Watson Webb Pty Ltd v Comino (No 2)

Watson Webb Pty Ltd v Comino (No 2) [2025] FCA 1294 is a Federal Court decision about costs, stays and the wording of consent orders after an earlier liability judgment in a registered designs dispute. It is not the main liability ruling. It is the later decision dealing with what should happen next.

The Court had to resolve three practical questions. First, whether All Valve Industries Pty Ltd, or AVI, should receive a third party costs order in the Designs Office appeal even though it was not the named appellant. Second, whether certain costs and damages inquiry orders in the related main proceeding should be stayed pending appeal. Third, whether consent orders staying assignment-related relief should continue only if there was an appeal in the Designs Office appeal or also if there was an appeal in the main proceeding.

The Court made a costs order in favour of both the appellant and AVI in the Designs Office appeal, refused the requested stay of the main proceeding costs and damages inquiry orders, and varied the consent orders so the relevant stay would continue if an appeal was lodged in the Designs Office appeal. For businesses, the case is a strong reminder that party naming, funding arrangements and order wording can become expensive issues in their own right.

The dispute sat within a broader fight over registered designs. The named appellant in the Designs Office appeal was Watson Webb Pty Ltd, formerly Watson Chiarella Pty Ltd, a legal practice. But the judgment shows that the commercial interest behind the revocation effort was tied to AVI and Cimberio. Mr Comino was the respondent in the Designs Office appeal and a respondent in the main proceeding. Strongcast was also involved in the main proceeding.

The filing history mattered because it showed a mismatch between the formal record and the commercial reality. A draft revocation request identified AVI as the customer and Robert Webb of MDW Law as AVI's agent. The filed version then identified The Trustee for the MWMC Unit Trust. After IP Australia said a trust could not be entered in the register, MDW Law asked for the claimant's name to be changed to Watson Chiarella Pty Ltd. IP Australia later confirmed that change.

Even so, later correspondence repeatedly said MDW Law acted for AVI and Cimberio. In March 2020, MDW Law wrote that AVI had caused revocation requests to be submitted. In September 2020, MDW Law told IP Australia it acted for AVI and Cimberio in the revocation proceedings. IP Australia replied that neither AVI nor Cimberio was a party, although Watson Chiarella Pty Ltd was the requestor. In March 2021, MDW Law again said it acted for AVI and Cimberio and confirmed that Watson Chiarella Pty Ltd was described as the applicant.

The written submissions filed in the Designs Office proceeding in May 2021 pushed the point further. They recorded the parties as AVI and Mr Comino, said AVI applied for revocation, referred to AVI's grounds and evidence, and were signed by counsel and solicitors for AVI. That documentary trail became central to the later costs issue because it showed that, although Watson Webb was the named party, AVI was being presented as the business whose interests were being advanced.

When the matter reached the Federal Court, the respondents raised concerns about adverse costs. Bird & Bird wrote that the appeal had been filed in the name of Watson Webb and suggested Watson Webb might be unable to pay if costs were awarded against it. Watson Webb responded that AVI had undertaken to indemnify it. The issue was later addressed by AVI giving undertakings to the Court that it would pay any adverse costs order due and owing by Watson Webb in the appeal.

After the earlier liability judgment and later consent orders, the Court still had to decide who should get costs in the Designs Office appeal, whether the main proceeding should be paused in part, and what the stay wording in the consent orders actually meant. That is the practical setting for this decision.

The first issue was whether the Court should make a third party costs order in favour of AVI in the Designs Office appeal. The Court noted that the Federal Court has power to make costs orders against or in favour of non-parties in suitable cases, but that such orders are exceptional and require caution. The judgment summarised general principles including these: there must be costs incurred in the proceeding, the non-party should have a direct and substantial interest in the outcome such that it would be justified in expecting to benefit from a costs order if successful, or there must be some special factor giving rise to a justifiable expectation of compensation, and the Court must look at the particular circumstances and the relationship between the non-party and the litigation.

The second and third issues were procedural. The respondents sought a stay of the costs order in the main proceeding and a stay of the orders for an inquiry into damages. The Court had to decide whether the balance of convenience and competing rights favoured a stay pending appeal.

The fourth issue concerned the proper construction of consent orders made on 27 August 2025. Those orders stayed certain relief for 28 days and, if an appeal was lodged, until the determination of that appeal. The dispute was whether the words about an appeal referred to an appeal in the Designs Office appeal or an appeal in the main proceeding. The Court also had to decide whether the orders should be varied in the interests of justice.

Halley J held that a third party costs order should be made in favour of AVI in the Designs Office appeal. The formal order required the respondent to pay the costs of the appellant and AVI with respect to the appeal and with respect to the proceeding before the Designs Office.

