A receiving party can apply for a Default Cost Certificate (DCC) under CPR 47.11. DCC in my experience are uncommon as paying parties usually ensure that Points of Dispute are served in time given the severe financial penalty if they are not (full payment of the Bill of Costs plus fixed costs for the DCC Application).
Given that DCC are rare this means that Applications to set them aside can often be done incorrectly. If you are a paying party seeking to set aside a DCC then CPR 47.12 and Practice Direction 47 (11.1 to 11.3) are the starting points. Here are some snippets:
‘The court will set aside a default costs certificate if the receiving party was not entitled to it’.
‘In any other case, the court may set aside or vary a default costs certificate if it appears to the court that there is some good reason why the detailed assessment proceedings should continue’.
‘an Application for an Order under Rule 47.12(2) to set aside or vary a default costs certificate must be supported by evidence’
‘in deciding whether to set aside or vary a certificate under Rule 47.12(2) the matters to which the Court must have regard include whether the party seeking the Order made the application promptly’
‘as a general rule a default costs certificate will be set aside under Rule 47.12 only if the Applicant shows a good reason for the Court to do so and the Applicant files with the application a copy of the bill, a copy of the default costs certificate and a draft of the points of dispute the Applicant proposes to serve if the Application is granted’
A good reason/s must be shown for the DCC to be set aside. The ‘Denton principles’ will no doubt creep in here when the Court is considering a good reason. Clearly, you are struggling if you rely on the pressures of work and a busy workload as the reason for the default.
An important aspect of the Application is to make sure it is made promptly. Therefore if you do receive a DCC, and you want to set it aside, you should commence work on the Application immediately and in my opinion ensure that it is filed no later than 7 days from receipt of the DCC.
Points of Dispute
It is very important if you are seeking to set aside a DCC that Points of Dispute are prepared and exhibited to the Application. I have seen instances in the past where parties have applied to set aside a DCC and explained at the hearing that Points of Dispute will be prepared if the DCC is set aside. This is incorrect and inconsistent with what the Practice Direction requires. Furthermore, if there are irrecoverable items or fundamental flaws with the Bill of Costs then the draft Points of Dispute become very important as they will demonstrate to the Court that the DCC has to be set aside.
Engage with the Receiving Party
If there is a very good reason to set aside a DCC then a sensible paying party should write to the receiving party (before making an Application to set aside) to request their agreement not to oppose the Application. If a receiving party unreasonably opposes then there may be a later argument for an adverse costs order (the Denton Judgment is useful and relevant in this regard). For example, if the receiving party has successfully applied for a DCC but did not serve the correct documents with the Bill of Costs or has claimed costs within the Bill of Costs which are not recoverable or did not provide the paying party with the required time to serve Points of Dispute, then the receiving party should agree for the DCC to be set aside (and if they do not then they face the risk of an adverse costs order).
Payment on Account
A further point to consider is a payment on account. The Practice Direction 11.3 specifically refers to Rule 3.1(3) which allows the Court to consider conditions when making an Order. Rule 44.2(8) (which enables the Court to order a party who it has ordered to pay costs to pay an amount on account before the costs are assessed) is likely to be a weapon for a receiving party on any application to set aside a DCC. A sensible receiving party will request that the Court imposes a payment on account as a condition or will request a payment on account from the paying party in exchange for an agreement to not oppose the application. Refusal to make a payment on account would not be a sensible decision as the Court is highly likely to make one under Rule 44.2(8) (unless of course there is an argument which could reduce the Bill of Costs to zero).
Overall, DCC and Applications to set them aside remain some of the quieter and less used parts of the CPR. However, if you do get into the position of seeking to set aside a DCC then ensure you meet the criteria set out in the Practice Direction, engage with the receiving party and consider a payment on account. If anyone has any recent experiences (post Denton) of DCC and Applications to set aside then please feel free to share them through this blog.
Andrew McAulay is a Costs Lawyer and Partner at Clarion Solicitors. He is the Head of the Costs and Litigation Funding team. He can be contacted on 0113 336 3334 or email@example.com