Federal Court of Australia

Mahommed v Cox [2025] FCA 469

ORDERS

THE COURT ORDERS THAT:

1.    The appellant’s amended notice of appeal filed on 6 March 2025 is dismissed.

2.    The appellant is to pay the respondent’s costs of the appeal.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    This is an appeal from orders made by the Federal Circuit and Family Court of Australia (FCFCoA) on 28 November 2024 dismissing with costs an application made on 19 September 2023 for review of a decision by a registrar by which the registrar, in turn, had dismissed an application to set aside a bankruptcy notice with costs: see Mahommed v Cox [2024] FedCFamC2G 1299 (J).

Background

2    The background to the proceeding before the primary judge and, it follows, for the most part to this appeal is set out at J[4]-[17]. I set out a summary below.

3    In 2020 the appellant, Peter Shah Mahommed, and another person, Roger Ward, as plaintiffs commenced proceeding No 2020/247595 in the Supreme Court of New South Wales (Supreme Court Proceeding). Westpac Banking Corporation and the respondent to this appeal, Karen Ann Cox as administrator of the deceased estate of David William Dixon, were respondents to the Supreme Court Proceeding.

4    The background to the Supreme Court Proceeding was summarised in Ward v Westpac Banking Corporation Ltd [2023] NSWCA 11 (Griffiths AJA, with whom Ward P and Adamson JA agreed) at [12]-[15] as follows:

[12]    The proceedings were commenced in 2020 by Mr Ward and Mr Mahommed. The named defendants were initially Westpac and the Registrar General of Titles, NSW. On 31 May 2021, the plaintiffs filed an amended statement of claim joining Ms Cox in her capacity as administratrix of the estate of the deceased (Mr Dixon) and adding claims against the estate.

[13]    In summary terms, the following features of the amended statement of claim should be noted:

(1)    Mr Ward claims security over a property (Lovedale property) under an unregistered mortgage.

(2)    Mr Mahommed claims as a creditor under a guarantee in a Deed of Assignment dated 22 December 2014 pursuant to which Mr Dixon had allegedly undertaken to guarantee the payment of all moneys due, owing and payable by a company called Loire Consultants Pty Ltd.

(3)    Mr Mahommed also claims as the assignee of certain other rights of action identified in other documents.

(4)    Mr Mahommed also claims to have been appointed as the sole trustee of the Lovedale Ranch Unit Trust on 20 June 2018. Prior to that time, Loire was the trustee of the Lovedale Ranch Unit Trust.

(5)    Mr Mahommed contends, in relation to the latter claim, that an officer of Westpac fraudulently and dishonestly entered into a registered mortgage over the Lovedale property and a property at 49 Bruce Street, East Maitland (Maitland property), knowing at the time that both properties were owned under trusts held by (respectively) Loire as trustee of the Lovedale Ranch Unit Trust and Greenhills Securities Pty Limited as trustee of the Greenhills Finance Trust.

(6)    Mr Mahommed claims that, in relation to the Lovedale property, Mr Dixon obtained a Rocket Home Loan in about September 2010 and on 24 November 2010 executed a mortgage in favour of Westpac over the property for $1,160,000, ostensibly to complete a purchase of the Lovedale property for $1,800,000. At the same time, an allegedly fraudulent transfer of the property from Loire to Mr Dixon was executed. The alleged purpose was to enable Mr Dixon to settle the purchase. He refinanced the property for $680,000.

(7)    On 7 December 2010, Mr Dixon presented the forged title documents to Westpac in order to obtain the $1,160,000 loan. The bank manager at Westpac, and Mr Unicomb, a tax adviser, are said to have conspired to arrange for Mr Dixon to obtain the property. Mr Dixon did not pay the balance of the purchase price.

(8)    Westpac settled the advance to Mr Dixon and thereafter Mr Unicomb made payments to Westpac to conceal the alleged fraud.

