DR ROHIT KULKARNI v GWENT HOLDINGS LIMITED & Anor.

The claimant sought summary judgment under CPR 24.2 in a dispute arising from a shareholders' agreement dated 13 February 2020. The application raised two principal legal issues: (1) whether the court should order rectification of the company's register of members under section 125 of the Companies Act 2006 to show the claimant as owner of 1,652 A shares with effect from 13 February 2020; and (2) whether two admitted breaches of the shareholders' agreement (the allotment of shares to the defendant and a purported termination letter) were "material" and, crucially, "capable of remedy" under clause 7.1(d) so as to trigger a deemed Transfer Notice enabling the claimant to acquire the other party's shares.

The court held that both issues involved substantial questions of construction and contested factual matters that could not be resolved fairly on a summary basis. On rectification the court identified real prospects for the defendants to show the recitals were intended as statements of intent rather than facts, and that estoppel by deed/contractual estoppel raised complex admissibility and public policy questions (including compliance with statutory rules on allotment and payment). On remediability, the court concluded the proper construction of clause 7.1(d) and whether the mischief caused by the breaches could be remedied depended on detailed factual inquiry and authorities (including Schuler v Wickman and Telechadder) did not permit summary resolution. Accordingly the claimant's application for summary judgment was dismissed.

The claimant, a consultant surgeon and (at the material time) an initial A shareholder and director, issued proceedings after disputes about the allotment and ownership of A shares in a company owning a private hospital. The shareholders' agreement (SHA) recorded in its recitals that the claimant was the registered owner of 1,652 A shares, although at execution he was in fact registered as owner of only one A share and had not paid the disputed subscription sum. The defendants had procured the company to allot the remaining 1,651 A shares to Gwent, and later Gwent sent a letter purporting to terminate the SHA. The claimant relied on (i) estoppel by deed/contractual estoppel and/or an agreement to entitle him to rectification of the register under section 125 Companies Act 2006, and (ii) clause 7.1(d) of the SHA (a deemed Transfer Notice on material unremedied breach) to acquire Gwent's shares at the lower of subscription price and Fair Value.

The issues before the court were:

• Issue 1: whether the register should be rectified with retrospective effect to show the claimant as proprietor of 1,652 A shares from 13 February 2020 (Companies Act 2006 s125); and
• Issue 2: whether the admitted breaches were "capable of remedy" under clause 7.1(d) such that the deemed Transfer Notice mechanism was triggered.

The court reviewed the relevant principles for summary judgment (CPR 24.2) and for granting declarations, then analysed contractual construction of the SHA and doctrines of contractual estoppel and estoppel by deed. On Issue 1 the court concluded there were real prospects that Recital (B) was intended to record an intention or expectation rather than an operative fact, and there were significant difficulties about what a rectified register would lawfully record (including statutory rules against allotment at a discount and the proper treatment of sums said to be "paid"), and uncertainty as to admissible evidence on estoppel by deed. The court therefore declined summary rectification and exercised its discretion to require a trial.

On Issue 2 the court held that "capable of remedy" must be construed in the contractual and factual context and that authorities show a detailed factual inquiry is often required (whether the mischief can be removed or a residual stigma remains). The court found the defendants had a real prospect of success on construction and on the facts, and that the remediability question was unsuitable for summary determination. The application for summary judgment was dismissed and the matters were remitted to trial.

The claimant's application for summary judgment under CPR 24.2 was dismissed. The Deputy Master concluded that (i) the claimant was not entitled, on the material before the court, to prospective rectification of the register under section 125 Companies Act 2006 because the recitals and estoppel argument raised matters of construction and admissible evidence that required a full trial; and (ii) whether the admitted breaches were "capable of remedy" under clause 7.1(d) of the shareholders' agreement involved disputed factual and legal issues (including loss of trust, stigma and remedial possibilities) unsuitable for summary disposal. The defendants were shown to have a real prospect of success on both issues.