Federal Court of Australia

Cox (Administrator) v Mahommed, in the matter of Mahommed [2025] FCA 1063

ORDERS

THE COURT ORDERS THAT:

1.    The respondent’s interlocutory application dated 30 June 2025 be dismissed.

2.    The respondent pay the applicant creditor’s costs of the interlocutory application dated 30 June 2025.

3.    The estate of Peter Shah Mahommed be sequestered under s 43(1) of the Bankruptcy Act 1966 (Cth).

4.    The applicant creditor’s costs (of the interlocutory application and creditor’s petition) be taxed and paid from the estate of the respondent in accordance with ss 51 and 109(1)(a) of the Bankruptcy Act 1966 (Cth).

THE COURT NOTES THAT:

1.    The act of bankruptcy is 31 August 2023.

2.    A consent to act as trustee signed by Bruce Gleeson has been filed under s 156A(1)(a) of the Bankruptcy Act 1966 (Cth).

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

REASONS FOR JUDGMENT

YOUNAN J:

1.    INTRODUCTION

1.1    Petition

1    By a creditor’s petition presented on 6 September 2023, the applicant creditor seeks a sequestration order under s 43 of the Bankruptcy Act 1966 (Cth), in respect of the estate of the respondent debtor, Peter Shah Mahommed (respondent). The applicant is Karen Ann Cox, who presents the petition in her capacity as administratrix of the deceased estate of her former husband, David William Dixon (applicant).

2    The petition was personally served on Mr Mahommed on 8 September 2023, and pleads that Mr Mahommed owes $25,900 in relation to a judgment debt arising from a costs assessment in proceeding NSD209 of 2022 in the Federal Court of Australia (first debt). Prayer two of the petition further pleads that Mr Mahommed owes an additional $28,598.94 to the applicant in accordance with a lump sum costs order in proceeding SYG897 of 2023 in the Federal Circuit and Family Court of Australia (FCFCoA) (second debt).

3    The alleged act of bankruptcy relied upon by the petition is Mr Mahommed’s failure to comply with the requirements of Bankruptcy Notice BN259819, or to satisfy the Court that he has a counter-claim, set-off or cross demand equal to or more than the sum claimed in the Bankruptcy Notice, being a counter-claim, set-off or cross demand that he could not have set up in the action or proceeding in which the judgment or order was obtained: Bankruptcy Act s 40(1)(g). In this regard, prayer five of the petition notes that Mr Mahommed commenced proceeding SYG897 of 2023 in the FCFCoA, seeking numerous counter-claims, set-offs and cross demands, each of which failed.

1.2    Notice of opposition

4    On 6 October 2023, Mr Mahommed filed a notice stating grounds of opposition to the petition. The notice opposes the grant of petition on nine grounds, which may be summarised as follows:

(1)    Grounds 1-4: The Registrar erred in proceeding SYG897 of 2023 in the FCFCoA, in failing to dismiss Mr Mahommed’s application to set aside the Bankruptcy Notice on 31 August 2023, by:

(a)    failing to correctly apply the principles in Byrnes v Kendle (2011) 243 CLR 253 as to liabilities owed by Ms Cox in her capacity as administratrix and legal representative of the deceased estate of Mr Dixon, and as the constructive trustee of the property situated at 713 Lovedale Road, Allandale (Lovedale property) and the property situated at 49 Bruce Street East Maitland (Maitland property);

(b)    failing to find that “any applicable requirement of mutuality” was satisfied in the circumstances outlined at paragraph 3(a)-(d) of the notice; and

(c)    failing to accord due process by finding in effect that “all of the issues raised” by Mr Mahommed had been finally determined in previous judgments.

(2)    Grounds 5-7: The petition (on which the bankruptcy proceeding before the Registrar was founded) suffered from several formal defects and irregularities (with no application to cure them under s 306(1) of the Bankruptcy Act), namely:

(a)    The petition is not founded upon an available act of bankruptcy within the meaning of s 40(1)(g) of the Bankruptcy Act.

(b)    The petition does not comply with the requirements of s 44(1)(a), (2) and (3) of the Bankruptcy Act, such that it is “invalid or [is] not founded upon an ‘available act of bankruptcy’ or [Ms Cox] [is] deemed not to be a creditor of [Mr Mahommed]”, in circumstances where the petition does not state: (i) that Ms Cox is willing to surrender any security (described in the notice) held by her; and (ii) that the said security is held for the benefit of creditors generally in the event of a sequestration order being made against Mr Mahommed.

(c)    Ms Cox is deemed to be a creditor only to the extent that the amount of the debt alleged in the petition exceeds the value of any said security, and the undisputed evidence of Mr Mahommed is that the “net value of the Lovedale [p]roperty or the Maitland [p]roperty” exceeds the amount of the debt relied upon in the petition.

(3)    Ground 8: No sequestration order should be made “for other sufficient cause” under s 52(2)(b) of the Bankruptcy Act, because:

(a)    Mr Mahommed is and/or will at the date of the hearing be solvent for reasons that he states at paragraph 8 of the notice, including that he is the “undisputed beneficial owner” of the Lovedale and Maitland properties.

(b)    It is in the interests of the proper administration of justice, in light of a range of allegations as to the conduct of the applicant (including breaches of fiduciary duty and “collateral abuses of process”) and other parties (Westpac Banking Corporation Ltd) in other proceedings, and the denial of due process by each court in which Mr Mahommed has presented related claims.

(4)    Ground 9: The hearing of the petition should follow the final disposition of Mr Mahommed’s application for review of the Registrar’s orders on 31 August 2023 to dismiss the application to set aside the Bankruptcy Notice. The application for review was the subject of further review (dismissed on 28 November 2024, per Given J), appeal (dismissed on 14 May 2025, per Markovic J), and an application for special leave to appeal to the High Court, filed on 6 June 2025 (S68/2025) (Special Leave 2025 application). This is not strictly a ground opposing the petition, but rather foreshadows the interlocutory application for adjournment almost two years later.

1.3    Interlocutory application

5    By interlocutory application filed 30 June 2025, Mr Mahommed seeks an adjournment of the petition to an unspecified date after the final determination of proceeding 2025/00244737 in the Supreme Court of New South Wales (Supreme Court 2025 proceeding). Mr Mahommed commenced that proceeding by way of a summons filed on 25 June 2025, in which he seeks a declaration, inter alia, that he is the “legal and beneficial owner of the Maitland property”.

6    In the alternative, Mr Mahommed seeks an order for a stay of the petition pending the final determination of: (a) the Supreme Court 2025 proceeding; and (b) the Special Leave 2025 application.

7    On 4 September 2025, after the hearing of this proceeding on 21 August 2025, the High Court refused special leave to appeal on the basis that the proposed appeal: (a) has no prospect of success; and (b) raises no question of principle about whether to set aside a bankruptcy notice: Karen Ann Cox as Administrator of the Deceased Estate of David William Dixon [2025] HCADisp 182 (S68/2025) (Edelman and Gleeson JJ) (Special Leave 2025 disposition).

8    The petition was originally due to lapse on 6 September 2024. On 13 August 2024, the expiration date was extended by a Registrar of this Court to 6 September 2025, pursuant to s 52(5) of the Bankruptcy Act. The parties accept that time cannot be further extended: Bankruptcy Act s 52(4), (5).

9    In oral submissions, Mr Mahommed accepted that the interlocutory application was in effect an application for an indefinite or permanent stay of the proceeding. As such, the question on the petition and on the interlocutory application was, essentially, the same: namely, whether a sequestration order should be made. Mr Mahommed confirmed that the sole basis of his challenge rested upon s 52(2)(b) of the Bankruptcy Act, that “for other sufficient cause” a sequestration order ought not to be made.