(9)    Similar allegations are made in respect of the Maitland property owned by Mr Dixon. The plaintiffs contend that a loan of $195,000 was advanced directly to Mr Dixon in about July 2011 purportedly to purchase the Maitland property as an investment property. Mr Dixon is said to have executed a declaration of trust in favour of Greenhills as trustee of the Greenhills Finance Trust, being a trust put in place as a discretionary family trust for Mr Mohammed and his family. It is alleged that the Westpac loans manager and loan broker knew that Mr Dixon only held the property as trustee.

(10)    The causes of action relied on include fraud, breach of fiduciary duty and breaches of both the National Consumer Credit Protection Act 2009 (Cth) and the National Consumer Credit Code.

[14]    Westpac filed a cross-claim against Ms Cox in her capacity as administratrix of Mr Dixon’s estate. Relevantly:

(1)    Westpac seeks judgment for possession of the Lovedale property, an order that Ms Cox make restitution to Westpac in the amount of $1,160,000 and other orders.

(2)    Westpac claims that Mr Dixon entered into a loan agreement for that amount secured by a mortgage over the Lovedale property. It contends that on 15 April 2013 Westpac issued a notice of default, and that Mr Dixon made no payment. A demand was served in March 2015 for the full amount owing under the loan agreement, being $1,269,824, which has never been paid.

(3)    Ms Cox admitted the allegations made by Westpac as outlined above, with the result that she concedes that possession should be given to Westpac. The applicants complain that this has thwarted their claims.

[15]    The value of the real estate of Mr Dixon’s estate is estimated to be $1,500,000 (Lovedale property) and $450,000 (Maitland property).

5    Ward v Westpac concerned an application for leave to appeal, and if leave was granted, an appeal by Messrs Ward and Mahommed from an order made in the Supreme Court Proceeding that they jointly provide security for Westpac’s and Ms Cox’s costs. The New South Wales Court of Appeal granted leave to appeal but dismissed the appeal with costs.

6    On 25 March 2022 Mr Mahommed filed a creditor’s petition in this Court pursuant to s 244 of the Bankruptcy Act 1966 (Cth) for administration of the deceased estate of the late David William Dixon over which Ms Cox, Mr Dixon’s former wife, was appointed Administrator by the Supreme Court of New South Wales on 27 November 2020 (FCA Proceeding). Ms Cox opposed the creditor’s petition: J[6].

7    To succeed in the FCA Proceeding Mr Mahommed needed to establish that he was a creditor for a debt of not less than the statutory minimum. In his creditor’s petition Mr Mahommed claimed a total debt of $5,845,545 but in oral submissions before the Court he confined his case to one single debt of $1,472,379.70 plus interest: see Mahommed v Cox as the Administrator of the deceased estate of Dixon [2022] FCA 886 at [8]. Mr Mahommed failed to establish that he was a creditor of the deceased because he was owed a debt by him at the time of his death. Accordingly, Mr Mahommed’s creditor’s petition was dismissed with costs: see Mahommed v Cox at [61].

8    Ms Cox proceeded to have the costs of the FCA Proceeding taxed. On 20 January 2023 this Court issued a certificate of taxation for the taxed costs (Costs Certificate) which certified Ms Cox’s costs as $25,900: J[8].

9    On 16 May 2023 the official receiver served bankruptcy notice BN259819 issued on 6 May 2023 on Mr Mahommed. The bankruptcy notice sought payment of the amount certified in Costs Certificate: J[9].

10    On 2 June 2023 Mr Mahommed filed an originating application in the FCFCoA seeking to set aside, and extend time for compliance with, the bankruptcy notice: J[10].

11    On 14 July 2023 a Full Court of this Court dismissed an appeal from Mahommed v Cox: see Mahommed v Cox as administrator of the deceased estate of Dixon [2023] FCAFC 107 (Mahommed v Cox Appeal).

12    In the meantime, Messrs Ward and Mahommed, the plaintiffs in the Supreme Court Proceeding, failed to provide security for costs as ordered by the Supreme Court. Accordingly on 18 August 2023 the Supreme Court dismissed the amended statement of claim filed by the plaintiffs in the Supreme Court Proceeding: J[12].

