Federal Court of Australia

Watson Webb Pty Ltd v Comino (No 2) [2025] FCA 1294

ORDERS

THE COURT ORDERS THAT:

1.    The respondent is to pay the costs of the appellant and All Valve Industries Pty Ltd with respect to the appeal and with respect to the proceeding before the Designs Office.

2.    If either party seeks any additional order for costs they are to notify chambers and the matter will be listed for an extended case management hearing at a date and time convenient to the Court and the parties to resolve the matter.

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

ORDERS

THE COURT ORDERS THAT:

1.    Order 9 of the orders made on 27 August 2025 be varied to provide that:

Upon the undertaking of the respondents, by their Counsel, to prosecute any appeal expeditiously, Declaration 6 and Order 4(b) of these orders be stayed:

(a)    initially for a period of 28 days from the date of these orders; and

(b)    if an appeal is lodged by the respondent in proceeding NSD 1335 of 2021 within that period, until the determination of that appeal, and any further appeal therefrom.

3.    The application by the respondents for a stay of Order 1 of the orders made on 9 September 2025, and Orders 7 and 8 of the orders made on 27 August 2025, be dismissed.

4.    If any party seeks any additional order for costs in this proceeding they are to notify chambers and the matter will be listed for an extended case management hearing at a date and time convenient to the Court and the parties to resolve the matter.

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

REASONS FOR JUDGMENT

HALLEY J:

A.    Introduction

1    On 30 July 2025, I delivered judgment in proceeding NSD 1335/2021 (Designs Office appeal) and proceeding NSD 1337/2025 (main proceeding): Watson Webb Pty Ltd v Comino [2025] FCA 871 (Liability Judgment or LJ). On that day, I made orders in each proceeding that the parties confer and provide agreed, or if not agreed, competing, draft orders to the Court to give effect to the Liability Judgment.

2    On 27 August 2025, I made orders by consent in both proceedings to give effect to my reasons in the Liability Judgment, other than with respect to costs. The orders also directed that there be an inquiry into damages in the main proceeding, and that certain orders made in each proceeding be stayed initially for 28 days and, if an appeal was lodged within that period, until the final determination of that appeal (Consent Orders).

3    On 9 September 2025, I made orders for costs in the main proceeding and that the remaining issues to be determined be listed for a hearing on 1 October 2025.

4    The remaining issues to be determined in the proceedings are whether:

(a)    a third party costs order should be made in the Designs Office appeal;

(b)    there should be a stay of the costs order in the main proceeding;

(c)    there should be a stay of the orders for an inquiry into damages in the main proceeding; and

(d)    the stay of Declaration 6 and Order 4(b) of the Consent Orders made on 27 August 2025 in the main proceeding properly construed only continues if an appeal is filed in the Designs Office appeal.

5    The appellant in the Designs Office appeal (Watson Webb) and the applicants in the main proceeding (AVI and Cimberio) contend that (a) there should be a third party costs order in favour of AVI in the Designs Office appeal, (b) there should not be any stay of the costs order or the orders for an inquiry into damages in the main proceeding, and (c) Declaration 6 and Order 4(b) have not been stayed because properly construed the Consent Orders only provided for them to be stayed if there was an appeal from the judgment in the Designs Office appeal.

6    Watson Webb and the applicants relied on five affidavits from Robert Webb, a partner of the law firm Watson Webb, an affidavit of Roberto Cimberio, and a bundle of email correspondence between Watson Webb and Bird & Bird, the respondents’ solicitors, in the period between 6 August 2025 and 26 August 2025 (Email Correspondence) leading up to the making of the Consent Orders.

7    Mr Webb was cross-examined at some considerable length by senior counsel for the respondents. I was generally satisfied that Mr Webb was giving evidence truthfully and to the best of his recollection, although at times, he appeared to find it difficult to distinguish between recollection and reconstruction. I accept that Mr Webb mistakenly believed at all relevant times, notwithstanding the objective contemporaneous evidence to the contrary, that the application that had been made to the Designs Office for revocation of the 005 Design and the 810 Design had been made in the name of AVI.

8    The respondents accept that a costs order should be made in favour of Watson Webb, as the appellant in the Designs Office appeal, but contend that (a) there should not be a third party costs order in favour of AVI, (b) the costs order and the orders for an inquiry into damages in the main proceeding should be stayed, and (c) properly construed, the Consent Orders provide that Declaration 6 and Order 4(b) have been stayed pending the determination of the appeal that the respondents have filed in the main proceeding.

9    The respondents relied on an affidavit of John Comino, the respondent in the Designs Office appeal and the first respondent in the main proceeding, three affidavits of the respondents’ solicitor, Rebecca Currey and an affidavit of Andrew Jones, a patent and trademarks attorney.

10    For the reasons that follow, I have determined that (a) a third party costs order should be made in favour of AVI in the Designs Office appeal, (b) there should be no stay of the costs order or the inquiry into damages in the main proceeding, and (c) properly construed, the Consent Orders made in the main proceeding should be varied to provide that the stay of Declaration 6 and Order 4(b) only extends beyond 28 days from 27 August 2025 if an appeal is filed in the Designs Office appeal.

11    These reasons for judgment assume a familiarity with, and should be read in conjunction with, the Liability Judgment.

B.    Third party costs order in the Designs Office appeal

B.1.     Overview

12    There was no dispute that costs should follow the event in the Designs Office appeal and that a costs order should be made in favour of the appellant, Watson Webb. Watson Webb, however, also seeks a third party costs order in favour of AVI. The respondent disputes that any third party costs order should be made in the Designs Office appeal.