2.    EVIDENCE

10    Ms Cox relies upon the following affidavits in support of the petition, which were read without objection:

(1)    affidavit of service of Bankruptcy Notice sworn by Chris Folpp on 17 May 2023;

(2)    affidavit verifying creditor’s petition sworn by Karen Ann Cox on 6 September 2023;

(3)    affidavit of search sworn by Ben Thomas on 6 September 2023;

(4)    affidavit of service of creditor’s petition sworn by Sarah Folpp on 20 September 2023;

(5)    affidavit of Peter Shah Mahommed affirmed on 6 October 2023;

(6)    affidavit of debt sworn by Karen Ann Cox on 9 October 2023;

(7)    affidavit of search sworn by Ben Thomas on 9 October 2023;

(5)    affidavit of Karen Ann Cox affirmed on 9 August 2024;

(8)    affidavit of final debt sworn by Karen Ann Cox on 17 February 2025;

(9)    affidavit of final search sworn by Ben Thomas on 17 February 2025;

(10)    affidavit of final debt sworn by Karen Ann Cox on 23 June 2025;

(11)    affidavit of final search sworn by Ben Thomas on 23 June 2025;

(12)    affidavit of final debt sworn by Karen Ann Cox on 20 August 2025; and

(13)    affidavit of final search sworn by Ben Thomas on 20 August 2025.

11    At the hearing on 21 August 2025, with a view to informing the Court of Mr Mahommed’s financial position, Ms Cox tendered the Orders of Williams J made on 18 November 2021 in an unrelated Supreme Court proceeding, which contained an order that Mr Mahommed (with another) pay equitable compensation in the amount of $1,058,579 plus interest. At a subsequent hearing on 5 September 2025, Mr Mahommed tendered the Special Leave 2025 disposition.

12    In the petition, Mr Mahommed relies upon his affidavit affirmed on 6 October 2023 and its annexures, Exhibit PSM-4 and Exhibit PSM-5 (although the latter, containing the Index and Court Book for Supreme Court proceeding 2020/00247595, was not uploaded on the Court file), in support of the notice of opposition.

13    On the interlocutory application:

(a)    Ms Cox relies on an affidavit of Ben Thomas sworn on 11 July 2025, and its annexure, Exhibit BT-1.

(b)    Mr Mahommed relies upon: (i) his affidavit affirmed on 30 June 2025, and its annexure, Exhibit PSM-1; and (ii) his affidavit affirmed on 29 July 2025, and its annexure, Exhibit PSM-2.

3.    BACKGROUND

14    The background to this proceeding, and the myriad related proceedings, is usefully summarised in several decisions of the Supreme Court of New South Wales (and Court of Appeal), the FCFCoA, and this Court. For convenience, those decisions and orders relevant to the present proceeding are listed, chronologically, below:

(1)    Ward v Westpac (unreported, Supreme Court of New South Wales, Lindsay J, 4 April 2022) (Security Application);

(2)    Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2022] FCA 886 (29 July 2022) (Burley J) (Bankruptcy Application);

(3)    Ward v Westpac Banking Corporation Ltd [2023] NSWCA 11 (15 February 2023) (Ward P, Adamson JA and Griffiths AJA) (Security Appeal);

(4)    Mahommed v Westpac Banking Corporation Limited & Ors [2023] HCASL 73 (11 May 2023) (Gordan and Steward JJ) (Security Special Leave Application);

(5)    Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2023] FCAFC 107 (14 July 2023) (Markovic, Goodman and McElwaine JJ) (Bankruptcy Application Appeal);

(6)    Order of Kunc J in Ward v Westpac Banking Corporation Limited (Supreme Court of New South Wales, 2020/00247595, 18 August 2023), noting the failure to give security for costs ordered on 4 April 2022, and dismissing the amended statement of claim, with costs;

(7)    Order of Registrar Morgan in Peter Shah Mahommed v Karen Ann Cox as Administrator of the Deceased Estate of David William Dixon (Federal Circuit and Family Court of Australia, SYG897/2023, 31 August 2023), dismissing an application to set aside the Bankruptcy Notice, with costs;

(8)    Ward v Westpac Banking Corporation Limited [2024] NSWSC 669 (31 May 2024) (Kunc J) (Defence Strike Out Decision);

(9)    Order of Kunc J in Ward v Westpac Banking Corporation Limited (Supreme Court of New South Wales, 2020/00247595, 20 June 2024), giving judgment for Westpac for possession of the Lovedale property and Maitland property, and in the amount of $2,467,266.21 against Ms Cox as administrator of the deceased estate of Mr Dixon;

(10)    Ward v Westpac Banking Corporation Ltd [2024] NSWCA 267 (12 November 2024) (Mitchelmore and McHugh JJA) (Defence Strike Out Appeal);

(11)    Mahommed v Cox [2024] FedCFamC2G 1299 (28 November 2024) (Given J) (Bankruptcy Notice Review Application);

(12)    Mahommed v Westpac Banking Corporation Ltd (ACN 007 457 141) & Ors [2025] HCADisp 25 (6 March 2025) (Edelman and Gleeson JJ) (Defence Strike Out Special Leave Application);

(13)    Mahommed v Cox [2025] FCA 469 (14 May 2025) (Markovic J) (Bankruptcy Notice Review Appeal);

(14)    Special Leave 2025 disposition (4 September 2025).

15    It is necessary to provide some further detail about these matters relevant to the present applications.

3.1    Supreme Court proceeding

16    On 23 October 2020, Mr Mahommed and Mr Ward (the plaintiffs), brought proceeding 2020/00247595 in the Supreme Court, naming Westpac and the Registrar-General of Titles as defendants. The plaintiffs filed an amended statement of claim on 31 May 2021, joining Ms Cox (in her capacity as administrator) as a defendant in the proceeding. The New South Wales Court of Appeal provided a helpful précis of the factual circumstances in Ward v Westpac Banking Corporation Ltd [2023] NSWCA 11 at [10]-[15] (per Griffiths AJA, with whom Ward P and Adamson JA agreed):

10     Summarising the substantive proceedings below is not an easy matter, not the least because of the difficulties presented by the plaintiffs’ amended statement of claim, which totalled 112 pages. As will shortly emerge, the prolixity and opaqueness of large parts of that pleading partly underpinned the primary judge’s description of the proceeding as “oppressive”.

11     As best the amended statement of claim and procedural history can be understood, the essential features of the plaintiffs’ primary claims may be summarised 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 [sic] 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).

(Emphasis in original.)

17    On 4 April 2022, Lindsay J made orders that the plaintiffs jointly provide security for the costs of Westpac and Ms Cox, in the sum of $150,000 and $125,000, respectively, to be paid on or before 4 August 2022. In his Honour’s ex tempore reasons, Lindsay J described the plaintiffs’ presentation of their case as “oppressive”, though not vexatious. His Honour stayed the proceeding until such time as the security was provided. That time was twice extended, to 2 December 2022 and ultimately to 17 February 2023.

3.2    Bankruptcy Application and Appeal

18    On 22 March 2022, Mr Mahommed presented a creditor’s petition in the Federal Court, in respect of the deceased estate of David William Dixon. Mr Mahommed sought an order that the estate be administered in bankruptcy pursuant to s 244 of the Bankruptcy Act, claiming that he was owed a total of $5,845,545 by Mr Dixon at the time of his death, which was opposed by Ms Cox on four grounds:

(1)    Mr Mahommed was not a creditor.

(2)    The purported debts did not exist. They were shams, and enforcement was barred by the Limitation Act 1969 (NSW).

(3)    The petition was an abuse of process, as Mr Mahommed had commenced and maintained proceedings in the Supreme Court of New South Wales.

(4)    In the alternative, the petition ought to have been adjourned until the Supreme Court proceeding was determined.

