Mahommed v Cox

Case [2024] FedCFamC2G 1299

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Mahommed v Cox [2024] FedCFamC2G 1299

File number(s): SYG 897 of 2023
Judgment of: JUDGE GIVEN
Date of judgment: 28 November 2024 
Catchwords: BANKRUPTCY – Review of Registrar decision dismissing application to set aside Bankruptcy Notice – where applicant alleges existence of counter-claim/set-off for purposes of s 40(1)(g) of Bankruptcy Act
Legislation:

Bankruptcy Act 1966 (Cth) ss 33, 40, 244

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 254, 256

Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) r 2.02
Cases cited:

AHH22 v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FedCFamC2G 426

Bechara v Bates (2021) 286 FCR 166

Cassimatis v Australian Securities and Investments Commission (2016) 334 ALR 350

Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 at 351

James v Abrahams (1981) 34 ALR 657

Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2022] FCA 886

Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2023] FCAFC 107

Pattison v Hadjimouratis (2006) 155 FCR 226

Stec v Orafanos [1999] FCA 457

Ward v Westpac Banking Corporation Ltd [2023] NSWCA 11
Division: General Federal Law
Number of paragraphs: 46
Date of hearing: 19 January 2024
Place:  Sydney
The Applicant:  In person
Counsel for the Respondent: Mr D Allen
Solicitor for the Respondent: Shaba & Thomas Lawyers

ORDERS

SYG 897 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF DAVID WILLIAM DIXON
BETWEEN:

PETER SHAH MAHOMMED

Applicant
AND:

KAREN ANN COX AS ADMINISTRATOR OF THE DECEASED ESTATE OF DAVID WILLIAM DIXON

Respondent

ORDER MADE BY:

JUDGE GIVEN

DATE OF ORDER:

28 NOVEMBER 2024

THE COURT ORDERS THAT:

1.The application made on 19 September 2023 (review application) is dismissed.

2.In addition to order 2 made on 31 August 2023, the applicant must pay the respondent’s costs and disbursements, of and incidental to the review application, as agreed or failing agreement to be taxed in accordance with the Federal Court Rules 2011 (Cth).

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

JUDGE GIVEN:

  1. Before the Court is an application for review of a decision by a Registrar by which he dismissed an application to set aside a Bankruptcy Notice (originating application) with costs (review application) by making orders in the following terms:

    1. The application to set aside Bankruptcy Notice BN259819 issued on 6 May 2023 be dismissed.

    2. The Applicant pay the Respondent’s costs of and incidental…

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AGLC
Mahommed v Cox [2024] FedCFamC2G 1299
Case
[2024] FedCFamC2G 1299
Decision Date

CaseChat Overview and Summary

In the matter of Mahommed v Cox, the applicant, Mr Mahommed, sought to review a decision by a Registrar of the Federal Circuit and Family Court of Australia, dismissing an application to set aside a Bankruptcy Notice. The dispute arose from the applicant’s unsuccessful creditor’s petition against the deceased estate of David William Dixon, administered by Ms Cox. The Registrar’s decision was based on the applicant's inability to establish a counter-claim or set-off under section 40(1)(g) of the Bankruptcy Act 1966 (Cth). The applicant’s review application was timely filed under section 256(1) of the Court Act.

The primary legal issue before the Court was whether the Registrar correctly exercised their delegated power in dismissing the application to set aside the Bankruptcy Notice. This involved an assessment of the applicant's assertion that he had a counter-claim or set-off sufficient to avoid the Bankruptcy Notice. The Court needed to determine if the Registrar’s decision was in error or if it was appropriate to uphold the dismissal based on the evidence and applicable law at the time of the review.

The Court conducted a de novo review of the Registrar’s decision, examining the evidence and law as they stood at the time of the review hearing. The Court found that the Registrar’s decision was based on an accurate application of the law and the evidence presented. The applicant did not successfully demonstrate a counter-claim or set-off that would entitle him to set aside the Bankruptcy Notice. Consequently, the Court upheld the Registrar’s decision, dismissing the review application.

The Court did not make any orders altering the Registrar’s decision. The Bankruptcy Notice remained in effect, and the applicant was required to comply with its terms. The Court’s ruling confirmed the Registrar's exercise of delegated power and the validity of the decision under the applicable legal framework.

