K & J Burns Electrical Pty Ltd & Anor v Melanie Timms & Anor [2026] NTSC 33 (18 May 2026)

Last Updated: 19 May 2026

CITATION: K & J Burns Electrical Pty Ltd & Anor v Timms & Anor [2026] NTSC 32

PARTIES: K & J BURNS ELECTRICAL PTY LTD

and

BURNS, Jarrod

TIMMS, Melanie

and

TIMMS, Ken Owen

TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION: SUPREME COURT exercising Territory jurisdiction

FILE NO: 2025-02724-SC

DELIVERED: 18 May 2026

HEARING DATE: 29 January 2026

JUDGMENT OF: Smyth A/AsJ

CATCHWORDS:

PRACTICE AND PROCEDURE – Application for summary judgment – Application for strike out of pleading – Principles which apply in respect to pleadings – Applications dismissed

Corporations Act 2001 (Cth), ss 53, 232, 233, 233(1), 234

Supreme Court Rules 1987 (NT), rr 10.06, 10.09, 22.01, 22.01(3), 22.06(1), 22.06(1)(b), 23.02(a), 23.02(c), 63.18

Australian Securities and Investment Commission v Cassimatis [2013] FCA 641; Australian Securities Commission v Lucas [1992] FCA 234; (1992) 108 ALR 521; Barnes v Commonwealth of Australia & Anor [2021] NTSC 30; Spencer v The Commonwealth of Australia (2010) HCA 28; (2010) 241 CLR 118; Secure Funding Pty Ltd v Yiallourou [2025] NTSC 88; Randazzo Investments (Mitchell Centre) Pty Ltd v Chatime Leasing Pty Ltd [2023] NTSC 70; Proud v Arkell [2019] NTSC 35; Sherrington v Independent Commissioner Against Corruption (NT) & Anor [2025] NTSC 27; Robertson v Northern Territory of Australia [2023] NTSC 91; McCasker v Omad (NT) Pty Ltd [2023] NTSC 1; Olive & Anor v Oceanview Developments Pty Limited & Ors [2023] NTSC 38; BWK Elders Australia Pty Ltd v Westgate Wool Company Pty Ltd & Ors (No 2) [2002] FCA 87; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; Cassegrain v Gerard Cassegrain & Co Pty Ltd [2012] NSWSC 403; Dunn v Yeperenye Pty. Limited & Anor [2025] NTSC 55; Joseph Taouk v Assure (NSW) Pty Ltd [2017] NSWSC 534; Rozenblit v Vainer & Anor [2019] VSC 316; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; Gray v Webb (1882) 21 Ch D 802; IceTV Pty Ltd v Ross [2011] NSWSC 1093; In the Matter of Wyndham Park Estate Pty Ltd [2019] VSC 92; Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452; McCasker v Omad (NT) Pty Ltd [2023] NTSC 1; Motor Accidents (Compensation) Commission v Toyota Motor Corporation Australia Limited & Anor [2023] NTSC 65; Northern Territory of Australia v Bellamack Pty Ltd [2025] NTSC 44; Northern Territory of Australia v John Holland Pty Ltd & Ors [2008] NTSC 4; Quinn v Hession (1878) 40 LT 70; Re a Company (No 1126 of 1992) [1994] 2 BCLC 146; Re Dawning Investments Pty Ltd and Dawning Developments Pty Ltd [2002] VSC 641; Re DG Brims and Sons Pty Ltd (1995) 16 ACSR 559; Sportsbet Pty Ltd v Moriaitis [2010] NTSC 24; Wardely Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514; Wheelahan v City of Casey [2013] VSC 316, referred to.

REPRESENTATION:

Counsel:

Plaintiffs: Dr C Ford SC

Defendants: Self-Represented

Solicitors:

Plaintiffs: De Silva Hebron

Judgment category classification: B

Judgment ID Number: Smy2605

Number of pages: 44

IN THE SUPREME COURT

OF THE NORTHERN TERRITORY

OF AUSTRALIA

AT DARWIN

K & J Burns Electrical Pty Ltd & Anor v Timms & Anor [2026] NTSC 32

No. 2025-02724-SC

BETWEEN:

K & J BURNS ELECTRICAL PTY LTD

First Plaintiff/First Defendant by Counterclaim

JARROD BURNS

Second Plaintiff/Second Defendant by Counterclaim

AND:

MELANIE TIMMS

First Defendant/First Plaintiff by Counterclaim

KEN OWEN TIMMS

Second Defendant/Second Plaintiff by Counterclaim

CORAM: SMYTH A/AsJ

REASONS FOR DECISION

(Delivered 18 May 2026)

[1] This matter involves two interlocutory applications, one each brought by the parties to the proceeding and which will be dealt with at the same time. The Plaintiffs’ application, by amended summons filed 25 November 2025, seeks summary judgment against the Defendants on their defence and counterclaim/set-off, pursuant to Rule 22.01 of the Supreme Court Rules 1987 (NT) (‘the Rules’). In the alternative, the Plaintiffs seek orders that the Defendants’ defence and counterclaim/set-off be struck out without liberty to re-plead and judgment be entered on the counterclaim/set-off in favour of the Plaintiffs, pursuant to Rule 23.02 of the Rules. The Defendants’ summons, filed 8 December 2025, seeks orders for the Plaintiffs’ substituted statement of claim (‘SSOC’) to be struck out either entirely or partially, and that the Plaintiffs to be ordered to re-plead any stuck out or defective paragraphs.

[2] A reply to the further amended defence (‘FA defence’), as well as a defence to the counterclaim, have been filed.

The principles applicable to summary judgment and strike-out

[3] In respect to an application for summary judgment, Rule 22.01 of the Rules provides that judgment may be given if there is no reasonable prospect of successfully defending (or prosecuting) the proceeding. For a claim or a defence to have no reasonable prospect of success, it need not be hopeless or bound to fail.^[1] Essentially, the party applying only needs to show that the opposing party has no reasonable prospect of successfully prosecuting or defending, as the case may be, the part of the proceeding that is the subject of the application.^[2] The test to be applied is less strict than that which had been applied to previous forms of the rule and sets a different line of inquiry. Although that does not mean that some of the principles applicable from the previous forms of the rule may still not be relevant to a degree.^[3] However, as stated in Spencer v The Commonwealth of Australia:^[4]

In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.

[4] In so far as the test has been framed with reference to requiring a more certain and concluded determination^[5] the broader approach as outlined above should be followed.^[6]

[5] In respect to the nature of the inquiry, it has been held that what is required is not a mini trial but a critical examination of the available materials to determine whether there is a real question of law or fact that should be decided at trial.^[7] An applicant bears the legal burden of establishing that the respondent has no reasonable prospect of successfully defending the claim (or prosecuting the claim). That may arise in respect to questions of fact, law, or mixed law and fact. Consistent with the modern approach to practice management, the Court must make a practical judgment as to whether the materials identify a “real question of fact or law” that justifies the time and expense of trial.^[8] Whilst acknowledging that each application for summary judgment or summary dismissal has to be determined according to its particular circumstances, and what is required is a practical judgment of the case at hand, some general principles were set out in Australian Securities and Investment Commission v Cassimatis:^[9]

“Accepting there can be no “hard and fast” rule about this, as a general principle, these authorities show that the moving party on an application for summary dismissal of the present kind is likely to succeed on its persuasive onus if it is able to demonstrate to the Court that the applicant’s success in the proceedings relies upon a question of fact that can be truly described as fanciful, trifling, implausible, improbable, tenuous or one that is contradicted by all the available documents or other materials. Conversely, as a general principle, it is unlikely to succeed where, on a critical examination of all the available materials, the Court is satisfied that there appears to be a real question of fact to be determined between the parties. This is more likely to be the case where the available materials include pleadings that raise factual disputes that can be truly described as significant, substantial, plausible or weighty. A real question of fact is also more likely to exist where the question/s of fact concerned is/are complex, eg involving numerous different events or transactions over a long period of time.