19    Mr Mahommed failed to satisfy the primary judge, Burley J, that he was a creditor of the deceased estate. His Honour concluded that even if he had been so satisfied, he would not have exercised his discretion under s 244(11) and (12) of the Bankruptcy Act in favour of granting the petition, having regard to the Supreme Court proceeding on foot at that time: Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2022] FCA 886 at [45], [55]-[60]. His Honour noted (at [58]) that, rather than applying to the Federal Court in May 2021, Mr Mahommed appeared to have chosen to pursue his claim against Ms Cox in the Supreme Court. His Honour concluded that to grant the petition would be to allow Mr Mahommed to change course “in circumstances that would only lead to additional cost and complexity” (at [58]).

20    Mr Mahommed’s petition was dismissed, with costs, on 29 July 2022. On 20 January 2023, the Federal Court issued a certificate of taxation (costs certificate), certifying those costs as $25,900. This became the first debt claimed under the petition presented by Ms Cox.

21    Mr Mahommed filed a notice of appeal in the Federal Court on 25 August 2022, asserting 25 grounds of error in the primary judge’s decision to dismiss his creditor’s petition. The Full Court of the Federal Court found there to be “no merit in any of [Mr Mahommed’s] arguments”, and dismissed the appeal with costs on 14 July 2023: Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2023] FCAFC 107. Mr Mahommed has not apprised this Court of any further appeals in relation to the Bankruptcy Application, in respect of which the first debt arose.

3.3    Supreme Court Security Appeal

22    While the Bankruptcy Application and Appeal progressed, the plaintiffs in the Supreme Court proceeding sought leave to appeal against the security for costs order made by Lindsay J, by way of a summons dated 30 June 2022. The Security Appeal was heard by the Court of Appeal on 8 February 2023, and determined on 15 February 2023. Leave to appeal was granted, as the Court accepted that it was “in the interests of finality to have the appeal determined on its merits”: Ward v Westpac Banking Corporation Ltd [2023] NSWCA 11 at [8] (per Griffiths AJA, with whom Ward P and Adamson JA agreed). The Court unanimously rejected each of the 17 appeal grounds, and dismissed the appeal, with costs.

23    On 9 March 2023, Mr Mahommed filed an application for special leave to appeal to the High Court from the judgment and order of the Court of Appeal in Ward v Westpac Banking Corporation Ltd [2023] NSWCA 11. That application was dismissed on 11 May 2023.

24    Having failed to provide the ordered security, the plaintiffs’ amended statement of claim was dismissed by Kunc J on 18 August 2023, with costs.

3.4    Bankruptcy Notice

25    On 16 May 2023, Mr Mahommed was personally served with the Bankruptcy Notice issued by the Official Receiver on 6 May 2023, to which was attached a copy of the order made by Burley J in the Federal Court on 29 July 2022; a letter from Ms Cox’ solicitors dated 8 May 2023; and the costs certificate for $25,900. The time for compliance under the Bankruptcy Notice was 21 days (noting that the time for compliance was extended by a Registrar to 31 August 2023).

3.5    Set Aside Application

26    On 2 June 2023, Mr Mahommed filed an originating application in the FCFCoA, seeking to set aside the Bankruptcy Notice and an extension of time for compliance. The grounds of the application included that Mr Mahommed had “multiple rights of counterclaim, set off or cross demand”, each exceeding the amount claimed in the Bankruptcy Notice. The debts said to be owed to Mr Mahommed included claims to the Lovedale and Maitland properties, ownership of which Mr Mahommed contested.

27    Ms Cox filed a notice stating grounds of opposition to the application on 9 June 2023, on three bases:

(1)    Mr Mahommed had no right to a counter-claim, set-off or cross demand.

(2)    Mr Mahommed’s pursuit of the purported debts by way of the set aside application was an abuse of process, as the claims were the same as those pleaded in the Supreme Court proceeding.

(3)    The purported debts claimed by Mr Mahommed were barred by the Limitation Act 1969 (NSW).

28    On 24 August 2023, Mr Mahommed’s originating application was returned before a Registrar who made orders adjourning the matter to 31 August 2023 and extending the time for compliance with the Bankruptcy Notice to that date.

29    On 31 August 2023, a Registrar made orders dismissing Mr Mahommed’s application and awarding costs to Ms Cox in the amount of $28,598.94. This became the second debt claimed under the petition.

3.6    Defence Strike Out Decision and Strike Out Appeal

30    On 31 May 2024, the plaintiffs’ defence to a cross-claim filed by Westpac in the Supreme Court proceeding was struck out as an abuse of process, without leave to replead: Ward v Westpac Banking Corporation Limited [2024] NSWSC 669.

31    The plaintiffs were thus removed as parties to the cross-claim, and Westpac and Ms Cox agreed orders for resolution of the dispute. Judgment for possession of the Maitland and Lovedale properties was granted in favour of Westpac, with leave to apply for the issue of writs of possession. That leave was stayed pending the determination of any application by the plaintiffs for leave to appeal.

32    By a summons filed 18 July 2024, the plaintiffs sought leave to appeal from the judgment and orders of Kunc J in the Supreme Court. On 12 November 2024, the summons was dismissed by the Court of Appeal, with costs in favour of Ms Cox, and the stay (granted by Kunc J apropos the leave granted to Westpac to apply for writs of possession) discharged: Ward v Westpac Banking Corporation Limited [2024] NSWCA 267.

33    On 12 December 2024, Mr Mahommed filed an amended application for special leave to appeal from the judgment of the Court of Appeal, which was refused by the High Court on 6 March 2025.

3.7    Bankruptcy Notice Review Application and Appeal

34    On 19 September 2023, while the Supreme Court proceeding continued, Mr Mahommed filed an application in the FCFCoA for review of the Registrar’s orders dismissing the application to set aside the Bankruptcy Notice (with costs in the amount of $28,598.94). In a de novo review, Given J dismissed the application with costs on 28 November 2024: Mahommed v Cox [2024] FedCFamC2G 1299.

35    Her Honour set out the grounds of review (at [24]-[25]), as follows (noting the second reference to “Ground 4” is likely a typographical error, as observed by Markovic J in Mahommed v Cox [2025] FCA 469 at [19]):

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 counterclaim). The FCA judgment records the value of the Lovedale property as being estimated at $450,000.

(collectively, the counter-claims).

(Emphasis in original, footnotes omitted.)

36    In relation to the first counter-claim, Given J observed that this alleged debt was the very subject of both the Federal Court Bankruptcy Application (where evidence adduced by Mr Mahommed failed to satisfy the primary judge that the debt was owed), and pleadings in the Supreme Court proceeding (at [35]). Accordingly, her Honour concluded (at [38]) that, in the absence of further or better evidence than that adduced in the Bankruptcy Application, there remained no basis upon which the court could be satisfied that there was a reasonably arguable counter-claim for a liquidated debt of $1,472,379.70 for the purpose of s 40(1)(g)(i) of the Bankruptcy Act.

37    As to the second counter-claim of $1,400,000, her Honour had difficulty ascertaining the basis for this figure (at [39]). Her Honour found there to be insufficient evidence to support “any conclusion that there is a bona fide counter-claim which would enjoy any prospect of success, or that any proceedings have been commenced or are even contemplated in pursuit of such a counter-claim” for the purpose of s 40(1)(g) of the Bankruptcy Act (at [39]). Her Honour did not deem it necessary to determine whether, as was submitted by Ms Cox, the proceedings were the subject of an issue estoppel or an abuse of process (at [41]).

38    The third and fourth counter-claims alleging wrongful conduct on the part of Ms Cox in relation to the Lovedale and Maitland properties were also rejected (at [42]-[45]).

39    Mr Mahommed sought to appeal from the orders of the FCFCoA by an amended notice of appeal filed in the Federal Court on 6 March 2025. In her reasons for judgment of 14 May 2025, Markovic J found no error in the primary judge’s conclusion that none of the alleged counter-claims constituted a counter-claim, set-off or cross demand for the purpose of s 40(1)(g) of the Bankruptcy Act. Accordingly, Mr Mahommed’s appeal was dismissed, with costs: Mahommed v Cox [2025] FCA 469.

