What is a Form N254 Default Costs Certificate?

If there is a failure on the Paying Party’s side in serving Points of Dispute within the required time frames, the receiving party should apply for a Default Costs Certificate (Form N254). 

On commencement of the process of detailed cost assessment with a Notice of Commencement (N252), the Paying Party has 21 days following service, to serve Points of Dispute.  If the Paying Party fails to serve any Points of Dispute, then Form N254 is completed and filed at Court as a formal Request for a Default Costs Certificate (DCC).  The DCC itself can be found in Form N255. The Form N254 is filed by the party entitled to recover costs, signalling their intent to have a Court assess the amount payable in the full sum claimed as detailed in the Bill of Costs and Notice of Commencement.

Once issued and served by the Court, the Default Costs Certificate brings an end to the Detailed Assessment process and orders the Paying Party to pay the full amount of costs listed in the Receiving Party’s Bill of Costs.

The Default Costs Certificate incentivises parties to comply with procedural deadlines, ensuring that the costs assessment process moves forward efficiently. It also protects the Receiving Party from unnecessary delays in recovering costs, though the Paying Party may still attempt to challenge the certificate, and in turn the Bill of Costs, in exceptional circumstances.

Such an example of setting aside a Default Costs Certificate can be found in our case study here, and typically the principles of the Denton Test are taken into account as appropriate factors as to whether a DCC should remain in force or be set aside.

Obtaining a Default Costs Certificate

If a Paying Party fails to serve their Points of Dispute within 21 days, the Receiving Party should make an application for a Default Costs Certificate to the Court. Practice Direction 47, Paragraph 10 sets out the procedure for making an application for this certificate and states:

“(1) A request for the issue of a default costs certificate must be made in Form N254 and must be signed by the receiving party or his legal representative.

(2) The request must be accompanied by a copy of the document giving the right to detailed assessment and must be filed at the appropriate office. (Paragraph 13.3 below identifies the appropriate documents).

10.2 A default costs certificate will be in Form N255.

10.3 Attention is drawn to Rules 40.3 (Drawing up and Filing of Judgments and Orders) and 40.4 (Service of Judgments and Orders) which apply to the preparation and service of a default costs certificate. The receiving party will be treated as having permission to draw up a default costs certificate by virtue of this Practice Direction.

10.4 The issue of a default costs certificate does not prohibit, govern or affect any detailed assessment of the same costs which are payable out of the Community Legal Service Fund or by the Lord Chancellor under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.”

An N254 form should be filled in and filed at Court (in triplicate if filing by paper) alongside a copy of the document allowing for detailed assessment to take place (either the Order allowing for detailed assessment, a Part 36 Offer and acceptance, or Notice of Discontinuance).  If proceedings were in a London based Court, then you should electronically file your Form N254 and supporting documents on CE-File, for the Senior Courts Costs Office (SCCO) to process.  At the time of writing, typically the SCCO processes DCCs within 48 hours, and sometimes in the same working day, and are a highly efficient Court to work with.  Paper based processing for other Courts can sometimes take several weeks.

If lodging for a DCC, the Receiving Party should make an application to the Court as soon as possible as the Court may not agree to issue the certificate if Points of Dispute are served in the meantime.  Even if the Court has issued the DCC, but Points of Dispute have been served prior to the sealing date of the Certificate, then it will be rendered unenforceable pursuant to CPR 47.9(5) which states: “If any party (including the paying party) serves points of dispute before the issue of a default costs certificate the court may not issue the default costs certificate.”

Attention is also drawn to Rules 40.3 (Drawing up and Filing of Judgments and Orders) and 40.4 (Service of Judgments and Orders) which apply to the preparation and service of a default costs certificate.  In essence, it is the applying party’s responsibility to draw up the relevant Forms N254 and N255 for approval, sealing and service by the Court.  A sufficient number of copies must also be provided so that sealed copies can be kept on the Court file and sent to the applying party, and the Paying Parties.

How Much Does it Cost to Lodge a Form N254?

The costs of applying for a Default Costs Certificate are fixed at £80 pursuant to Practice Direction 47, Para 10.7.  This amount has not been increased in over a decade, and therefore is likely to remain the same for the forseeable future.  The Court fee has however, increased over time and at the time of writing in December 2024, the applicable Court fee is £78 (total fixed costs are therefore £158).  These amounts should be checked online on HMRC resources to verify no changes to fees have arisen since the writing of this article.

Case Study – How ARC Costs recently assisted on a Default Costs Certificate case

A client recently instructed ARC Costs for preparation of a bill of costs and negotiation. The client was a defendant in civil personal injury claim involving assault, for which an adverse costs order was made, and enforceable outside of QOCs.

The Claimant’s solicitors on the court record were officially served with a copy of the formal Bill of Costs and the accompanying Notice of Commencement. The notice specifically specified that any points of dispute must have been served within 21 days.  Copies of the Bill and Notice of Commencement were also provided to several addresses of the Claimant as provided by the client, as difficulties had been experienced previously in confirming whether the Claimant still had legal representation, and/or in communicating with the Claimant on the issue of costs.

The Solicitors failed to respond with any Points of Dispute within the prescribed time frame, meaning that the Defendant proceeded to apply for a Default Costs Certificate.

However, it was subsequently discovered through Companies House that the Claimant’s solicitors had recently entered into liquidation. This put the Defendant’s prospects of recovery of costs at risk and meant that they may not have been recoverable.

ARC Costs managed to obtain an order for costs as the Claimant’s Solicitors had failed to remove themselves from the official Court record, nor had the Claimant sought to change the address for service with a Notice of Change.  Therefore service of the Bill of Costs was deemed to be effective, and it should be noted that a copy of the Bill had been provided to the Claimant directly in any event. This meant that the client was able to successfully enforce a Default Costs Certificate.

As a result, the Bill of Costs was paid in full and the Court fees for applying for the order were reimbursed. Our team at ARC Costs successfully managed a 100% recovery for the client.

How can ARC Costs assist?

The costs team at ARC Costs are highly experienced as independent experts in the recovery or opposition of legal costs. With regards to Default Costs Certificates, we can assist in the enforcement of costs by drafting Bills of Costs and applying for a Form N254 DCC if the Paying Party has failed to serve their Points of Dispute on time.

We can also assist in the application for Interim/Final Costs Certificates, if required to ensure timely payment of costs on account, or on the conclusion of proceedings in the event of a default.

We can also assist a Paying Party if they are served with a Notice of Commencement to challenge the Bill of Costs, or to assist in making a prompt application to set aside any Default Costs Certificate if received unexpectedly.

If you require any free initial advice, or our assistance with regards to any aspect of costs, please email us at info@arccosts.co.uk, or contact us via the contact us page and one of the team will get in touch on the same working day.  Our team of experts can also be spoken to on the phone on 01204 397302

We can also provide assistance with anything relating to your legal costs claim, whether it be preparing a Costs Budget, to preparing the Bill of Costs and negotiating recovery of your outstanding fees. Simply get in touch to find out more. 

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