Federal Court of Australia

Cooper (Receiver), in the matter of Green Grain Processing Technologies Pty Ltd (Receivers Appointed) (No 6) [2026] FCA 1144

THE COURT ORDERS THAT:

1.    The interlocutory application filed on 13 July 2026 to set aside default judgment entered against the second and third defendants on 5 May 2026 is dismissed.

2.    The interlocutory application filed on 20 July 2026 to stay the enforcement of default judgment entered against the second and third defendants on 5 May 2026 is dismissed.

3.    The second defendant is to pay the plaintiff’s costs of and incidental to the interlocutory applications filed on 13 July 2026 and 20 July 2026 respectively on an indemnity basis.

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

REASONS FOR JUDGMENT

Ex tempore, settled from transcript

O’SULLIVAN J:

1    On 5 May 2026, the Court entered default judgment against the second and third defendants in this matter on the basis that no defences had been filed. Some nine weeks later, on 13 July 2026, Mr Lutfi, who is the first defendant and an undischarged bankrupt, filed an affidavit and an interlocutory application pursuant to r 39.05 of the Federal Court Rules 2011 (Cth) seeking to set aside that default judgment.

2    On 20 July 2026, Mr Lutfi filed an application for a stay of the enforcement of the default judgment. That interlocutory application is misconceived because the matter has been referred for an assessment of damages such that there is no enforcement to stay. The application is dismissed.

3    As a part of the application filed on 13 July 2026, Mr Lutfi attached submissions as to why the default judgment should be set aside. There is a concern about those submissions because at [18] there is a reference to a case called Edwards v Noble, which is given a Federal Court Report citation. That case does not exist under that citation. There is a case with the name Edwards v Noble however, it is a decision of the Full Court of the Supreme Court of South Australia. There is also a High Court decision. The issue in that matter concerned overturning a trial judge’s findings of fact and is not relevant in any way to this matter.

4    There was no attendance on behalf of the second and third defendants today. Three matters may be observed. The first is that although Mr Lutfi attended today, as I have noted, he is an undischarged bankrupt, and therefore the action against him in these proceedings is automatically stayed pursuant to the provisions of the Bankruptcy Act 1966 (Cth).

5    The second is that Mr Lufti is disqualified from being a director of the second defendant by virtue of his bankruptcy: s 206B(3) of the Corporations Act 2001 (Cth). Further, there has been no application that he be able to fill the role of director of the second defendant and, in any event, the Court has indicated on numerous occasions that it will not grant him leave to represent the corporate defendants in this matter.

6    The third is that the third defendant was deregistered in March of this year. This was not brought to the attention of the Court by Mr Lutfi. Ms Chryssidis, who appeared for the plaintiff, raised it at a previous case management hearing. Since the third defendant has been deregistered, this application does not concern it.

7    The plaintiff opposes the set-aside application on two bases:

(1)    It is an abuse of the Court’s process; and

(2)    The application to set aside the default judgment fails to address matters required on such an application, such as:

(a)    a satisfactory explanation for the default;

(b)    a reasonable excuse for the delay in applying to set aside the default judgment; and

(c)    filing a defence which provides a genuinely arguable defence.

Abuse of the Court’s process

8    There is force in the plaintiff’s first submission that the interlocutory application of 13 July 2026 represents an abuse of the Court’s process. The term “abuse of process” can include proceedings that are scandalous, vexatious or frivolous, however those terms are not defined in the FCR. A “vexatious proceeding” is, however, defined under s 37AM(1) of the Federal Court of Australia Act 1976 (Cth) and includes, among other things, a proceeding that is an abuse of the process of a court or one that is instituted or pursued in a court without reasonable grounds.

9    There have been numerous cases discussing what comes within the expression “vexatious and frivolous” under FCR 26.01(1), which confers power on the Court to enter judgment against another party because the proceeding is an abuse of process or it is frivolous or vexatious. That does not apply in this matter because judgment has already been given against the second defendant.

10    Apart from being frivolous, vexatious or scandalous, a proceeding (which includes an application of the type under consideration) may also be an abuse of process if it has no prospect of resulting in substantial remedy or involves unjustifiable expense and use of judicial resources.

11    In my view, this application falls into that category, being an application involving unjustifiable expense and use of judicial resources.