13    On 24 August 2023 Mr Mahommed’s application to set aside the bankruptcy notice was listed before a registrar of the FCFCoA. The application was adjourned for hearing to 31 August 2023 at which time a registrar made orders dismissing Mr Mahommed’s application to set aside the bankruptcy notice (Registrar’s Orders): J[13]-[14].

14    On 6 September 2023 Ms Cox filed a creditor’s petition in this Court against Mr Mahommed. He has since filed grounds of opposition to the creditor’s petition: J[15], [17].

15    On 19 September 2023 Mr Mahommed filed an application for review of the Registrar’s Orders which was listed for hearing before the primary judge on 19 January 2024. On 28 November 2024 the FCFCoA made orders dismissing that application with costs. As set out above it is those orders that are the subject of this appeal.

16    On 31 May 2024, following the hearing of the application for review before the primary judge and before her Honour gave judgment, orders were made in the Supreme Court Proceeding striking out the defence filed by Messrs Ward and Mahommed to a cross-claim filed by Westpac in that proceeding: see Ward v Westpac Banking Corporation Limited [2024] NSWSC 669 (Ward v Westpac 2024). In Ward v Westpac 2024 Kunc J noted (at [5]) that the defence sought to be relied on by Messrs Mahommed and Ward incorporated their claims in their amended statement of claim as an answer to the cross-claim and that, in light of their failure to provide security for costs, the amended statement of claim was struck-out. That being so his Honour determined that Messrs Mahommed and Ward should not be entitled to rely on the allegations made in the amended statement of claim in defence to Westpac’s cross-claim. Accordingly, the Supreme Court made orders striking out their defence to the cross-claim as an abuse of process and refused them leave to replead. In doing so Justice Kunc described the abuse in the following way at [7(a)]:

The abuse is that now to permit the claims in the defence to be maintained would circumvent the Court’s process as given effect by both the making of the order for security for costs in respect of the [amended statement of claim] and its subsequent dismissal for failure to provide the security….

17    An application for leave to appeal from the Orders made in the Supreme Court Proceedings striking out Messrs Ward and Mahommed’s defence to the cross-claim was dismissed: see Ward v Westpac Banking Corporation Limited [2024] NSWCA 267.

The primary judge’s reasons

18    After setting out the background to the proceeding the primary judge referred to the task for the court in considering an application for review of the exercise of a delegated power by a registrar. Her Honour observed that a review application is not an appeal but that such an application should be heard on a de novo basis. That is, the court is required to hear the application afresh, unaffected by the registrar’s conclusions. Thus, her Honour identified her task to be to determine afresh the originating application to set aside the bankruptcy notice, rather than to ascertain whether the decision of the registrar was affected by error: J[20]-[21], [23].

19    In his review application Mr Mahommed raised seven grounds which the primary judge described in the following way at J[24]-[25]:

24    The originating application contained seven grounds. The first ground simply says that the applicant claims multiple rights of counterclaim, set-off or cross demand, the value of each of which is claimed to exceed the amount of the judgment debt. The second ground, together with its particulars, asserts that no counter-claim was “set up” or is capable of being established by the applicant in his proceedings before the Federal Court. Ground 7 simply repeats the relief sought (see [14] above).

25    Accordingly, it is only truly grounds 3 to 6 of the originating application which set out the applicant’s alleged entitlement to relief. Those grounds can be summarised as follows:

(a)    Ground 3 – a liquidated debt in the amount of $1,472,379.70, allegedly owed to the applicant by the deceased and was the subject of written demands for payment that were not contested (first counter-claim).

(b)    Ground 4 – a liquidated debt in the amount of $1,400,000 plus interest allegedly owed to the applicant by the deceased, said to have been the subject of written demands for payment (second counter-claim).

