A Sydney Muslim woman suffered a miscarriage of justice at her terrorism raid lawsuit because she was not allowed to give evidence with her face covered, an appeal court has been told.

The “deeply held religious beliefs” of Moutia Elzahed meant that she did not give “crucial” evidence about her version of what police did during the September 2014 raid, her lawyer, Jeremy Kirk SC, argued on Monday in the New South Wales court of appeal.

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Elzahed, who lost her civil action and was ordered to pay $250,000 in police legal costs, is challenging the trial judge’s ruling that she could not enter the witness box while wearing a niqab. Her then lawyer had told the trial judge it was against her religion to reveal her face to men before screening options were discussed.

Kirk on Monday acknowledged the parties had been in “deep and substantially unchartered waters”, noting there was only one other Australian case in the Western Australian district court.

He understood the only appeal ruling in the world involving the niqab was in Ontario. “There is no ruling or law that says a face must be uncovered when a person is giving evidence, at least not in formal terms,” he said.

Woman cannot give evidence in a niqab, Australian court rules Read more

Two police officers testified at the hearing as to what happened in the bedroom at Elzahed’s house during the raid, so her version was always going to be crucial, Kirk said.

But he submitted that the trial judge did not appear to recognise its significance.

“The fact is we are dealing with very important issues here, about a witness giving evidence and about due respect for religious beliefs,” he said.

The hearing is continuing.