Mahommed v Cox

Case [2025] FCA 469


FEDERAL COURT OF AUSTRALIA

Mahommed v Cox [2025] FCA 469

File number: NSD 1874 of 2024
Judgment of: MARKOVIC J
Date of judgment: 14 May 2025
Catchwords: BANKRUPTCY AND INSOLVENCY – appeal from decision of primary judge to dismiss application for review of registrar’s decision to dismiss an application to set aside a bankruptcy notice – whether appellant has a counter-claim, set-off or cross demand equal to, or in excess of, the judgment debt – where judgment debt created by a costs order – appeal dismissed  
Legislation: Bankruptcy Act 1966 (Cth) s 40(1)(g)
Cases cited:

Capsanis, in the matter of Capsanis v Owners – Strata Plan 11727 [2000] FCA 1262

Re Glew; Glew v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331

Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 50
Date of hearing: 1 May 2025
Counsel for the Appellant: The appellant appeared in person.
Counsel for the Respondent: Mr D Allen
Solicitor for the Respondent: Shaba & Thomas Lawyers

ORDERS

NSD 1874 of 2024
BETWEEN:

MR PETER MAHOMMED

Appellant

AND:

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

Respondent

ORDER MADE BY:

MARKOVIC J

DATE OF ORDER:

14 MAY 2025

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…

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Details
AGLC
Mahommed v Cox [2025] FCA 469
Case
[2025] FCA 469
Decision Date

CaseChat Overview and Summary

In the case of Mahommed v Cox, the appellant, Mr Mahommed, sought to appeal against the decision of the primary judge to dismiss his application for review of the registrar’s decision to dismiss his application to set aside a bankruptcy notice. The dispute involved whether Mr Mahommed had a counterclaim, set-off or cross-demand equal to, or in excess of, the judgment debt, which was created by a costs order. The case was heard and decided by the Federal Court of Australia.

The central legal issue in this case was whether the appellant, Mr Mahommed, had a counterclaim, set-off or cross-demand equal to, or in excess of, the judgment debt. This issue was based on section 40(1)(g) of the Bankruptcy Act, which provides that a debtor commits an act of bankruptcy if they do not comply with the requirements of a bankruptcy notice served by a creditor who has obtained a final judgment or order against them, and the debtor does not have a counterclaim, set-off or cross-demand that is equal to or exceeds the amount of the judgment debt.

The court considered the primary judge’s assessment of Mr Mahommed’s alleged counterclaims and concluded that none of them constituted a counterclaim, set-off or cross-demand for the purpose of section 40(1)(g) of the Bankruptcy Act. The court found that the primary judge had correctly applied the law and there was no error in her conclusion. The court further noted that the appellant had failed to establish any of his grounds of appeal. Consequently, the appeal was dismissed with costs.

The final orders of the court were that the appellant’s amended notice of appeal filed on 6 March 2025 was dismissed, and the appellant was to pay the respondent’s costs of the appeal. The entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

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.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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 Mr Mahommed has failed to establish any of his grounds of appeal. It follows that the appeal should be dismissed with costs. I will make orders accordingly.

Ratio Decidendi

Legal Principle Established

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 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. 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;… 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. 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.