B.2.     Factual findings

13    Watson Webb previously operated under the name Watson Chiarella Pty Ltd and used the business name MDW Law. At all relevant times Mr Webb was a partner of the firm.

14    With effect from 22 November 2019, MDW Law was retained by AVI pursuant to an undated and unsigned costs agreement to advise generally and prepare and file a revocation application of “Registered Designs” with IP Australia.

15    In or about late November 2019, a draft of the request for revocation of the 005 Design and the 810 Design (Draft Revocation Request) recorded the “Customer” as “All Valve Industries Pty Limited” and nominated “Robert Webb, MDW Law” as the agent of AVI.

16    The grounds stated in the Draft Revocation Request included the following statement:

…Cimberio was engaged to design and manufacture the Designs by All Valve Industries Pty Limited (‘AVI’), the Requestor, at the request of Strongcast Pty Limited, a company directed by Comino.

17    On 18 December 2019, a revised version of the request for revocation of the 005 Design and the 810 Design was electronically filed with IP Australia (Revocation Request). The “Customer” in the Revocation Request was identified as “The Trustee for the MWMC Unit Trust”, and no agent was nominated. The Revocation Request listed 10 documents that were being furnished with the request including “10. Distributor Agreement dated 16 July 2013”.

18    On 23 January 2020, IP Australia wrote to “The Trustee for MWMC Unit Trust” informing it that pursuant to s 117 of the Designs Act 2003 (Cth) (Designs Act), a trust could not be entered in the register and that the “claimant’s name” in the Revocation Request should be amended to the trustee’s name and the references to the trust should be omitted, unless the trustee was an incorporated trust.

19    On 24 January 2020, MDW Law electronically filed an IP Australia Service Request asking for the claimant’s name in the Revocation Request to be changed to “Watson Chiarella Pty Ltd”.

20    On 14 February 2020, IP Australia wrote to “The Trustee for MWMC Unit Trust” describing the matter as “Re: REQUEST BY WATSON CHIARELLA PTY LTD FOR REVOCATION ON GROUNDS RELATING TO ENTITLED PERSONS” and confirming that the “claimant’s name” on the Revocation Request had been changed to “Watson Chiarella Pty Ltd”.

21    On 2 March 2020, MDW Law wrote to Foundry Intellectual Property Pty Ltd, who acted for Mr Comino. MDW Law stated that “We act for All Valve Industries Pty Ltd” with respect to the “AUSTRALIAN REGISTERED AND CERTIFIED DESIGNS CURRENTLY HELD BY JOHN ALEXANDER COMINO” and included the following statements directed at the oceeding:

1.    APPLICATIONS ON BEHALF OF AVI TO REVOKE THE REGISTERED DESIGNS

1.1.    In November 2019 AVI caused to be submitted to IP Australia a “Request to Revoke a Registered Design – Ownership Only (S51)” in respect of IP right numbers owned by Comino as follows:

a)    201811005; and

b)    201811810.

(together Designs.)

…

3.5.     In circumstances where the revocation is not granted by IP Australia and our Clients are required to make an application to the courts under 51 and/or section 93 of the Designs Act 2003 (Cth) (Act) then we confirm that we currently hold instructions to make such an application.

22    On 4 September 2020, MDW Law wrote to IP Australia in response to the expert evidence that had recently been filed by Mr Comino. MDW Law advised IP Australia:

RE: REQUEST BY WATSON CHIARELLA PTY LTD FOR REVOCATION ON GROUNDS RELATING TO ENTITLED PERSONS | DESIGN NOS. 201811810 AND 201811005 (THE REVOCATION PROCEEDINGS)

We act for All Valve Industries Pty Ltd and Cav. Uff. Giacomo Cimberio S.p.A in respect of the above Revocation Proceedings.

We note that the parties completed filing their evidence-in-answer with IP Australia on 2 September 2020.

23    On 10 September 2020, IP Australia responded to MDW Law’s letter of 4 September 2020. IP Australia informed MDW Law:

Your letter states that you act for All Valve Industries Pty Ltd and Cav. Uff. Giacomo Cimberio S.p.A. Neither of those entities are party to the current proceedings. However, I note that you are also the address for service of Watson Chiarella Pty Ltd (Requestor), the party seeking revocation of these designs. I respond to you in your role as the address for service of the Requestor.

24    On 17 March 2021, MDW Law wrote to IP Australia in response to hearing notices that it had received earlier that day. MDW Law’s letter included the following identification of the proceeding before IP Australia and opening paragraph:

RE: REQUEST BY WATSON CHIARELLA PTY LTD FOR REVOCATION ON GROUNDS RELATING TO ENTITLED PERSONS (THE REVOCATION PROCEEDINGS) | DESIGN NOS. 201811810 AND 201811005 (THE REGISTERED DESIGNS) | REQUEST FOR HEARING

We act for All Valve Industries Pty Ltd and Cav. Uff. Giacomo Cimberio S.p.A in respect of Revocation Proceedings Design No 201811810 and 201811005. We confirm that we (Watson Chiarella Pty Ltd) are described as the Applicant in both Revocation Proceedings.

25    On 24 May 2021, MDW Law filed submissions in the Designs Office proceeding. The parties to the Designs Office proceeding were recorded in the submissions as “All Valve Industries Pty Ltd” and “John Alexander Comino”. The submissions commenced with the following paragraph:

1.    All Valves Industries Pty Ltd (AVI) applies under section 51 of the Design Act 2003 (Cth) (the Act) for the revocation of two designs registered by the respondent (Mr Comino) based on ball valves designed and manufactured by Cav. Uff. Giacomo Cimberio S.p.A. (Cimberio).

