Federal Court of Australia

The NOCO Company v Brown and Watson International Pty Ltd (No 2) [2025] FCA 1176

ORDERS

THE COURT ORDERS THAT:

1. The applicant pay 80 per cent of the respondent’s costs of the claim and the cross-claim (including reserved costs), on a party and party basis, such costs to be determined on a lump sum basis.

2. By 4.00 pm on 24 October 2025, the respondent file and serve a Costs Summary in accordance with paragraphs 4.10 to 4.12 of the Court’s Costs Practice Note (GPN-COSTS) (Practice Note), not exceeding 10 pages in length.

3. By 4.00 pm on 21 November 2025, the applicant file and serve a Costs Response in accordance with paragraphs 4.13 and 4.14 of the Practice Note, not exceeding 8 pages in length.

4. By 4.00 pm on 5 December 2025, the parties file and serve any submissions on costs in accordance with paragraph 4.15 of the Practice Note, not exceeding 5 pages in length.

5. The amount of the lump sum of costs identified in these orders be determined by a Registrar of the Court.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1 On 7 August 2025, I gave judgment in this proceeding: The NOCO Company v Brown and Watson International Pty Ltd [2025] FCA 887 (the August 2025 Reasons).  These reasons, which deal with the issue of costs, should be read together with the August 2025 Reasons.  I will adopt the abbreviations used in the August 2025 Reasons.

2 Pursuant to orders made on 7 August 2025, the parties have each filed initial written submissions on costs and responding written submissions on costs.  In response to a request that the parties be permitted to file reply submissions, I gave leave to the parties to do so.  Each party then filed reply submissions.

3 By way of context, the outcomes of the claim and the cross-claim were as follows:

(a) B&W’s cross-claim alleging invalidity of the asserted claims was successful.  For many of the asserted claims, I concluded that the claims were not entitled to the asserted priority date.  It followed (from a concession made by NOCO) that such claims were invalid for lack of novelty.  Further and in any event, I concluded that all of the asserted claims were invalid for lack of inventive step.  I made declarations of invalidity in relation to the asserted claims and made orders that the asserted claims be revoked.

(b) It followed that NOCO’s claim that B&W had infringed the Patents was unsuccessful and was dismissed. Although it was not necessary to do so, I considered the infringement issues on the assumption that (contrary to my earlier conclusions) all of the asserted claims were valid.  On that assumption, the effect of my conclusions was that some of the B&W impugned products infringed some of the asserted claims.

4 The positions of the parties as regards costs can be summarised as follows:

(a) NOCO accepts that B&W is the successful party and that there should be a costs order in its favour.  However, NOCO submits that there should be an apportionment of costs to reflect NOCO’s success in relation to the claim and in relation to certain issues.  NOCO submits that an appropriate costs order is that NOCO pay 70 per cent of B&W’s costs of the proceeding.

(b) B&W submits that it was the successful party and that costs should follow the event; in other words, NOCO should be ordered to pay B&W’s costs of the proceeding.  Further, B&W relies on an offer to compromise that it made dated 16 January 2025 (the January 2025 Offer).  The offer was not accepted by NOCO.  B&W seeks orders (pursuant to r 25.14(2) of the Federal Court Rules 2011) that NOCO pay B&W’s costs:

(i) before 11 am on 20 January 2025, on a party and party basis; and

(ii) after 11 am on 20 January 2025, on an indemnity basis.

5 There is also a subsidiary issue between the parties as to whether the costs should be determined on a lump sum basis.  B&W seeks an order that the costs be determined on that basis, along with associated timetabling orders.  NOCO submits that the question whether the costs should be determined on a lump sum basis should be referred to a Registrar to determine.

6 For the reasons that follow, I have concluded that:

(a) In the circumstances of this case, it is appropriate to adopt an issues-based approach to the question of costs.  The starting point is that B&W was successful in respect of both the claim and the cross-claim.  However, some allowance should be made for NOCO’s success on particular issues.  I conclude that the appropriate costs order is that NOCO pay 80 per cent of B&W’s costs.