40    Her Honour made a number of findings in relation to the operation of s 40(1)(g) of the Bankruptcy Act.

41    First, a counter-claim under s 40(1)(g) of the Bankruptcy Act must be for a sum of money that exceeds the amount of the judgment debt underpinning the bankruptcy notice. Mr Mahommed sought declarations as to the ownership of the Lovedale and Maitland properties, which is not a sum of money, liquidated or unliquidated (at [41]-[42]).

42    Second, Mr Mahommed’s claim of ownership over the Lovedale and Maitland properties was central to the Supreme Court proceeding. 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 that proceeding (at [43]-[44]). With a view to the finality of proceedings in the Supreme Court and Federal Court, her Honour agreed with the conclusions of the primary judge that Mr Mahommed failed to establish that he had a genuine and reasonably arguable counter-claim, set-off or cross demand (at [44]). Furthermore, it was not the task of the primary judge to resolve the question of ownership of the Lovedale and Maitland properties. Rather, the task of the primary judge (i.e., the statutory question) was to determine whether Mr Mahommed had a counter-claim 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 (at [45]).

43    Third, the claims must be mutual: Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 at 351-352 (Dixon CJ, McTiernan and Windeyer JJ). Her Honour agreed with the primary judge that any claim by Mr Mahommed would be against the deceased estate, and not a set-off (directly) against a claim by Ms Cox against Mr Mahommed (at [48]).

3.8    Extant proceedings

44    As indicated above, the Special Leave 2025 application, which seeks an order that the matter be remitted to the Federal Court for determination of the question of whether the Lovedale and Maitland properties are held on trust, was refused on 4 September 2025.

45    In relation to the Supreme Court 2025 proceeding, in which Ms Cox as administrator of the deceased estate of Mr Dixon is named as defendant, Mr Mahommed seeks declarations, inter alia, that he is the “legal and beneficial owner” of the Maitland property, and an order pursuant to s 141 of the Real Property Act 1900 (NSW) that the registration of Ms Cox as proprietor of the Maitland property be set aside or declared void, “on the ground that the registration was obtained through or resulted from, fraud or mistake”. That proceeding is yet to be determined.

4.    INTERLOCUTORY APPLICATION

4.1    Respondent debtor’s submissions

46    In written submissions filed 20 August 2025, Mr Mahommed submits that the hearing of the creditor’s petition should be adjourned, or stayed, until after the determination of related proceedings (viz., the Supreme Court 2025 proceeding and Special Leave 2025 application), or alternatively, acknowledging that the petition is due to lapse on 6 September 2025, that the petition should be dismissed on the basis of “other sufficient cause” under s 52(2)(b) of the Bankruptcy Act.

47    Mr Mahommed submits that the “unresolved question of the Maitland property ownership is central to the Court’s exercise of discretion under s 52(2)(b)” of the Bankruptcy Act, and that title to the Maitland property (which he claims) is “now under active challenge”. Mr Mahommed clarified in oral submissions that he does not put s 52(1) of the Bankruptcy Act in issue.

48    Mr Mahommed claims that a sequestration order would prejudice existing litigation, and allow Ms Cox to continue treating the Maitland property as her asset. He claims that “[d]etermining the petition prior to the respondent being afforded the opportunity to prosecute proceedings concerning disputed property ownership would unjustly deprive him of the opportunity to have that critical issue resolved by the Court”. He submits that it is in the public interest to have the question of ownership determined, which it has not been.

49    In submissions filed on 22 June 2025, Mr Mahommed claims that the balance of prejudice favours him, where, if made bankrupt, he would be required to seek the trustee’s consent or leave of the Court to continue related legal proceedings, whereas an adjournment would not cause undue prejudice to the petitioner.

50    In oral submissions, while acknowledging that the time for the hearing of the petition could not be extended further, Mr Mahommed suggested that Ms Cox could file another petition. He indicated that he is prepared to provide an undertaking to the applicant and to the Court that, if he is unsuccessful, and if the applicant were to file another petition, he “[would] not object to it, because [he] would have no grounds to object to it”.

51    In a further hearing on 5 September 2025, Mr Mahommed submitted that the Special Leave 2025 disposition does not “resolve or diminish the current Supreme Court proceedings” (which relate to the Maitland property), and that the matters underpinning his submissions remain unchanged.

4.2    Applicant creditor’s submissions

52    The applicant creditor submits that, as the life of the petition cannot be extended, the grant of an adjournment would be contrary to public interest, and a refusal to exercise jurisdiction.

53    A creditor is obliged to prosecute a petition, and acts in the public interest of stopping insolvent persons from trading and allowing creditors to be paid in doing so: Rozenbes v Kronhill (1956) 95 CLR 407 at 414 (Dixon CJ, Webb and Fullager JJ); Rotstein and Associates Pty Ltd v Slaveski [2010] FCA 493 at [17] (Bromberg J). If the creditor is not proceeding with due diligence, the Court may substitute another creditor: Bankruptcy Act s 49.

54    The time limitation for petitions under the Bankruptcy Act is to ensure the public interest is met. Once expired, the petition ceases to exist, and the Court is deprived of jurisdiction under s 43 of the Bankruptcy Act: Hrycenko v Hrycenko (2022) 294 FCR 233.

55    The applicant creditor submits that, should the petition lapse, there would be prejudice to the applicant, who would be required to present a new petition and thereby lose the relation-period, being some two years.

56    The applicant creditor submits further that the grounds for an adjournment are untenable.

(c)    In relation to the first ground, the likelihood of the respondent being granted special leave is negligible, and in any event, should the appeal be upheld, the creditor undertakes to consent to the sequestration order being set aside: Federal Court Rules 2011 (Cth) r 39.05(f). In light of the Special Leave 2025 disposition, there is no need to address this submission or undertaking further.

(d)    In relation to the second ground, the applicant submits that the Court has already determined that the debtor has no set-off, counter-claim or cross demand: Mahommed v Cox [2025] FCA 469. The substance of Mr Mahommed’s claim was previously dismissed in the Supreme Court.

57    The applicant creditor submits that the fact that the debtor will pursue further litigation against the creditor is a reason to make the sequestration order; if there is a good claim, it will be championed by the trustee in bankruptcy. Furthermore, Mr Mahommed has not put before the Court evidence of his financial position, such that the Court can determine the public risk of an adjournment.

5.    PETITION

5.1    Applicant’s submissions

58    The applicant submits that the correct approach to an application for a sequestration order under s 52 of the Bankruptcy Act is summarised in Toyota Finance Australia Ltd v Youssef Berro [2022] FCA 497 at [33]-[37] (Burley J).

59    The applicant claims that the requirements of s 52(1) of the Bankruptcy Act are met, and evidenced in the following documents:

(1)    the Bankruptcy Notice issued on 6 May 2023;

(2)    the affidavit of service of Bankruptcy Notice of Chris Folpp sworn on 17 May 2023;

(3)    the creditor’s petition presented on 6 September 2023, with affidavit verifying the failure to comply with the Bankruptcy Notice on 31 August 2023 (see Bankruptcy Act s 47(1));

(4)    the affidavit of Ben Thomas sworn on 6 September 2023 (see Federal Court (Bankruptcy) Rules 2016 (Cth) r 4.04(1)(a)(i));

(5)    the trustee consent to act declaration of Bruce Gleeson dated 7 September 2023 (see Bankruptcy Act s 156A);

(6)    the affidavit of service of creditor’s petition of Sarah Folpp sworn on 20 September 2023;

(7)    the affidavit of final search of Ben Thomas sworn on 20 August 2025 (see Bankruptcy Rules r 4.06(3)(a)-(c), (5));

(8)    the affidavit of debt of Karen Ann Cox sworn on 20 August 2025, showing that the debt on which the creditor relies is still owing (see Bankruptcy Rules r 4.06(4)).