Similarly, as a general principle, the moving party on an application for summary dismissal is likely to succeed on its persuasive onus if it is able to demonstrate to the Court that the applicant’s success in the proceedings relies upon a question of law that is straightforward and confined, or is trite in the sense that it is well settled on authority, such that the question can be resolved summarily without the necessity for a full trial. On the other hand, the moving party would be unlikely to succeed if the Court is satisfied that the applicant’s success in the proceedings relies upon a question of law that is serious or important, or is difficult and therefore likely to require lengthy argument for its resolution, or involves conflicting authority, or is apparently arguable, yet novel.

Then there are proceedings involving questions of fact and law, or mixed questions of fact and law. Because this combination or mixing of factual and legal questions usually gives rise to the sort of complexity that traditionally requires a trial, where the Court is satisfied that this combination or mixing exists in the proceedings, it should, as a general principle, be particularly cautious about ordering summary determination. In other words, the moving party on an application for summary dismissal would, as a general principle, need to show a substantial absence of merit on either of the question of fact or law concerned, or where the two questions are mixed, on the mixed question, before having any chance of success in persuading the Court that questions of these kinds should be resolved summarily.”

[6] Once an applicant has established a prima facie case that the respondent has no reasonable prospect of success, a persuasive or evidential burden falls upon the respondent to show cause.^[10] Rule 22.06(1)(b) of the Rules requires that the respondent show cause by satisfying the Court that ‘in respect of that claim or part a question ought to be tried or that there ought for some other reason be a trial of that claim or part’.^[11] The principles applying to the procedural and evidential parts of Order 22 were described by Southwood J in Sportsbet Pty Ltd v Moriaitis.^[12]

[7] Notwithstanding those considerations, the Court retains a discretion as to whether to summarily determine the proceeding, which must be exercised judicially. The power to grant summary judgment is not to be exercised lightly and should be attended to with great caution.^[13]

[8] In respect to striking out a pleading because it does not disclose a cause of action or defence,^[14] the test which applies is similar to that for summary judgment, namely, whether there is ‘no reasonable prospects of success’.^[15] A pleading which does not comply with the pleading rules will be embarrassing for the purposes of Rule 23.02(c) of the Rules and liable to be struck out. I recently reiterated the proper purpose of pleadings in Northern Territory of Australia v Bellamack Pty Ltd^[16] and examples of specific types of pleadings which are embarrassing were given in Motor Accidents (Compensation) Commission v Toyota Motor Corporation Australia Limited & Anor.^[17] For the sake of completeness, I would also repeat the general principles which were summarised by Dixon J in Wheelahan v City of Casey (footnotes omitted):^[18]

(a) Order 13 of the Rules set out the relevant requirements of a sufficient pleading, while r 23.02 provides the grounds on which the sufficiency of a pleading may be impugned;
(b) the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;
(c) the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence). The expression “material facts” is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;
(d) as a corollary, the pleading must be presented in an intelligible form — it must not be vague or ambiguous or inconsistent. Thus a pleading is “embarrassing” within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged;
(e) the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant;
(f) pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);
(g) a pleading which contains unnecessary or irrelevant allegations may be embarrassing — for example, if it contains a body of material by way of background factual matrix which does not lead to the making out of any defined cause of action (or defence), particularly if the offending paragraphs tend to obfuscate the issues to be determined;
(h) it is not sufficient to simply plead a conclusion from unstated facts. In this instance, the pleading is embarrassing;
(i) every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a));
(j) the effect of any document or purport of any conversation, if material, must be pleaded as briefly as possible, and the precise words of the document or the conversation must not be pleaded unless the words are themselves material (r 13.03);
(k) particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement — namely, to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met. An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried;
(l) a pleading should not be so prolix that the opposite party is unable to ascertain with precision the causes of action and the material facts that are alleged against it;
(m) extensive cross-referencing of facts in a pleading may render parts of the pleading unintelligible;
(n) in an application under r 23.02, the court will only look at the pleading itself and the documents referred to in the pleading;
(o) the power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown; and
(p) if the objectionable part of the pleading is so intertwined with the rest of the pleading so as to make separation difficult, the appropriate course is to strike out the whole of the pleading.

[9] Additionally, when exercising the Court’s discretion to strike out a pleading, I agree with the observations of Luppino AsJ in Motor Accidents (Compensation) Commission v Toyota Motor Corporation Australia Limited & Anor:^[19]

Based on modern case management principles, it is now accepted that the Court has a discretion to allow a pleading which might otherwise be non-compliant, provided that the Court is satisfied that proper notice of the case that must be met has been given, whether by the pleadings or extrinsically. That discretion is often utilised to deal flexibly with pleadings which do not strictly comply with the technical pleading rules. Extrinsic matters that can be utilised for this purpose include further and better particulars, the provision of expert reports and lay affidavit evidence in chief and lastly, mediation.

[10] And in BWK Elders Australia Pty Ltd v Westgate Wool Company Pty Ltd & Ors (No 2) per Mansfield J:^[20]

The tendency in pleadings in recent years has been to address matters of substance rather than matters of form. Thus, as von Doussa J pointed out in Beach Petroleum NL v Johnson, the strict distinction between material facts and particulars has not been rigidly adhered to, and technical objections raised to pleadings on the ground of alleged want of form are not so enthusiastically received. The Court’s focus has been upon ensuring the case is identified with clarity, so that the opposing party knows the case to be met and the issues for trial are identified. The focus upon case management, to ensure the efficient and fair conduct of proceedings, has also led to the emphasis on technical pleadings rules being diverted to an emphasis upon ensuring that, in substance, the objectives of pleadings.... are fulfilled.

The Plaintiffs’ claim

[11] The SSOC was filed on 21 August 2025. There are two distinct parts to the SSOC: namely, allegations of misappropriation of the First Plaintiff’s assets by the Defendants and certain conduct by the Defendants in respect to Burtimms Super Pty Ltd (‘Burtimms’), which is the trustee of a self-managed superannuation fund. Both parts of the claim are made pursuant to s 232 of the Corporations Act 2001 (Cth) (‘the Act’) and seek remedies under s 233 of the same.

The Misappropriation Claims

[12] It is not disputed that the Second Plaintiff is a director of the First Plaintiff and was a director of the First Plaintiff, along with the First Defendant, from 21 May 2009 to 3 May 2022. The Second Plaintiff and First Defendant were, at relevant times and continue to be, shareholders in the First Plaintiff. The First Defendant was also previously employed by the First Plaintiff as its financial controller and ceased employment on or about 31 May 2022. The Second Defendant was employed by the First Plaintiff as its General Manager and ceased employment on or about 1 June 2022.

[13] The Defendants are also shareholders in another company, KM Timms Pty Ltd (‘KM Timms’), of which the First Defendant is the sole director. KM Timms is also a shareholder in the First Plaintiff (holding one C class share), although it has non-voting rights and is alleged to have been used as a vehicle to direct benefits/bonuses earned by the Defendants to them (presumably whilst directors or employees). In about May 2022, the Defendants resigned their employment from the company and the First Defendant resigned as a director. Thereafter, the Second Plaintiff remained to operate the company, but the First Defendant remained as a shareholder.

