The High Court’s refusal to set aside default costs certificate in the recent case of Masten v London Britannia Hotel Ltd [2020] EWHC B31 (Costs), highlights the importance of making an application for the same as a matter of urgency.

Master Leonard further held that if a deadline or time limit cannot be met, then the party should seek an extension. It was held to be a dangerous strategy to allow for the time limit to pass and then take a course of action. Master Leonard stated that applying to set aside Default Costs Certificate is not a routine administrative matter.

Facts of the Case

In this case, the Claimant served their Notice of Commencement with their Bill of Costs dated 03 January 2020. The parties agreed an extension for serving Points of Dispute until the 14th February 2020 and a further agreement was made to extend the time until 28 February 2020 with the condition that a payment on account of £120,000 was made by the 21 February 2020.

The Defendant failed to make the payment in time and thus the Claimant went on to request a Default Costs Certificate. The Claimant obtained a Default Costs Certificate which was issued in June 2020 in the sum of £363,695.25.

The Defendant went on to apply to set aside Default Costs Certificate in August 2020 with the reasoning for missing the deadlines being that the Defendant’s representatives were overworked.

The Decision on the Case

Master Leonard referenced CPR 47.12 in his Judgement stating that the Defendant’s application to set aside Default Costs Certificate was not made in line with CPR 47.12 and that this was one of the first reasons it needs to be dismissed.

Further reference was made to Practice Direction 47, paragraph 11.2 in assessing the promptness of the application. PD 47, paragraph 11.2 requires that a draft of the points of dispute is filed with the application to set aside Default Costs Certificate. The Master held that whether there is good reason in proceeding or commencing detailed assessment must lie on the circumstances of the case, not merely on the fact that there are challenges to the Bill.

Master Leonard also went on to assess the criteria in the case of Denton:

“In exercising any power conferred by the Civil Procedure Rules, including the power to set aside a DCC, CPR 1.2 requires the court to give effect to the overriding objective at CPR 1.1, which requires that cases be dealt with justly and at proportionate cost. That expressly, includes ensuring that cases are dealt with expeditiously and fairly, and enforcing compliance with rules, practice directions and orders.”

In concluding whether to set aside Default Costs Certificate, Master Leonard concluded:

“It is accepted that the Defendant’s default was serious and significant, nor does the Defendant attempt to argue that there was good reason for it. The remaining question is whether it would be just, bearing in mind all the circumstances of the case, to set the DCC aside.”

The Master held that the Defendant could have applied to the Court for an extension, providing reasons as to why the deadline could not be met and in the meantime, Points of Dispute could have been prepared prior to the application being heard. Instead, the Master found that the Default Costs Certificate was treated as a fait accompli and the application to set aside Default Costs Certificate was treated as a routine administrative matter, rather than the avoidance of a Default Costs Certificate being prioritised.

By the time the Defendant took action on the Default Costs Certificate, four months had passed since the time limit for serving the Points of Dispute and it was this avoidable delay, along with how the delay was allowed to come about which resulted in the application to set aside the Default Costs Certificate being refused.

It was held that, had the Claimant received the Points of Dispute by the end of February 2020, they would have been able to request detailed assessment hearing which would normally be completed within 6 months.

The master concluded:

“I appreciate that refusal to set aside will almost certainly result in the Claimant recovering more than would have been the case had there been a detailed assessment, but as I have observed that may not be decisive. One must look at all the circumstances. Both the failure to serve points of dispute within the agreed period and the subsequent mismanagement of the file were, by an objective standard, negligent. The loss of the opportunity to challenge the bill is the result of that negligence. DCCs are often entered as a result of negligent omission, and that in itself need by no means be fatal to an application to set aside, but in my view there are cases in which the application of the overriding objective and the balance of fairness require that the consequences of negligence must be borne by the negligent party. This is one of them.”

“It seems to me that if I am to place appropriate weight on the importance of dealing with cases expeditiously, of complying with rules, practice directions and orders, and of the inevitable prejudice to the Claimant on setting aside the DCC, this application must be refused.”

How Can ARC Costs Assist?

At ARC Costs, we are costs specialists and experienced Costs Draftsman and Costs Lawyers. We assist numerous clients in their costs cases, preparing Bill of Costs on behalf of the receiving party or assisting in disputing costs on behalf of the paying party.

We can prepare Points of Disputes on costs for which you are liable to pay and raise legal arguments on any costs which you may deem to be unreasonable. If you have been issued with a Default Costs Certificate for not filing Points of Dispute within the time limit, we can assist in preparing an application to set aside Default Costs Certificate. We can also provide advice on how to apply for a default costs certificate.

Whether this application goes to a hearing or the application is granted and the matter proceedings to Detailed Assessment hearing, we can represent you in Court as Costs Lawyers.

To discuss your costs query further, you may contact us on 01204 397302 or info@arccosts.co.uk. Alternatively, you may complete the enquiry form and a costs expert will contact you to discuss your query further.

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