60    The applicant submits that the petition is in the correct form; the debt is for more than $10,000 (i.e., the statutory minimum prescribed by reg 10A of the Bankruptcy Regulations 2021 (Cth)), for which the creditor does not hold security; the petition was presented on 6 September 2023, within 6 months of the act of bankruptcy, being 31 August 2023 (Bankruptcy Act s 44(1)(c)); there is no dispute as to service; the debtor owes the debt claimed, which he acknowledges, and he is not already bankrupt.

61    The applicant submits that once the matters in s 52(1) of the Bankruptcy Act have been established, a creditor has a prima facie right to an order for sequestration. That was not put in issue by Mr Mahommed.

62    The applicant submits that there is not any “other sufficient cause” for the Court to exercise its discretion to dismiss the petition under s 52(2) of the Bankruptcy Act, bearing in mind that it is for the debtor to show such cause: Rozenbes at 414, per Dixon CJ, Webb and Fullager JJ.

63    First, Mr Mahommed has not put before the Court sufficient information about his financial circumstances for the Court to properly exercise its discretion. However, there is evidence of an order for equitable compensation exceeding one million dollars made against Mr Mahommed on 18 November 2021 in the Supreme Court, and of many costs orders against Mr Mahommed in favour of Westpac and Ms Cox, in the Supreme Court proceedings arising from Mr Mahommed’s amended statement of claim, which have not been paid.

64    Second, the respondent’s claim of ownership over the Maitland property is not a sufficient reason to set aside the Bankruptcy Notice, and the question of ownership of that land does not give rise to a counter-claim. Mr Mahommed has had ample opportunity to litigate his claim for ownership of the Maitland property, as evidenced by the numerous proceedings brought and maintained by him. Even if Mr Mahommed could establish that there may be a residue on the sale of property to which he is entitled, he has not established the quantum of that residue and whether it would be sufficient to pay his debts.

65    Third, in relation to the Supreme Court 2025 proceeding, even if there exists a genuine and arguable case that the Maitland property is held on trust for Mr Mahommed, the cause of action would vest in the trustee in bankruptcy, who would decide whether to pursue the claim in the interests of creditors generally. No argument is put forward by the respondent that he could have any such proceeding quickly determined, and that, if successful, it would give him an asset which could then be quickly realised such that he would have sufficient funds to cover the debts that are due and payable.

66    Fourth, the summons filed by the respondent in that proceeding is an “artifice” to give the Court a reason not to make a sequestration order, amounting to an abuse of process. The declaratory relief claimed by Mr Mahommed in the summons relates to the same lot of land, being the Maitland property, as that which was claimed in the amended statement of claim filed on 31 May 2021. The applicant notes that Westpac is not named as a party to the proceeding, despite having an order for possession of the property. There has been no explanation of the respondent’s delay in filing the most recent summons, and an application has been made for its dismissal as an abuse of process. There is no evidence that Mr Mahommed asked that his application for special leave to appeal to the High Court be dealt with expeditiously.

67    Fifth, there are no reasonable prospects of the Special Leave 2025 application being granted. On the assumption that the High Court sets aside the Bankruptcy Notice, an annulment application could be made pursuant to s 153B(1) of the Bankruptcy Act. The applicant undertakes to consent to the setting aside of any sequestration order pursuant to r 39.05(f) of the Rules, should this occur. As indicated above, given the Special Leave 2025 disposition, there is no need to address this submission further.

68    Sixth, the applicant submits that there is significant risk that, given his history of litigation, and by analogy with trading, Mr Mahommed will continue to pursue the applicant with unsuccessful and costly litigation.

69    Seventh, should the petition be allowed to lapse, the applicant would have to bring a new petition and start the process again, and there would be prejudice in that Ms Cox would lose the relation-back period.

70    Eighth, if the trustee is satisfied that all the bankrupt’s debts have been paid in full, the bankruptcy is annulled on the date on which the last such payment was made, by force of s 153A(1) of the Bankruptcy Act.

5.2    Respondent’s submissions

71    Mr Mahommed’s case has evolved since the notice of opposition was filed on 6 October 2023. That case as articulated in written and oral submissions is predicated on there being “other sufficient cause” to dismiss the petition pursuant to s 52(2)(b) of the Bankruptcy Act. Mr Mahommed does not rely on s 52(2)(a) of the Bankruptcy Act on the basis that he is able to pay his debts, and he does not take issue with satisfaction of the requirements in s 52(1) of the Bankruptcy Act.

72    Mr Mahommed advances two broad contentions.

73    First, the question of ownership in relation to the Maitland property remains unresolved, and is “central to the Court’s exercise of discretion under s 52(2)(b)”. In submissions filed on 17 February 2025, Mr Mahommed contends that resolving the “substantive issue of ownership, may potentially invalidate the outcome of the Petition”. In submissions filed on 22 June 2025, Mr Mahommed explains that, should he ultimately succeed in the Supreme Court, the judgment debt supporting the petition “may ultimately be overturned and extinguished”. At the hearing, Mr Mahommed was not able to say “[t]o what degree” as “it’s just not quantifiable at this point in time”.

74    The respondent submits that he will have more success in having the question of ownership determined in the Supreme Court 2025 proceeding as it involves fewer parties and the statement of claim is “succinct”, “uncomplicated”, and supported by what he contends is “incontrovertible documentary evidence” that “has never been addressed by [the applicant] in any proceedings”.

75    The respondent submits that in the Supreme Court 2025 proceeding, the respondent in his personal capacity (i.e., not as trustee) is suing the applicant in her personal capacity, thus removing the “mutuality obstacle” noted in Mahommed v Cox [2025] FCA 469 at [25]-[26]. (As noted above, the action is brought against the applicant in her capacity as administrator of the deceased estate.)

76    The respondent submits that it is “highly unlikely” that a trustee in bankruptcy appointed by the applicant would continue the proceeding, in which case the property ownership dispute – which remains the “critical issue” – would remain unresolved.

77    The second contention is closely tied to his first (and to the respondent’s submissions on the adjournment application). A sequestration order against the respondent should not be made while a related proceeding remains on foot.

78    The respondent submits that “consistency requires that the same discretion” exercised by Burley J in 2022 (under s 244 of the Bankruptcy Act, which Mr Mahommed argues is the same as the test under s 52 of the Bankruptcy Act) be exercised in the present case, and that a sequestration order would be “inappropriate for the same reasons identified by Burley J in Mahommed v Cox [as Administrator of the Deceased Estate of Dixon [2022] FCA 886]” . Those reasons included that insolvency was not determinative of the outcome, and that granting the petition (in that case) would fragment proceedings and duplicate costs while Supreme Court proceedings were on foot.

6.    LEGAL FRAMEWORK

79    Section 43 of the Bankruptcy Act empowers the Court to make a sequestration order where certain conditions are met. That section relevantly provides:

43     Jurisdiction to make sequestration orders

(1)     Subject to this Act, where:

(a)     a debtor has committed an act of bankruptcy; and

(b)     at the time when the act of bankruptcy was committed, the debtor:

(i)    was personally present or ordinarily resident in Australia;

(ii)    had a dwelling-house or place of business in Australia;

(iii)    was carrying on business in Australia, either personally or by means of an agent or manager; or

(iv)    was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;

the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.

(2)     Upon the making of a sequestration order against the estate of a debtor, the debtor becomes a bankrupt, and continues to be a bankrupt until:

(a)     he or she is discharged by force of subsection 149(1); or

(b)     his or her bankruptcy is annulled by force of subsection 74(1) or 153A(1) or under section 153B.