[14] The Second Plaintiff alleges four instances of misappropriation of the First Plaintiff’s property. These are as follows:

(1) That, after the departure of the Defendants from the First Plaintiff, he discovered instances of misappropriation of the company’s expenditure by the First Defendant and/or the Second Defendant. That misappropriation is alleged to comprise of the Defendants causing expenditure of company funds, services and materials for purposes which were not for the company’s benefit but for their own benefit. The expenditure is said to be particularised in four itemised invoices issued by the First Plaintiff to the Defendants, totalling $313,771.37. It is alleged that the First Defendant recorded the expenditure as if it was expenditure for the benefit of the company when it was not. It is alleged that each occasion of the allocation of the expenditure was a breach of the First Defendant’s fiduciary duty to the First Plaintiff and to the Second Plaintiff in his capacity as a director of the company. It is also alleged that that the Second Defendant was aware that he was receiving the benefit of the expenditure and should be similarly brought to account.
(2) On or about 23 May 2022, the First Defendant authorised final salary payments for herself and the Second Defendant in her capacity as financial controller. Though, she did not cease employment until 31 May 2022. It is alleged that the First Defendant continued to have a fiduciary duty by virtue of her position as director up until 3 May 2022, and her continued employment and control of company bank accounts until 31 May 2022. The salary payments included amounts for unused sick leave in the amounts of $16,106.50 and $11,807.50. It is alleged that the Second Defendant knew that the Defendants had no entitlement to be paid unused sick leave and that the money paid was from company property. It is alleged that those payments amounted to misappropriation of company funds by the Defendants. It is not expressly pleaded, as it is for (1) above, that the misappropriation was in breach of a fiduciary duty. Although, it is alleged that the First Defendant was a fiduciary.
(3) On 4 May 2022, the First Defendant purported to transfer ownership of a vehicle belonging to the First Plaintiff to the Second Defendant for the price of $45,000. It is alleged that the sale price of that vehicle was about 65% of the market value. At the time, the First Defendant had ceased to be a director of the company but remained an employee and recorded the transfer in the books of the First Plaintiff. It is alleged that the First Defendant misappropriated the First Plaintiff’s property, for the benefit of herself and the Second Defendant, to the value of $25,000. Additionally, it is alleged that the First Defendant and/or the Second Defendant purported to acquire from the First Plaintiff certain property, being a boat and two trailers, by paying an amount of $21,625 for them. It is alleged that the boat and trailers were worth $45,000. At that time, the First Defendant had ceased to be a director but remained an employee and was able to affect the transfer of the boat and trailers to herself and Second Defendant. As a result, it is alleged that the Defendants misappropriated the First Plaintiff’s property to the value of $23,875.

[15] It is the Plaintiffs’ claim that the misappropriation of the company’s assets and moneys amounted to actions on behalf of the company which were contrary to the interests of the members as a whole and/or unfairly prejudicial to the Second Plaintiff. Certain relief is sought under s 233 of the Act, namely: valuation of the company by an independent Court appointed valuer; purchase by the First Plaintiff of the First Defendant’s shares in the company (or the shares be sold to the Second Plaintiff at fair market value); on purchase of the First Defendant’s shares, the First Plaintiff is entitled to set-off such amounts as found to be misappropriated by the Defendants; the C class shares issued to KM Timms to be cancelled; and, in the alternative, the Defendants pay to the First Plaintiff such amounts as found to have been misappropriated by the Defendants as alleged.^[21]

The Burtimms Claim

[16] It is alleged that the Second Plaintiff and Defendants are shareholders and directors of Burtimms. This aspect of the claim has three components of oppressive conduct which are said to satisfy s 232 of the Act. These are as follows:

(1) Burtimms has failed to take necessary steps to realise the assets of the self-managed superannuation fund, which are required in order to action a request to transfer the member balance of the Second Defendant and another (Tanielle Timms), to another superannuation fund. In doing so, it is alleged that Burtimms (through the control of the Defendants) have rejected an offer to purchase property^[22] by the Second Plaintiff, have insisted it be sold on the open market, have prevented the property being sold with a lease in place, and have insisted the property cannot be sold for a price that delivers less than a 15% net return on investment.
(2) Burtimms (through the control of the Defendants) has failed to offer the First Plaintiff a further and longer lease over the property, upon which the First Plaintiff operates. This adversely affects the market value of the property, and ultimately the value of the superannuation fund and the company itself, to the detriment of the shareholders.
(3) From about 2022 to 2024, the Defendants misappropriated money of Burtimms by causing Burtimms to pay the legal fees of the Defendants in the conduct of a dispute with the company and these proceedings.

[17] As a result, it is alleged that the Defendants have: caused Burtimms’ affairs to be conducted contrary to the interests of the members as a whole; conducted the affairs of Burtimms in a manner which is unfairly prejudicial to the Second Plaintiff; and caused the directors of Burtimms to be deadlocked, meaning no decision can be made to effect the transfer requests. Relief is sought under s 233 of the Act seeking: a referral of the matter for expert determination of the lease on a commercially acceptable basis to all parties; an order for Burtimms to execute a lease in favour of the company for 2 years with 2x5 year options or alternatively, an order for Burtimms to renew or extend the lease, or to enter into a new lease; an order for Burtimms to sell the property within 60 days of the execution of a new or renewed lease; and removal of the Defendants as directors to allow the Second Plaintiff to conduct the affairs of Burtimms, or an order that Burtimms take all necessary steps to effect the dissolution of the superannuation fund and that Burtimms be wound up.

Evidence

[18] The Defendants rely on affidavit evidence in respect to their application to strike out the Plaintiffs’ SSOC. That evidence comprises the affidavit of Melanie Timms made 8 December 2025. Whilst the affidavit contains matters in the nature of numerous legal submissions as to the adequacy of the SSOC as pleaded, the gist of the affidavit is that the inadequacy of the pleading leaves the Defendants in a position where they cannot properly understand the case that is alleged or from preparing a meaningful response.

Disposition of the Defendants’ application to strike out the Plaintiffs’ SSOC

[19] The Defendants’ challenge to the Plaintiffs’ SSOC is made on numerous grounds.^[23] In particular including: a failure to plead material facts; a failure to plead the legal effect of a buy-sell agreement;^[24] a failure to plead the ownership of company assets; a failure to plead how authority was withdrawn or exceeded; a failure to comply with former Practice Direction 6; a failure to refer to prior share evaluations; certain limitation issues; a failure to plead the legal basis for liability entitling the Plaintiffs to issue invoices to the Defendants; and a failure to plead a reconciled net account between parties.

[20] Having dissected the Plaintiffs’ SSOC as above, it is quite plain that the Plaintiffs’ cause of action is statutorily based and they seek relief under s 233 of the Act. In doing so, they need to satisfy the elements of s 232 of the same, and the pleading must contain a statement of the material facts upon which the Plaintiffs rely to satisfy those elements. For completeness, that provision provides:

The Court may make an order under section 233 if:

(a) the conduct of a company's affairs; or
(b) an actual or proposed act or omission by or on behalf of a company; or
(c) a resolution, or a proposed resolution, of members or a class of members of a company;

is either:

(d) contrary to the interests of the members as a whole; or
(e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

[21] As a starting point, standing to apply for an order under s 233 of the Act is provided by s 234 of the same, which may include a member of the company. The Second Plaintiff is a member of the company. However, in these proceedings, both the company and member seek relief under s 233.^[25] The company does not appear to have standing under s 234 of the Act to apply for an order, as the oppression remedy is designed to provide personal relief to members. Although it was not argued in the Defendants’ application, there are doubts as to whether the First Plaintiff has standing in this proceeding. As this aspect was not raised or argued by either party, I will not make an order striking out paragraph 32 of the SSOC. That paragraph is capable of amendment if similar orders are sought by the Second Plaintiff (i.e. the aggrieved affected member).

