The Consequences of Late Service of an N260 for Summary Assessment of Costs: Prejudice and Proportionality

The requirement to serve a statement of costs (Form N260) for the purposes of summary assessment of costs is set out in the CPR Part 44 Practice Direction paragraph 9.5. It is set out in the following terms:

‘(1) It is the duty of the parties and their legal representatives to assist the judge in making a summary assessment of costs in any case to which paragraph 9.2 above applies, in accordance with the following subparagraphs. …
 
(4) The statement of costs must be filed at court and copies of it must be served on any party against whom an order for payment of those costs is intended to be sought as soon as possible and in any event –
 
(a) … ; and
 
(b) for all other hearings, not less than 24 hours before the time fixed for the hearing.’

Paragraph 9.6 then provides as follows:

‘The failure by a party, without reasonable excuse, to comply with paragraph 9.5 will be taken into account by the court in deciding what order to make about the costs of the claim, hearing or application, and about the costs of any further hearing or detailed assessment hearing that may be necessary as a result of that failure.’

As is observed in Cook on Costs at [29.19] a failure to comply ‘is relevant to the award as well as the amount of assessed costs’.

There is no equivalent provision in the FPR 2010. The only relevant reference is in PD 28A where at paragraph 4.5 it is said that:

‘Parties who intend to seek a costs order against another party in proceedings to which rule 28.3 applies should ordinarily make this plain in open correspondence or in skeleton arguments before the date of the hearing. In any case where summary assessment of costs awarded under rule 28.3 would be appropriate parties are under an obligation to file a statement of costs in CPR Form N260.’

As a consequence it is the above provisions of CPR 1998 that govern the summary assessment procedure in both financial remedy cases (to which r28.3 applies) and other cases (to which r28.2 applies).

But what are the consequences of a breach of the rule to serve the statement of costs not less than 24 hours before the start of the hearing? How is a failure ‘without reasonable excuse’ to comply with the obligation ‘taken into account’ in practice?

It is clear from the authorities (which are principally civil rather than family cases) that the court takes a discretionary and highly fact-specific approach to breaches of this rule.

Arguably the leading authority remains MacDonald v Taree Holdings Limited [2001] 1 Costs LR 147. Neuberger J (as he then was) allowed an appeal against a refusal to make an order for costs (and where the N260 was provided at 11.15 am for a hearing at 3 pm) because of the mandatory (‘must’) wording of what was then PD 44 paragraphs 13.5(4) and 13.6 but was otherwise in very similar if not identical form to the current rule. The judge said this:

‘[23] In my judgement, the correct approach is this. Where there is a failure to comply with the Practice Direction and a schedule of costs is not served more than 24 hours before the hearing, the court should take that into account but its reaction should be proportionate. Where there is a mere failure to comply, that is a failure to comply without aggravating factors, it seems to me that the first question for the court should be: what, if any, prejudice has that failure to comply caused to the other party? If no prejudice, then the court should go on and assess the costs in the normal way. If satisfied it has caused prejudice, the next question is: how should that prejudice best be dealt with? To my mind, there would normally be three answers. The first would be to give the paying party a brief adjournment of, say, quarter of an hour or so, to consider the schedule and then to proceed to assess costs. If that course were taken, then the court should bear in mind the fact that the paying party has not had as much time as it should have done, and it should err in favour of a light figure rather than a heavy figure, in any case of doubt.
 
[24] The second possibility would be for the court to stand over the matter for a detailed assessment; if it takes that course, it may well be right to require the receiving party to pay the costs of the detailed assessment or at any rate to make it clear that the costs judge should consider that option when assessing costs.
 
[25] The third possibility would be to stand over the assessment of costs but to keep the assessment on a summary basis. In many cases I suspect that would not require another hearing: it could be dealt with by the parties each sending their respective submissions, and in particular the paying party sending its submissions in writing and for the court to communicate its decision also in writing.
 
[26] I do not take the view, bolstered by the brief observation of the Court of Appeal [in the unreported decision in Carey v London Guildhall University, 7 September 1999]. that in a case of mere failure to comply, without more, it would be right to deprive a party, otherwise entitled to a summary assessment of his costs, of his costs altogether.
 