80    An act of bankruptcy is defined in s 40 of the Bankruptcy Act. Section 40(1)(g) is apposite:

40     Acts of bankruptcy

(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;

…

81    Three conditions for bringing a creditor’s petition are set out in s 44(1) of the Bankruptcy Act, which provides:

44     Conditions on which creditor may petition

(1)     A creditor’s petition shall not be presented against a debtor unless:

(a)     there is owing by the debtor to the petitioning creditor a debt that amounts to the statutory minimum or 2 or more debts that amount in the aggregate to the statutory minimum, or, where 2 or more creditors join in the petition, there is owing by the debtor to the several petitioning creditors debts that amount in the aggregate to the statutory minimum;

(b)     that debt, or each of those debts, as the case may be:

(i)    is a liquidated sum due at law or in equity or partly at law and partly in equity; and

(ii)    is payable either immediately or at a certain future time; and

(c)     the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition.

82    Section 47 sets out certain formal requirements of a petition, and is supplemented by the Bankruptcy Rules, particularly rr 4.02, 4.04, 4.05 and 4.06. Compliance with these rules was not put in issue by Mr Mahommed. I am satisfied of compliance with those rules, with reference to the various affidavits of service, search and debt outlined at paragraph [10] of these reasons.

83    Before a sequestration order can be made, the Court requires proof of certain matters outlined in s 52(1) of the Bankruptcy Act.

52     Proceedings and order on creditor’s petition

(1)     At the hearing of a creditor’s petition, the Court shall require proof of:

(a)     the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b)     service of the petition; and

(c)     the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

84    If the Court is satisfied that the requirements of s 52(1) are met, it is said that the creditor has a prima facie right to a sequestration order: Cain v Whyte (1933) 48 CLR 639 at 646 (Rich J, Starke, Dixon, Evatt and McTiernan JJ agreeing at 648); Rozenbes at 414 (Dixon CJ, Webb and Fullagar JJ); Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509 at 521 (Isaacs J, quoting King v Henderson (1898) AC 720 with approval).

85    Where the debt relied upon by the creditor is a judgment debt, the judgment is prima facie evidence of that debt: Toyota Finance at [35] (Burley J, citing Wolff v Donovan (1991) 29 FCR 480 at 487 (Davies J)). As the judgment debt is not contested (as owing), it is not necessary to examine the circumstances in which the Court may go behind the judgment to ascertain “whether there is in truth and reality a debt owing to the petitioning creditor”: see Commonwealth Bank of Australia Ltd v Jordanou [2018] FCCA 2972 at [31] (Wilson J, citing Compton v Ramsay Health Care Australia Pty Ltd (2017) 261 CLR 132 at [97] (Kiefel CJ, Keane and Nettle JJ, Edelman J agreeing)).

86    The critical time for determining whether an act of bankruptcy has been committed is the date on which the period limited by the bankruptcy notice expired (in the present case, as extended by the Registrar). If the debtor has not by that date complied with the requirements of the notice, the act of bankruptcy is then completed. An act of bankruptcy once committed does not, by reason of subsequent circumstances, cease to have been committed (nor must it be treated as such): Re Hanby; Ex parte Flemington Central Spares Pty Ltd (1967) 10 FLR 378 at 381 (Gibbs J); Re Vella; Ex parte Seymour (1983) 67 FLR 287 at 289 (Morling J). The position may be different where the judgment is made without jurisdiction, and is therefore “void”: cf. Zagoridis v Q'Plas Group Pty Ltd (1990) 27 FCR 108 at 113-114 (Spender J).

87    The power to make the order is qualified by the discretion under s 52(2) of the Bankruptcy Act:

(2)     If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a)     that he or she is able to pay his or her debts; or

(b)     that for other sufficient cause a sequestration order ought not to be made;

it may dismiss the petition.

88    As indicated above, only s 52(2)(b) is in issue in this proceeding. What constitutes “other sufficient cause” is unconfined in its terms, as are the factors that may be taken into account in the exercise of the discretion: Baker v Perpetual Trustee Co Ltd (2012) 204 FCR 593 at [35] (Katzmann J). It is for the debtor to show (Cain at 646, per Rich, Starke, Dixon, Evatt and McTiernan JJ):

… some cause overriding the interest of the public in the stopping of unremunerative trading, and the rights of individual creditors who are unable to get their debts paid to them as they become due. Something has to be put before the court to outweigh those considerations before it can be said that sufficient cause is shown against the making of a sequestration order.

89    A Court may exercise its discretion under s 52(2)(b) if a debtor is able to show that he or she has a real claim “in truth and reality” against the creditor that is likely to succeed, for an amount equal to or greater than that owing to the creditor: Wren v Mahony (1972) 126 CLR 212 at 224 (Barwick CJ); Re Schmidt; Ex Part Anglewood Pty Ltd (1968) 13 FLR 111 at 115-116 (Gibbs J). In certain cases, a Court may also recognise that a debtor has a real claim against a creditor for unliquidated damages: Re Schmidt at 115-116 (Gibbs J). However, in those circumstances, a Court must consider not only whether the debtor has a real claim that is likely to succeed, but whether it is appropriate to adjourn the petition in order to allow the debtor to litigate that claim: Re James; Ex Parte Carter Holt Harvey Roofing (Aust) Pty Ltd (No 2) (1994) 51 FCR 14 at 22 (Olney J). A Court may decide to dismiss a petition even though it is not satisfied that the debtor’s claim will most likely succeed: Clapham v Commonwealth Bank of Australia [2013] FCAFC 84 at [54] (North, Barker and Nicholas JJ). Furthermore, it may not be in the creditor’s interest or the public interest to make a sequestration order in circumstances where the debtor’s insolvency is likely to be of only short duration: Ling v Enrobook Pty Ltd (1997) 74 FCR 19 at 26 (Davies, Wilcox and Branson JJ).

90    The existence of a pending appeal against the judgment giving rise to the judgment debt relied upon by a creditor may be reason for a Court to grant an adjournment of the petition, provided the appeal is based on “genuine and arguable grounds”: Rigg v Baker (2006) ALR 629 at [67] (French J, citing Ahern v DCT (Qld) (1987) 76 ALR 137 at 141, per Davies, Lockhart and Neaves JJ). However, it is still necessary to balance the public interest in proceeding with the bankruptcy as against the right to challenge the debt in respect of which the petition has been issued: see Commonwealth Bank of Australia v Qureshi [2009] FMCA 1111 at [5]-[6] (Raphael FM). Even if the appeal is successful, that does not necessarily result in a conclusion that no money is owed by the respondent to the applicant: see Cusack v De Angelis [2008] FMCA 18 at [30]-[31] (Wilson FM).

91    As stated above, the petition was extended to 6 September 2025. Section 52(4) and (5) of the Bankruptcy Act relevantly provides:

(4)     A creditor’s petition lapses at the expiration of:

(a)     subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or

(b)     if the Court makes an order under subsection (5) in relation to the petition—the period fixed by the order;

unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn.

(5)     The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor’s petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 24 months, commencing on the date of presentation of the petition as is specified in the order.

92    Given the outer limit of 24 months stipulated in s 52(5) of the Bankruptcy Act, and the date on which the petition was presented (viz., 6 September 2023), no further extension of time beyond 6 September 2025 is permitted.

93    Section 51 of the Bankruptcy Act provides that, subject to s 109, the prosecution of a creditor’s petition to and including the making of a sequestration order on the petition shall be at the expense of the creditor. Section 109(1) provides that that the trustee must, before applying the proceeds of the property of the bankrupt in making any other payments, apply those proceeds in a certain order. The first priority is provided in s 109(1)(a), which includes the taxed costs of the petitioning creditor.

7.    CONSIDERATION

94    Given the pending expiration of the period in which the petition can be presented to the Court, the central question on both the adjournment application and the creditor’s petition is whether or not the Court should make a sequestration order. That is the basis on which the parties proceeded at the hearing of both applications.

