Kea Investments Ltd v Watson & Ors

A committal applicant must prove breach beyond reasonable doubt. The respondent must know the order and the facts making the conduct a breach. Deliberate disobedience is unnecessary to establish contempt, although it is highly material to punishment.

An application notice must clearly identify the alleged acts or omissions. It need not allege contumacy. A time-limited mandatory order creates a single breach when the deadline passes. It does not impose an implied, continuing duty to update information later obtained.

An asset-disclosure order may validly extend to assets held informally for a respondent’s economic benefit. A respondent cannot rely on a third party’s refusal to provide documents where the documents could in fact have been obtained. Those principles justified findings of contempt for non-disclosure of an account held by the respondent’s mother.

Kea Investments Ltd, a judgment creditor, sought to commit Mr Watson for alleged failures to comply with orders requiring information about traceable funds and his assets. The application proceeded on ten sub-counts under orders made in April, September and November 2018.

The April order required Mr Watson to use best endeavours to provide information about funds paid to Munil Development Inc. The September order required a sworn disclosure of worldwide assets and specified trust assets. The November order required further information and bank statements concerning interests held by Mr Watson’s mother.

The central issues were whether the orders were sufficiently clear and properly particularised for committal, whether the alleged information fell within them, and whether any non-compliance was proved to the criminal standard.

1. The committal application succeeded in part. The court found Mr Watson in contempt under Count 4(a) and 4(b). It deferred sentencing for a further hearing.

2. The court confirmed that contempt required proof beyond reasonable doubt that Mr Watson knew the relevant order, acted or failed to act in breach of it, and knew the facts making that conduct a breach. Contumacy was not an element of liability. It remained highly relevant to whether committal or another penalty was appropriate.

3. The April order’s requirement to use best endeavours required Mr Watson to take all reasonable steps to discover and provide the requested information, including making reasonable enquiries of others. The order was sufficiently clear despite its reference to a schedule to a witness statement. However, Count 1(a) failed. Applying re Jones [2013] EWHC 2579 (Ch), the court held that failure to meet a specified deadline was a single breach. The order did not impose an implied rolling obligation to disclose a later mortgage transaction.

4. The other Count 1 breaches were established as matters of non-disclosure. The court was not sure that Mr Watson understood that the relevant transactions had to be disclosed. They were therefore not treated as contumacious breaches warranting committal. The Count 3 allegations concerning litigation-funding interests, the FOH loan, the Hart loan and unidentified assets were not proved beyond reasonable doubt.

5. Count 4 was proved. The NZ$3.5m transferred to Mr Watson’s mother had, in substance, been made available for his use. He therefore shared in its economic interest within the express definition in the November order. His failure to disclose the Rainy Day account was deliberate. It was also not impossible for him to obtain its bank statements: they were produced readily when it later suited him to rely on them.

6. The court rejected the contention that the application was oppressive or an abuse of process. It concerned serious, rather than merely technical, non-compliance and was a legitimate means of securing future obedience to court orders.

• High Court: In the underlying action, the court gave judgment for Kea in Glenn v Watson [2018] EWHC 2016 (Ch) .
• Court of Appeal: Mr Watson’s appeal on the interest rate used to calculate equitable compensation was dismissed in Watson v Kea Investments Ltd [2019] EWCA Civ 1759 .
• High Court: This first-instance committal application found two contempts under the November order and dismissed or declined to commit on the remaining allegations.