[27] However, where there is a failure to apply plus some aggravating factor, then it may very well be right to deprive the party who would otherwise be entitled to his costs, of all or a significant proportion of his costs. For instance, if it can be shown that the party concerned was specifically asked for his schedule of costs in time, and the court is satisfied that the failure to comply was deliberate, that may well justify depriving him of all or some of his costs. Similarly, if the party concerned can be shown to have had a history in the litigation of failing to serve a schedule within time and it had been drawn to his attention, and he still fails to comply, that would be an aggravating factor. It would be wholly inappropriate for me to pretend that I could set out all the aggravating factors, and those are but two examples. Similarly, it may be that there are other factors which are not aggravating factors but which, when taken together with the failure to comply, may suffice to persuade the court that no order for costs should be made in favour of the successful party, or a less favourable order should be made in his favour than if he had complied. But, in the absence of aggravating factors, I think that it would be an unusual case where the failure to comply involved the party who would otherwise recover his costs being deprived of any of his costs save (a) to the extent of the court leaning against him if it carries out an immediate assessment or (b) requiring him to pay the extra costs of a further hearing, be it before the court concerned or before the costs judge.’

The approach in MacDonald v Taree Holdings Limited was adopted in Kingsley v Orban [2014] EWHC 2991 (Ch) where at first instance the N260 was served just after 2 pm when the hearing was listed for, though the hearing did not in fact start until 2.10 pm. On appeal Nugee J (as he then was) (at [10]) ‘proceed[ed] on the basis that para 9.6 applied and that there was a failure by a party without reasonable excuse to comply with para 9.5’. He thereafter considered whether there were any aggravating factors (in addition to the failure to comply) and decided that there were none before stating:

‘[22] … even taking into account the fact that Mr Kingsley did not draw the deputy district judge’s attention to para 9.6 of the passage in the White Book which refers to Neuberger J’s decision in MacDonald v Taree Holdings I accept that it would have been preferable for the deputy district judge to have granted Mr Kingsley a short adjournment of 15 minutes or so had he asked for it to consider any points arising on the schedule.
 
[31] My conclusion therefore is that, despite the fact that, with the assistance of Mr Anderton and the citation of authority, it can be seen that the deputy district judge should have given Mr Kingsley the opportunity of taking some time to consider the schedule, in accordance with the judgment of Neuberger J in MacDonald v Taree Holdings it would not in fact have made a substantive difference and I therefore dismiss the appeal on the second ground also.’

A different approach was adopted in Group M UK Ltd v Cabinet Office [2014] EWHC 3863 (TCC) per Akenhead J where a statement of costs was served only three hours before the handing down of a judgment when costs were to be considered (and was also incomplete as it did not contain a breakdown of time spent on documents). The judge applied the three-stage test in Denton v TH White [2014] EWCA Civ 906 for relief from sanction regarding the breaches, concluded that the breaches were serious, that there was no good reason for them, but that it would be wholly disproportionate to allow no costs and, instead, imposed a ‘delay discount’ of £2,240 as a sanction for what he determined at [14 (a)] to be a breach ‘at the lower end of serious’. Similarly in Simpson v MGN Ltd [2015] EWHC 126 (QB), where the claimant had filed, but not served, a statement of costs, Warby J (as he then was) made a reduction from the assessed costs reflecting the additional costs that this failure had caused (the prolonging of the hearing by at least an hour). Likewise in Scenic International Group Ltd (in Provisional Liquidation) v Adenaike and Others [2024] EWHC 1178 (Ch), Roth J took the failure to file and serve an N260 until the court ordered it at the hearing, as a factor in determining the amount of costs it subsequently assessed.

In Re A (A Child) [2018] EWCA Civ 904 an order for costs against an unrepresented litigant was set aside because the failure of the represented party to file and serve a Form N260 rendered the process unfair. The real point on fairness, however, was the fact that because there would be further hearings, there was no reason for the judge to have decided the costs application at the conclusion of the appeal hearing. The mother’s right to be heard could have been met if the costs issue had been adjourned.