26    Subsequent parts of the submission included statements that “AVI relies on three grounds for the revocation of the two designs” (at [4]), “AVI furnished a Request for Revocation on grounds relating to Entitled Persons (the Revocation Request) with the following documents …” under the heading “B. Evidence Relied Upon”, and “Further to orders of the Registrar, AVI also filed and served the following declarations it relies upon …” (at [5]) (emphasis in original). Significantly, the documents listed under the heading “B. Evidence Relied Upon” reproduced the list in the Draft Revocation Request and did not include the document described in the Revocation Request as “Distributor Agreement dated 16 July 2013”.

27    Further, the submissions were signed by “Counsel for AVI” and “Solicitors for AVI”.

28    On 26 May 2021, MDW Law wrote to IP Australia attaching two visual aide-memoires. MDW Law’s letter included the following identification of the proceeding before IP Australia and opening paragraphs:

RE: REQUEST BY WATSON CHIARELLA PTY LTD FOR REVOCATION OF DESIGN NOS. 201811810 AND 201811005 (THE REGISTERED DESIGNS) | AIDES-MEMOIRES

We act for All Valve Industries Pty Ltd (AVI) and Cav. Uff. Giacomo Cimberio S.p.A (Cimberio).

We refer to the written submissions filed by the parties with IP Australia on Monday, 24 May 2021.

29    On 2 February 2022, Bird & Bird wrote to MDW Law noting that the Designs Office appeal had been filed in the name of “Watson Webb Pty Ltd”, stating:

3.     Whilst there was some suggestion that the request by Watson Chiarella Pty Ltd for revocation of registration design numbers 201811005 and 201811810 both in the name of John Alexander Comino before a Delegate of the Registrar of Designs was made on behalf of Cav. Uff. Giacomo Cimberio S.p.A and All Valve Industries Pty Ltd (see 2021 ADO 2 (Decision), at [7]), plainly, and as you are no doubt aware, in terms of any cost consequences of this appeal to the Federal Court adverse to Watson Webb, cots are as between party and party, and it will be Watson Webb that is responsible for those costs.

4.     Our client has reason to believe that, should an order for costs be made in its favour, Watson Webb may be unable to pay the Respondent’s costs of the proceeding.

30    On 9 February 2022, MDW Law responded to Bird & Bird’s letter of 2 February 2022, providing details of the financial position of AVI after stating:

1.1.    As you point out, our firm, Watson Webb Pty Ltd, is the appellant in FCA Proceeding NSD 1335/2021 (the Appeal).

1.2.    As was aired on a number of occasions with IP Australia and the Australian Designs Office, we acted in the proceedings below for All Valve Industries Pty Ltd (AVI) and Cav. Uff. Giacomo Cimberio S.p.A (Cimberio). It is a regrettable quirk of IP Australia’s system that Watson Webb was named as a party in the proceedings below at all.

1.3.    In any case, AVI has undertaken to indemnify Watson Webb against any costs order which may be made against Watson Webb in the Appeal.

1.4.    Based on our description of AVI’s financial position below, we trust your clients will thus be satisfied of Watson Webb’s capacity to meet any adverse costs order such that no issue regarding security arises in respect of the Appeal.

31    Bird & Bird were not satisfied that the undertaking provided by AVI to Watson Webb was sufficient to provide adequate security for the respondent’s costs given the financial position of Watson Webb. Ultimately the matter was resolved on 21 March 2022, when AVI provided undertakings to the Court that it would on demand pay to Mr Comino any costs orders due and owing to him by Watson Webb pursuant to any adverse costs order in the Designs Office appeal.

32    An undated costs agreement between Watson Webb and AVI that was signed only by Watson Webb provided for Watson Webb to act for AVI in both the Designs Office appeal and the main proceeding and stipulated that “This agreement starts on 12 March 2024” (Watson Webb Costs Agreement).

33    On 8 April 2024, the hearing of the Designs Office appeal and the main proceeding commenced.

B.3.     Relevant principles

34    It is well established that s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) confers jurisdiction on the Court to make a third party costs order in a suitable case: Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224; (1993) 117 ALR 253 at 261 (Lee, Hill and Cooper JJ); Malone v B&M Aboriginal Corporation (In Administration) (No 2) (2025) 309 FCR 35; [2025] FCAFC 51 at [22] (O’Bryan, Halley and Horan JJ).

35    The broad discretion under s 43 of the FCA Act extends to awarding costs against or in favour of a non-party: Kelly v Willmott Forests Ltd (in liquidation) (No 6) [2019] FCA 745 at [8] (Murphy J).

36    The Court will, however, only award a third party costs order where it is in the interests of justice to depart from the general rule that only parties to a proceeding may be subject to a costs order, and such orders are usually made where the non-party has a close connection to the proceeding, such as through controlling or funding the litigation or standing to benefit from it: Malone at [22] (O’Bryan, Halley and Horan JJ).

37    A potential entitlement to a third party costs order has been recognised in at least four categories of cases.

38    First, where a third party has intervened in existing proceedings: see Kelly v Willmott Forests at [17] (Murphy J); Hewson v Gothard; Re Allco Finance Group Ltd (recs and mgrs apptd) (in liq) [2014] FCA 412 (Foster J); Fletcher and Barnet, in the matter of Octaviar Ltd (Receivers and Managers Appointed) (In Liq) and Octaviar Administration Pty Ltd (In Liq) (No 4) [2012] FCA 344 (Emmett J).

