The High Court’s decision in Clarke v Guardian News & Media Ltd [2025] EWHC 2575 (KB) demonstrates when dishonest conduct in defamation proceedings justifies an order for indemnity costs and a substantial payment on account.
Background
The case concerned a claim for defamation and data protection brought by the actor Noel Anthony Clarke against Guardian News & Media Ltd. The claim arose from a series of articles published by the defendant in 2021, which contained allegations of misconduct against the claimant. The claimant’s case was that these articles were defamatory and caused serious harm to his reputation. The defendant defended the claim on the grounds of truth and public interest. Following a liability trial, Mrs Justice Steyn handed down a judgment on 22 August 2025, dismissing the claimant’s claims in their entirety [§2]. The court found that the defendant had established both the truth defence and the public interest defence. The judgment also concluded that the claimant had advanced a baseless conspiracy allegation and had made dishonest statements in his evidence [§20-21]. The hearing on 23 September 2025 was convened to deal with consequential matters, including the resolution of several outstanding costs issues.
Costs Issues Before the Court
The court was required to determine four distinct costs issues following the dismissal of the claim. The first was the appropriate costs order to be made upon the dismissal of the claim [§1]. The second concerned the treatment of various ‘costs reserved’ orders made during the proceedings [§4]. The third issue was whether the costs should be assessed on the standard or indemnity basis [§13]. The fourth and final issue was whether the defendant was entitled to a payment on account of costs and, if so, in what amount [§25].
The Parties’ Positions
The defendant sought an order that the claimant pay its costs of the claim, to be assessed on the indemnity basis [§16]. It argued that the claimant’s conduct, including advancing and maintaining dishonest evidence and pursuing baseless allegations of conspiracy and dishonesty against the defendant’s witnesses, justified a departure from the standard basis. The defendant also sought a payment on account of costs in the sum of £3 million [§28], citing its incurred costs which were significantly in excess of £6 million [§26]. Regarding the ‘costs reserved’ orders, the defendant submitted that no further order should be made, meaning they would be treated as costs in the case [§6].
The claimant, who appeared in person [§19], did not formally contest that the defendant was entitled to its costs but opposed an order for indemnity basis assessment [§17]. He submitted that he had a right to bring the claim to defend his reputation, had relied on legal advice, and had made efforts to settle. He argued that his social media posts did not amount to courting publicity and urged the court to consider the devastating financial impact of the litigation on him and his family [§17]. He opposed any payment on account, or alternatively submitted that it should be modest, proportionate to his means, and stayed pending a potential appeal [§29]. In relation to the reserved costs, he argued that the interim non-disclosure application was unnecessary as he had given undertakings promptly, and that the proposed new defendants in the amendment and joinder application were never joined and incurred no costs [§7].
The Court’s Decision
The court ordered that the claimant pay the defendant’s costs of the claim, to be subject to detailed assessment on the indemnity basis [§24]. It found no reason to depart from the general rule that the unsuccessful party should pay the costs of the successful party [§2-3].
In deciding on the indemnity basis, the court applied the test from Three Rivers DC v Bank of England, which requires conduct that is “unreasonable” rather than morally condemnable [§16]. The court highlighted three specific factors justifying indemnity costs [§20-22]:
-
-
- First, the claimant had made statements in his pleaded case and evidence that were found to be untrue and dishonest. The court referred to the principle from Esure Services Limited v Quarcoo that where a claim is maintained dishonestly, “it will be normal for a court to seek to mark its disapproval” with an indemnity costs order [§20].
- Secondly, the claimant maintained a false case by advancing baseless allegations of dishonesty and bad faith against almost all the defendant’s witnesses, including untrue allegations that victims were lying and other serious allegations such as falsification of documents, theft, perversion of justice, and conspiracy — all of which caused distress, particularly to those recounting personal incidents of sexual misconduct [§21].
- Thirdly, the claimant made and maintained wholly unfounded allegations of dishonesty against three professional journalists. The court noted that when such allegations are made and not substantiated, courts have long shown themselves ready to respond with indemnity costs orders [§22].
-
The court also noted that while it was not necessary to show the unreasonable conduct increased costs, the conspiracy allegation had in fact “inevitably” and “significantly” increased the defendant’s costs [§23].
Regarding the ‘costs reserved’ orders, the court made no further order [§12]. This meant that the costs of the interim non-disclosure application and the amendment and joinder application would be treated as costs in the case, and thus payable by the claimant as part of the defendant’s overall costs. The court found the non-disclosure application was necessary due to a threat of publication for which the claimant and his legal team bore responsibility [§8]. On the amendment application, the court noted that the conspiracy allegation was without foundation and permission would have been refused as having no real prospect of success [§9].
The court ordered a payment on account of costs in the sum of £3 million, to be paid within 28 days [§39]. It held that there was no good reason not to make such an order, rejecting the claimant’s assertion of inability to pay as a relevant consideration at this stage, citing Bank St Petersburg PJSC v Arkhangelsky [§30]. The court emphasized that a party’s ability to pay is not relevant when considering what costs order to make in principle, but becomes relevant at the stage of enforcement [§18, §30].
The court found the sum of £3 million was a “reasonable sum” representing a reasonable estimate of the likely level of recovery. Applying Excalibur Ventures LLC v Texas Keystone Inc, the court noted that a reasonable sum often allows an “appropriate margin to allow for error in the estimation” [§35]. The court concluded that £3 million was “substantially lower than the defendant’s likely level of recovery on detailed assessment” and therefore allowed a “suitably wide margin of error,” particularly given the indemnity basis of assessment [§39]. The court addressed and rejected the claimant’s various objections to specific cost items, finding that the costs appeared to have been reasonably incurred in the context of the litigation [§32-38].
Finally, the court refused the claimant’s application to extend time for seeking permission to appeal [§42] and, consequently, refused to stay the costs order [§43]. It noted that the claimant had already had more than the usual period to consider an appeal and had not identified any potential grounds.
Indemnity Basis Costs Following Discontinuance
Indemnity Costs Awarded For Unsubstantiated Fraud Allegations In Original Pleading
Campaign Of Vengeance Results In Award Of Indemnity Costs
CPR 44.2(8) | Payments On Account In Civil Litigation
Costs Thrown Away, Indemnity Costs And Payments On Account
Indemnity Costs And The Effect Of An Approved Costs Budget