95    Grounds 1-4, and 9 of the notice of opposition represent an attempt to relitigate the application to set aside the Bankruptcy Notice, which has been determined finally, with no further avenue of appeal, as a consequence of the Special Leave 2025 disposition. Those grounds are rejected on that basis.

96    Further, in ground 3 of the notice of opposition, Mr Mahommed makes a number of claims against Ms Cox, including breach of statutory and fiduciary duties, as well as perjury. None was substantiated. He did not call for her cross-examination. As the Privy Council found in Henderson (at 729, per Lord Watson), a creditor has an absolute right to found a petition seeking a sequestration order on a statutory act of bankruptcy; an ulterior private purpose is not necessarily a fraud on the court; a further motive is not a bar to bringing a petition for sequestration unless there is fraud; and an abuse of process does not exist unless the remedy is unsuitable and would enable the person obtaining it to fraudulently defeat the rights of others, whether legal or equitable (approved in Rozenbes at 417, per Dixon CJ, Webb and Fullagar JJ); Dowling at 522 (Isaacs J); see also Williams v Spautz (1992) 174 CLR 509 at 528, per Mason CJ and Dawson, Toohey and McHugh JJ). There is nothing to suggest any fraudulent conduct on the part of Ms Cox.

97    Grounds 5-7, pertaining to alleged defects in the petition, and ground 8, regarding the application of s 52(2)(b) of the Bankruptcy Act, remain in issue.

7.1    Can the sequestration order be made?

98    The first question is whether the Court is satisfied with the proof of the matters in s 52(1) of the Bankruptcy Act. There was no contest on this question.

99    I am satisfied:

(e)    of the matters stated in the petition, for which purpose I accept as sufficient the affidavit verifying the petition sworn by Ms Cox on 6 September 2023: Bankruptcy Act s 52(1)(a);

(f)    that the petition was served on Mr Mahommed, as evidenced in the affidavit of service of creditor’s petition sworn by Sarah Folpp on 20 September 2023: Bankruptcy Act s 52(1)(b); Bankruptcy Rules r 4.05(a); and

(g)    that each debt on which the creditor relies is still owing, as evidenced in the affidavit of final debt sworn by Karen Ann Cox on 20 August 2025, filed the day before the hearing: Bankruptcy Act s 52(1)(c); Bankruptcy Rules r 4.06(4).

100    In relation to the matters stated in the petition, I accept that Mr Mahommed failed within 21 days of service of the Bankruptcy Notice (which time was extended to 31 August 2023) to pay the debt owed to the applicant creditor (viz., a judgment debt of $25,900 and a lump sum costs order of $28,598.94), or make an arrangement to the creditor’s satisfaction for payment of the debt, as stipulated in paragraph 1 of the Bankruptcy Notice.

101    I am satisfied that the act of bankruptcy occurred on 31 August 2023, by way of the failure to comply with the requirements of the Bankruptcy Notice: Bankruptcy Act s 40(1)(g). Mr Mahommed did not contest his failure to comply with the notice.

102    While Mr Mahommed did not take issue with any matter in s 52(1) of the Bankruptcy Act, and indicated at the hearing that his challenge was based solely on s 52(2)(b), ground 6 of the notice of opposition claimed that the petition is not founded upon an available act of bankruptcy within the meaning of s 40(1)(g) of the Bankruptcy Act.

103    Consistently with Mr Mahommed’s oral submissions, I take that challenge to be one of the assertion of a counter-claim, set-off or cross demand equal to or more than the sum claimed in the Bankruptcy Notice, that Mr Mahommed could not have set up in the action or proceeding in which the judgment or order was obtained: Bankruptcy Act s 40(1)(g).

104    I am not satisfied of such a counter-claim, set-off or cross demand, despite multiple proceedings in which the question of Mr Mahommed’s interest in the Maitland property has been raised (e.g., Supreme Court proceeding 2020/00247595; [2021] NSWSC 1178; [2022] FCA 886; [2023] NSWCA 11; [2024] NSWSC 669; [2024] FedCFamC2G 1299; [2024] NSWCA 267; [2025] FCA 469).

105    Mr Mahommed claims that the question of ownership of the Maitland property has never been determined. That is a partial truth – often repeated by Mr Mahommed – which belies the fact that Mr Mahommed had the chance to prosecute his claim for ownership of the property, which claim was dismissed by Lindsay J in the Supreme Court for failure to provide security for costs, having considered an argument as to stultification in making those orders.

106    Mr Mahommed posits that this unresolved question is a reason to adjourn or stay or deny the petition. I do not agree. Even if the question of property ownership were resolved in Mr Mahommed’s favour, it does not demonstrate a counter-claim or set-off that is equal to, or exceeds, the amount of the judgment debt which Mr Mahommed could not have set up in the action or proceeding in which the judgment was obtained. This Court has already determined that: (a) Mr Mahommed is not a creditor of the deceased estate of Mr Dixon: Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2023] FCAFC 107, upholding the decision of Burley J in [2022] FCA 886; and (b) Mr Mahommed’s claim of property ownership does not give rise to an arguable counter-claim, which must be for a sum of money, as opposed to a declaration as to ownership of property: Mahommed v Cox [2025] FCA 469 at [42]-[44] (per Markovic J). I accept the applicant’s submission that, even if Mr Mahommed could establish that there is a residue on the sale of property to which he is entitled, he has not established the quantum of that residue and whether it would be sufficient to pay his debts.

107    Furthermore, this does not detract from the fact that Mr Mahommed did not comply with the Bankruptcy Notice. The act of bankruptcy was completed on 31 August 2023, which is not negated by subsequent circumstances. As indicated above, the position may be different in circumstances where the judgment (underpinning the debt the subject of the Bankruptcy Notice) is made without jurisdiction. Mr Mahommed made no such claim. He did not contest that the debt was owed. The issue does not arise in the present case.

108    Ground 7 of the notice claims that the petition is invalid for the purpose of s 44(1)(a), (2) and (3) of the Bankruptcy Act. Mr Mahommed does not demonstrate any non-compliance with these statutory provisions, let alone that they ‘invalidate’ the petition, let alone that this undermines the Bankruptcy Notice, non-compliance with which is the basis of the act of bankruptcy.

109    I am satisfied that Ms Cox does not hold security over the property of Mr Mahommed, as stated in the petition, which begs the question of the application of s 44(2) and (3) of the Bankruptcy Act.

110    With proof of the matters in ss 44(1) and 52(1) of the Bankruptcy Act, I am satisfied that Mr Mahommed has committed an act of bankruptcy (s 43(1)(a)), and of the relevant circumstances in s 43(1)(b), such that the Court may make an order of sequestration against his estate.

111    To say that the applicant creditor has a prima facie right to a sequestration order, having satisfied the Court of the matters in s 52(1) of the Bankruptcy Act, says little more than that the burden now shifts to Mr Mahommed to show some overriding cause such that the order should not be made.

7.2    Should the sequestration order be made?

112    While the Court is not required to make such an order upon proof of the matters in s 52(1) of the Bankruptcy Act, the matter was fought on the battleground of s 52(2)(b).

113    In that regard, the authorities make clear that the exercise of discretion is one of balancing competing interests. Mr Mahommed has not persuaded me that the public interest in dealing with an insolvent debtor and the rights of individual creditors are outweighed by the considerations that he advances.

7.2.1    Prejudice to the respondent debtor: determination of related proceedings

114    I do not accept that the “unresolved question of the Maitland property ownership” is sufficient cause to deny the petition (directly or by allowing it to lapse by adjournment).