39    Second, where a third party seeks to enforce an order against a party made in the third party’s favour: see O’Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 (Nicholson J).

40    Third, where a party is indemnified by an insurer for its costs, such that the insurer is in substance a third party which is the beneficiary of the costs order: see Cristovao v Tan & Tan Lawyers [2018] FCAFC 41 (Bromberg, Mortimer and Lee JJ); Cristafo v Registrar Trott [2019] FCAFC 88 (Derrington, Colvin and Jackson JJ).

41    Fourth, where a costs order was made in favour of a party which was a nominal party for a third party whose rights were being asserted: see Dyktynski v BHP Titanium Minerals Pty Ltd (2004) 60 NSWLR 203; [2004] NSWCA 154 (Mason P, McColl JA and Davies AJA).

42    The following general principles can be distilled from those authorities:

(a)    there must be costs incurred “in the proceedings before the Court”: O’Keefe at [24] (Nicholson J);

(b)    the third party should be able to demonstrate that it has a direct and substantial interest in the outcome of the proceeding such that it would have been justified in believing that it would get the benefit of a costs order if it succeeded: Re Allco Finance at [31] (Foster J);

(c)    alternatively, there must be some “special factor” that exists outside the ordinary course of events that gives rise to a “justifiable expectation” of compensation for costs in the third party’s mind: Octaviar Ltd at [12] (Emmett J);

(d)    a non-party costs order is generally only made in “exceptional” circumstances, such as where the non-party’s participation was necessary to protect an interest not common with the parties to the proceeding, and such orders must be treated with “considerable caution”: Newman (Trustee), in the matter of Vlahos, a bankrupt [2021] FCA 122 at [27] (Davies J); O’Keefe at [24] (Nicholson J);

(e)    regard must be had to the particular circumstances of each case, the requirements of reason and justice, and the nature of the relationship between the non-party and the litigation: Octaviar Ltd at [12] (Emmett J); O’Keefe at [24] (Nicholson J).

B.4.     Submissions

43    The primary submission of Watson Webb is that an order providing that the “costs of the appellant” would be construed as “the costs invoiced by Watson Webb to, and paid by, AVI”. It submits that this construction would be supported by (a) the context provided by the Designs Office proceeding, (b) the undertakings sought by Mr Comino and provided by AVI to pay any costs order in the Designs Office appeal, (c) the fact that AVI has incurred all costs in the Designs Office appeal and has paid all costs to Watson Webb, and (d) statements made in the respondent’s opening written submissions. Those submissions included the following statements at [28]:

In December 2019, Cimberio and AVI, by their legal representatives, sought revocation of the Designs (before the Designs Office) on the bases that Mr Comino was not entitled to be entered on the Register as the owner of the designs, and that Cimberio should have entered on the Register of Designs as a registered owner of the Designs.

44    Regardless of its primary position, Watson Webb seeks a costs order in the following terms:

The respondent pay the Appellants’ and All Valve Industries Proprietary Limited’s costs of the appeal and of the proceeding before the Designs Office.

45    Watson Webb submits that the addition of AVI is necessary to avoid it having to re-litigate the construction of the costs order before a registrar in any lump sum dispute and it is consistent with the manner in which the parties conducted the Designs Office appeal. Watson Webb accepts that “technically” this would be a third party costs order but AVI was a third party in form only, particularly in the context of the broader dispute litigated concurrently in the main proceeding. It submits that making such an order would be consistent with a proper application of the indemnity principle and third party costs authorities.

46    The respondent submits that the Court should not make a costs order in favour of AVI because this is not one of the “rare and exceptional cases” in which a third party costs order should be made in favour of a third party for the following principal reasons.

47    First, any costs incurred by AVI were not incurred in the Designs Office appeal. The appeal was an appeal by Watson Webb from a decision of the Designs Office in relation to an application filed by Watson Webb in its own name.

48    Second, there are insufficient reasons to make such an exceptional order because Watson Webb had its own standing to make the application to the Designs Office and was the only person with standing to appeal from an unfavourable decision of the Designs Office on its application.

49    Third, the exercise of “considerable caution” favours a refusal of a third party costs order in favour of AVI because it will discourage any practice of applicants bringing “nominal” applications to the Designs Office and appeals from those applications and thus enabling a non-party to benefit from a costs order but at the same time shielding them from an adverse costs order on the basis that they were not a party to the appeal.

50    Fourth, there was no “special factor” that was present in this case beyond the arrangements made between Watson Webb and AVI and those arrangements should not have created any “justifiable expectation” of the payment of any costs before either the Designs Office or in the Designs Office appeal.

51    Fifth, there was no participation of a non-party where it had been “necessary to protect an interest not common” with Watson Webb because the interests of Watson Webb and AVI in seeking revocation of the Designs were aligned and consistent with each other.

52    Further, the respondent submits that the indemnity principle undermines, rather than supports, the making of a third party costs order in favour of AVI. They submit that the principle is directed at (a) compensating a party to a proceeding, (b) for costs that it has actually incurred, but neither of these elements is present in this case. They submit that AVI was not a party to the Designs Office appeal and any costs of AVI are not the costs of Watson Webb, the party to the appeal. They submit that any analogy to the operation of the indemnity in “special cases” – such as when a party engages a solicitor in a proceeding but does not pay their costs because of an indemnity from an insurer is not apposite – because in this case, Watson Webb was both a party to the appeal and the law practice charging a third party for the proceeding.