(c)    Ground 5 – “wrongful conduct” on the part of the respondent in respect of the Lovedale Property which has allegedly caused the applicant to lose the net present value of the Lovedale Property (third counter-claim). The FCA judgment records the value of the Lovedale property as being estimated at $1,500,000.

(d)    Ground 4 – because of the “wrongful conduct” of the respondent in respect of the Maitland Property the applicant is unable to recover, and claims loss to the net present value of and his rights to occupy and possess the Maitland Property (fourth counter-claim). The FCA judgment records the value of the Lovedale property as being estimated at $450,000.

(collectively, the counter-claims).

(Footnotes omitted.)

I pause to note that the reference to “Ground 4” at J[25(d)] is likely a typographical error and that her Honour intended to refer to this ground as “Ground 6”. In any event I will for present purposes refer to it and each of grounds 3, 4 and 5 adopting the defined terms used by the primary judge, namely first, second, third and fourth counterclaim.

20    Her Honour recorded the evidence relied on by the parties and a summary of their submissions and turned to consider each of the counterclaims, as defined: J[26]-[32].

21    The primary judge observed that the first counterclaim, Mr Mahommed’s contention that he is owed the sum of $1,472,379.70 by the deceased and therefore his estate, was the subject of the FCA Proceeding and that the originating application to set aside the bankruptcy notice also detailed that this alleged debt was the subject of pleadings in the Supreme Court. Her Honour noted (at J[36]) that this Court considered and determined whether that alleged debt existed and concluded that the evidence did not demonstrate that a debt was owing by the deceased at the time of his death nor in fact that any debt was owing: see Mahommed v Cox at [20]-[24]. Her Honour also noted that on appeal the question of the existence of that debt was again discussed and a conclusion reached, referring to [21]-[25] and [52] of Mahommed v Cox Appeal.

22    The primary judge concluded that while the Court in Mahommed v Cox determined the question of whether an order should be made under s 244 of the Bankruptcy Act, the underlying factual question as to whether the debt was owing “did not conceivably alter” for the purposes of the proceeding before her Honour and the question of whether the bankruptcy notice should be set aside. Her Honour observed that no further or better evidence than was presented in the FCA Proceeding had been relied on for the purposes of the review application to establish the alleged debt that was the subject of the first counterclaim. Accordingly, her Honour concluded that there was no basis upon which she could be satisfied for the purposes of s 40(1)(g)(i) of the Bankruptcy Act that there exists a reasonably arguable counterclaim constituted by the alleged liquidated debt in the sum of $1,472,379.70: J[38].

23    Her Honour observed that the second counterclaim was described in the same terms as the first counterclaim but was in the sum of $1.4 million and how the sum was arrived at, and its basis, were difficult to ascertain. Her Honour also observed that much less evidence had been provided that could give rise to any conclusion that there was a bona fide counterclaim which would enjoy any prospect of success or that any proceeding had been commenced or even contemplated in pursuit of that counterclaim. Her Honour concluded that there did not appear to be any basis by which the court would be satisfied for the purposes of s 40(1)(g) of the Bankruptcy Act and that, in fact, it was not: J[39].

24    In relation to the third and fourth counterclaims, which her Honour noted alleged wrongful conduct on the part of Ms Cox in relation to the properties situated at 713 Lovedale Road, Allandale (Lovedale property) and 49 Bruce Street, East Maitland (Maitland property), her Honour said at J[43]-[44]:

43    The applicant’s submissions make serious allegations of wrong-doing on the parts of many and using seemingly unrestrained language to do so including dishonesty, illegality, conspiracy and subterfuge. Based on these allegations the Court is asked to infer mala fides and conspiracy on the part of, inter alia, Ms Cox. However, the there is nothing before me which would cause me to either find or infer that the respondent was engaged, or intends to engage in, unlawful conduct in respect of the properties (or allow Westpac to do so), despite the applicant inviting the Court to so conclude.