[22] The phrase a ‘company’s affairs’ in s 232 of the Act is defined in s 53 of the same. The phrase ‘conduct of a company’s affairs’ has been given a very wide scope.^[26] Acts or omissions extend to past, present or future acts or omissions. What constitutes acts or omissions which are contrary to the interests of members as a whole, or oppressive to, unfair to, or unfairly discriminatory against members in that capacity or any other capacity, have similarly been interpreted broadly and in a flexible manner by the courts. Relevantly, the misappropriation of company funds by an executive director as to breach their fiduciary duty to the company has been held to constitute the necessary oppressive conduct.^[27] Similarly, the sale of company assets at a significantly undervalued amount has been held to constitute oppressive conduct.^[28] The use of company funds to defend oppression proceedings themselves has been found to constitute oppression.^[29] Although, whether a company’s participation is proper will depend on interests of the company.^[30] Likewise, the actions of directors in making certain business judgments in good faith (such as selling property or negotiating a lease which may be in the interest of the company and the shareholders) which had the effect of oppression might attract the operation of s 232 if no board of directors, acting reasonably, would have taken the relevant action.

[23] In respect to claims by the Defendants that the Plaintiffs’ allegations are barred by limitation periods in the Limitation Act 1981 (NT), a claim for oppression under s 232 of the Act is not subject to any specific limitation period and the remedy allows the Court to make orders even if the oppressive conduct has ceased.^[31] However, the Court retains a broad discretion, including taking into account reasons for delay in bringing proceedings as a factor in the exercise of the Court’s power to grant relief. In respect to the issue of whether a limitation period applies to an allegation of a breach of fiduciary duty, where a breach of fiduciary duty is alleged as an incident of the oppression, an interlocutory application of the present nature is not the appropriate vehicle to consider the resolution of specific limitation issues which can often turn on specific evidence and should either be dealt with by separate application alone or preferably before the trial judge.^[32]

[24] In my opinion, subject to the qualification set out below and above in respect to issues of standing, the Plaintiffs’ SSOC is sufficiently pleaded in terms of what is required by the Rules. The cause of action is an application under s 232 of the Act and seeks relief under the same, and the material facts of the oppressive conduct are sufficiently pleaded. It may be that the Defendants believe there is a lack of particulars in some instances. That can be cured by a request of further and better particulars and, absent satisfaction of that request, an application for an order for the same.^[33]

[25] Orders are sought against Burtimms to execute leases or to sell property, for the removal of two of its directors, or to take all necessary steps to effect the dissolution of the superannuation fund and for it to be wound up.^[34] The second part of the SSOC, in fact, is almost primarily aimed at Burtimms. The failure to join Burtimms is one of the grounds raised by the Defendants in their summons.^[35] In fact, neither of the other named corporate entities, namely Burtimms or KM Timms, are parties to the proceeding. Notwithstanding an argument that Court orders would be binding on their directors/shareholder and therefore they need not be joined, in my opinion, they should be joined as parties to the proceeding if their interests are affected or they are to be bound by Court orders. It may be that they are named as a nominal party and play an abiding role but, as their interests are affected, it will be necessary for them to be joined. Leave will be granted for the Plaintiffs to amend their SSOC to join KM Timms and Burtimms as defendants to the proceeding.

[26] The Defendants’ summons is otherwise dismissed.

The Defendants’ defence and counterclaim/set-off

[27] The FA defence was filed on 24 October 2025 and is prolix, comprising some sixty pages or 151 paragraphs as opposed to the nine-page SSOC. Parts of the FA defence are likely embarrassing and would be amenable to being stuck out under Rule 23.02(c) of the Rules. Other parts of the FA defence appear to be wholly unnecessary. For example, some of the FA defence is taken up arguing there was no contractual agreement to provide the services the subject of certain invoices, and therefore the Defendants do not have a legal obligation to pay them.^[36] That is not the Plaintiffs’ case. The Plaintiffs’ claim is that, contrary to their fiduciary duties, the Defendants personally received goods and services from the company and attributed the costs of those services to the company when they were not for the benefit of the same. The claim is that such conduct comprised a misappropriation of company assets, amounting to a breach of fiduciary duty which constitutes the relevant oppressive conduct for the purposes of s 232 of the Act. Whether there was a contractual obligation to pay the invoices is irrelevant in the context of the claim. The Plaintiffs have not sought to have those parts of the FA defence struck out as being nonresponsive.

[28] The Plaintiffs’ application by amended summons seeks summary judgment and is brought under Rule 22.01 of the Rules. The second order sought on Plaintiffs’ amended summons, in the alternative, is to have the Defendants’ pleadings (the FA defence and counterclaim) struck out, without liberty to re-plead, and judgment entered on the counterclaim/set-off (presumably under Rule 23.02(a) of the Rules). I will treat the Plaintiffs’ application as primarily a summary judgment application on the basis that the Defendant has no reasonable prospect of successfully defending the proceeding (or prosecuting the counterclaim). The application for a strike out, with no further re-pleading and judgment, essentially adopts the same test: the pleadings are relevantly defective and are not capable of amendment because there is no reasonable prospects of success.

[29] The Plaintiffs’ claim is set out in detail above, and I need not repeat it.

[30] Paragraph 16 of the FA defence denies each allegation of misappropriation. In respect to the first instance of misappropriation (the services, work and assets received), the Defendants plead that the work done was with the knowledge of the Second Plaintiff and was authorised for legitimate and proper business to benefit the company. The Defendants deny any breach of fiduciary duty and set out, in some detail, a response to the expenditure raised in each of the four invoices. The Defendants additionally deny a liability to repay the First Plaintiff. In respect to the second aspect of the alleged misappropriation (the paid sick leave entitlements) commencing at paragraph 79 of the FA defence, the Defendants deny that the payments were unauthorised or improper. Rather, in essence, the payments were in accordance with company practice, within the First Defendant’s authority to make, and were reasonable. In respect to the third aspect of the alleged misappropriation (the sale of the vehicle at less than market value) commencing at paragraph 96 of the FA defence, the Defendants plead that the transfer was authorised and in accordance with company procedures, including determining an appropriate sale value. In respect to the fourth aspect of alleged misappropriation (sale of the boat and trailers) commencing at paragraph 100 of the FA defence, the Defendants deny that the property was the company’s and allege that the Second Plaintiff was the registered owner. The Defendants plead that, as the boat and trailers were not company assets, there could not have been misappropriation of company assets as alleged and, in any event, were transferred with the Second Plaintiff’s knowledge and agreement. The Defendants additionally deny the relief sought, deny any shareholder oppression, deadlock or any reason for the valuation and purchase of shares. Additionally, the Defendants deny liability for any sum which would or should be set off in any ordered share acquisition. The Defendants also address the order seeking sale of the shares held by KM Timms and state that no grounds have been made out to justify that order, and that any sale must be made in accordance with whatever agreements are in place.

[31] In respect to the claims relating to Burtimms, the Defendants’ defence is set out in paragraphs 120 to 151 of the FA defence. In short, the Defendants deny the oppressive conduct alleged in respect of Burtimms and respond to the allegations made in the SSOC by asserting that the various decisions have been made in accordance with legislation, the relevant company constitution, collectively at directors meetings, and in good faith according to prudent business practices.

[32] The Defendants’ counterclaim is brought by both Defendants against both Plaintiffs. For the sake of confusion, I will continue to refer to the parties as they are named in the main claim. The counterclaim consists of three distinct parts: the first part comprises a claim by the Second Defendant against the First Plaintiff in relation to unpaid bonuses, on-call allowances, overtime and other allowances which accrued during the Second Defendant’s period of employment. The amount claimed is $575,738.00. This claim can only be brought by the Second Defendant against the First Plaintiff company.^[37] It is difficult to see how the claim could be brought against the Second Plaintiff in his personal capacity and the claim needs amending in that regard. The second part comprises a claim by the Defendants against the Plaintiffs for damage done to their property (it is alleged both Defendants were the registered owners of the property) in the course of certain building/renovation work undertaken by the First Plaintiff or its employees. The amount claimed is $21,247.60. Again, it is difficult to see how this claim can be personally maintained against the Second Plaintiff for the actions of the First Plaintiff and its employees. The third part of the claim involves a claim that the Defendants (presumably, jointly) are owed money by the First Plaintiff in terms of reimbursement of payments which they personally made to the company in circumstances where (presumably) there was an arrangement with the First Plaintiff to make good those payments (possibly in kind) in return. The Defendants claim they paid $349,601.88 to the company and that, on the company’s account, only received $313,771.37. Thus, leaving a shortfall of $35,830.51. The claim is made in terms of unjust enrichment warranting restitution.^[38]

[33] The Defendants seek to have any amounts found in their favour on their counterclaim to be set off against the Plaintiffs’ claims.

