The judge noted that Watson "was clearly embittered by what he saw as misconduct on Julian's part".
He has given both parties the chance to agree to a sum of money over the contested property deal - referred to as the "German Opportunity". His ruling stated if that was not possible, "I am in the position to make an order without need for a further hearing at this stage".
The judge also ruled that Brown's brother, Quentin - who was a director of Kauri Investments - was also in breach of a no conflict rule.
The ruling revealed Julian Brown first met Watson in the mid-1990s and the pair struck up a friendship.
After Watson moved to London, Julian Brown followed him and stayed with him.
Julian Brown then began working for the multi-millionaire from 2001 to 2003 and considered Watson a mentor.
He eventually left Watson's company and started his own business dealing in property acquisition and management. Brown acquired shares and properties in London, Berlin and Poland.
In 2005 Watson and Julian Brown formed a property investment company Kauri Investments Ltd. Brown was the chief executive and Quentin, was a director working alongside him.
The judgement revealed Watson and Julian Brown's relationship turned sour after Julian Brown personally invested in a joint venture with a partner in Germany - without Cullen Investments' blessing.
The deal involved establishing a Berlin-based property management company and the redevelopment of residential sites in Germany, particularly in Berlin.
Eric Watson was cross-examined over three days of hearings last year
Judge Barling said Watson was an" honest witness", but his evidence was "surprisingly vague" at times.
In his decision the judge wrote "it was clear he [Watson] was generally content to leave the detail of arrangements to those who worked for him, and only focused on 'specific issues' when it was necessary for him to take a decision or when he became 'concerned about a particular matter'."
The judge's decision revealed Brown acknowledged in an email to Watson that "the Berlin deal was my only prospect to 'salvage' something from all my efforts and investments in the UK so far and to get my UK visa".
Julian Brown added in the email it was Kauri's only prospect of "recovering costs" and Kauri's only prospect for "receiving future fees", and Cullen's only prospect to "capitalise" on Cullen's efforts and investments in Kauri.
Julian Brown, who now lives in Auckland and is property consultant, told the Weekend Herald: "I'm very disappointed with the judge's finding on this contractual issue.
"The decision is currently under review so it is not appropriate that I comment further at this time."
Watson did not respond to an approach for comment.
