DSA Investments Inc (A Company Registered Under the Laws of the British Virgin Islands) v Optima Worldwide Group PLC & Ors

An interim charging order may carry an implied undertaking in damages where it restrains dealing with property and may cause loss. The undertaking does not arise for a final charging order. A person who was not the respondent to the relevant order cannot enforce the undertaking, particularly where that person has no proprietary interest in the restrained assets. An inquiry into damages requires credible evidence of loss and a causal connection with the order. Costs are governed by the court’s discretion, including conduct and partial success. Where enforcement ultimately fails but the judgment debtor’s conduct materially prolongs the proceedings, a substantial proportion of the creditor’s reasonable costs may still be recoverable.

The claimant had obtained judgment against the first defendant and sought to enforce it by charging orders over shares in Oracle Power plc. The second defendant objected to the charging process and disclosure inquiry, while the third defendant held custody of the shares. The judgment debt was subsequently paid, and the claimant abandoned its claim to charge the remaining shares after reviewing disclosure. The court had to determine whether an implied undertaking in damages arose from the charging orders, whether the second defendant could enforce it or obtain an inquiry, and how the costs of the enforcement application and inquiry should be allocated.

1. An order requiring a third party to retain custody of charged shares may, in principle, be in the nature of an interim injunction and attract an implied undertaking in damages. The rationale is that the order restricts dealings with property and may cause loss to persons affected by it. However, the undertaking did not arise here. The order of 3 April 2019 made the charging order final over the relevant shares. The interim-injunction principles in American Cyanamid v Ethicon [1975] 1 AC 386 had effectively been addressed by the final judgment.

2. Even if an undertaking had arisen, the second defendant could not enforce it. It was not the respondent to the order, and it disclaimed any proprietary interest in the relevant shares. The order operated against the third defendant, which held custody of them.

3. An inquiry into damages ordinarily requires credible evidence that loss was suffered and that it was caused, at least prima facie, by the order. The second defendant provided neither. The alleged detriment pre-dated the final order, was not linked to the relevant paragraph of that order, and was unsupported by proper evidence. No inquiry was ordered.

4. The charging application and the inquiry formed one continuous enforcement process. The inquiry was a true inquiry into beneficial ownership, not a trial of an issue requiring pleadings. There was no proper basis for separating the costs. Although the claimant ultimately failed to secure a charge over the remaining shares, the defendants’ repeated disclosure failures and failure to pay the judgment debt substantially prolonged the proceedings. Applying Civil Procedure Rules 1998, r 44.2, the first and second defendants were jointly and severally liable for 80% of the claimant’s costs relating to them, assessed on the standard basis.

5. The second defendant could not claim costs in the third defendant’s name by subrogation. No indemnity had been paid or properly demanded, and no subrogated right had arisen. The court made no order concerning the third defendant’s costs. The first defendant was separately liable for 80% of the costs of the claimant’s penal-notice application.