(b) In relation to the application for indemnity costs (after 11.00 am on 20 January 2025), under the applicable rule it is necessary for the Court to be satisfied that NOCO “unreasonably” failed to accept the January 2025 Offer.  In all the circumstances, I am not satisfied that NOCO’s failure to accept the offer was unreasonable.  Accordingly, the application for indemnity costs is rejected.

(c) I consider it appropriate to make an order that the costs be determined on a lump sum basis.

7 I will now deal with each of the issues in turn.

Apportionment issue

Applicable principles

8 The applicable principles relating to the award of costs are conveniently set out in the judgment of Greenwood, White and Burley JJ in Davies v Lazer Safe Pty Ltd (No 2) [2019] FCAFC 118 (Davies) at [5]-[7]:

5    It is well established that the Court has a broad discretion in awarding costs. In Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 (Nicholas, Beach and Burley JJ), the Full Court said:

[3]    The power of the Court in relation to costs is well established. Section 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court a wide discretion in awarding costs. The exercise of the Court’s discretion is not without principles or practices; it must be exercised judicially (Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 at [305] per Bennett, Besanko and Beach JJ). The ordinary rule is that costs follow the event, although a successful party may be awarded less than its costs, or costs may be apportioned, based upon success on the issues (Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192; [2015] HCA 53 at [6] per French CJ, Kiefel, Nettle and Gordon JJ; Les Laboratoires Servier at [297] to [298] and [303]).

6    Some general principles as to awarding costs, and as to when the Court may award costs on an issues basis, were set out in Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; 247 FCR 61 (Bennett, Besanko and Beach JJ):

[297]    There are two general approaches to the award of costs that have general application and have been the subject of numerous decisions:

(1)    The successful party is generally entitled to its costs. That is, costs usually follow the event.

(2)    It is also the case that a successful party may be awarded less than its costs, or there may be an order apportioning costs, on the basis of success on the issues.

…

[301]    On the other hand, Courts have been increasingly concerned, generally, to use all proper means to encourage parties to consider carefully what matters they will put in issue in their litigation. This has led to decisions whereby the successful party does not recover all of its costs where it has been unsuccessful on a discrete issue or in what is decided to be an unmeritorious objection. While it is acknowledged that, ordinarily, costs follow the event, the wide discretion in awarding costs has led to circumstances where a successful party who has failed on certain issues may be ordered to pay the other party’s costs of them (as discussed in Hughes v Western Cricket Association (Inc) [1986] ATPR 40-748 per Toohey J), although warnings have been stated that care should be taken in such a course and consideration be given to whether the issues on which the successful party failed are clearly dominant or separable (Waters v PC Henderson (Australia) Pty Ltd (1994) 254 ALR 328 at 330 to 331 per Mahoney JA) and to whether the issues involved different factual enquiries in the one proceeding or multiple causes of action, even if based on a common substratum of fact.

7    A claim for patent infringement and a cross-claim for patent invalidity are typically treated as separate events upon which the ordinary rule applies to costs: GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No 2) Limited v Generic Partners Pty Limited (No 2) [2018] FCAFC 100 at [8] (Middleton, Nicholas and Burley JJ), citing PAC Mining Pty Ltd v Esco Corporation (No 2) [2009] FCAFC 52 (Sundberg, Jessup and Middleton JJ) and Damorgold Pty Ltd v Blindware Pty Ltd (No 2) [2018] FCA 364 (Middleton J).

(Emphasis added.)

9 In Hanwha Solutions Corporation v REC Solar Pte Ltd (No 2) [2024] FCA 336 (Hanwha Solutions), Burley J stated at [14]:

A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties’ costs of them. In this sense “issue” does not mean a precise issue in the technical pleading sense but any disputed question of fact or law; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 346; (1993) 26 IPR 261 at 271 – 272 and Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at [11] (Black CJ and French J).

(Emphasis added.)

