Kea Investments Ltd v Watson

Lord Justice Nugee handed down judgment yesterday in Kea Investments Ltd v Watson [2022] EWHC 5 (Ch), rejecting a committed contemnor’s argument that his costs should be paid by the successful applicant. This judgment will be of interest to parties considering committal as a means to secure compliance with court orders as well as to those whose clients are in breach of those orders.

During a 4 week committal hearing Kea established a serious breach in relation to 5 of the 10 sub-counts tried before Lord Justice Nugee (Kea Investments Ltd v Watson [2020] EWHC 2599 (Ch)). One of these 5 serious breaches was a contumacious breach which merited an immediate term of 4 months’ imprisonment (Kea Investments Ltd v Watson [2020] EWHC 2796 (Ch)).

In yesterday’s judgment, Lord Justice Nugee rejected Mr Watson’s argument that Kea should pay part of his costs because it had not succeeded on all the counts included in the application. He held that Kea was the successful party for the purposes of CPR r44.2(2) as it had succeeded in establishing a sufficiently wilful breach of an order to require punishment by way of committal. It did not matter that the committal application was supported by a number of counts or sub-counts: it was still a single application with a single objective, namely Mr Watson’s committal. Under the general rule Kea was therefore entitled to its costs, subject to the court’s discretion to make a different order under CPR r44.2(2)(b).

The judgment contains a useful analysis of the appropriate exercise of the court’s discretion under CPR r.44.2(2)(b) where a party has not succeeded on all counts underlying an application. Although Kea had been unsuccessful in relation to some of the counts supporting its application, it had not acted unreasonably in pursuing those counts. Taking into account all the circumstances of the case, Mr Watson was ordered to pay 50% of Kea’s costs on the indemnity basis.

The judgment is available here.

Elizabeth Jones QC, Justin Higgo QC, Gareth Tilley and Zahler Bryan (instructed by Toby Graham of Farrer & Co) acted for Kea.