Evidence

[34] In support of their application for summary judgment, the Plaintiffs rely on the affidavits of Peter Orr made 21 November 2025 and 22 January 2026. Mr Orr’s evidence can be summarised as follows (predominantly on what he was told by the Second Plaintiff and verily believes):

(1) Peter Orr affidavit of 21 November 2025

Neither Defendants had requested payment of any amounts made in the counterclaim during the course of their employment.

At no time did the Second Plaintiff agree to payments for overtime or other allowances as claimed in the Defendants’ counterclaim.

The first time a claim was made, in the nature of what is claimed by the Second Defendant in the counterclaim, was in April 2023 and then by subsequent correspondence in September 2024 and January 2025.

That the claims in the counterclaim/set-off are limited by the operation of the Fair Work Act 2009 (Cth) and Limitation Act 1981 (NT), and he believes the Plaintiffs have a good defence.
(2) Peter Orr affidavit of 22 January 2026

Following the resignation of the Defendants from the First Plaintiff in May 2022, there were difficulties in operating the First Plaintiff’s business which continue to present and which threaten the on-going viability of the business.

In May 2022, following the departure of the Defendants from the First Plaintiff, there was an agreement with the First Defendant to sell the company. A valuation was obtained and the First Defendant indicated she was willing to sell her shares in the company subject to satisfactory appraisal by a business broker.

After May 2022, the Second Plaintiff became aware of the matters alleged in the SSCO, in respect to misappropriation by the Defendants, and he commenced legal proceedings. The First Defendant is now refusing to sell her shares whilst the proceedings are on foot and without resolving the Second Defendant’s claims against the First Plaintiff.

The First Plaintiff conducts its business on leased land owned by Burtimms. The Second Plaintiff and Defendants are directors of and shareholders in Burtimms. The lease is a month-to-month lease. Burtimms is refusing to grant a longer lease to the First Plaintiff or is refusing to sell the property to the First Plaintiff at market value, insisting on an open market sale. The uncertainties in occupancy are affecting the value of the property and the certainty of the First Plaintiff’s occupancy. Burtimms has also increased the rent on the property without agreeing to an extension, renewal or new lease to the First Plaintiff.

Burtimms is also the trustee of a self-managed superannuation fund for the benefit of the Second Plaintiff, Defendants and Ms Burns. Since October 2022, the Second Plaintiff and Ms Burns have sought to transfer their balances in the fund to a new fund. The Defendants have refused to act, in their capacity as directors, to affect those requested transfers.

Generally, the viability of the First Plaintiff has become inviable because of the actions of the Defendants, as set out in the Plaintiffs’ affidavits and pleadings.

Mediation had been attempted in 2024 but was cancelled at the request of the Defendants.

[35] The Defendants, in reply, rely on the affidavits of Melanie Timms made 22 December 2025 and 27 January 2026, and Ken Timms made 22 December 2025. Those affidavits can be summarised as follows:

(1) Affidavit of Melanie Timms made 22 December 2025

At all material times, the First Plaintiff had two directors, herself and the Second Plaintiff. Ms Timms’ role was working on the strategic side of the business, not the operation side, which was consistent with the business’ governance framework.

Matters such as payroll, remuneration policy, award interpretation, accounting treatment, financial approvals were made at director level. The Second Defendant did not have such delegations and nor did he participate in decisions of the company.

Payroll and accounting entries for the First Plaintiff were entered, maintained and reconciled by the company’s administrative staff and an external bookkeeper.

The Second Defendant sometimes did not receive payslips and did not receive itemised breakdowns of how recorded hours were processed.

The company maintained a bonus incentive scheme applicable to trade-based employees, which operated in addition to award or contractual entitlements. The Second Defendant, despite a move into the operational manager role, remained an award covered employee. There was no agreement that his overtime or other allowances were to be absorbed into a fixed amount payment.

The Second Defendant was required to be available for after-hours work, both operationally and in respect to his operational management role.

Following the Defendants’ departure from the company, a number of invoices were issued to recover historic amounts owing by them. Those invoices have a number of flaws and their accuracy is challenged. Additionally, no demands were made for such payments during their employment. During her time as a director, it was common practice for the company that work performed or materials supplied (be it for employees, close family or friends of directors) were not treated as ordinary commercial transactions and were either not charged at all or were charged on a heavily discounted basis. Such practices were reflected in the books of the company with the knowledge of directors, and it was part of the ordinary course of the company’s business.
(2) Affidavit of Ken Timms made 22 December 2025

During the material times he was employed solely as an employee of the First Plaintiff and was never a director, officer, partner or shareholder in the company, nor had financial authority over the company.

Evidence was given as to his employment circumstances, being that he was paid an hourly rate in accordance with the relevant award, and how he recorded hours worked. For many years, he did not receive payslips and when they were issued, they were irregular. Irregularities included not showing breakdowns of ordinary hours, overtime or other allowances. In the absence of payslips, he relied on the company’s payroll system, director and bookkeeper oversight.

It was only after he ceased employment that he requested copies of his payslips and payroll records, and gained an appreciation that there may have been potential underpayments of on-call allowance and overtime.

During his employment, he made payments to the company in respect to personal expenditure, materials and other items incurred through the business. Those payments were accepted by the company at the time, and he believed internal company process would address those payments.

Following the end of his employment, he received certain invoices from the company for moneys owing, which he disputes.

On cessation of his employment, he received a pay out of accrued sick leave as part of his final termination payment. Prior to the payment, he was informed by the directors/management of the company that the payment would be made, and he understood such payments were allowed under company policy.
(3) Affidavit of Melanie Timms made 27 January 2025

The affidavit was filed in response to the affidavit of Mr Orr made 22 January 2026, as well as written submissions made by the Plaintiffs. The affidavit is in the nature of legal submissions rather than evidence, and I will treat it as such.

Disposition of the Plaintiffs’ application for summary judgment or strike-out of the Defendants’ defence and counterclaim/set-off

[36] The Plaintiffs’ case is that the FA defence and counterclaim do not raise an effective opposition to a claim under s 232 of the Act.

[37] It is submitted that the Defendants’ response to the Plaintiffs’ claim cannot defeat it, in law or fact. This was on the basis that at law: the fact of the claim itself proves a deadlock between the only two shareholders, preventing the company from operating effectively (and therefore oppression); a counterclaim for a monetary sum does not go to the issues under s 232 of the Act and is not available;^[39] the First Defendant as director, shareholder and employee undertook the final payroll payments and did not claim or pay any amounts outstanding now claimed in the counterclaim; and the amount of $711,917.08 being counterclaimed by Second Defendant cannot go to any claim against the First Defendant.