Consideration

10 NOCO’s first submission is that a claim for patent infringement and a cross-claim for invalidity are typically treated as separate events upon which the ordinary rule as to costs applies (relying on Davies at [7] and the cases there cited).  On the basis of that proposition, NOCO submits that it succeeded in showing that the B&W impugned products fell within the scope of the following claims: claims 1-4, 6-10, 12, 14 and 21-24 of the 059 Patent and claims 1, 5-8, 10-14, 16-19, 21-23, 25-31 and 33-36 of the 338 Patent.  Thus, NOCO submits, the Court found that NOCO established that all of the B&W impugned products fell within the scope of at least one claim of each of the 059 Patent and the 338 Patent.  I note that, of the claims referred to by NOCO, claims 27 and 28 of the 338 Patent were not asserted claims, and claim 5 of the 338 Patent is dependent on claim 4, which NOCO abandoned during the trial.  It should also be noted that not all of the claims listed above were relied on in respect of all of the impugned products.

11 In my view, NOCO’s first submission should be rejected.  I accept that the claim and cross-claim should generally be treated as separate events for the purposes of costs.  However, adopting that approach, the outcome of NOCO’s claim for infringement was that it was unsuccessful rather than successful.  For this purpose, one looks to the orders made by the Court rather than whether the impugned products were held to be within the scope of the asserted claims (on the assumption that the claims were valid).  Here, the order made in relation to the claim was that it be dismissed.  Accordingly, the starting point for the purposes of costs relating to the claim is that NOCO should pay B&W’s costs.  However, that is not to say that the costs of the claim might not be apportioned on the basis of the success of the parties on the issues.  That is a matter to which I will return in the context of considering NOCO’s second submission.

12 NOCO’s second submission is that the Court should apportion the costs of the proceeding (both for the claim and the cross-claim) on an issue-by-issue basis.  NOCO submits that this approach is well established and promotes efficiency by encouraging parties to consider carefully what matters they choose to place in issue in their litigation (relying on BlueScope Steel Limited v Dongkuk Steel Mill Co, Ltd (No 3) [2020] FCA 113 (BlueScope) at [18] per Beach J).  In this context, NOCO makes the following submissions:

(a) NOCO was largely successful in relation to the construction issues.  There were a significant number of construction issues advanced by B&W, with 14 construction issues identified in the August 2025 Reasons at [99]-[195].  B&W largely failed in respect of these issues and, in particular, it largely failed on two of the three issues identified in the August 2025 Reasons as the main construction issues (being the Automatic Start issue and the USB issue).  While B&W succeeded in relation to the Manual Mode issue, this issue largely related only to the 223 Patent.  Another substantial issue on which B&W failed was the DC-DC converter issue (dealt with in the August 2025 Reasons at [173]-[189]).  Otherwise, consideration of the construction issues at [99]-[195] of the August 2025 Reasons shows that NOCO was largely, albeit not wholly, successful in rebutting the arguments raised by B&W on these issues.  The infringement aspect of the proceedings consumed a substantial amount of time and therefore costs.  Each of the parties produced separate tranches of affidavit evidence and written submissions on the claim.

(b) B&W pressed a case of lack of novelty and lack of inventive step on the basis of CN190 (referred to in the August 2025 Reasons at [66]). This required substantial evidence going to that prior art which included not only the translation but its impact on the disclosure of the claims.  B&W only abandoned this prior art on Day 7 of the trial (T763).

(c) B&W failed on the best method case because that case required consideration of the best method known as at the date of filing the priority document, PCT434 (August 2025 Reasons, [389]).  The best method case was the subject of evidence and addressed in section G of the Joint Expert Report.  Mr Stanfield was also cross-examined on that topic (T257-290).

13 In addition to the above, NOCO submits that B&W’s inventive step case was based on materials that were raised late, that B&W was not wholly successful in relation to the priority date issue, and that B&W abandoned grounds of invalidity on the first day of trial.

14 In response to those submissions, B&W submits, in summary:

(a) As Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; 247 FCR 61 (Servier) recognises, the appropriateness of adopting an issue-by-issue approach will depend on the circumstances, including “whether evidence and argument can be separated” (at [300]).  For the reasons identified in its submissions, B&W submits that this is not such a case.