In Lemmens v Lemmens [2018] EWCA Civ 2963 the husband sought to appeal a costs order made by Recorder Cusworth QC (as he then was) at the conclusion of a hearing determining his application for a variation of periodical payments. The husband appealed on grounds inter alia that the wife did not provide him with a copy of her costs schedule (said to have been a Form H) until just before he was due to make his final submissions at the end of the hearing. The husband submitted that the judge did not respond in a proportionate manner to the wife’s failure to serve her costs schedule. He argued that he was prejudiced by this because he had no real opportunity to analyse the detail.

Moylan LJ stated as follows:

‘[28] The wife should have served her costs schedule on the husband in accordance with the rules. If a party fails to do so, this will be taken into account by the court when determining what order to make. There is no direct reference in the judgment to the late service of the schedule. However, the judge cannot, in my view, have been unaware of this. Further, despite the husband’s submissions, I can see no real prejudice to him arising from the late service of the Form H in the manner in which the judge dealt with costs. The issues were relatively simple and, in my view, the husband did not need more time to enable the costs to be determined fairly to him. In particular, the husband has not persuaded me that there were any substantial grounds on which he sought to dispute the costs claimed which meant that the costs could not be dealt with summarily. …
 
[30] Accordingly, I consider that the judge was entitled to decide to assess the costs summarily. There were no, let alone any serious, procedural or other irregularities which undermine the judge’s decision to do so.’

None of the grounds advanced by the husband succeeded and his appeal was therefore dismissed.

In R (Kuznetskov) v London Borough of Camden [2019] EWHC 3910 (Admin) Mostyn J dismissed an application to set aside a costs order. However the successful local authority was deprived of their costs as no N260 had been filed. Having cited from PD 44 paragraph 9.5 the judge stated:

‘[9] It is my practice in such circumstances, where the court is charged with a duty to bring closure by summary assessment, and where there is a positive duty to file a Form N260, the legal advisers having failed to do so they, having made that bed, must lie in it and they will not get an award of costs. In relation to today there will be no order as to costs.’

In Mahandru v Neilson [2021] EWHC 2297 (QB) Steyn J having dismissed an appeal considered the defendant’s application for costs where no schedule of costs had been served. She stated as follows:

‘[28] The claimant submits that the appropriate order in these circumstances is to make no order for costs. In my judgment, that would be unjust given the ordinary rule that the successful party is entitled to their costs. Nevertheless, the fault for not providing a schedule of costs clearly lies with the defendant and it seems to me, in the circumstances, the only sums that I can properly summarily assess are the costs which I am told have been incurred in respect of counsel’s appearance at the hearing today and drafting of the skeleton argument.’

In Vine v Belfield [2021] EWHC 3068 (QB) a successful party failed to file a costs schedule. Nicklin J stated:

‘[33] Mr Henderson has pointed out that the Claimant has failed to serve the relevant statements of costs in support of the application for costs that has now been made. He has referred me to the Practice Direction to CPR 44 §§9.5(4) and 9.6. The effect of those provisions is that the failure to serve a statement of costs is a relevant matter for the Court to consider both when deciding the issue of costs and any assessment of those costs.
 
[34] Notwithstanding the failure to serve the statement of costs, I am nevertheless satisfied that, as a matter of principle, the Claimant is entitled to the costs of the application …
 
[35] Turning to the assessment of those costs, the failure to serve a statement of costs disables the paying party from having an opportunity to consider whether there are objections that can be taken to the costs. I did offer Mr Henderson and the Defendant the possibility of adjourning until 2 o’clock to enable instructions to be taken but Mr Henderson rejected that in favour of inviting the Court to deal with the matter by directing that the costs should be subject to a detailed assessment, if not agreed. In order, therefore, to preserve the proper opportunity of the Defendant to raise such points as he considers he can to challenge the costs sought to be recovered under the costs order that I have made, I will direct the detailed assessment of those costs if they are not agreed.’

The court ordered a significant payment on account alongside the detailed assessment.