The Court accepted that, if the costs order were limited to the costs of the appellant, Watson Webb, that would not at least expressly permit recovery of the costs incurred by AVI. The judge said that Watson Webb, as a party to the appeal, did not in a relevant sense incur liability to pay its own costs. Instead, the costs and disbursements for the work undertaken by Watson Webb were paid by AVI under the costs agreement.

The Court considered that the case fell generally within the category where a costs order is made in favour of a party that is a nominal party for a third party whose rights are being asserted. The judgment says that, 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 for the benefit of its client, AVI. AVI, as the Australian distributor of the Cimberio valves, had a legitimate and substantive commercial interest in the designs.

The Court also said that making the order was consistent with the indemnity principle. The critical issue was that the costs had actually been incurred in the litigation. The judgment rejected the respondents' position as leading to an implausible result where no one would be treated as having incurred costs, even though substantial legal work had plainly been done in the appeal.

On the stay applications in the main proceeding, the Court refused the respondents' application for a stay of the costs order and the orders for an inquiry into damages. The catchwords indicate the Court considered that costs thrown away was not a sufficient reason for a stay, there was a risk the respondents might not be able to meet a later costs order, delay would likely increase costs, and a stay in one proceeding could create inconsistencies because the two proceedings had been heard together.

On the consent orders, the Court varied the earlier order so that the stay of Declaration 6 and Order 4(b) would continue beyond the initial 28 days only if an appeal was lodged by the respondent in proceeding NSD 1335 of 2021, being the Designs Office appeal, within that period, and until the determination of that appeal and any further appeal from it.

This case is a practical warning about litigation structure. Businesses often operate through distributors, holding companies, trustees, advisers or related entities. Those arrangements may make commercial sense, but in a dispute the Court will look closely at who is named on the record, who has standing, who paid the legal costs, who benefits from the claim, and what the documents say over time.

The decision does not say that naming mistakes are harmless. It says the Court may, in an appropriate and exceptional case, recognise the commercial reality and make a costs order in favour of a non-party. But getting to that point required evidence about the draft filing, the filed request, IP Australia correspondence, later submissions, the costs agreement and undertakings about adverse costs. That is a lot of extra process that many businesses would prefer to avoid.

A direct example is where a distributor funds a revocation challenge because it sells the relevant product in Australia, but a law practice or another entity ends up as the formal applicant due to filing mechanics. If the distributor succeeds, it may not be enough to ask for the costs of the named appellant. The distributor may need a specific order in its own favour to recover the costs it actually paid.

The refusal of the stay application is also important. Businesses sometimes assume that once an appeal is filed, costs and damages steps will pause. This judgment shows that is not automatic. If delay is likely to increase costs, if there is concern about later recovery, or if a stay would create procedural inconsistency across related proceedings, the Court may let those steps continue.

The variation to the consent orders is a reminder to draft orders with precision. If an order says relief is stayed pending an appeal, the order should identify which appeal. If related proceedings are running side by side, vague wording can trigger another dispute about what was meant.

The judgment is a good example of how courts use the paper trail to work out substance. Several documents and events were important.

First, the draft revocation request identified AVI as the customer and MDW Law as AVI's agent. That supported the view that AVI was the commercial actor from the start. Second, the filed revocation request identified a trust, and then the claimant name was changed to Watson Chiarella Pty Ltd after IP Australia said a trust could not be entered in the register. That explained how the formal record came to differ from the original commercial position.

Third, later correspondence and submissions repeatedly described MDW Law as acting for AVI and Cimberio, and some submissions before IP Australia were framed as if AVI itself were the applicant. Fourth, Bird & Bird's early challenge about Watson Webb's ability to meet an adverse costs order, and AVI's later undertakings to the Court, showed that everyone understood AVI was financially and commercially behind the appeal. Fifth, the costs agreement and evidence that AVI paid the costs and disbursements were central to the Court's conclusion that AVI had actually incurred the relevant litigation costs.

For a business owner, the lesson is that courts do not look only at one form or one pleading. They look at the whole course of conduct. If your documents tell inconsistent stories about who the real actor is, that inconsistency can become a live issue on costs and procedure.

This checklist does not replace legal advice on standing or costs, but it reflects the practical pressure points exposed by the judgment. Most of the expense here appears to have come from sorting out issues that could become avoidable if the litigation structure and drafting are right from the beginning.

The earlier liability judgment was delivered on 30 July 2025. Consent orders were made on 27 August 2025. Costs orders in the main proceeding were made on 9 September 2025. The remaining issues were heard on 1 October 2025, and this judgment was delivered on 24 October 2025.

The decision is a published Federal Court judgment. This page focuses on the costs and procedure issues decided in this later judgment, not the full merits of the earlier liability ruling.