(b) The Full Court has not adopted the suggestion in BlueScope that issue-by-issue apportionment should be the “norm” in patent disputes: see, eg, Caffitaly System SPA v One Collective Group Pty Ltd (No 2) [2021] FCAFC 164 (Caffitaly) at [8(b)], [9].  If a party succeeds only on an issue of “no or only limited significance”, apportionment may be inappropriate: see Caffitaly at [9].

(c) To the extent that NOCO seeks to rely upon Servier and BlueScope, neither of those cases supports any reduction to the costs recoverable by B&W.

(d) Save for the fact that this is a patent dispute, NOCO does not assert that any aspect of B&W’s conduct in running its case makes the issue-by-issue approach appropriate. The observations of the Full Court in Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [8] are apposite.

(e) Insofar as NOCO submits that there would be unfairness if costs were determined other than on an issue-by-issue basis because the unsuccessful party would thereby incur two sets of costs – its own costs and the successful party’s costs – NOCO does not identify any authority in support of this argument.  It should not be accepted.

15 B&W also submits that: a substantial portion of NOCO’s costs must have been incurred in respect of issues common to the present proceeding and the Carku proceeding (referred to at [55] of the August 2025 Reasons); so much is illustrated by NOCO’s opening submissions on infringement (dated 30 January 2025), which were concurrently filed in this proceeding and the Carku proceeding; those submissions ran for 48 pages, dealt with 13 construction issues (most arising in both proceedings), and dedicated only four pages to the infringement allegations made specifically against B&W.

16 As explained above, the starting point for the purposes of costs is that B&W was successful in relation to both its cross-claim alleging invalidity and in respect of NOCO’s claim alleging infringement.  Thus, the starting position is that NOCO should pay B&W’s costs of the proceeding.  However, as in many patent cases, there were discrete issues in relation to which NOCO was successful or largely successful, and which occasioned significant costs for NOCO.  In my opinion, those issues are sufficiently discrete and occupied sufficient time that it is appropriate to have regard to the success of the parties on those issues in apportioning the costs of the proceeding.  In particular, NOCO was successful or largely successful in relation to the following issues:

(a) three of the construction and associated infringement issues, namely:

(i) the Automatic Start issue and the associated infringement issue, which were dealt with in the August 2025 Reasons at [110]-[131] and [403];

(ii) the USB issue and the associated infringement issue, which were dealt with in the August 2025 Reasons at [149]-[170] and [408]; and

(iii) the DC-DC converter issue and the associated infringement issue, which were dealt with in the August 2025 Reasons at [173]-[189] and [405];

(b) the issues relating to CN190, which was abandoned as a piece of prior art by B&W late in the trial (see the August 2025 Reasons at [66]); and

(c) the best method issue, which was dealt with in the August 2025 Reasons at [369]-[398].

17 I accept that some of the construction issues referred to above were relevant to the invalidity part of the case as well as to infringement.  However, they were primarily relevant to infringement.  In any event, they were discrete issues in respect of which NOCO was successful or largely successful.

18 The effect of the outcomes on the Automatic Start issue, the USB issue and the DC-DC converter issue was that each of the B&W impugned products fell within the scope of at least one of the asserted claims.  (Although the Manual Mode issue was decided in B&W’s favour, this issue did not apply to all of the asserted claims.)  Thus, it is fair to say that, although it was ultimately unsuccessful, NOCO achieved some measure of success in relation to the infringement part of the case.

19 In relation to CN190, in its submissions in answer, B&W submits that its abandonment of this piece of prior art was not due to difficulties with its translation (i.e. the cross-examination of Ms Liu).  B&W submits that it abandoned CN190 in the context of a concession by Mr Wilson that there was nothing unusual about a two sensor arrangement.  It is not possible (including because of legal professional privilege) to determine why B&W abandoned CN190.  In any event, in circumstances where B&W abandoned this piece of prior art late in the trial, including after the cross-examination of Ms Liu, which occupied some time, I consider it appropriate to treat NOCO as having been successful in relation to CN190.