Conversely, in North Warwickshire Borough Council v Milner-Edwards [2022] EWHC 1458 (QB), in what was the hearing of a contempt application, HHJ Kelly stated:

‘[25] I am not going to make any order as to costs because the claimant has failed to file or serve a schedule of costs. Neither the court nor the defendant has thus had the opportunity of understanding what costs are sought. A schedule should have been provided if costs were going to be pursued.’

In Brake and Another v Guy and Others [2022] EWHC 2907 (Ch) HHJ Paul Matthews (sitting as a Deputy High Court Judge), and who was dealing with costs on paper, rejected the argument that the costs should not be summarily assessed because the receiving party did not file or serve their statement of costs in accordance with paragraph 9.5(4), i.e. 24 hours before the hearing. The judge stated as follows:

‘[8] … it has become relatively common, since the coronavirus pandemic, for costs and other consequential applications to be dealt with on paper. As a general proposition, the courts have for procedural purposes usually sought to equate dealing with the matter on paper with a hearing in the conventional sense.
 
[9] But, of course, there will be procedural rules that which do not lend themselves to this process. … In the context of paragraph 9.5(4)(b), however, it seems to me that the judge cannot begin consideration of the paper application until he has received the written submissions on both sides, time-limited for lodging such submissions has expired. It is only then that the ‘hearing’ can begin.
 
[10] In the present case, therefore, lodging the statement of costs some 48 hours before the reply submissions of the paying party are due amounts to compliance with that paragraph. Even if it did not, it is not uncommon for the court to proceed to a summary assessment even where less than 24 hours’ notice of the statement of costs has been given. The court has a discretion, which it exercises on a fact sensitive basis.’

In Bogolyubova v Bogolyubov [2023] 2 FLR 1149 one of the grounds of appeal was – per King LJ at [29] (v) – that ‘[t]he order for costs dealt with by the judge by way of summary assessment failed to take into account the appellant’s written submissions or that the statement of costs for summary assessment had not been served 2 (sic) days in advance of the substantive hearing’. The judge thereafter stated as follows:

‘[78] Mr Turner also seeks to appeal against the summary assessment of costs made by the judge at the conclusion of the hearing. …
 
[79] In brief, whilst the statement of costs for summary assessment had not been served in advance pursuant to CPR PD 44, para 9.5(4), the judge is entitled to dispense with that requirement.’

The appeal was dismissed on this and all other grounds.

The variety of approaches taken in many of the above cases is well summarised in the Guide to the Summary Assessment of Costs (2021 Edition) which is a starting point for judges carrying out summary assessment:

‘8. Statements of costs must be filed and served not less than 2 days before a fast track trial and, for other hearings, not less than 24 hours before the start of the hearing: Practice Direction 44 para 9.5(4). Failure to comply with those time limits will be taken into account in deciding what costs order to make and about the costs of any further hearing that may be necessary as a result of that failure: para 9.6. Any sanction should be proportionate. The court should consider what, if any, prejudice had been caused to the paying party and how that should be taken into account. Possible courses to take include a short adjournment to enable the paying party to consider the statement of costs, adjourning the summary assessment to another date, ordering a detailed assessment, disallowing some of the costs which might otherwise have been allowed, or making no costs order at all.’

It is therefore clear that the court may still exercise its discretion to conduct a summary assessment despite a failure to comply with the 24-hour timeframe (or indeed to comply in full with the form’s requirements as other authorities such as Timokhina v Timokhin [2019] EWCA Civ 1284 and Changing Climates Limited v Warmaway Limited [2021] EWHC 3117 (TCC) demonstrate). Outcomes vary widely, with the court sometimes refusing costs, sometimes reducing them, and sometimes proceeding normally. What will be appropriate depends on considerations of prejudice, proportionality (which is the criteria emphasised in the White Book at 44.6.5) and conduct with the court’s broad discretion being exercised to ensure the process remains a fair one.

As is stated in Cook on Costs at [29.19]:

‘The conclusion, it seems, is that the result of a failure to serve within the time specified will be case specific, but that the court may well impose some form of sanction to mark the breach of the requirements of the rules.’