"The reason we rejected it is because it is a barber shop," he told Today this morning. "I only specialise in cutting men's hair. I'm not qualified to cut females' hair. That's pretty much it. I'm surrounded by hairdressers."
He said when women come into the shop he just points them to the nearest hairdressing salon. "They are literally a 20-second walk away."
The woman took her complaint to the Human Rights Commission, claiming he breached anti-discrimination laws and embarrassed her daughter.
Mr Rahim said he offered the woman an apology, but she didn't accept it. He's now been served court papers, which he said was stressful to deal with.
"I've got two kids. I've had to drag them to go find legal advice because we've never been to court or in this situation," he said. "We were just surprised and shocked that it's come so far."
Mr Rahim's wife Rhonda said she was shocked by the woman's behaviour.
"After her rant in the store, she proceeded to go on Facebook and continue the rant ... and discredit everything that he's built, because her daughter was declined a haircut.
"It was not a personal attack. It wasn't anything personal. It's just that he didn't have that skill to cut her hair."
Mr Rahim insisted it wasn't discrimination — he merely wasn't qualified to cut women's hair. "We're all for gender equality ... but the skillset is completely different. A barber course is about six months and a hairdressing TAFE course is three years, in which you have to do your apprenticeship as well. It's completely different. When you walk into a barber shop, you rarely see any women in there because a barber shop is just known for men."
In a statement to the Nine Network, the complainant claimed Mr Rahim never said he was unqualified to cut women's hair.
"A claim has been brought against Hunters Hill Barber Shop in the Federal Circuit Court for an alleged breach of the Sex Discrimination Act. The basis of the claim is that the barber shop refused to simply run the clippers through my daughter's undercut, because she was a girl.
"I indicated to him that I did not need him to style, cut or trim the rest of her hair, which is styled in a 'bob'.
"Mr Rahim's explanation was that he wished to keep his barber shop for boys and men only. He never said he was not qualified to cut women's or girls' hair, as he has incorrectly reported to the media.
"The matter remains before the Court and it is inappropriate for me to provide any further comment at this point in time."