44    Ms Cox says that given the respective losses in the Federal Court, Full Federal Court and Supreme Court of New South Wales, it cannot be said that Mr Mahommed’s claims have a reasonable fair chance of success, even if they are not found to lack bona fides. To the extent that by the fourth counter-claim Mr Mahommed made allegations that Ms Cox has engaged in “wrongful conduct”, she says that not (sic) such conduct has been properly identified, there is no cause of action manifest and that the quantum of the alleged set-off is neither stated nor established. Based on the evidence before the Court, I agree.

25    Finally, her Honour accepted Ms Cox’s submission that for the alleged counterclaims to be sustained by mutuality any alleged set off would be a claim made against the deceased estate and not a purported set off against a claim by Ms Cox against Mr Mahommed. Ms Cox’s contention was that she was not personally liable for a claim against the estate. Her Honour found that the matters alleged by Mr Mahommed were within the ambit of Ms Cox’s conduct as administrator of the deceased estate and was not satisfied that the broad allegations of alleged wrongdoing in relation to the Lovedale and/or Maitland properties satisfied the definition prescribed by s 40(1)(g) of the Bankruptcy Act: J[45].

26    The primary judge was not satisfied that there was any basis and specifically nothing arising from s 40(1)(g) of the Bankruptcy Act to warrant the bankruptcy notice being set aside and accordingly dismissed the application for review of the Registrar’s Orders with costs.

The appeal

27    Mr Mahommed relies on an amended notice of appeal filed on 6 March 2025 in which he raises four grounds of appeal. The notice of appeal both sets out the grounds relied on as well as including discursive material which is more in the nature of submissions. Without reproducing everything in the amended notice of appeal the grounds are:

Ground 1:

1.    Error of Law – Failure to Consider Critical Relevant Evidence

(a)    The primary judge failed to take into account material considerations that were relevant and necessary for a proper determination of the case.

(b)    The omission of critical evidence resulted in a decision that was legally unreasonable, as it was not based on all material facts and considerations.

(c)    These failure (sic) constitutes an error of law as articulated in House v The King (1936) 55 CLR 499 at [504–505], where the High Court held that a decision may be set aside if a judge or tribunal fails to consider a material matter.

…

Ground 2:

1.    Miscarriage of Justice – Decision Based on an Incomplete or Improperly Excluded Evidentiary Basis

(a)    The primary judge erred in failing to consider or improperly excluding material evidence that was relevant to the just determination of the case.

(b)    This failure resulted in a miscarriage of justice, warranting appellate intervention as established in Stead v State Government Insurance Commission (1986) 161 CLR 141 at [145–147].

(c)    Denial of Procedural Fairness - The Appellant was denied a fair opportunity to have all relevant evidence considered in the proceedings. The High Court held that a party must not be deprived of the opportunity to present its case fully; Stead v State at [149].

(d)    Incorrect Application of Legal Principles Due to Incomplete Evidence - The primary judge misapplied legal principles as a direct result of failing to consider all relevant evidence.

(e)    The High Court emphasized that a judgment based on an incomplete evidentiary basis may be set aside for a miscarriage of justice; Stead v State at [145–146].

…

Ground 3:

1.    Error of Fact – erred in making no findings of wrongdoing contrary to the weight of the conclusive and undisputed evidence by failing to consider that evidence.

(a)    Appellate Review of Factual Findings - The High Court emphasized that while appellate courts should exercise caution in overturning a trial judge's findings, they are duty-bound to intervene when a conclusion is "glaringly improbable" or "contrary to compelling inferences; Fox v Percy (2003) 214 CLR 118 at [25];

(b)    Inconsistency with Undisputed Evidence - The High Court noted that the primary judge's findings were at odds with unchallenged evidence; Fox v Percy at [31];

…

Ground 4:

1.    Error in the Application of Legal Principles Leading to Incorrect Judgment

(a)    Principles of Procedural Fairness (Natural Justice) - These principles ensure that individuals are given a fair opportunity to present their case, that decision-makers are unbiased, and that decisions are made based on relevant evidence.