115    I am not persuaded that a sequestration order would prejudice the Supreme Court 2025 proceeding. Mr Mahommed claims that determining the petition prior to being afforded the opportunity to prosecute proceedings concerning the “foundational issue” of disputed property ownership would deprive him of the opportunity to have that issue resolved by the Court. That opportunity has been afforded. Mr Mahommed had the chance to prosecute his claim for ownership of the Lovedale and Maitland properties, which claim was dismissed in the Supreme Court for failure to provide security for costs. Furthermore, the submission ignores the finding of this Court that Mr Mahommed’s property claims do not give rise to a counter-claim for the purpose of s 40(1)(g) of the Bankruptcy Act.

116    I accept that a sequestration order may lead to certain constraints upon Mr Mahommed in pursuing litigation, but I do not consider requiring the trustee’s consent or leave of the Court to continue proceedings to be an undue constraint in light of the evidence (such as it is) of Mr Mahommed’s financial position and his litigation history.

117    The Court must keep in mind, not only the interests of the individual parties before it in the particular case, but also the public interest, which may be adversely affected by the propping up of insolvency: Re Svir; Ex Parte Commissioner of Taxation (1998) 83 FCR 314 at 317 (Burchett J).

118    At the time of the notice of opposition (6 October 2023), Mr Mahommed claimed that he “was and/or will at the date of the hearing be solvent” (ground 8(a)). The alternative “or” does not give me confidence in either circumstance. More recently, in the Special Leave 2025 application, Mr Mahommed stated that he was impecunious. Furthermore, there is evidence of several costs orders against Mr Mahommed in favour of the applicant creditor and Westpac, which have not been paid, as well as an order in the Supreme Court for equitable compensation against Mr Mahommed for over one million dollars. The status of that debt is unclear in the absence of evidence of Mr Mahommed’s financial circumstances. Even where the debtor has a paucity of creditors, that may remove a bar, but it does not provide a positive ground constituting “other sufficient cause” why a sequestration order ought not to be made: Re Svir at 317. The extent of any debt owed must also be considered. The order for equitable compensation is significant in itself. Furthermore, as the applicant submits, if the trustee is satisfied that all the bankrupt’s debts have been paid in full, the bankruptcy may be annulled: Bankruptcy Act s 153A.

119    In light of my conclusions, I need not opine on the prospects of the extant proceeding. Even if they were reasonable, they would not alter my conclusion. Section 153A of the Bankruptcy Act provides further comfort in the event that Mr Mahommed successfully prosecutes his property claim and (as a result or otherwise) satisfies his debts. In light of that provision, and in the circumstances of this case, I am satisfied that it is not in the public interest to wait and see, while the protection afforded by the creditor’s petition is allowed to lapse.

120    I also accept the applicant creditor’s submission that the fact that Mr Mahommed will pursue further litigation against the creditor is a reason to make the sequestration order, and that, if there is a genuine and arguable case that the Maitland property is held on trust for Mr Mahommed, the cause of action would vest in the trustee in bankruptcy, who may decide to pursue the claim. There is no evidence to suggest that Mr Mahommed could realise any such claim with greater expedition. Furthermore, I do not accept Mr Mahommed’s submission that it is “highly unlikely that a trustee in bankruptcy appointed by the applicant” would pursue such a claim. In the absence of evidence supporting the proposition, I do not consider it to be a necessary or reasonable assumption.

121    Mr Mahommed claims that a sequestration order would allow Ms Cox to continue treating the Maitland property as her asset. There are a number of factual assumptions in that submission that were not substantiated in cross-examination or otherwise. Even so, I would not consider it sufficient cause to dismiss the petition.

122    Mr Mahommed claims that each court that has dealt with his claims has failed to accord him due process. That claim is baseless. It is an attempt to re-litigate matters that have been finally determined.

123    Mr Mahommed’s reliance on the exercise of discretion by Burley J in Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2022] FCA 886, to posit an analogy with the discretion to be exercised in the present proceeding, is misplaced. It is not evident how the denial of Mr Mahommed’s petition in respect of Mr Dixon’s estate under s 244 of the Bankruptcy Act should dictate the denial of the creditor’s petition in respect of Mr Mahommed’s estate under s 52(2)(b) of the Bankruptcy Act. Mr Mahommed says that a sequestration order would be “inappropriate for the same reasons identified by Burley J”. However, there is no suggestion that insolvency is determinative of the outcome in this case (in that regard, Mr Mahommed appears to accept his insolvency as a factual premise of the analogy he proposes), and there is no evidence that the petition is “intimately linked” with Mr Mahommed’s extant proceeding. Whether or not that is so, I do not accept that granting the petition would fragment proceedings and duplicate costs. The “additional cost and complexity” to which his Honour made reference at [58] was that occasioned by Mr Mahommed pursuing his claim against Ms Cox in various courts and proceedings.

124    Finally, I am not persuaded that it is in the public interest to have the question of ownership of the Maitland property determined, at least not at the expense of the interests that are served by granting the petition.

7.2.2    Prejudice to the applicant creditor: file another petition

125    Mr Mahommed claims that denial of the creditor’s petition would not cause undue prejudice to the petitioner. I do not agree. I consider it undue prejudice to be forced to forgo the time and expense of pursuing the current petition, which was presented some two years ago. Even if Mr Mahommed were not to object to a second petition, the petitioner would forgo the current relation-back period (i.e., relation back to the time of the commencement of the earliest act of bankruptcy committed within the period of 6 months before the date on which the petition is presented: Bankruptcy Act s 115(1)). This may have consequences for the respondent debtor in terms of the ability to protect property from being vested in the trustee (by virtue of the earlier petition), and for creditors in terms of the ability to claim against the bankrupt estate: Bankruptcy Act s 116(1).

7.2.3    Other public interests

126    It is difficult to determine the public risk of denying the petition in the absence of evidence of Mr Mahommed’s financial position. That circumstance does not favour Mr Mahommed, who did not present any evidence of his current circumstances. The evidence presented by the applicant creditor paints a picture of further significant debt. I accept the applicant creditor’s submission that the Court’s inability to make a determination of the public risk of denying the petition, is, in the present circumstances, a factor – albeit not determinative – favouring its grant.

127    It is apparent that Mr Mahommed is seeking to ventilate the question of property ownership in the context of different claims in different courts, in order to obtain the answer he seeks to that question. In that regard, he engenders the additional costs, complexity and fragmentation of proceedings of which he complains. He should not profit from the circumstance of delay in filing the most recent summons (to ventilate another iteration of the same question regarding ownership of the Maitland property), proximate to the expiration of the petition, so as to engender the dismissal of the petition. It is not necessary for me to determine whether the summons filed by the respondent in the Supreme Court 2025 proceeding is an abuse of process (noting that an application has been made for its dismissal on that basis). However, these circumstances tell of a public interest that would be served by the grant of the petition, the consequence of which would be to place the decision to litigate in the hands of the trustee in bankruptcy, to be made in the interests of creditors.

128    I accept the applicant creditor’s submission that, given Mr Mahommed’s history of litigation, there is a significant risk that he will continue to pursue the applicant with unsuccessful and costly litigation. That risk and other public interest considerations weigh against allowing Mr Mahommed to continue to litigate in his own name, and the public interest in meeting an undetermined claim is met by the trustee making an informed decision as to whether to pursue the claim.

129    I am not satisfied that there is other sufficient cause not to make the sequestration order for the purpose of s 52(2) of the Bankruptcy Act.

8.    CONCLUSION

130    I consider that it is in the public interest to grant the applicant creditor’s petition to make a sequestration order against the estate of the respondent debtor under s 43(1) of the Bankruptcy Act, and thereby dismiss the respondent debtor’s adjournment application.

131    Accordingly, it is appropriate that the applicant creditor’s costs of the petition and the adjournment application are taxed and paid out of the estate of the respondent debtor in accordance with s 109(1)(a) of the Bankruptcy Act.

Associate:

Dated:    19 September 2025