M5 Associates Limited v Simon Nevill Wetton & Anor [2026] EWHC 185 (Comm)

[2026] EWHC 185 (Comm)

Case No CC-2024-CDF-000010

IN THE HIGH COURT OF JUSTICE

KING'S BENCH DIVISION

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMMERCIAL COURT

Venue Cardiff Civil and Family Justice Centre, 2 Park Street, Cardiff, CF10 1ET

Date 06/02/2026

Before

HIS HONOUR JUDGE JARMAN KC

Sitting as a judge of the High Court

Between

M5 Associates LimitedClaimant

(2) Phillip WatkinsDefendants

Mr Mark Stephens (instructed by RDP Law Ltd) for claimant

The first defendant appeared in person for in person

Mr Nicholas Cobill (instructed by Huttons Law) for second defendant

Hearing Hearing dates: 16 January 2026

Approved Judgment

This judgment was handed down remotely at 10.30am on 6 February 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

.............................

HIS HONOUR JUDGE JARMAN KC

HHJ JARMAN KC:

[1]This judgment deals with costs and other consequential matters following a judgment which I handed down on 17 October 2025 (

[2025] EWHC 2682

) dismissing the claimant’s claim. I asked that a draft order be agreed as far as possible and filed within 14 days together with written submissions on any consequential matters which cannot be agreed. The claimant and the second defendant, Mr Watkins, filed draft orders which were not agreed, and written submissions filed by them showed that the parties were far apart, and so I directed that a hearing should take place. Mr Stephens made oral submissions on behalf of the claimant, and Mr Cobill did the same on behalf of Mr Watkins. The first defendant, Mr Wetton, adopted the latter submissions and made some further points. Since the hearing, Mr Wetton has been the subject of a bankruptcy order, so the statutory stay applies. Accordingly this judgment deals only with the position of Mr Watkins.

[2]The claim form issued on 13 December 2023 and sought £2,797,141.23 under a deed of guarantee signed by the defendants to secure borrowing from the claimant. This was reduced in a witness statement dated September 2024 on behalf of the claimant to £1,198,205.48. By a consent order dated 16 April 2024, the defendants or each of them were to pay into court the sum of £250,000 by 28 May 2024. That was the amount of their capped liability under the deed of guarantee. However by clause 2.2 of the deed that cap was not to be applied to liability which arose directly or indirectly from any fraud, negligence or misconduct on the part of either defendant. It was the claimant’s case that default interest arose from the fraud, negligence or misconduct of the defendants in making promises to pay which they had no intention of keeping.

[3]By order dated 13 June 2024, judgment was entered against the defendants on a joint and several basis in the sum of £250,000.

[4]The claimant proceeded on the balance of the claim. After a hearing in October 2024 I dismissed the balance of the claim. However, after further disclosure by Mr Watkins, the claimant applied for a redetermination hearing on the basis that an explanation which he had given during cross-examination as to what happened to the proceeds of sale of property, referred to as the Lidl property, was inaccurate, something which he then accepted. Accordingly by order dated 1 July 2025 I granted permission for a reconsideration hearing. I also ordered that the interest rate applicable to the judgment debt of £250,000 given on 13 June 2024 was varied to the rate of 2.45% per month accruing from 19 June 2023 and continuing to accrue at that rate until the judgment debt is satisfied. There was no appeal from that order and no application to set it aside.

[5]On the basis of the further disclosed documents, Mr Watkins gave a different explanation at the redetermination as to the proceeds of sale. In my judgment on the redetermination, I observed that the way this evidence had unfolded was highly unsatisfactory, but nevertheless I remained unsatisfied that the claimant had proved its case on fraud, negligent or misconduct and dismissed that part of the claim. The result was that the liability of the defendants remained at £250,000, as ordered in June 2024.

[6]The claimant is entitled under clause 2.2 of the deed of guarantee to recover all costs and expenses of enforcement. CPR r.44.5 gives effect to the decision in Gomba Holdings (UK) Ltd v Minories Finance Ltd (No. 2)

[1993] CH 171

that the court’s discretion on costs should be exercised in line with the contract, but the court retains a discretion to make a costs order that departs from the contract, see Forcelux Ltd v Binney

[2009] EWCA Civ 1077

[7]The claimant in the present case did not succeed in lifting the cap on the defendants’ personal liability or in achieving additional sums sought in the prayer. Mr Stephens, however, maintains that the claimant was overall the successful party, and relies on Sharp v Blank

[2020] EWHC 1870

in submitting that costs are determined by reference to overall success.