…

(Underlining omitted.)

28    Mr Mahommed seeks orders that the appeal be allowed, the decision of the primary judge be set aside, a final judgment in his favour be entered and that the bankruptcy notice be set aside. In addition, he seeks the following further relief:

4.    That the Respondent pay the costs of the:

(a)    Appellant in this Appeal

(b)    Applicant in proceedings NSD209/2022 before Justice Burley;

(c)    Appellant in proceedings NSD679/2022 before Markovic, Goodman and McElwaine JJ;

(d)    Applicant in proceedings SYG897/2023 before Registrar Morgan;

(e)    Respondent in proceedings NSD970/2023: Notice Stating Grounds of Opposition to Petition;

(f)    Applicant in proceedings SYG897/2023 before Judge Given;

in a lump sum on the indemnity basis.

(g)    A declaration that Peter Shah Mahommed is the registered proprietor of Certificate of Title Folio Identifier 15/100/758374 being the land situated at and known as 49 Bruce Street East Maitland NSW; and

(h)    A declaration that Rasheed Rane is the registered proprietor of Certificate of Title Folio Identifier 7/253585 being the land situated at and known as 713 Lovedale Road Lovedale NSW.

Mr Mahommed’s submissions

29    While there are four grounds of appeal, they are related and in each case focus on a contention that the primary judge failed to consider the evidence before the court and to determine the questions of the ownership of the Lovedale and Maitland properties.

30    In relation to ground 1, Mr Mahommed submits that the primary judge failed to consider and apply the relevant legal principles and did not engage with the requirement to determine property ownership or conduct a proper review of the material evidence. He refers to the decisions of the High Court in House v The King (1936) 55 CLR 499 at [3] and Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [3], [30].

31    In relation to ground 2, Mr Mahommed submits that the primary judge disregarded the “incontrovertible evidence” which led to a miscarriage of justice and, by failing to assess and include the evidence, he was deprived of a fair hearing which impacted the ultimate decision in a way that is contrary to the principles of natural justice. Mr Mahommed refers to some of the evidence which was before the primary judge and was also before me which he contends establishes that the Lovedale and Maitland properties were held by the deceased on trust. He submits that the primary judge did not refer to nor make any findings in relation to that evidence or any of the other evidence which he says is listed in his chronology. Mr Mahommed says that these omissions deprived him of a fair trial and undermine the integrity of the primary judge’s decision referring to Stead v State Government Insurance Commission (1986) 161 CLR 141 at [8], [9], [16].

32    In relation to ground 3, Mr Mahommed submits that the primary judge failed to make necessary factual findings or reached conclusions not supported by the evidence. He observes that the primary judge accepted Ms Cox’s submission that his claims had little chance of success given past losses and that his allegations of her wrongful conduct were vague and unsupported but submits that the primary judge made no adverse findings about Ms Cox’s credibility, referring to evidence which he says clearly indicates an error in that finding.

33    Mr Mahommed submits that Ms Cox engaged in misleading conduct by withholding crucial evidence and making false statements, warranting adverse inferences about her credibility as administrator of the deceased estate and the accuracy of her claim that the deceased personally owned the subject properties.

34    In relation to ground 4, Mr Mahommed submits that the primary judge relied on prior judgments that did not consider the complete evidentiary record. He contends that the primary judge should have reassessed the impact of the “incontrovertible evidence” rather than deferring to past decisions that were made without it. Mr Mahommed submits that secondary issues have consistently overshadowed the substantive issue of ownership of the Lovedale and Maitland properties in these proceedings and that Ms Cox’s omission of three critical pieces of evidence in earlier proceedings have prevented courts from fully considering the “conclusive and undisputed facts” in their entirety which undermined the validity of previous orders made against him.

Consideration

35    The task of the primary judge was to consider afresh Mr Mahommed’s application to set aside the bankruptcy notice. It is clear that her Honour understood her task. In doing so the primary judge had regard to the grounds relied on by Mr Mahommed in his originating application filed in the FCFCoA by which he sought an order that the bankruptcy notice be set aside. Those grounds as summarised by the primary judge are set out at [19] above.

