The allegations were pursued to the “bitter end”, with the proceedings seen as the “vanguard”, or first wave of cases, before a “banquet of litigation” in a strategy to swamp ANL with other potential claims, he said.
The strategy was such that, even if the full panoply of allegations were not proved, any finding against ANL would be a “catastrophe” for the Daily Mail publisher, White added.
The claimants, who included David Furnish, Sadie Frost, Liz Hurley and Simon Hughes, cast a “strikingly wide” net for their claim “in the hope of catching some fish”.
White said he was sad to say that Lawrence, the mother of the murdered teenager Stephen Lawrence, was recruited to the case by Harry as a “national treasure” to garner public sympathy and give the claims the necessary degree of credibility. “That is a matter of regret for my client, but it is not to be shrunk from,” he said.
White pointed to the statement, issued by Harry and Lawrence after the 11-week trial, which attacked the judge and called the 426-page ruling a “complete and obvious whitewash”.
Nicholas Bacon KC, for the claimants, said in written submissions that the judge should not award ANL its costs on the stricter, indemnity basis, adding that the incurred costs as of this month were nearly £34.5m, which “exceed its approved budget” by more than £18.6m.
It reflected “an astonishingly high legal spend” by ANL and an “entirely cavalier” and “no expense spared” approach, overriding the principle of proportionality that seeks to ensure parties are on an equal footing.
The claimants had obtained insurance cover of a combined £16.2m. “At that level of cover, the claimants would reasonably expect to be insured for the total of Associated’s incurred costs and approved estimated costs.”
He told the court ANL had increased its legal spend “without telling us”, and had previously told the court its spend would be £20m.
He said that the group had “conducted themselves honestly and in good faith”. Referring to the post-trial statement by Harry and Lawrence, he said “The costs to be ordered at this hearing concern the action itself, not the reaction to it.”
ANL argued the costs had been incurred during the four-year legal battle and 11-week trial.
Bacon said ANL knew what adverse costs the claimants had insured themselves for, and there was no suggestion its costs were anything like what it was now seeking until it disclosed last Friday that its total spend was £34.5m. “They have left us in a world where we are uninsured,” he told the judge.
All the claimants had entered the litigation in “good faith”, Bacon said. While the court dismissed their claims, it did not make any findings against them of “dishonesty or lack of sincerity in belief”.
“They accept they have lost and costs should follow the event.” Bacon said. But ANL wished to take that further and had stated publicly that it intends to “go for the jugular” in the costs hearing, he added.
The hearing continues.