B.5.     Consideration

53    I accept that if the costs order was limited to the costs of the “appellant”, it would not, at least expressly, permit Watson Webb to recover the costs incurred by AVI in the Designs Office appeal. In no relevant sense did Watson Webb as a party to the Designs Office appeal incur any liability to pay its own costs. The costs and disbursements for the work undertaken by Watson Webb were paid by AVI pursuant to the terms of the Watson Webb Costs Agreement.

54    It is therefore necessary to determine whether a third party costs order should be made in favour of AVI.

55    The parties were not able to point to any previous judicial consideration of whether a third party costs order should be made in directly analogous circumstances. I am satisfied, however, that the making of a third party costs order in this case would fall generally within the fourth established category of cases in which a costs order had been made in favour of a party who was a “nominal party” for a third party whose rights were being asserted.

56    For the following reasons I have concluded that a third party costs order should be made in favour of AVI in the circumstances of this case.

57    First, properly understood, making a third party costs order in favour of AVI is consistent, not inconsistent, with the indemnity principle.

58    The critical issue is that the costs must actually be incurred in the litigation. That requirement does not speak to or otherwise seek to confine costs that have actually been incurred in the litigation to costs that are payable by a party to the litigation. Here, the costs rendered by Watson Webb to AVI pursuant to the Watson Webb Costs Agreement were clearly in respect of legal work that was performed by Watson Webb in the Designs Office appeal. As a matter of substance, if not form, Watson Webb was pursuing the Designs Office appeal as the named or nominal party with the statutory entitlement to appeal the decision of the Designs Office for the benefit of its client, AVI. In turn AVI, as the Australian distributor of the Cimberio valves, had a legitimate and substantive commercial interest in the Designs.

59    The contentions advanced by the respondent lead to the implausible conclusion that no costs were incurred by Watson Webb in the Designs Office appeal because it was indemnified by AVI and AVI did not incur any costs in the Designs Office appeal because it was not a party to the appeal. Such a result would be manifestly absurd given it can readily be inferred in light of the length of the hearing of the Designs Office appeal, concurrently with the main proceeding, that substantial legal costs were invoiced to and paid by AVI for the legal services that Watson Webb undertook in prosecuting the appeal.

60    The ‘indemnity principle’ provides that the general purpose of a costs order is to provide an indemnity or partial indemnity for legal costs incurred in the proceeding: Dahler v Australian Capital Territory [2016] FCA 257 at [59] (Katzmann J).

61    Likewise, Gleeson J observed in Parker (in his capacity as liquidator of Waverley Estate Aged Wines Pty Ltd (in liq)) v Laureti [2016] FCA 352 at [11]:

In Old v McInnes [2011] NSWCA 410 at [33], Beazley JA (as her Honour then was) cited with approval the following passage from the reasons of Hodgson JA in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121]:

In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs…

62    In Cristovao v Tan, Bromberg, Mortimer and Lee JJ addressed at [40]-[43] a contention that where a successful party was entitled to a costs indemnity from a third party it could not recover costs from the unsuccessful litigant:

The argument of the appellant that this principle means that where a successful litigant is entitled to a costs indemnity from a third party, costs cannot be recovered against the unsuccessful litigant, as this would result in a breach of the indemnity principle, has been rejected on numerous occasions: see, for example, New Pinnacle Group Silver Mining Co v Luhrig Coal and Ore Dressing Appliances Co (1902) 2 SR(NSW) 50; Adams v London Improved Motor Coach Builders, Limited [1921] 1 KB 495 and, perhaps most relevantly for present purposes, McCullum v Ifield [1969] 2 NSWR 329.

In McCullum, Taylor J held that a defendant who had not incurred any liability for costs to his solicitor (as the solicitor was retained by the defendant’s third party insurer, the Government Insurance Office), was nevertheless entitled to recover the costs of the litigation against the plaintiff. This is an apposite analogy to the present circumstances.

The relevant principles were the subject of detailed examination by the New South Wales Court of Appeal in Dyktynski v BHP Titanium Minerals Pty Ltd [2004] NSWCA 154; (2004) 60 NSWLR 203 where McColl JA, after a thorough review of over 100 years of common law concerning the application of the indemnity principle, concluded (at 220 [95]) that the principle would not prevent the recovery of adverse costs, provided there was a third party “with an interest in the litigation [who incurred costs] in proceedings brought in another’s name”. Essentially this was because, as explained at 219–220 [93]:

…“costs” was understood as an indemnity to the real party bringing the action without regard to the “liability of the nominal party, whose name must necessarily appear on the record”. In such cases the indemnity principle operated on the substance rather than the form to produce a sensible and just result.

Hence if the ‘real’ party who incurred the costs of litigation had an “interest in the litigation”, party and party costs may be rightfully recovered. McColl JA did not elaborate upon what constitutes an “interest in the litigation”, but consistent with McCullum, such interest will plainly be established by the contractual (or in that case statutory) obligation to indemnify an insured for judgments and settlements on claims in respect of which the insurer is on risk and where the insurer is under a statutory or contractual liability “to indemnify a defendant against all costs and expenditures of and incidental to the proceedings” and thereby exercises “its right to defend the proceedings in the defendant’s name”: see McCullum at 331.

(Emphasis in original.)