20 In relation to best method, B&W submits that while NOCO succeeded on the first issue (the legal issue), B&W succeeded on the second issue (the factual issue), and regard should be had to that aspect for the purposes of costs.  In my opinion, the issues should not be analysed at such a granular level for present purposes.  B&W relied on the best method ground as part of its invalidity case.  That ground was unsuccessful.  Had B&W not relied on this ground, some time and associated costs would not have been incurred.

21 I do not consider the other matters relied on by NOCO to provide a proper basis for reducing the costs otherwise payable by NOCO to B&W.  That is broadly because I do not consider them discrete issues for present purposes.

22 Although it would be possible to have separate orders for each of the claim and the cross-claim (with an appropriate reduction in respect of each of them), in the circumstances of this case I consider it simpler to have a single order that deals with the costs of both the claim and the cross-claim, with an appropriate reduction in the costs otherwise payable by NOCO to B&W.  This will make the process of assessment easier.  This approach is available here because, in respect of both the claim and the cross-claim, the starting position is that NOCO should pay B&W’s costs.

23 Having regard to NOCO’s success in relation to the issues identified at [16] above, I consider a reduction of 20 per cent on the costs otherwise payable by NOCO to B&W to be appropriate.  Accordingly, I consider the appropriate costs order to be that NOCO pay 80 per cent of B&W’s costs of the proceeding.

Indemnity costs issue

24 B&W relies on the January 2025 Offer, which was dated 16 January 2025.  By that offer (set out in Annexure C to B&W’s initial submissions on costs), B&W offered to settle the proceeding on the following basis:

(a) NOCO’s claim alleging infringement would be dismissed;

(b) all existing costs orders would be vacated;

(c) each party would bear its own costs of the claim and the cross-claim;

(d) the parties would sign and B&W would file a notice of discontinuance of the cross-claim, with each party bearing its own costs of the cross-claim;

(e) B&W would undertake not to challenge the validity of any of the Patents in the future, except to the extent that the patent is asserted against B&W in new proceedings; and

(f) B&W would pay NOCO $200,000.

25 The offer was open to be accepted for 14 days after service.  The amount of the offer would be paid within 28 days after acceptance of the offer.

26 The offer was provided under cover of a letter from B&W’s solicitors dated 16 January 2025 (also included in Annexure C to B&W’s initial submissions).  The letter referred to earlier offers that had been made by B&W pursuant to the principles in Calderbank v Calderbank [1976] Fam 93.  Those offers were made by letters dated 28 March 2024 and 13 December 2024.  I note that, for present purposes, B&W does not rely on either of the earlier offers.

27 The letter dated 16 January 2025 contained some analysis of the claim and the cross-claim.

Applicable principles

28 Rule 25.14 of the Federal Court Rules provides in part:

25.14 Costs where offer not accepted

…

(2)    If an offer is made by a respondent and an applicant unreasonably fails to accept the offer and the applicant’s proceeding is dismissed, the respondent is entitled to an order that the applicant pay the respondent’s costs:

(a)    before 11.00 am on the second business day after the offer was served—on a party and party basis; and

(b)    after the time mentioned in paragraph (a)—on an indemnity basis.

(3)    If an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment that is more favourable than the terms of the offer, the applicant is entitled to an order that the respondent pay the applicant’s costs:

(a)    before 11.00 am on the second business day after the offer was served—on a party and party basis; and

(b)    after the time mentioned in paragraph (a)—on an indemnity basis.

29 Although it is both a respondent and a cross-claimant, B&W accepts that it is to be treated as a respondent for present purposes and therefore that the relevant sub-rule is (2) rather than (3) of r 25.14: see Rakman International Pty Ltd v Boss Fire & Safety Pty Ltd (No 2) [2022] FCA 1113 at [31]-[33].

30 Here, there is no issue that the January 2025 Offer was an offer to compromise pursuant to Part 25 of the Rules and that the applicant’s proceeding (the claim) was dismissed.  The only issue is whether the applicant (NOCO) “unreasonably” failed to accept the offer, as required by r 25.14(2).

