At the outset, the name of the plaintiff in the relevant proceeding warrants mention: Refuse to Lose Pty Ltd as trustee for Refuse to Lose Trust (Refuse to Lose)!!  All jokes aside, Refuse to Lose successfully opposed an application to set aside a default judgment which it had obtained against various defendants.  It is an important reminder to all parties (including their legal advisors) involved in litigation to ensure that there is compliance with Court orders and be aware of the obligations imposed by the Civil Procedure Act 2010 (Vic) (CPA) and the ramifications which might arise if there is non-compliance with those obligations.  Litigation is expensive but strategic decisions made by parties to fund some aspects of the litigation and not other important parts can have detrimental outcomes.

In the recent Supreme Court decision of Refuse to Lose Pty Ltd as trustee for the Refuse to Lose Trust v Kostakis [2026] VSC 5, Justice Delany dismissed the defendants’ application to set aside the default judgment but varied the terms of a freezing order.

There were several factors which were relevant for the Court in relation to the application to set aside the default judgment:

1. In applications to set aside default judgment, the Court has a discretion and it will be required to consider matters including whether there is a reasonably arguable defence on the merits of the case; what reasons explain the applicant’s default; how promptly the application to set aside was made after the default judgment was made; and whether a suitable award of costs or security would suffice to avoid prejudice. The obligations imposed by the CPA are relevant considerations for these applications;
2. As to whether there was a reasonably arguable defence, there were defences to some claims and possibly no arguable defence in relation to other claims;
3. As to the reason for a defence not being filed, the defendants had difficulties with funding and were not able to pay for the legal costs required for solicitor and counsel to draw the defence.  The application to vary the freezing order sought to deal with this issue and for funds from the deposit of a sale of a property used for this purpose.  However, the defendants failed to comply with two court orders by which the defence was required to be filed.  In fact, the Court was concerned that the defendants and their solicitors did not comply with those orders but instead dedicated time and resources to other disputes in the litigation;
4. It was only when default judgment was entered by Refuse to Lose that a proposed defence was prepared and a funding plan considered. His Honour noted that these actions demonstrated that deliberate decisions were made about certain work that would be performed without funding and what work would not and the purpose of the work which was performed was to secure the release of funds;
5. As to delay, the application to set aside the default judgment was made promptly but there was no explanation given for the period between 20 November 2025 (being the hearing of the plaintiff’s application for leave to enter default judgment as well as conduct before that date) and 12 December 2025 (being the date the application was issued)  – decisions taken by the defendants and their solicitors reflected poorly on them with such conduct not being in accordance with obligations under the CPA and gave rise to the leave being granted to apply for default judgment;
6. Importantly, Justice Delany proceeded on the basis that the defendants, who did not give any evidence explaining why they did not file a defence, made a deliberate strategic decision, in conjunction with their legal advisors, not to file a defence.  There was no evidence given by the defendants that they had no funds to be able to file a defence;
7. The Court determined that it was in the interests of justice that the default judgment should not be set aside, particularly taking into account the delays that had occurred and the substantial costs and time that would be incurred in proceeding to a trial;
8. Accordingly, he freezing order was amended to allow the defendants to fund their legal costs for the assessment of damages and compensation only.

This case is an important reminder to those who may be involved in litigation to ensure compliance with the CPA.  The significance of filing a defence in this matter was critical but for some reason, other interlocutory disputes and tasks were undertaken instead of focusing on the preparation of a defence.  This case demonstrates that the Courts will not extend indulgences to those who have failed to comply with Court orders on numerous occasions and which had already been extended with the consent of other parties.  Whilst certain decisions may be made in the course of litigation that may seem like the preferable course, a failure to file critical court documents may be significant with costs implications – your client may not be happy with a judgment being entered against them as a result of decisions made in priority to the filing of a defence.