63    The respondents seek to rely on the following statements by the High Court in Birketu Pty Ltd v Atanaskovic (2025) 421 ALR 256; [2025] HCA 2 at [17] (Gageler CJ, Gordon, Edelman, Gleeson and Beech-Jones JJ):

…The general common law principle limits the costs that can be ordered in two respects. First, it confines the costs that can be ordered to the costs of professional legal services rendered to a litigant in the conduct of litigation. Second, it confines the costs of professional legal services rendered to a litigant in the conduct of litigation to those “actually incurred” by the litigant so as, for example, to exclude professional legal services which have been agreed to be rendered to a litigant for free.

(Footnote omitted.)

64    The statements need to be understood in their relevant context. They are directed at a claim for costs made by a law firm as a self-represented litigant and they immediately come after the following sentences in that paragraph of their Honours reasons in Birketu:

To repeat the formulation in Cachia v Hanes as endorsed in Bell Lawyers, the general common law principle embodied in the reference to “costs payable” in the definition of “costs” in s 3(1) of the Civil Procedure Act is that costs are awarded only by way of indemnity or partial indemnity “for professional legal costs actually incurred in the conduct of litigation”.

(Footnotes omitted.)

65    Second, in no relevant sense did AVI seek to protect itself from any adverse costs consequences if the Designs Office appeal had been unsuccessful. As is apparent from the matters summarised at [21]-[32] above, Watson Webb made clear on numerous occasions that it was pursuing the Designs Office proceeding and the Designs Office appeal for the benefit of, or on behalf of AVI and Cimberio, and AVI provided an undertaking to the Court, as explained at [31] above, that it would meet any adverse costs order.

66    Third, and relatedly, the matters summarised at [14]-[32] above and the undertaking to meet any adverse costs order are sufficient to establish that (a) AVI had a “direct and substantial interest in the outcome” of the Designs Office proceeding and Designs Office appeal that would have given it a justifiable expectation that it would get the benefit of a costs order if the Designs Office appeal was successful, or (b) in the alternative, the existence of a “special factor” outside the ordinary course of events that would give rise to a “justifiable expectation” by AVI that it would be compensated for its costs.

C.     Stay of costs and inquiry orders in the main proceeding

C.1.     Overview

67    The Consent Orders and the orders made on 9 September 2025 in the main proceeding to give effect to the Liability Judgment included the following orders with respect to costs and inquiries as to damages:

68    Orders 7 and 8 of the Consent Orders in the main proceeding (together, Inquiry Orders) provide:

7.     There be an inquiry as to the quantum of pecuniary relief pursuant to Order 6 of these orders.

8.     There be an inquiry as to the quantum of any award of damages and/or compensation pursuant to s 236 and/or s 237 of the ACL in respect of any loss that the first applicant suffered by reason of the respondents’ ACL contraventions summarised in Declaration 4 of these orders.

69    Orders 1 of the orders made on 9 September 2025 (Costs Order) in the main proceeding provided:

1.    The respondents are to pay, on a party and party basis, 75% of the applicants’ costs arising from and in connection with the originating application filed on 20 December 2021.

70    Order 2 of the orders made on 9 September 2025 (Schedule Order) in the main proceeding provided:

2.     The applicants are to provide a schedule to the respondents setting out any proposed categories of discovery sought for the purposes of the Inquiry by 4.30 pm on Thursday, 2 October 2025.

    (Emphasis in original.)

71    On 1 October 2025, the Schedule Order was extended to 4.30 pm on the next day after delivery of judgment with respect to the interlocutory applications before the Court on 1 October 2025.

C.2.     Relevant principles

72    It is well established that an applicant for a stay has the burden of persuading the Court that it should be granted: Advanced Building Systems v Ramset Fasteners (Aust) Pty Ltd (1997) 38 IPR 289; [1997] HCA 24 at [6]; Hunter Pacific International Pty Ltd v Martec Pty Ltd (No 2) [2016] FCA 1041 at [7] (Nicholas J).

73    The Court has a broad discretion to grant a stay of final orders and it is not necessary to establish special circumstances. A successful party, however, is entitled to the benefit of a judgment and the presumption that it is correct. In the exercise of its discretion to grant a stay the Court will weigh up such factors as the balance of convenience and the competing rights of the parties, in particular, any prejudice to the parties that would result from granting or refusing the stay: In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd (No 2) [2020] FCA 772 at [25] (Katzmann J).

C.3.     Submissions

74    The respondents contend that there should be a stay of the Costs Orders and Inquiry Orders. They submit that (a) the parties will have been put to unnecessary expense if they are required now to give effect to the Costs Orders and Inquiry Orders and their appeal from the main proceeding judgment is successful, (b) they have met their legal costs to date which exceed $1,000,000 which shows they have the financial capacity to maintain and conduct litigation before the Court, (c) in the absence of a stay of a costs order in the Designs Office appeal, Watson Webb can pursue the lump sum determination of costs in that proceeding, and (d) the only relevant inquiry for AVI is with respect to the ACL findings but to date AVI has not provided any evidence of loss or damage arising from the ACL claim and the inquiry could reasonably be expected to take some time to determine.

75    The applicants contend that there should be no stay of the Costs Orders or the Inquiry Orders. They submit that if their appeal were successful, and the respondents suffered any “loss” by having to “re-do” aspects of the costs procedure, it would be open to the Court to make an order that the applicants compensate them for any costs thrown away pursuant to a costs order that has ultimately been set aside.

76    The applicants also submit, by reference to confidential financial information in evidence, that the ability of the respondents to meet any costs order and to pay any damages or account determined in the inquiries may well be materially reduced if those matters are not determined and resolved prior to the ultimate determination of the appeal. Further the applicants submit that the confidential information in evidence concerning AVI’s assets and financial position establish that there is no reason to doubt its ability to repay the costs order if the respondents’ appeal were successful.