[8]Mr Stephens submits that those claims which were not upheld were nevertheless maintained on reasonable grounds. He points to Mr. Watkins’ formal written promise to pay specific sums within 1 business day of receipt of the proceeds of sale of property but submits that he then withheld documents dealing with those proceeds. Both defendants acknowledged in writing, before the claim was issued, that they remained committed to payment of the guarantee and the agreed sums under the updated facility agreement. After the claim was issued however, the defendants made no admissions. After the initial judgment was entered against them they continued to deny that the claimant had made a valid demand under the deed, but lost on that issue.

[9]Mr Stephens submits that the costs of the application for a redetermination and of the redetermination, and the costs of the claimant’s second application for specific disclosure against Mr Watkins should be paid by him on the indemnity basis. He submits that his conduct in not giving proper disclosure of documents relating to the proceeds of sale of property, his inaccurate evidence about that at the first hearing, his failure thereafter to give disclosure until the claimant made an application which was only conceded the day before the hearing of the application, are all out of the norm of the ordinary course of litigation.

[10]Mr Stephens further submits that it was the conduct of Mr Watkins that necessitated the redetermination and that the costs so incurred would have been avoided if he had complied with his disclosure duties. There would have been no need to set aside the original findings if he had done so. In his written submissions on consequential matters, Mr Stephens added that that would have been avoided had Mr Watkins given “honest” evidence. He repeated later on in those submissions that this evidence was dishonest. Such an allegation seemed to me to underline the need for a oral hearing. Mr Stephens repeated this allegation at the outset of his oral submissions. I pointed out that I had not made such a finding in the substantive judgments.

[11]My conclusions on the redetermination as to Mr Watkins’ evidence included the following:

“14. There is no direct evidence to contradict his evidence at the review hearing as summarised above. However, his changing evidence causes me to be very cautious about now accepting his evidence at face value. I acknowledge, as Mr Cobill reminds me, the frailties of human memory (see, for example, Kogan v Martin [2019] EWCA 1645). This is particularly so where, as here, Mr Watkins was being cross examined in detail about his complex financial situation some three or four years previously. It is clear from the contemporaneous documents that he had several pressing creditors, which he was, in his word, "firefighting." That is, he was trying to pay something to creditors in the short term with a view to settling in due course. The only creditor paid in full at this time was the utility provider to the dwellings under construction, who was threatening to cut power, which would have impacted adversely on the completion of the project. Most creditors were paid in full in due course, the notable exception being the claimant. 15. However, it is not just the changing evidence which causes me to be so cautious. It is also the assuredness with which Mr Watkins gave his explanation at the original hearing, his failure to give full disclosure before the original hearing of documentation relevant to the Lidl sale proceeds and the possession proceedings, his subsequent resistance to further disclosure, and his exaggerated (if not misleading) evidence in his June 2025 statement that the possession proceedings were completely unexpected... 16. Mr Stephens submits that the evidence now available shows Mr. Watkins did not honestly intend to honour the promise to pay the claimant, because he had promised to pay the same sum to a secured creditor. The misconduct was the making of a false promise or deliberately dishonouring his promise to pay which increased the company's liability because default interest began to accrue. As Mr Stephens accepted, the only pleaded particular of negligence is failure to honour the promise... 17. I am not satisfied that the contemporaneous documentation, as now available, does show that Mr Watkins did not intend to keep the promise to the claimant at the time he made it on 4 March 2021. It is a question whether that is a safe and proper inference to draw. In my judgment it is not.”

[12]I asked Mr Stephens whether he wished to have time to consider the position or to re-read that judgment, but he indicated that he did not. When I asked him whether he wished to withdraw the allegation of dishonesty against Mr Watkins, he replied that he would so withdraw. In my judgment that was a proper course. There is no basis for such an allegation.

[13]Mr Cobill for Mr Watkins relies on an email sent on behalf of Mr Watkins in April 2024 making an open offer to pay £250,000 to the Claimant, whilst also contending that it was not due as no demand had been served. That offer was not accepted. The claimant made several without prejudice save as to costs offers in full and final settlement of its claim. These were to accept from Mr Watkins £500,000 in February 2024; £750,000 (as a Part 36 offer on 27 March 2024); and £880,000 in February 2025.

