Sharaf-Deen Yusuf was charged with intimidation and driving in a dangerous manner after he allegedly subjected the family of 20 people - including nine children aged under 10 - to a tirade of verbal abuse on a Sunday afternoon in April.

According to police, Yusuf - an Australian citizen of Nigerian background - yelled "F--k the Muslims. You're dead. I'll f--king kill you" towards the family before using his car to drive in circles around the group.

It is understood the family, from western Sydney, were Australian citizens of Muslim faith.

In court on Tuesday, defence lawyer Tyrone Phillips said his client had been assessed by Justice Health while in custody and had been diagnosed as suffering from a mental illness.

"I need to discuss with Mr Yusuf what course these matters will take regarding the mental illness he was suffering at the time," Mr Phillips said.

Documents tendered to the court during previous proceedings said Yusuf was already at the barbecue area, south of Panorama House, when the family arrived in five separate vehicles.

As a man from the group got out of his car, Yusuf allegedly walked up to the vehicle and took a photo of it, before taking images of the other cars.

When asked what he was doing, Yusuf did not respond, prompting one of the victims to tug lightly on Yusuf's jumper. Yusuf allegedly abused the man, saying "don't f--king touch me. I'll f--king kill you. You'll be dead."

Police said Yusuf got into his car and drove "very fast" circles around the group about three times while allegedly yelling "f--k the Muslims. I'm going to kill you. F--k the Muslims. I'm going to kill you".

Yusuf was arrested a short time later, taken to Wollongong police station and charged.

The case will return to court on June 25.