TVNZ reports a High Court judge in London found Watson in contempt of court for withholding information about his assets from philanthropist Sir Owen Glenn.
Watson's legal counsel has requested to apply for an appeal and requested that the sentencing not be immediate.
This marks the latest chapter in the bitter dispute between Watson and Glenn.
Earlier this month, the High Court in England and Wales ruled Watson committed acts of contempt by failing to comply with court orders after earlier being found to have deceived Glenn during their business dealings.
After a lengthy trial, Watson was declared liable in 2018 for £43.5m ($85m) and interest compounding at 6.5 per cent per annum in compensation to Glenn's company Kea Investments (Kea). He was ordered to pay an interim sum of £25m ($48.8m) plus costs of £3.8m ($7.4m).
Kea, however, accused Watson of being "deliberately reticent" over providing information about his assets as part of a strategy to frustrate compensation recovery efforts.
It sought three orders of contempt against Watson, which were argued over several days in April and May, over suspicions about interests, including those held by his mother Joan Pollock and a house bought in Sweden.
In an October 2 decision, Lord Justice Christopher Nugee said it was "demonstrated how blatantly Mr Watson lied to the Court of Appeal" about the state of his assets.
Watson's formal witness statement to the Court of Appeal displayed his "willingness to tell outright lies if he thinks they will remain undetected".
"It is one of the clearest examples of why I regard him as a witness whose evidence is almost worthless."
Justice Nugee said there were "strong grounds" for believing Watson used the period between the end of the trial and his judgment "to arrange his affairs to put himself in the best position to make it difficult for Kea to enforce any judgment".
While the judge said he had "no confidence that [Watson] is telling the truth" he only found him guilty of contempt over withholding a statement of transactions about a "Rainy Day account" in Pollock's name.
Watson, formerly one of New Zealand's wealthiest men, now claims to be impecunious. He said in a court statement the "small amount I spend on living is given to me by my mother".
An analysis of Watson's bank statements for September 2018 to September 2019 showed more than £500,000 ($976,987) coming into his account, much of it from the Rainy Day account.
"In other words, the available evidence is that when Mrs Pollock was asked for the bank statements in circumstances when it suited Mr Watson to say he was unable to provide them, she said she was unwilling; but when Mr Watson really did want them, they were forthcoming without difficulty," Justice Nugee said.
"There is not the slightest reason to doubt that if Mr Watson had really wanted to provide them in December 2018 so as to comply with the November [court] Order, he could have obtained them equally easily. He chose to hide behind the fact that the account was in his mother's name."
Justice Nugee added he strongly suspected Pollock "may have been led to believe that it would suit Mr Watson if she refused to provide them".
The judge also said Glenn was not pursuing the court action "out of a desire for revenge".
"In those circumstances, I do not think it is relevant to know, nor am I tempted to speculate, whether Sir Owen would gleefully rejoice to see Mr Watson committed to prison, or merely wants Kea's judgment debt paid."
The London-based Watson "has not voluntarily paid a penny" of what he was ordered to.
"Kea has managed to identify, and compel payment from, various assets, and has thereby obtained comparatively small sums towards the judgment debt but is still owed the vast majority of it, and has found it difficult to locate, let alone execute against, any substantial assets," the judgment reads.
