Fayed loses bid to recover costs from Hamilton backers

Mohamed Al-Fayed yesterday lost his High Court attempt to recover legal costs from eight financial backers of Neil Hamilton's failed "cash for questions" libel action.

The Harrods owner, who is owed about £1.3m in legal fees from the trial, now faces having to pay up to £100,000 in costs to the former Tory MP for Tatton's supporters.

James Price, for Mr Fayed, named the eight supporters as: the former Tory minister the Duke of Devonshire; Sir Robert McAlpine Ltd, the company set up by the former Tory party treasurer; the business tycoon Lord Hanson; the Earl of Portsmouth; the gossip columnist Taki Theodoracopulus; Richard Clay, David Wills and Christopher Sharples.

Mr Justice Morland said it would be "unjust and unreasonable" to order costs against any of them and he proposed to order Mr Fayed to pay the costs of all eight, who were represented separately.

Mr Price had told the judge that a fighting fund, and Lord Portsmouth ­ who effectively "underwrote" it ­ contributed £466,321 to Mr Hamilton's costs for the 1999 libel trial.

Mr Hamilton sued over claims made by Mr Fayed in a January 1997 Channel 4 Dispatches programme that he had corruptly demanded and accepted gifts, cash, and a free holiday at the Paris Ritz hotel in return for asking parliamentary questions on behalf of Harrods.

Mr Hamilton did not pay anything towards the costs although he pledged his house when it appeared likely that there would be a shortfall.

Mr Price argued that the action would never have been brought without the fund. He said the fund was responsible for forcing Mr Fayed into meeting the costs for defending a libel action in which he was complete vindicated.

Mr Price said there was nothing wrong in funding a libel action if funders "recognised their responsibility" to meet a proportion of a successful defendant's costs.

"What is unjust and unreasonable is to walk away from it when the action fails, leaving the defendant to pick up a massive bill for defending an action which would not otherwise have been brought, and in which he has proved to be in the right," Mr Price said.

The court heard that seven other contributors had settled with Mr Fayed before the case got to court.

Mr Fayed's claim against two other individuals was settled earlier this week.