C.4.     Consideration

77    I am not satisfied that there should be any stay of the Costs Orders or the Inquiry Orders.

78    The prejudice that the respondents seek to advance in favour of a stay does not, in substance, arise above costs thrown away in the event that their appeal from the judgment in the main proceeding was successful. In itself, that does not provide a compelling reason for a stay. Any costs thrown away could be addressed by an order providing for the applicants to pay those costs. By pressing for costs to be determined prior to the ultimate resolution of the appeal, the applicants are exposing themselves to the risk of such an order but that is not a reason why they should not be entitled to the “fruits of their victory”, including the payment of their costs and inquiries to determine damages. There was no suggestion that the applicants would not be able to meet such a costs order or participate in the inquiries into damages.

79    Moreover, although the evidence was somewhat equivocal, the risk of the respondents not being able to meet the costs order in the main proceeding, in full, if there were a significant delay in the determination of those costs, could not be entirely discounted.

80    Next, significant delays in determining costs and undertaking the necessary inquiries into damages can only be expected to increase the cost of those exercises as recollections begin to fade and matters have to be revisited many months, if not years, after the relevant events informing those determinations have taken place.

81    Finally, no appeal has been filed from the judgment in the Designs Office appeal and no stay beyond 1 October 2025 has been sought by the respondents of that judgment. Given the Designs Office appeal and the main proceeding were heard together and given the extent of their factual overlap, any determination of the costs of the Designs Office appeal independently of the determination of the costs in the main proceedings is unlikely to be efficient and is likely to give rise to potential inconsistencies in any apportionment of costs between the two proceedings.

D.     Stay of Declaration 6 and Order 4(b)

D.1.     Overview

82    Order 9 of the Consent Orders made in the main proceedings provides:

Upon the undertaking of the respondents, by their Counsel, to prosecute any appeal expeditiously, Declaration 6 and Order 4(b) of these orders be stayed:

(a)    initially for a period of 28 days from the date of these orders; and

(b)    if an appeal is lodged by the respondents within that period, until the determination of that appeal, and any further appeal therefrom.

83    Declaration 6 of the Consent Orders in the main proceeding provides:

6.     The second applicant is entitled to file an application (or applications) with the Designs Office in respect of the designs depicted in the 810 Design and the 005 Design pursuant to s 55 of the Designs Act 2003 (Cth), such applications having the same priority dates as the 810 Design and the 005 Design.

84    In turn, Order 4(b) of the Consent Orders in the main proceeding provides:

4.     The first respondent is to assign in writing to the second applicant, by 4.30 pm on Wednesday, 10 September 2025, all of his rights, title and interest in each of:

a.     the designs the subject of the 810 Design and the 005 Design;

b.     any design applications the subject of Declaration 6 of these orders;

failing compliance with which the Registrar of the Court may execute such a transfer and assignment.

D.2.     Submissions

85    The respondents contend that the reference in Order 9 to the prosecution expeditiously of an appeal is plainly a reference to an appeal from the judgment in the main proceeding. They contend that given an appeal has been filed from the judgment in the main proceeding (main proceeding judgment), Declaration 6 and Order 4(b) have been stayed by consent until the determination of that appeal, and any further appeal therefrom.

86    The respondents advance the following submissions in support of those contentions.

87    First, there is no need to vacate or vary Order 9 because no appeal has been filed from the Designs Office appeal judgment and therefore the declarations and orders made in the Designs Office appeal have not been stayed. They submit that those declarations and orders provide for Cimberio and Mr Comino to be recorded as the “entitled persons” in respect of the 005 and 810 Designs and therefore the two designs can be registered in their joint names pursuant to s 55 of the Designs Act.

88    Second, Order 9 provides a sensible and rational stay where there is no appeal from the Designs Office appeal judgment providing that Mr Comino and Cimberio are joint owners but there is an appeal from the main proceeding judgment in which Mr Comino was found to hold his interest in the Designs on constructive trust for Cimberio, by reason of his breach of confidence.

89    Third, the applicants did not submit at the oral hearing on 1 October 2025 that they had made any mistake in consenting to the making of Order 9.

90    Fourth, there is no prejudice in the continuing operation of the stay imposed by Order 9 because (a) it does not preclude Cimberio from being recorded as a joint owner of the Designs, (b) as joint owner Cimberio is entitled to exercise exclusive rights in each Design for its own benefit without any accounting to Mr Comino, and (c) Cimberio, as a registered owner for the purposes of s 73(1) of the Designs Act, would be entitled to bring infringement proceedings in its own right against any third party.

91    The applicants contend that as a matter of construction, Order 9 should not be construed as providing for a continuation of the stay of Declaration 6 and Order 4(b) unless there was an appeal from the Designs Office appeal judgment. In the alternative, the applicants contend that if that construction is not accepted, the Court should vary or vacate Order 9 so that it does not operate to stay Declaration 6 and Order 4(b).

92    The applicants submit that the Court should not interpret Order 9 in a manner that would prevent Cimberio from exercising full control over the Designs until the determination of the appeal from the main proceeding judgment because (a) it would be inconsistent with the stated intention of the parties as reflected in the Email Correspondence, (b) it would be incongruous given the respondents are not appealing the Designs Office appeal judgment, and (c) it would deprive the applicants of their fruits of victory for a period of some 12 to 18 months in circumstances where the respondents do not point to any prejudice and have, in any event, not used the Designs since 2020.