36    By those grounds, Mr Mahommed contended that he had a counterclaim, set-of or cross- demand that satisfied s 40(1)(g) of the Bankruptcy Act which provides:

(1)    A debtor commits an act of bankruptcy in each of the following cases:

…

(g)     if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:

(i)    where the notice was served in Australia—within the time fixed for compliance with the notice; or

(ii)    where the notice was served elsewhere—within the time specified by the order giving leave to effect the service;

comply with the requirements of the notice or satisfy the Court that he or she has a counter‑claim, set‑off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter‑claim, set‑off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;

…

37    The primary judge assessed each of the alleged counterclaims and concluded that none of them constituted a counterclaim, set-off or cross demand for the purpose of s 40(1)(g) of the Bankruptcy Act. I can discern no error in the primary judge’s conclusion. My reasons follow.

38    In Capsanis, in the matter of Capsanis v Owners – Strata Plan 11727 [2000] FCA 1262 Hely J said the following in relation to the establishment of the ground in s 40(1)(g) of the Bankruptcy Act at [11]:

The authorities make it plain that in order to comply with Order 77 rule 13, and in order to establish the ground referred to in s 40(1)(g) of the Act, it is necessary for the evidence to do more than merely assert the existence of a counterclaim set off or cross demand of the relevant value. It is necessary for the evidence to contain sufficient details to show that the debtor is bona fide in his contention that the counter-claim, set off or cross demand existed. Further, the Court needs to be satisfied that the counter-claim, set off or cross demand, is for a sum equal to or exceeding the amount of a judgment debt: see, eg Re Brink; Ex parte Commercial Banking Company of Sydney Limited (1979-1980) 30 ALR 433; Re Donkin; Ex parte AGC Advances Limited (1994) 125 ALR 293; Crimmins v Glenview Home Units [1999] FCA 515. The Court has to be satisfied that the debtor has a fair chance of success on a counter-claim, set off or cross demand equal to or exceeding the amount of the judgment debt: see, eg Gould, in the matter of Gould v Day [1999] FCA 1650 par 27, 28.

39    Relying in part on the passage from Capsanis in the preceding paragraph, Lindgren J in Re Glew; Glew v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331 at [9] and [12] summarised the matters which an applicant seeking to rely on s 40(1)(g) of the Bankruptcy Act must satisfy the Court:

[9]    There are authorities suggesting that [the applicants] must satisfy me of the following interrelated and sometimes overlapping matters:

(a)    that they have a ‘prima facie case’, even if they do not adduce evidence which would be admissible on a final hearing making out that case;

(b)    that they have ‘a fair chance of success’ or are ‘fairly entitled to litigate’ the claim; and

(c)    that they are advancing a ‘genuine’ or ‘bona fide’ claim.

It may be that the first and second formulations are intended to cover the same ground. In Brink Lockhart J treated (at 141) the reference to a “prima facie case” in Ebert as a reference to “a fair chance of success”.

…

[12]    Perhaps little more can usefully be said than that a debtor must satisfy the Court that there is sufficient substance to the counter-claim, set-off or cross demand asserted to make it one which the debtor should, in justice, be permitted to have heard and determined in the usual way, rather than be forced to comply with the bankruptcy notice by payment or to commit an act of bankruptcy.

(Citations omitted.)

40    That formulation has been referred to with approval on numerous occasions: see for example Fitzgerald v Fitzgerald [2021] FCAFC 225 at [8] (Logan J with whom Rangiah and Downes JJ agreed); Croker v Commonwealth of Australia; In the Matter of Croker [2010] FCA 1031 at [13] (Foster J) unanimously upheld on appeal in Croker v Commonwealth of Australia [2011] FCAFC 25 (Siopis, Tracey and Gilmour JJ); CFB18 v Reader Lawyers & Mediators [2018] FCA 611 at [34] (Colvin J); Muriniti v Lawcover Insurance Pty Ltd; Newell v Lawcover Insurance Pty Ltd [2023] FCA 33 at [66]-[67] (Moshinsky J).