[38] In respect to those issues, traditionally a deadlock or failure of shareholders to co-operate has not been held to be an instance of shareholder oppression.^[40] However, there is recent authority that suggests that where the company cannot maintain proper governance, a deadlock will be contrary to the interests of the members as a whole.^[41] In In the Matter of Wyndham Park Estate Pty Ltd,^[42] mutual allegations of oppressive conduct were made by each opposing side, comprising two 50% shareholders and directors of a small, tightly held private company. The Court observed that the company was in a state of deadlock as it could not maintain a proper governance regime. Each party complained of the other party failing to convene a meeting of directors or passing a resolution in respect to the lodging of tax returns. The Court held that plainly, the state of affairs was contrary to the interests of the members of the company even if the numerous other allegations which made up oppressive conduct (which were allegations of unauthorised payments) were not established at trial. The jurisdiction under s 233 of the Act was therefore enlivened.

[39] In this proceeding, the First Plaintiff has only one remaining director, the Second Plaintiff, who apparently has been operating the company since 2022. The pleaded instances of oppression relate to allegations of misappropriation of company property in 2022 (or earlier) by the Defendants. There is no pleading of a failure to call directors meetings or to pass important resolutions crucial to the on-going governance of the First Plaintiff. The Defendants deny the oppressive conduct as alleged and assert that the company continues to operate under the exclusive direction of the Second Plaintiff. Mr Orr’s evidence deposes to certain difficulties the business has suffered as a result of the departure of the Defendants, who were key employees or officers. That the First Plaintiff may be suffering because of those reasons is not sufficient in my mind to support a finding that there is a deadlock in its governance, either by its director who is responsible for its day-to-day operations or in its shareholders. Insofar as a deadlock or breakdown between shareholders is evidenced by this proceeding (and/or the counterclaim) holding up any possible agreement by the shareholders for either the sale of shares from one to the other, or sale of the company, it is my view that the state of the evidence is far from clear.^[43] Additionally, it is not certain (certainly on the authorities referred to) whether that type of impasse would be considered as ‘precluding the proper functioning of the ‘internal management and proceedings’ of the company’.^[44] Even if it was sufficient, there are difficulties. Firstly, the deadlock is not pleaded in the SSOC and, in my opinion, it should. This is particularly so if it is to be relied on in a summary judgment application. Secondly, the factual circumstances surrounding the arrangement for the sale of the company and/or the First Defendant’s shares are unclear making is less than ideal for a determination for summary judgment.^[45]

[40] In my opinion, the circumstances of the proceeding are insufficient to invoke s 232 of the Act on the basis of a deadlock in the operations of the First Plaintiff, warranting summary judgment in respect to that part of the claim.

[41] However, a deadlock is expressly pleaded in respect in the context of the Burtimms’ part of the claim.^[46] The allegation is that the directors of Burtimms are deadlocked and no decision can be made to affect the members’ transfer requests. It is presumed that is in respect to the decision to ultimately effect the relevant transfer requests, which is dependent on a decision in respect to the sale of Burtimms’ property (i.e. the assets required to be realised in order to action the transfers). In that regard, the affidavit of Mr Orr made 22 January 2026 refers to the acts of Burtimms but mainly in the context of the effect of its conduct on the operations of the First Plaintiff, namely, causing the First Plaintiff to ‘become unviable’.^[47] There is evidence from Mr Orr that the Defendants have refused to act on the requests, but there is also no further evidential material evincing an actual deadlock in decision making.^[48] The company structure for Burtimms shows that the directors are the Second Plaintiff, the Defendants and Ms Burns. Each director is also a shareholder holding 10 shares each.^[49] It is alleged in the SSOC that the Defendants hold 64% voting rights in Burtimms.^[50] Burtimms’ company constitution provides that voting rights for directors and shareholders shall be in proportion to the dollar amount each hold in the fund (i.e. one vote for each dollar) and resolutions are passed by a majority of votes cast. There is no independent verification of amounts held by each director, but it is Mr Orr’s evidence that as at the end of the last financial year, the Defendants held $214,000, the Second Plaintiff $90,000 and Ms Burns $28,000 (or 64%^[51], 27% and 9% respectively). A deadlock in decision making, either with directors or shareholders, would normally occur when each had equal voting rights and neither side had a majority, such that resolutions could not be passed.^[52] There is, of course, a distinction between a decision not capable of being made because of a clear deadlock and a decision not being made because a majority of those entitled to vote have voted for it not to be made, contrary to the wishes of another. The latter is not a deadlock but the manner in which a company is designed to operate (i.e. by majority vote). There is no evidential material by the Defendants in reply to this issue of a deadlock in Burtimms. Notwithstanding that, I am not satisfied on the evidence put forward by the Plaintiffs that there is a deadlock in Burtimms sufficient to warrant summary judgment in respect to s 232 of the Act. In that respect, the Plaintiffs have therefore failed to put on a proper affidavit as set out in Sportsbet. As stated, the Defendants have not, to any suitable extent, addressed the issue of a deadlock in Burtimms in evidence. A response is, however, extensively addressed in the FA defence. The FA defence provides an explanation for the decision making concerning the request for the transfer of shares and decision making as to the sale of the property.^[53] The FA defence makes reference to procedures for resolving director disputes and deadlocks through Burtimms’ company constitution and a “Deed of Amendment”.^[54] No “Deed of Amendment” has been put in evidence, and there is an inference that there is a document which contains dispute resolution mechanisms in it which has not been implemented. Notwithstanding that, the FA defence denies that the directors of Burtimms are deadlocked, but refers to an “impasse which arose” because the Second Defendant refused to attend directors meetings and that refusal to act in accordance with the company’s constitution prevented the proper management of the company’s affairs.^[55] On the above basis, it is manifestly unclear if there is or was a deadlock between directors of Burtimms in respect to matters concerning the request to transfer members out of the self-managed fund (and other related decisions concerning realisation of fund assets). It is not clear if there was a deadlock in voting by directors (or shareholders). It is not clear, if there was a deadlock, whether deadlock mechanisms had been implemented. It is not clear if a deadlock arose by the failure of one director to attend meetings as chair (i.e. the Second Plaintiff). Those circumstances make it inappropriate for a determination that there was oppression, comprising a deadlock, for the purposes of a summary judgment application.

[42] In respect to the submission that the counterclaim does not go to the issues under s 232 of the Act, and subject to the discussion in respect to set-off, the counterclaim does not need to go to the issues raised under s 232. A defendant may raise by counterclaim any claim they have against the plaintiff and is it not necessary that it be connected with the plaintiff’s claim.^[56] They are two separate proceedings conveniently tried together, subject to being separated pursuant to Rule 10.06 of the Rules. I do not take the case of IceTV as authority for the proposition that a defendant cannot bring a counterclaim in respect to an application under s 232 of the Act. IceTV appears to have comprised a decision in respect to a foreshadowed application by a party alleging oppression to amend a crossclaim and to seek compensation for that oppression. In IceTV, Brereton J appears to have conceded that s 233(1) of the Act might allow such a claim but queried against whom the compensation might be awarded, noting that it was not likely sought against the company but the oppressing directors.

[43] The Plaintiffs, in paragraph 32(c) of the SSOC, seek to have offset (from the value of the First Defendant’s shares in the First Plaintiff, before purchase by the company) any amounts found to have been misappropriated from the company by the Defendants. In the alternative at paragraph 32(e) of the SSOC, they seek an order that the Defendants repay the First Plaintiff such amounts as found to have been misappropriated by each of them. Those orders would be made in the exercise of the Court’s discretion under s 233 of the Act. It is against those possible awarded amounts that the Defendants seek a set-off.^[57] In that regard, it is worth reiterating what a set-off is. A set-off is a defence to the claim and should be pleaded as such in a defence, not in the counterclaim. Further, as part of the defence, a set-off is usually plead at the end of the defence after the final denial.^[58] The Defendants have sought to do that but the set-off is pleaded at the end of the counterclaim. The set-off should be properly pleaded in the body of the defence itself. The Defendants will have leave to make that amendment. That then leads to the issue as to whether a set-off is possible in the circumstances. What is proposed is not the usual set-off of by a defendant against a plaintiff. The Defendants seek to set-off any moneys which they may be found to be liable for in respect to the alleged misappropriation of company assets, either directly or indirectly, via diminution in the value of shares as they are acquired by the company^[59] or in from monies directly paid back to the company.^[60]

[44] In this context, the Court’s powers are broad in terms of the discretion to make such order or orders as it thinks appropriate pursuant to s 233 of the Act. I see no principle which would prevent the Defendants from not only counterclaiming but pleading a set-off (assuming it is done correctly) against the relief sought by the Plaintiffs in terms the scope afforded by orders made under s 233.^[61] Assuming the Plaintiffs and Defendants are successful on their separate claims (or partially successful) and a set-off is sought, it is not ultimately for me to decide what might happen on this application. Although, I note that even if a set-off is not available, the Court has the ability to “nett off” a successful claim and counterclaim and give judgment for the balance under Rule 10.09 of the Rules.