31 The circumstances to be taken into account in determining whether rejection of an offer was “unreasonable” (albeit not specifically in the context of r 25.14(2)) were identified by the Full Court (Nicholas, Yates and Beach JJ) in Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 (Anchorage) at [7]-[8]:

7    The circumstances to be taken into account in determining whether rejection of an offer was “unreasonable” cannot be stated exhaustively but may include, for example:

(a)    the stage of the proceeding at which the offer was received;

(b)    the time allowed to the offeree to consider the offer;

(c)    the extent of the compromise offered;

(d)    the offeree’s prospects of success, assessed as at the date of the offer;

(e)    the clarity with which the terms of the offer were expressed; and

(f)    whether the offer foreshadowed an application for an indemnity costs [order] in the event of the offeree rejecting it.

(Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [25] per Warren CJ, Maxwell P and Harper AJA; Beling v Sixty International S.A. (No 2) [2015] FCA 355 at [25] per Mortimer J).

8    An unsuccessful party is not liable to pay indemnity costs merely because it received an offer to settle on terms more favourable than it achieved at trial and rejected that offer (CGU Insurance at [75]; Black at [217]-[218]). As we observed in the Appeal Reasons, albeit in the context of r 25.14(2) of the FCRs, assessment of the “unreasonableness” of an offeree’s refusal of a settlement offer is a broad-ranging inquiry that is not restricted to consideration of the extent or quantum of the compromise offered.

These principles were recently affirmed in Caporaso Pty Ltd v Mercato Centrale Australia Pty Ltd (Costs) [2025] FCAFC 29 at [21] per Katzmann, Wheelahan and Hespe JJ.

32 In its submissions in answer, NOCO relies on the following passage from the judgment of Beach J in State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd (No 3) [2021] FCA 568; 159 IPR 281 (State Street FCA).  His Honour stated at [38]:

Further and more generally, the fact that an offer of compromise is made which is more favourable than the final result does not automatically result in an award of indemnity costs. Further, it does not follow that even if an offer involved a genuine compromise, any rejection is unreasonable. The question of whether indemnity costs should flow from a rejected offer is whether, given the information then available to the offeree, it should have known that its case was likely to fail. The question of the unreasonableness of the rejection is to be analysed utilising the perspective at the time of the offer.

(Emphasis added.)

33 NOCO relies, in particular, on the sentence that has been emphasised in the above extract.  NOCO submits that that statement was identified as a correct statement of principle by the Full Court (Jagot, Burley and Rofe JJ) in State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd [2022] FCAFC 57; 399 ALR 704 (State Street FFC) at [123].  NOCO also relies on Hood v Down Under Enterprises International Pty Ltd (No 2) [2022] FCAFC 106 at [11] per Yates, Moshinsky and Rofe JJ.

34 In my opinion, the statement in State Street FCA at [38] relied on by NOCO needs to be read in the context of his Honour’s reasons as a whole (at [37]-[46]).  When so read, I do not consider that his Honour was intending to depart from the general principles stated in Anchorage or to state an absolute proposition that, in every case, before one can reach a finding of unreasonableness, it must be shown that the offeree should have known that its case was likely to fail.  I read the judgment in State Street FFC at [123]-[124] in the same way.

35 I therefore consider the principles stated in Anchorage at [7]-[8] to be applicable.

Consideration

36 The issue to be determined is whether NOCO’s failure to accept the January 2025 Offer was unreasonable.  I will now consider the non-exhaustive list of factors identified in Anchorage at [7].

37 The first factor is the stage of the proceeding at which the offer was received.  The offer was received at a relatively late stage of the proceeding.  By this stage, most of the written evidence had been filed and served.  The Joint Expert Report had not yet been completed, but this occurred during the period of 14 days while the offer was open for acceptance.  There is a difference between the parties as to whether the relevant time for present purposes is the time when the offer was received or the time when the offer lapsed (and thus was implicitly rejected).  I do not consider it necessary to resolve this difference.  On any view, the offer was made at a time when all or most of the written evidence had been filed.  However, on any view, that written evidence remained to be tested through cross-examination.