41    First, the counterclaim must be for a sum of money that exceeds the amount of the judgment debt which underpins the bankruptcy notice. On appeal Mr Mahommed focusses on the Lovedale and Maitland properties and his contention that the primary judge failed to assess the evidence he relied on before her which, in his opinion, would lead to the conclusion that those properties were not owned by the deceased but were held on trust. Mr Mahommed makes no challenge to the primary judge’s conclusions about counterclaims 1 and 2 as defined in her Honour’s reasons.

42    That is, Mr Mahommed asserts a counterclaim which ultimately concerns a declaration as to ownership of the Lovedale and Maitland properties and, as is apparent from the relief sought in his amended notice of appeal (see [27] above), was not a sum of money, liquidated or unliquidated.

43    Secondly, as the primary judge correctly observed at J[41] the orders of this Court and the Supreme Court in respect of the matters with which they dealt were final. Relevantly, the question of ownership of the Lovedale and Maitland properties was central to the Supreme Court Proceeding. That proceeding was ultimately dismissed because of Messrs Ward’s and Mahommed’s failure to pay security for costs as ordered. Leave to appeal the order for security for costs was granted and the appeal was refused. The issue was reagitated by Messrs Ward and Mahommed by way of a defence to cross-claim in the Supreme Court Proceeding which was struck out as an abuse of process on the basis that it sought to litigate and rely upon the matters pleaded in their statement of claim (which was dismissed for failure to pay security for costs as ordered). Leave to appeal that decision was refused.

44    It was the failure to provide security for costs as ordered and its consequence which led to the question of ownership not being resolved in the Supreme Court Proceeding. In those circumstances, the primary judge was, in my view, right to conclude as her Honour did at J[38] that the evidence before her Honour provided no reasonable basis upon which the Court could be satisfied that Mr Mahommed had a genuine and reasonably arguable claim that would amount to a bona fide counterclaim, set-off or cross-demand.

45    In any event, it was not the task of the primary judge to resolve the question of ownership of the Lovedale and Maitland properties. The task of the primary judge was to determine whether Mr Mahommed had a counterclaim or set-off that was equal to or exceeded the amount of the judgment debt which he could not have set up in the action or proceeding in which the judgment was obtained. The primary judge considered that very question in relation to each of the counterclaims identified by Mr Mahommed.

46    Thirdly, Mr Mahommed submits that Ms Cox withheld evidence from the Supreme Court and this Court in the FCA Proceeding and subsequent appeal. For that reason Mr Mahommed says that those Courts were not able to assess the question of ownership. Putting to one side the question of whether that is a relevant factor for the purposes of this appeal, there is no evidence to substantiate that submission and that Ms Cox withheld evidence. To the contrary in oral submissions before me Mr Mahommed informed the Court that he had found the material on which he now relies as the “incontrovertible evidence” in boxes of records which he has held since 2014 but had not, it seems, prior to the proceeding giving rise to this appeal, reviewed.

47    Fourthly, insofar as Mr Mahommed relies on the decisions in House v The King and AON, neither of those decision is relevant to the questions that arise on this appeal: House v The King concerns the standard of appellate review where a court exercises a discretion; and AON concerns the factors relevant to exercise of a court’s discretion in considering an application for the adjournment of a trial and amendment of pleadings.

48    Finally, the claims must be mutual: see Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 at 351. As the primary judge identified at J[45] any claim by Mr Mahommed would be against the deceased estate and not a set-off against a claim by Ms Cox against Mr Mahommed.

Conclusion

49    Mr Mahommed has failed to establish any of his grounds of appeal. It follows that the appeal should be dismissed with costs.

50    I will make orders accordingly.

Associate:

Dated:    14 May 2025