D.3.     Consideration

93    The reference in Order 9 to the prosecution of “any appeal”, at least textually, must be construed, in the absence of any more explicit identification of “any appeal”, as a reference to any appeal from the declarations or orders made in the main proceeding. It would therefore follow that the effect of Order 9 is that Declaration 6 and Order 4(b) have been stayed by consent until the determination of the respondents’ appeal from the main proceeding judgment and any appeal therefrom.

94    The Court, however, has the power to vary an interlocutory order, even one made by consent, pursuant to r 39.05 of the Federal Court Rules 2011 (Cth): Trust Company (Nominees) Limited, in the matter of Angas Securities Limited v Angas Securities Limited (No 4) [2016] FCA 1240 at [26]-[33] (Beach J); Greenbot Pty Ltd v Clean Energy Regulator [2025] FCA 369 at [57] (Horan J). A stay order is by its very nature an interlocutory order: McKinnon v Commonwealth Bank of Australia [2005] FCA 1898 at [2] (Dowsett J).

95    The principles governing the power to vary or set aside an interlocutory order have been discussed in numerous authorities.

96    The circumstances in which it has been said a Court may vary an interlocutory order have included where (a) there is new material or material not available at the time that the order was made, (b) there has been a material change in circumstances, (c) exceptional circumstances which warrant a reconsideration of the matter, and (d) as a matter of discretion, the justice of the matter requires that the applicant be permitted to revisit the matter: P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) (2009) 255 ALR 466: [2009] FCA 413 at [49].

97    I respectfully agree with the view expressed by Horan J in Greenbot at [60] that the power to set aside an interlocutory order is not conditioned by any universal rule that an applicant must establish special or exceptional circumstances before the power can be exercised.

98    The overriding principle is that the Court should do what is required by the interests of justice in the particular circumstances of the case: Greenbot at [61] (Horan J) citing Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46 (McLelland J); Liu v The Age Co Ltd (2016) 92 NSWLR 679; [2016] NSWCA 115 at [13] (Beazley P), [199] (McColl JA), [292] (Ward JA).

99    I am satisfied that the exchanges between the solicitors in the Email Communications leading up to the making of the Consent Orders demonstrate the interrelationship between the stay ultimately agreed of Declaration 6 and Order 4(b) in the main proceeding and the making of the s 55 notation and the design revocation orders in the Designs Office appeal. In order to resolve a dispute that had arisen in the course of the Email Communications as to whether the proposed s 55 declaration should be made in the Designs Office appeal or the main proceeding, the applicants suggested that the declaration be moved to the main proceeding and a notation could be made in the Designs Office appeal. In response, the respondents provided proposed orders seeking a stay in both proceedings for an initial period of 28 days and if an appeal was lodged within that period, until the determination of the appeal, and any appeal therefrom.

100    On 26 August 2025, the applicants’ solicitors informed the respondents’ solicitors that their clients did not consent to any stay of a costs order but their clients did consent to:

… a limited stay in respect of the design revocation orders only, in order to alleviate any concern that the Court (or the Respondents) may have in respect of the Court’s power to reinstate the Designs post-appeal if they are first revoked. Accordingly, as you can see from the orders, our clients agree to stay the relevant orders and declarations in NSD 1335 (except as to costs), and also declaration 6 and order 10(b) in NSD 1337”.

Our clients’ position is otherwise that the stays should not be made pending appeal.

(Emphasis in original.)

101    The consent to the stay was limited to the “design revocation orders” and on the basis that if there were a successful appeal it might not be possible to reinstate the Designs if they had been revoked. The applicants submit, and I accept, that the revocation issue would only arise if there was an appeal from the Designs Office appeal judgment.

102    On 1 October 2025, the respondents indicated in the further hearing on that date that they will not appeal the Designs Office appeal judgment and they could not point to any prejudice if there was an assignment or a transfer of the Designs to Cimberio.

103    As the applicants submit, the respondents’ ultimate argument was not one of prejudice but rather:

… seeking to hold the Applicants to a previous order (made in a convoluted process of determination of final orders and under the apprehension that an appeal might occur in NSD1335) that is no longer necessary or appropriate in circumstances where the Respondents are not appealing the design revocation orders in NSD1335.

104    For the foregoing reasons I am satisfied that it is in the interests of justice that Order 9 should be varied to reflect the evident intention of the consent position reached in the Email Communications but inaptly reflected in Order 9. In the absence of any evidence of prejudice to the respondents, there is no reason why the applicants should not have the fruits of their victory pending the determination of the appeal in the main proceeding. A conclusion that I am fortified in reaching in circumstances where (a) Cimberio has not had ownership of the Designs since their registration in 2018, (b) in the absence of full ownership Cimberio cannot licence the Designs without the consent of Mr Comino, and (c) there is at least a theoretical possibility that Strongcast might sell products the subject of the Designs in competition with Cimberio.

E.     Disposition

105    An order will be made in the Designs Office appeal that the respondent pay the costs of Watson Webb and AVI, and an order will be made in the main proceeding varying the stay of Declaration 6 and Order 4(b) to provide explicitly that the stay is only to extend beyond the initial period of 30 days if there is an appeal lodged from the judgment in the Designs Office appeal.

106    My preliminary view is that there be no orders as to the costs of the determination of these issues given the circumstances in which the issues arose but the parties will be given an opportunity to be heard on costs.

Associate:

Dated:    24 October 2025

SCHEDULE OF PARTIES