Prince Harry and co-claimants face huge legal bill due to insurance shortfall

Claimants’ insurance might not cover Associated Newspapers’ costs for defending phone-hacking case, high court hears

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, with their claims dismissed in their entirely by Mr Justice Nicklin on 7 July. Now, their insurance may not cover the costs incurred by ANL 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 are 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 proven, any finding against ANL would be a “catastrophe” for the Daily Mail publisher, White added.

The claimants, who also 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 their costs on the stricter, indemnity basis, adding that the incurred costs as of this month were nearly £34.5m million, 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 which 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 their 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.”

The hearing continues.