[14]Mr Cobill accepts that Mr Watkins must pay the costs of the claimant up until the default judgment on 13 June 2024. In my judgment Mr Watkins should pay these costs on the standard basis. Mr Cobill submits that the claimant should pay Mr Watkins’ costs which he incurred in defending the balance of the claim and responding to the claimant’s applications from then on which did not assist the claimant to overturn the dismissal of the balance of its claim on 23 October 2024.

[15]CPR 44.2 applies to the court’s discretion as to costs. It materially provides:

“44.2 (1) The court has discretion as to – (a) whether costs are payable by one party to another; (b) the amount of those costs; and (c) when they are to be paid. (2) If the court decides to make an order about costs – (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but (b) the court may make a different order... (4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including – (a) the conduct of all the parties; (b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and (c) any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply. (5) The conduct of the parties includes – (a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol; (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended its case or a particular allegation or issue; (d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim; and (e)whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution”

[16]In my judgment the just and proportionate orders for costs are as follows. Mr Watkins should pay the claimant’s costs up until and including the default judgment in June 2024 on the standard basis. The claimant should pay the costs of Mr Watkins up to and including the first hearing, on the standard basis. It was not reasonable for the claimant to proceed to claim a considerable amount more on the basis of alleged fraud, negligence or misconduct. It was for the claimant to prove such allegations. I accept that regard must be had to success overall. However the claimant had achieved judgment for the capped amount. It was its decision to seek to prove these allegations, and it failed to do so. In my judgment that is sufficient justification to depart from the contractual position, even if these costs can be said to be the costs of enforcement, which is questionable.

[17]However, it was Mr Watkins’ failure to give proper disclosure leading to the first hearing, and his inaccurate evidence when cross examined about the proceeds of sale of the Lidl property, which led the claimant to seek further disclosure and redetermination. The claimant could have made an application for specific disclosure before the first hearing, but did not do so. However the duty of disclosure remained on Mr Watkins. In my judgment this is conduct which justifies an order that he should pay the costs of the second disclosure application and of the redetermination insofar as those costs relate to him. In my judgment that should be on the standard basis. I am satisfied that these arose not out of any deliberate avoidance on his part, but because of the frailty of human memory in the circumstances described in paragraph 11 above.

[18]As for interest, although there was no appeal from the order of July 2025 or application to set aside, both parties in written and oral submissions on consequential matters, invited me to revisit that order, by increasing the rate of interest according to Mr Stephens, and by limiting the period to January 2025 according to Mr Cobill. In my judgment in the absence of an appeal or timely application to set aside, it is now too later to revisit these matters. The parties did at the oral hearing, with some encouragement from the court, agree to a 60 day moratorium on interest.

[19]This judgment was sent out in draft to the parties’ solicitors for typographical corrections in the usual way. However, the solicitors for Mr Watkins wrote to the court and filed the same on CE-File. The letter attached the observations of Popplewell LJ in refusing the claimant’s application for permission to appeal my judgment on redetermination. The letter claimed that “the Court of Appeal’s finding that the claim had "no pleaded basis" is a binding determination that effectively renders the Redetermination hearing a retrospective nullity.” I was invited to revisit the costs order in light of that.

[20]In my judgment there is no substance in that request. Firstly, what is said to be a binding determination are reasons why permission to appeal was refused. More fundamentally however, the reasons make it clear that what is being dealt with is my dismissal of what the claimant referred to as its subsidiary claims and the reasons which I gave for doing so in [22] of the redetermination judgment. Popplewell LJ observed that there was no inconsistency between my conclusions "on this point” and my reasoning in relation to the cap point. What I said in [22] was:

“Mr Stephens also sought to enforce the promises made by the defendants (giving credit for £20,000 in respect of Mr Watkins) against them. These sums were sought in the prayer of the particulars of claim, but it was not clear in the claimant’s pleading what the basis was for seeking these sums from the defendants personally, over and above their guarantees as limited. It is pleaded that on the basis of these promises the claimant entered into the ARA. It is also pleaded that the promises were made fraudulently, negligently or as a result of misconduct. I have found that they were not. This part of the claim did not figure largely in the skeleton arguments, evidence or submissions in either the original or the review hearings. I am not persuaded that it is made out.”

[21]As these claims did not figure largely in either the original or the redetermination hearings there is no justification for altering the conclusions I have come to above as to the appropriate and just costs orders.

[22]The parties should file an agreed draft order within 14 days of hand down of this judgment. As this is itself a judgment on consequential matters, I see no further scope for disagreement.