- Charging orders—does a cross undertaking in damages arise? (DSA Investments v Optima Worldwide Group)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Whether there was an implied cross undertaking in damages by virtue of the order of April 2019
- If such undertaking existed, could it be enforced by BHC?
- Should the court order an inquiry as to BHC’s damages?
- Who should pay the costs of the application and inquiry (and related sub issues)?
- Case details
Dispute resolution analysis: In DSA Investments, Deputy Master Linwood considered how costs should be dealt with where an application for a charging order had been made firstly on an interim basis (an interim charging order or ICO) and then (in part at least) on a final basis (a final charging order or FCO). The issues concerned (i) whether in principle a cross undertaking in damages could arise in respect of charging orders; (ii) whether a cross undertaking had arisen as a matter of fact; (iii) whether a third party could enforce a cross undertaking as against the applicant/beneficiary of the charging order; and (iv) whether there should be any inquiry into the alleged loss suffered by the third party. Deputy Master Linwood also considered the appropriate costs order to make in the application for a charging order and the related costs of an inquiry into the beneficial ownership of the shares the subject of the charging order. In doing so Deputy Master Linwood applied the rule in CPR 44.2(2)(b) and made a different order contrary to the general rule set out in CPR 44.2(2)(a) that the unsuccessful party be ordered to pay the costs of the successful party. Written by Michael Rhode, senior associate at Trowers & Hamlins LLP.
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