38 The second factor is the time allowed to the offeree to consider the offer.  Here, the time allowed was 14 days, which is a reasonable period.

39 The third factor is the extent of the compromise offered.  The offer involved: the withdrawal of the challenge to the validity of the asserted claims; no order as to costs (i.e. B&W would forego its claim for costs); and B&W paying $200,000 to NOCO. In light of those components, the offer did involve some element of compromise.  However, significantly, the offer did not involve B&W ceasing to sell etc. the B&W impugned products.  Thus, one of the main aspects of the relief sought by NOCO in the claim would not have been achieved.  B&W could continue to sell the impugned products.  Having regard to these aspects, I consider that the extent of compromise was limited.

40 The fourth factor is the offeree’s prospects of success, assessed as at the date of the offer.  In my view, assessed as at the date of the offer (or at the end of the 14 day period), each side had cogent arguments – both legal and factual – and it could not be said that NOCO’s case was obviously weak or that it should have known its case was likely to fail.  The legal and factual issues were not straightforward, as indicated by the fact that they occupied ten hearing days and required a lengthy judgment to deal with them.

41 The fifth factor is the clarity with which the terms of the offer were expressed.  The offer to compromise was expressed in clear terms.

42 The sixth factor is whether the offer foreshadowed an application for an indemnity costs order in the event of the offeree rejecting it.  The offer to compromise was made under Part 25 of the Federal Court Rules and thus implicitly foreshadowed an application for indemnity costs.

43 Having regard to the above factors, and the circumstances generally, I am not satisfied that it was unreasonable for NOCO to fail to accept the January 2025 Offer.  It is true that the offer was made at a relatively late stage in the proceeding and that it involved some element of compromise.  However, critically, the expert evidence remained to be tested through cross-examination and each side had cogent arguments, both factual and legal.  Further, the extent of compromise was limited.  The offer did not involve any undertaking by B&W not to sell the impugned products.  In these circumstances, faced with the offer, I am not satisfied that it was unreasonable for NOCO to fail to accept it.

44 For these reasons, the application for indemnity costs is rejected.

Lump sum issue

45 B&W seeks an order that the costs be determined on a lump sum basis.  NOCO submits that it is premature to decide this question and it should be referred to a Registrar to decide.

46 In my view, it is preferable for me to decide the question (whether costs should be determined on a lump sum basis) now, rather than leaving it for further argument before a Registrar.  I consider that there is sufficient information before the Court to enable me to make a decision on that question.

47 In my opinion, it is appropriate to adopt a lump sum approach to costs.  The Court’s Costs Practice Note (GPN-COSTS) states at [4.1] that the Court’s preference, wherever it is practicable and appropriate to do so, is for the making of a lump sum costs order.  The matters to which NOCO refers in its submissions do not persuade me that it is inappropriate to adopt a lump sum approach here.  For example, the fact that B&W engaged two sets of solicitors is a matter that can be taken into account under a lump sum process.  NOCO refers to the fact that the costs are likely to be significant.  That can be accepted.  However, I consider that the lump sum process is suitable for significant costs claims.

48 In its initial submissions on costs, NOCO referred to the possibility of an appeal and said that, if it did appeal, “there may be merit to the [quantification] of costs being stayed pending final determination of the appeal”, referring to the approach taken by Burley J in Hanwha Solutions (see at [6]).  I note that an appeal has now been commenced.  It seems to me that, in the present case, any application for a stay of the costs orders should be made formally by way of an interlocutory application in the appeal proceeding.  In that way, both sides would have an opportunity to be heard on the issue.

Conclusion

49 I will therefore make an order that NOCO pay 80 per cent of B&W’s costs of the claim and the cross-claim (including reserved costs), on a party and party basis, such costs to be determined on a lump sum basis.  I will also make timetabling orders for the determination of the lump sum amount, with that determination to be made by a Registrar.  Although B&W’s proposed orders provided for the determination to be made “on the papers”, I propose to omit those words as I consider it preferable to leave open whether the determination is made on the papers or following a hearing; this is something for the Registrar to determine.

Associate:

Dated:    24 September 2025