Orders

Orders of the court

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Background

Background to the litigation

Section 256(1) of the Court Act has the effect that a party to a proceeding in which the Registrar has exercised delegated powers under s 254 may apply to the Court for review of the exercise of that delegated power within a prescribed time.BACKGROUND The background to these proceedings has been derived from the written submissions of the parties, the Court Book, material available on the Court’s electronic file and relevant judgments which were delivered by various Courts in relation to the subject matter which forms the background to these proceedings and which were determined by the time of the hearing of the review application. In 2020, proceedings No 2020/00247595 were commenced by the applicant and one other plaintiff in the Supreme Court of New South Wales Equity Division against, inter alia, the respondent (Supreme Court proceedings). The background to the Supreme Court proceedings is relevantly the background to the subject matter of alleged debts relevant to these proceedings. The genesis of the Supreme Court proceedings was summarised by the New South Wales Court of Appeal in Ward v Westpac Banking Corporation Ltd [2023] NSWCA 11 at [12] to [15] per Griffiths AJA, being the judgment in an application for leave to appeal from an interlocutory decision made in the Supreme Court proceedings, by which the applicants were ordered to provide security for costs of the respondents. By its judgment, the Court of Appeal granted leave to appeal, but ultimately dismissed the appeal with costs. On 25 March 2022, the applicant, Mr Mahommed, filed a creditor’s petition pursuant to s 244 of the Bankruptcy Act 1966 (Cth) (Act) for administration of the deceased estate of the late David William Dixon (Federal Court proceedings) over which Ms Cox (who is the ex-wife of the deceased) was appointed Administrator by the Supreme Court of New South Wales on 27 November 2020 (Court Book (CB) 43). The creditor’s petition the subject of the Federal Court proceedings was opposed by Ms Cox. The Federal Court proceedings were determined by Burley J on 29 July 2022 (see Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2022] FCA 886 (FCA judgment)) in which the applicant was found to have failed to establish that any debt was owing by the deceased at the time of his death within or was still owing within the meaning of ss 244(1)(a) and 244(11) of the Act, respectively. The result of the FCA judgment was the dismissal of the applicant’s creditor’s petition, with costs. Ms Cox proceeded to have the costs of the Federal Court proceedings taxed, and the Federal Court issued a Certificate of Taxation in respect of them on 20 January 2023 (costs certificate). The costs certificate certified Ms Cox’s costs as $25,900 which went on to form the relevant judgment debt (judgment debt). On 16 May 2023, the official receiver served the applicant (by hand) with a Bankruptcy Notice (reference “BN 259819”) issued on 6 May 2023 (Bankruptcy Notice) and the costs certificate.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 14 July 2023, the Full Federal Court upheld the FCA Judgment on appeal: see Mahommed v Cox as Administrator of the Deceased Estate of Dixon [2023] FCAFC 107 per Markovic, Goodman and McElwaine JJ (FCAFC judgment). Meanwhile, back in the Supreme Court proceedings, the plaintiffs there (including the instant applicant) failed to provide security for costs as ordered and the proceedings were dismissed on 18 August 2023. On 24 August 2023, the originating application seeking to set aside the Bankruptcy Notice was returned before a Registrar of the Court on which occasion the following orders were made: 1. The matter be adjourned to 2:00pm on 31 August 2023.2. The time for compliance with Bankruptcy Notice Number BN 259819 issued on 6 May 2023 be extended up to and including 4pm on 31 August 2023.3. By 4pm on 28 August 2023 the Applicant and Respondent provide written submissions as to costs. The adjourned hearing proceeded on 31 August 2023, at the conclusion of which the Registrar’s Orders were made dismissing the application to set aside the Bankruptcy Notice. On 6 September 2023, the respondent filed a creditor’s petition in the Federal Court against the applicant based on the costs of the Registrar’s Orders (CB 1150 to 1153). On 19 September 2023, the applicant filed the instant review application (CB 951 to 953). On 6 October 2023, the applicant filed his grounds of opposition to the creditor’s petition (CB 1154 to 1161). REVIEW APPLICATIONReview principles Pursuant to r 2.02(3) of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules). 2.02 Exercise of powers by Registrars…(3) Subject to any direction by the Court or a Judge to the contrary, an application under subsection 256(1) of the Act for review of the exercise of a power of the Court by a Registrar must be made by filing an application in accordance with Form B3A within 21 days after the day on which the power was exercised. Accordingly, by reference to the date of the Registrar’s Orders, any application for review of the Registrar’s decision was required to be made by 21 September 2023 and the review application made on 19 September 2024, was made within time. The exercise of the Registrar’s delegated power derives its validity from the availability of review by a judge of this Court: see Bechara v Bates (2021) 286 FCR 166 (Bechara v Bates) at [3] per Allsop CJ, Markovic and Colvin JJ and AHH22 v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FedCFamC2G 426 (AHH22). In Bechara v Bates at [17] Allsop CJ, Markovic and Colvin JJ said the following about the nature of a review of a Registrar’s decision: To underpin the validity of the delegation of judicial power of the Commonwealth to a non‐judicial court officer there must be a rehearing de novo before a judge of the Court (whether Circuit Court or Federal Court). The review does not hinge, or focus, upon error in the decision of the registrar. It is a hearing de novo, in which the matter is considered afresh on the evidence and on the law at the time of the review, that is at the time of the hearing de novo. The importance of the de novo rehearing is Constitutional, being the supervisory condition that enables judicial power to be delegated to a registrar. All the jurisprudence stems from this requirement marked out by the High Court in the landmark decision in 1991 of Harris v Caladine [1991] HCA 9; 172 CLR 84, which is discussed in many of the cases referred to below.

Ratio Decidendi

Legal Principle Established

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