[45] As to the issue of the First Defendant preparing a final payroll and not claiming or paying any amounts claimed in the counterclaim, it was not made clear in submissions why, as a matter of law, this would defeat the Defendant’s response to the claim. In the counterclaim, there are three categories of payments claims, which comprise: the outstanding employment entitlements due to the Second Defendant; a claim by the Defendants for repayment for monies overpaid to the company; and a claim by the Defendants for damage to their property. It appears that the claim for repayment of overpaid moneys did not become apparent until sometime after the final payroll payments were made, and the damage to the property would not have normally been included in final payroll payments. Therefore, it is assumed that the failure to pay amounts claimed in the final payroll must refer to those outstanding payments to the Second Defendant now claimed by him. In respect to the payment of the overtime/allowances/bonuses claimed by the Second Defendant, this will be a matter for the Second Defendant’s counterclaim. It is the Second Defendant’s evidence^[62] that it was not until after his employment ended, after which he obtained advice and became aware of the shortfalls in payments made by the company, that he made a claim. His evidence is that, prior to this, he believed his employment entitlements had been properly addressed by the company. The Plaintiffs have not established, certainly to the extent required in a summary judgment application, why the reference in the Defendants’ defence to the First Defendant processing the final payments for the Second Defendant, and not making the outstanding entitlements presently claimed by the Second Defendant, is fatal to the Defendants’ case. I accept that the amount being counterclaimed by the Second Defendant can only be set-off against any other adverse monetary award affecting him, which is primarily the order for the account of profits from the allegedly misappropriated funds (either where he was directly accountable for them or possibly through the effect of his conduct had on the First Defendant’s shares).^[63] In my opinion, the Defendants raise an arguable defence to the Plaintiffs’ application, and I do not find that there is no reasonable prospect of successfully defending the proceeding. Similarly, the counterclaim is effective, as too is the set-off (subject to qualification). That part of the Plaintiffs’ application fails.

[46] As to the Plaintiffs’ submission that the FA defence and counterclaim fail in fact because: ‘the Defendant’s plead an agreement to the effect of the relief sought and/or the counterclaim is a confection manufactured to offset and exceed the claim because in effect it ‘beggars belief’ that a claim in the amount sought by Second Defendant was not contemplated or mentioned by any of the parties prior to his termination of employment until sometime much later in the context of this dispute’. In respect to the agreement pleaded, it is pleaded that in about May 2022, it was agreed between the Second Plaintiff and First Defendant to arrange for the company to be valued for potential sale, and for the First Defendant to commence steps to discharge loans/liabilities for the same purpose.^[64] Those pleadings are far from the relief sought in the proceeding. The relief seeks a valuation but also compulsory sale of the First Defendant’s shares and offsets for the alleged misappropriation. That the parties may have agreed to a potential sale of the company at one time and had it valued for that purpose, but for whatever reason that process broke down, does not deliver the FA defence and counterclaim a fatal blow. Nor am I necessarily convinced that the failure to deal with the Second Defendant’s outstanding entitlements, or him raising them at a later stage, is fatal. Whilst on one view it might be improbable that an employee would not be aware of his entitlements or raise such a large claim in a timely manner, the reasons for his ignorance in respect to the entitlements, and the delay in raising them after his employment ended, are addressed in his affidavit.^[65] Should the matter proceed to trial, his motivations for doing so will presumably be the subject of an assessment of his credit in the context of his belief as to the entitlements. I am not convinced that that aspect of the counterclaim has no reasonable prospects of success.

[47] In accordance with the principles applying to summary judgment (or by analogy, a strike-out with no ability to re-plead), relevant facts are in dispute between the parties and there are real questions to be tried, and I cannot find that the FA defence or counterclaim have no reasonable prospects of success. The Plaintiffs’ application fails.

Conclusion and Orders

[48] Both the Plaintiffs’ and Defendants’ applications fail. The Defendants’ application fails because the Plaintiffs’ SSOC, subject to certain exceptions, properly pleads an application under s 232 of the Act and relief under s 233. If the Defendants wish further and better particulars, then they can be sought via the process provided by the Rules. The Plaintiffs’ claim, however, is defective in the sense that it has not joined necessary parties Burtimms or KM Timms as parties to the proceeding. The Plaintiffs will have leave to amend the SSOC to join Burtimms and join KM Timms.

[49] The issue of standing for the First Plaintiff to bring an application pursuant s 234 of the Act, and to seek orders in terms of paragraph 32 of the SSOC, is raised. I will not strike out paragraph 32 as no order has been sought to that effect. However, it may be amenable to a future application. Should the Plaintiffs choose, leave will be granted to amend paragraph 32 of the SSOC so as to ensure the application is made by a party who has standing (i.e. the Second Plaintiff). If that occurs, it may be that the First Plaintiff should be removed as a plaintiff and re-joined as a defendant. Leave will be granted to affect that amendment if necessary. That may necessitate amendments to the FA defence and counterclaim as well, for which leave will similarly be granted.

[50] In respect to costs, and in accordance with the usual rule as to costs in interlocutory proceedings, I see no reason why Rule 63.18 of the Rules should not apply given that both parties were generally unsuccessful. However, should any party disagree, I will provide liberty to apply in respect to any application for costs upon at least 5 working days’ notice to the other party and the Court, with any application to be made within 21 days of the publication of these reasons.

[51] I therefore make the following orders:

The Plaintiffs’ amended summons filed 25 November 2025 is dismissed.
The Defendants’ summons filed 8 December 2025 is dismissed.
The Plaintiffs will have leave to amend the Substituted Statement of Claim, in accordance with these Reasons for Decision, to be filed and served within 21 days of these reasons.
The Defendants will have leave to amend their Further Amended Defence, in accordance with these Reasons for Decision, to be filed and served within 21 days of these reasons or within 21 days of service of any amended Substituted Statement of Claim, whichever is later.
Costs are to be costs in the proceeding pursuant to Rule 63.18, unless a party makes an application for costs within 21 days of the publication of these Reasons for Decision with at least 5 working days’ notice of the application to be given.
The proceeding is to be listed for further directions hearing on a date suitable to the Court and parties.

-----------------------------

[1] Rule 22.01(3) of the Rules. Although, I note there appears to be a drafting error in Rule 22.01(3) as it presently reads (my emphasis): ‘a defence of a proceeding or part of a proceeding need not be hopeless or bound to fail for it to have no reasonable prospect of success’, which could be construed as applying only to a defence of a proceeding. It should properly read ‘a defence OR a proceeding or part of a proceeding...’. Section 31A(3) of the Federal Court of Australia Act 1976 (Cth), upon which the rule was modelled, provides ‘[f]or the purposes of this section, a defence or a proceeding or part of a proceeding need not be...’.

[2] Olive & Anor v Oceanview Developments Pty Limited & Ors [2023] NTSC 38 at [21].