The merits of the application to set aside the default judgment

12    Mr Lutfi argued in his submissions that a defence was filed in 2024 on behalf of himself and, at least, the second defendant. A consideration of that defence reveals that it does not comply with any meaningful way with the FCR dealing with pleadings. In particular, it does not answer, in any way, on behalf of any party, the allegations in the statement of claim filed by the plaintiff against the first, second and third defendants.

13    Further, it is devoid of any pleading answering the allegations made against the second defendant. For the purposes of this application, that is the important point: there was no defence filed on behalf of the second defendant.

14    In support of the application, Mr Lutfi swore and filed on 13 July 2026 an affidavit which has not been read on the application (because it contains irrelevant and scandalous matters) but which I have nonetheless considered. The affidavit is not directed to any of the grounds upon which a default judgment may be set aside.

15    Whereas Mr Lufti has no right to represent the second defendant, the material put forward by him in support of the application, comprising his affidavit sworn on 13 July 2026 and the submissions filed by him are, in any event, inadequate.

16    The power to set aside a judgment under FCR 39.05 is discretionary. The circumstances which govern the exercise of that discretion were described by Davies J in Sovereign Point Pty Ltd v Gu (No 2) [2020] FCA 1377. In that matter, her Honour identified at least four considerations.

17    First, whether the evidence discloses a defence of sufficient merit to warrant setting aside the default judgment. As I have noted, that is not the case.

18    Second, the explanation, if any, given by the party for their default. There is no explanation given by Mr Lutfi other than that he contends, on previous occasions and in his submissions, that a defence was filed on behalf of the second defendant in 2024. That is demonstrably not so.

19    Third, whether the application to set aside judgment was made promptly after the judgment came to the knowledge of the defendant. Mr Lutfi was present in Court on 5 May 2026, even though he did not appear for the second defendant. Nonetheless, it has been some 10 weeks between then and now, and there was a delay of some nine weeks before the application was made.

20    Fourth, whether the judgment, if set aside, results in the plaintiff being prejudiced in any respect which could not be adequately compensated by a suitable award of costs and the giving of security.

21    If the judgment were set aside, the plaintiff would be prejudiced in a way that could not be adequately compensated by an award of costs and the giving of security. That is because the matter is proceeding to an assessment of damages. To set aside the default judgment at this stage would be to reinstate the proceedings and proceed to trial in circumstances where there is significant doubt as to whether or not the second defendant is able to meet any judgment or indeed pay any costs.

22    As to the defence that Mr Lutfi asserts was filed on behalf of the second defendant, I have dealt with that above, and I repeat that it completely fails to respond to the plaintiff’s allegations against the second defendant.

23    It is for those reasons that there is no basis upon which the default judgment against the second defendant can be set aside. This application is, therefore, an abuse of process and a waste of the Court’s time and resources. As such, the Court declines to exercise its discretion under FCR 39.05 to set aside the default judgment.

Costs

24    The plaintiff applies for indemnity costs. It identifies three grounds which it submits justify such an order.

25    First, the application was not competent as it was without reasonable grounds. I accept that submission.

26    Second, the application was frivolous, vexatious and scandalous. I agree that is an appropriate description for the application for the reasons set out above.

27    Third, Mr Lutfi’s affidavit, which ran to some 132 pages, is voluminous and irrelevant. I accept that submission.

28    Further, as I have already noted, Mr Lutfi’s affidavit does not explain satisfactorily the default, does not raise a genuinely arguable defence to the claim on the merits, and only refers to the defence in broad terms which, as I have indicated, does not in any way address the allegations in the statement of claim brought against the second defendant.

29    The plaintiff is being vexed by the applications dealt with today, neither of which have merit. It is appropriate in the circumstances that the set-aside application be dismissed with costs to be awarded on an indemnity basis. Those costs will be directed to the second defendant, who did not appear today because it is an unrepresented corporate defendant.

30    There will be orders as follows:

(1)    The interlocutory application filed on 13 July 2026 to set aside default judgment entered against the second and third defendants on 5 May 2026 is dismissed.

(2)    The interlocutory application filed on 20 July 2026 to stay the enforcement of default judgment entered against the second and third defendants on 5 May 2026 is dismissed.

(3)    The second defendant is to pay the plaintiff’s costs of and incidental to the interlocutory applications filed on 13 July 2026 and 20 July 2026 on an indemnity basis.

Associate:

Dated:    14 August 2026

SCHEDULE OF PARTIES