Bains v Arunvill Capital Ltd & Anor

A contractual material-breach cure clause requires the court to identify the breach specified in the notice and determine whether it was remedied within the contractual period. Where the breach is an actual refusal to perform a continuing positive obligation, the party must resume performance within that period. A statement of future intention is insufficient if the party continues not to perform. A notice referring to a refusal to provide services can be sufficiently clear when it identifies an existing refusal and continuing non-performance, rather than a merely theoretical future threat. The appeal was dismissed.

Mr Jas Bains was engaged as a consultant by Arunvill Capital Ltd under an agreement requiring him to provide specified services. Arunvill served notice alleging a material breach and required it to be remedied within 21 days. Mr Bains replied that he intended to perform his contractual obligations, but provided no further services.

HHJ Dight found that the breach had not been remedied and that the agreement had terminated. Fancourt J dismissed Mr Bains’s appeal in a judgment reported at [2019] EWHC 1749 (Ch). The issue before the Court of Appeal was whether the letter of intention, without resumed performance, remedied the breach.

1. Appeal dismissed. Moylan LJ delivered the judgment, with which Patten LJ and Mann J agreed. The courts below had correctly identified the breach and concluded that it had not been remedied.
2. Application of a material-breach clause involves identifying the material breach specified in the notice and determining whether that breach was remedied within the contractual cure period. The notice served on 5 April 2016 was sufficiently clear. In context, the reference to a refusal to provide services identified an existing refusal to work and continuing non-performance, not merely a theoretical threat about future conduct.
3. The claimant’s obligation to provide the contracted Services was freestanding and did not depend on Arunvill first giving him instructions or cooperation. Because the breach was an actual refusal to perform a continuing positive obligation, remedy required the claimant to resume providing the Services within the 21-day period. The letter of 20 April 2016 merely stated an intention to perform in the future. No services were provided, so the breach continued and the agreement terminated on 26 April 2016.
4. The court rejected the submission that the rejection of the newly created strategies left the claimant with nothing to do. The Services were broader than those strategies and could still be performed. Any difference between the lower courts’ reasoning on that point was immaterial to the appeal.
5. The court’s additional discussion of Griffon Shipping LLC v Firodi Shipping Ltd [2014] 1 Lloyd’s Rep. 471 did not assist the claimant. That authority concerned a different contract and the relationship between express contractual termination rights and common-law remedies. Its general recognition of the value of contractual termination rights did not affect the approach required to determine whether the present breach had been remedied.

• Court of Appeal (Civil Division). Appeal dismissed.
• High Court, Chancery Division. Fancourt J dismissed Mr Bains’s appeal from the first-instance decision: [2019] EWHC 1749 (Ch).
• First instance. HHJ Dight found that the material breach had not been remedied within 21 days and that the agreement had terminated.