[3] Barnes v Commonwealth of Australia & Anor [2021] NTSC 30 at [11].

[4] (2010) HCA 28; (2010) 241 CLR 118 at [59] (‘Spencer’).

[5] Secure Funding Pty Ltd v Yiallourou [2025] NTSC 88, or see also Randazzo Investments (Mitchell Centre) Pty Ltd v Chatime Leasing Pty Ltd [2023] NTSC 70 at [16] and Proud v Arkell [2019] NTSC 35 at [11].

[6] Sherrington v Independent Commissioner Against Corruption (NT) & Anor [2025] NTSC 27 at [49]- [53]; Robertson v Northern Territory of Australia [2023] NTSC 91 at [17]- [18]; McCasker v Omad (NT) Pty Ltd [2023] NTSC 1 (‘McCasker’); Olive & Anor v Oceanview Developments Pty Limited & Ors [2023] NTSC 38 at [21]- [24].

[7] Olive & Anor v Oceanview Developments Pty Limited & Ors [2023] NTSC 38 at [21], citing Australian Securities and Investment Commission v Cassimatis [2013] FCA 641; (2013) 220 FCR 256 (‘Cassimatis’) at [46].

[8] Cassimatis at [46].

[9] Cassimatis at [47]-[49].

[10] McCasker at [17]. Although, I note the observations of Reeves J in Cassimatis in the context of s 31A of the Federal Court Act (upon which Rule 22.01 of the Rules was modelled) that there is not a two stage shifting onus test. The authorities, in respect to s 31A, identify one relevant criterion in a summary dismissal application and make it clear that the moving party bears the persuasive onus on that question throughout.

[11] McCasker at [17].

[12] [2010] NTSC 24 (‘Sportsbet’). Recently restated in McCasker at [18].

[13] See Spencer at [24]. Cassimatis at [50].

[14] I.e. Pursuant to Rule 23.02(a) of the Rules.

[15] Motor Accidents (Compensation) Commission v Toyota Motor Corporation Australia Limited & Anor [2023] NTSC 65 at [93].

[16] [2025] NTSC 44 at [9], citing Northern Territory of Australia v John Holland Pty Ltd & Ors [2008] NTSC 4.

[17] NTSC 65 at [14].

[18] [2013] VSC 316.

[19] [2023] NTSC 65 at [15].

[20] [2002] FCA 87 at [20].

[21] A form of relief which is available is an account of profits earned in breach of a fiduciary duty where that constitutes oppression, and that remedy can extend to third parties. See: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672.

[22] Which happens to be the property upon which the First Plaintiff operated and leases from Burtimms.

[23] As set out in the Defendants’ Hearing Outline A–N and in the affidavit of Melanie Timms made 8 December 2025 received on the basis that it was more in the nature of legal submissions rather than evidence.

[24] Which is Annexure ‘PSO-8’ of the affidavit of Peter Orr made 22 January 2026. That buy-sell agreement only appears to apply to the circumstances of death or disablement of a shareholder, referred to as an ‘Option Event’.

[25] SSOC at [32] provides ‘[t]he Company seeks the following orders pursuant to s 233 of the Corporations Act’.

[26] Australian Securities Commission v Lucas [1992] FCA 234; (1992) 108 ALR 521 at 539.

[27] Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452.

[28] Cassegrain v Gerard Cassegrain & Co Pty Ltd [2012] NSWSC 403.

[29] See: Re DG Brims and Sons Pty Ltd (1995) 16 ACSR 559.

[30] See: Re a Company (No 1126 of 1992) [1994] 2 BCLC 146 at 156.

[31] Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [65] per French CJ and at [182] per Gummow, Hayne, Heydon and Kiefel JJ.

[32] See: Wardely Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514.

[33] See: Dunn v Yeperenye Pty. Limited & Anor [2025] NTSC 55 at [11].

[34] See: SSOC at [45(b)]-[45(f)].

[35] See: ground 1(i) of the Defendants’ summons filed 8 December 2025.

[36] See: FA defence at [44]-[48].

[37] It is quite likely that for the main claim, the company should be a defendant and not a plaintiff. It follows that, for the counterclaim, the company should be a defendant to the same.

[38] Although the cause of action of “unjust enrichment” itself is not recognised in Australia, see: Joseph Taouk v Assure (NSW) Pty Ltd [2017] NSWSC 534 at [91]- [92] and Rozenblit v Vainer & Anor [2019] VSC 316 at [122]- [125].

[39] Citing IceTV Pty Ltd v Ross [2011] NSWSC 1093 at [6] (‘IceTV’), an ex tempore decision of Brereton J.

[40] See: Re Dawning Investments Pty Ltd and Dawning Developments Pty Ltd [2002] VSC 641 at [34].

[41] Ibid.

[42] [2019] VSC 92.

[43] The First Plaintiff’s share register or holdings is not in evidence, although it is assumed the Second Defendant and First Defendant each hold 50% of the shares. The constitution of the First Plaintiff is not in evidence, so it is unknown whether there are any means for the resolution of disputes amongst shareholders and/or deadlock dispute provisions. Although there is mention of deadlock in the context of minutes of a meeting relating to the Burns Family Constitution dated 15 April 2023, which is Annexure ‘PSO-01’ of the affidavit of Peter Orr made 21 November 2025. That deadlock reference refers to seeking external advice from Deloitte in circumstances of a deadlock. It is unclear if that applies to the shareholders of the First Plaintiff.

[44] In the Matter of Wyndham Park Estate Pty Ltd [2019] VSC 92 at [37]. Also see: Re Dawning Investments Pty Ltd and Dawning Developments Pty Ltd [2002] VSC 641 at [34], where it was stated ‘[t]he breakdown must prevent the company from functioning properly’.

[45] For example, the affidavit of Peter Orr made 22 January 2026 makes reference to an agreement between the shareholders to sell the company in May 2022, and also a refusal of the First Defendant to sell her shares to the Second Plaintiff due to the existence of the proceedings.

[46] SSOC at [44(c)].

[47] Affidavit of Peter Orr made 22 January 2026 at [12].

[48] No minutes of director’s meeting showing voting deadlock or shareholder meetings showing deadlock in voting.

[49] Affidavit of Peter Orr made 22 January 2026 at Annexure ‘PSO-6’.

[50] SSOC at [36].

[51] Which is denied by the Defendants. See: FA defence at [121].

[52] For example, see: In the Matter of Wyndham Park Estate Pty Ltd [2019] VSC 92 at [25].

[53] See: FA defence at [121]-[122], [123]-[127].

[54] FA defence at [130]. See also: Affidavit of Peter Orr made 22 January 2026 at Annexure ‘PSO-6’.

[55] FA defence at [131].

[56] See: Gray v Webb (1882) 21 Ch D 802; Quinn v Hession (1878) 40 LT 70.

[57] The set-off is not truly pleaded in the defence as a defence to the SSOC as envisaged by Rule 13.14 of the Rules. Rather, it is pleaded as part of the counterclaim.

[58] Usually to the effect of ‘Further or alternatively, if which is denied, the Defendant is liable to the Plaintiff as alleged or at all, the Defendant seeks to set off against such liability, the amount set out in the Counterclaim herein, in extinction or diminution thereof’.

[59] SSOC at [32(c)].

[60] SSOC at [32(e)].

[61] Acknowledging that issue may ultimately rest with the trial judge.

[62] Affidavit of Ken Timms made 22 December 2025 at [39].

[63] Assuming that the Plaintiffs are seeking to reduce the value of the First Defendant’s shares when sold to the company on the basis of the amounts said to have been misappropriated by the Second Defendant’s conduct.

[64] FA defence at [104], [114].

[65] See: affidavit of Ken Timms made 22 December 2025 at [47].

Subsequent Judicial Consideration0