Baroness Lawrence of Clarendon OBE & Ors v Associated Newspapers Limited

Under Civil Procedure Rules 1998, indemnity costs require conduct or circumstances taking litigation outside ordinary and reasonable proceedings. The assessment is fact-sensitive and cumulative. Serious allegations, unsupported or unpleaded cases, failure to reassess or withdraw, unjustified breadth, procedural defaults and publicity may together justify indemnity costs, but no single category creates an automatic rule. The court may consider conduct by lawyers, experts and witnesses enlisted by a party, while assessing reasonableness at the relevant time and avoiding hindsight. Costs budgeting does not prevent indemnity costs. The court has power in principle to cap assessed costs, but any cap must have a principled evidential basis. Detailed assessment remains the safeguard against unreasonable costs.

Following trial, the claimants had lost their claims against Associated Newspapers Limited and accepted liability for costs. The earlier judgment was [2026] EWHC 1637 (KB). At the consequential hearing, the court determined whether costs should be assessed on the standard or indemnity basis, whether an indemnity order could be capped in a budgeted case, and the payment to be made on account.

Associated relied on the breadth and changing character of the case, serious allegations, compromised evidence, procedural conduct and publicity. The claimants relied on genuine concerns, partial findings, prior costs orders, costs budgeting and after-the-event insurance. The central questions were whether the litigation was outside the norm, whether a cap was legally available and principled, and what sum should be paid pending assessment.

Costs. The court ordered the claimants to pay Associated’s costs, save where costs orders had already been made, on the indemnity basis.

1. The discretion under Civil Procedure Rules 1998, rules 44.2 and 44.3, is broad. Indemnity costs remain exceptional. The governing question is whether conduct or circumstances take the litigation outside the norm. Moral condemnation is unnecessary, but the conduct must be unreasonable to a high degree. Three Rivers DC v Bank of England [2006] 5 Costs LR 714 and Thakkar v Mican [2024] 1 WLR 4196 supported that approach.
2. The assessment had to be made objectively, in the context of the litigation as a whole and by reference to what was known, or ought reasonably to have been appreciated, at the relevant time. The cumulative effect of the matters relied upon was decisive. The court considered the speculative and inferential origin of the claims, their exceptional breadth, grave allegations against numerous individuals, continued reliance on compromised evidence, failure to reassess or withdraw allegations, unpleaded allegations at trial, a changing case and publicity.
3. Serious allegations do not automatically justify indemnity costs. The absence of findings of dishonesty against the claimants, genuine concerns about information gathering and some legitimate issues for trial did not make the overall conduct ordinary. Conduct by lawyers, experts and witnesses could be relevant under the broader principle recognised in Excalibur Ventures LLC v Texas Keystone Inc (No.2) [2017] 1 WLR 2221.
4. The court could consider matters not necessary to the liability judgment, provided there was an evidential foundation and a fair opportunity to respond. The consequential hearing was not a second trial. The absence of an earlier strike-out or summary judgment application was not a sufficient answer. The interlocking features were present from the outset, so neither issue-based nor temporal indemnity orders would fairly reflect the litigation.
5. The court held that it had jurisdiction under CPR 44.2 to order assessment subject to a quantified cap. SCT Finance Ltd v Bolton [2003] 3 All ER 434 was binding authority. However, a cap required a principled and evidence-based figure and could not duplicate detailed assessment. No cap was imposed because the necessary bills, schedules and evidence were unavailable. Detailed assessment was the proper safeguard.
6. Payment on account was a broad-brush exercise. The court ordered £9,544,355, comprising 90% of approved budgeted costs and 60% of incurred pre-budget costs, payable by 28 August 2026.

The judgment records that the claims had been decided at trial in the earlier High Court judgment dated 7 July 2026, reported at [2026] EWHC 1637 (KB). The present judgment determined consequential costs and payment-on-account issues. No appellate stage is stated.