Federal Court of Australia

Chapcon Building Services Pty Ltd v Spectrum Homes Qld Pty Ltd (No 2) [2026] FCA 888

ORDERS

THE COURT ORDERS THAT:

1.    The applicants provide security for costs in the amount of $70,000 within 28 days by either paying the amount into Court or providing an irrevocable bank guarantee in a form acceptable to the first and second respondents.

2.    In the event that the security is not provided in accordance with order 1, the parties contact the associate to Downes J for the purposes of having the matter listed for a case management hearing and for the applicants to show cause why the proceeding should not be dismissed.

3.    The costs orders made in the proceedings in favour of either or both the first and second respondents and dated 28 July 2023, 3 November 2023, 28 January 2025 and 24 April 2025 be payable forthwith.

4.    Pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth), the costs which are payable pursuant to order 3 be paid in a lump sum.

5.    The issue of the quantum of the lump sums for costs, as identified in these orders, including any procedural directions relating to that issue, be determined by Judicial Registrar O’Connor, if not agreed.

6.    By 4:00pm on 13 July 2026, the first and second respondents file and serve a Costs Summary in accordance with paragraphs 4.10-4.12 of the Costs Practice Note
(GPN-Costs).

7.    By 4:00pm on 20 July 2026 the first applicant file and serve any Costs Response in accordance with paragraphs 4.13- 4.14 of GPN-Costs.

8.    In the event that the amount ordered by Judicial Registrar O’Connor to be paid following the determination in order 5 is not paid by the applicants within 14 days of the Order, the parties contact the associate to Downes J for the purposes of having the matter listed for a case management hearing and for the applicants to show cause why the proceeding should not be dismissed.

9.    There be no order as to costs in relation to the interlocutory applications filed on 31 May 2026.

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

REASONS FOR JUDGMENT

DOWNES J:

1    This proceeding was commenced on 22 March 2023, and summary judgment was entered in favour of the third respondent on 28 July 2023: Chapcon Building Services Pty Ltd v Spectrum Homes Qld Pty Ltd [2023] FCA 873 (Chapcon 1). By order on that date, the first applicant was ordered to provide security for the first and second respondents’ costs in the amount of $130,000.00.

2    This judgment relates to two interlocutory applications brought by the first and second respondents seeking (a) orders to the effect that costs orders made in their favour and dated 28 July 2023, 3 November 2023, 28 January 2025 and 24 April 2025 (costs orders) be payable forthwith and be assessed, with an order that a costs order made against them by a Judicial Registrar of this Court be vacated and (b) an order increasing the security for their costs.

3    The first applicant, Chapcon Building Services Pty Ltd (Chapcon), is a company which is primarily involved in the construction industry. It alleges that it acquired certain assets from liquidators of Newstart Homes (SE Qld) Pty Ltd (NHSQ) in November 2016, which included the “copyright in the NHSQ Plans”. That acquisition is alleged to have occurred pursuant to an agreement styled the “Asset Sale Agreement” in the Third Further Amended Statement of Claim.

4    It is also alleged that Chapcon licensed the copyright in the plans to the second applicant, Newstart Homes Australia Pty Ltd (Newstart) in January 2017. Newstart was only joined as an applicant by order of 12 May 2026, which had the consequence that trial dates in this matter were vacated. The involvement of Newstart was alluded to in Chapcon 1 at [24] and [25], and the statement of claim has been amended on at least three occasions prior to the current iteration, but that Newstart was a necessary party was only realised in the weeks before the trial was due to take place, which is wholly unsatisfactory. This meant that trial dates which could have been offered to other parties in this Court were lost.

5    The first respondent (Spectrum Homes) is a competitor of Chapcon, and has been since it commenced operations in late 2016. The second respondent is the sole director of Spectrum Homes.

6    In Chapcon 1, reference was made at [23] to the agreements which are pleaded and relied upon by Chapcon as being the basis upon which it claims to be the owner of copyright. It is stated that “the NHSQ Plans (as defined) are not referred to or identified in either the Asset Sale Agreement (as defined) between Chapcon and NHSQ dated 9 November 2016, or the Melo Deed (as defined) between Mr Melo and NHSQ dated 6 December 2016, or the Deed of Assignment (as defined) between Chapcon and NHSQ dated 15 December 2016”. Notwithstanding this observation in Chapcon 1 (which formed one of the reasons for entering summary judgment), the allegations in the statement of claim concerning the manner in which Chapcon became the owner of the copyright are unchanged. I therefore remain concerned that the foundation of the applicants’ case, being that Chapcon acquired the copyright as alleged, will not be able to be established by the applicants at trial. The lack of apparent strength in the applicants’ case is a relevant factor in both applications.

7    A trial on liability only will be held in February 2027. That will be nearly four years since Chapcon commenced this proceeding.

8    Before that happens, the applicants will be ordered to pay the costs orders to the first and second applicants forthwith, to be assessed on a lump sum basis by a Judicial Registrar of this Court, which is an efficient and pragmatic means of having these costs assessed. The first and second applicants have been held out of their costs for long enough. The delays by the applicants in progressing this litigation, and their failure to focus on the real issues in this case (including identification of the proper applicant), have been unacceptable. The costs incurred by the first and second respondent are significant, and are above those which they likely would have incurred had the applicants handled the proceeding with competence and diligence: see Watson v Kriticos (Costs Payable Forthwith) [2022] FCA 4 (Perram J) at [6]–[7]. Further, the strain imposed on the remaining (self-represented) respondents which has been caused by the ongoing delay in the resolution of this dispute is self-evident.

9    If the costs as ordered by the Judicial Registrar are not paid by the applicants, the applicants will be called upon to show cause why the proceeding should not be dismissed.

10    Turning to the application for security for costs, the applicants contended that the further amount of $7,000.00 was appropriate, with the first and second respondents seeking further security in the amount of $164,000.00.

11    For the following reasons, I will order that the applicants provide a further $70,000.00 as security for the costs of the first and second respondents:

(1)    the first and second respondents are obtaining the benefit of costs orders made in their favour becoming payable forthwith;

(2)    taking a broad-brush approach, the first and second respondents have incurred about $420,000.00 in legal costs to date. If one discounts these to (say) $280,000.00 as representing the amount which would be recovered on a taxation and assumes that, of this amount, (say) $80,000.00 will be payable pursuant to the lump sum order to be made by the Judicial Registrar, that leaves a total of $200,000.00, which equates to the remaining likely recoverable costs;

(3)    the first and second respondents are no longer legally represented and did not indicate that further recoverable costs would be incurred prior to and during the trial. If that position changes, then they can apply for further security including in relation to the cost of any experts;

(4)    some weight is given to the fact that the costs incurred by the first and second respondents relate to past legal costs, and that no application for further security was brought prior to 2026. Some weight is also given to my concerns as to the applicants’ prospects of success at trial.

12    A previous hearing was held before another Judicial Registrar in March 2026 at which the first and second respondents made interlocutory applications including for security for costs. Those applications failed, and the first and second respondents were ordered to pay costs. Although I understand the basis on which that costs order is sought to be vacated, having regard to the different result which was achieved in the current application, it is not appropriate to vacate that order in circumstances where there were no reasons given for that order being made, no application to review and no appeal.

Associate:

Dated: 1 July 2026