Dr Rohit Kulkarni v Gwent Holdings Limited & Anor

A contractual mechanism deeming a transfer notice to have been served is triggered only when its stated conditions are satisfied. Where a breach is capable of remedy, service of the contractual remediation notice and expiry of the remediation period are necessary steps.

Repudiatory character does not make a breach incapable of remedy for every contractual purpose. Remediability is a practical, forward-looking inquiry focused on whether the position can be put right for the future. A commercial shareholders’ agreement does not acquire quasi-partnership characteristics merely because the parties previously had a personal relationship.

The claimant and the defendants entered into a shareholders’ agreement concerning the ownership and management of a private hospital. The claimant alleged four breaches: wrongful allotment of A and B shares, purported termination of the agreement, and delay in recognising his appointment of a director.

The parties agreed that three breaches had occurred, while the directorship breach was disputed. The claimant sought a deemed transfer notice under clause 7.1(d), declarations, payment of £80,000, and rectification of the register. The central issues concerned construction of the remediation mechanism, the legal effect of the parties’ discussions before execution, the enforceability of the share allotment, estoppel by deed, and whether the breaches were material, persistent and remediable.

1. Clause 7.1(d). A transfer notice was not deemed to have been served. Where a material or persistent breach is capable of remedy, the clause requires service of a notice to remedy and expiry of the 10 Business Day period. The claimant’s negative control over whether a notice could be served did not make that construction uncommercial, since other legal remedies remained available.
2. Repudiatory breaches and remediation. A repudiatory breach is incapable of unilateral cure so as to deprive the innocent party of its common-law right to terminate. That principle did not determine remediability for the separate contractual purpose of clause 7.1(d), particularly where the claimant had affirmed the agreement or had no right to terminate under his pleaded case.
3. Formation and share allotment. The 7 February discussions produced no binding agreement requiring Gwent to gift the claimant shares or pay £80,000 for them. The discussions were uncertain, lacked consideration, and were plainly provisional. On 13 February the claimant offered to subscribe for 1,651 A shares for £80,000 and SJIH accepted. The allotment and issue were conditional on payment.
4. Estoppel by deed. Recital B objectively stated that the claimant held 1,652 fully paid A shares, but the parties did not intend that recital to form the basis of their bargain. The wider transaction required subscription capital, and the contractual and statutory context was inconsistent with the alleged estoppel.
5. Hussain Breach. Clause 13.2 gave the claimant a right to appoint a director and clause 13.4 made the appointment effective on receipt of notice. A short period for formalities was permissible, but the delay of several months was a breach. It was both material, because it deprived the minority shareholder of board representation, and persistent, because the defendants continued the position despite protest.
6. Remediability. The relevant inquiry was practical and forward-looking. The A and B share breaches could be reversed; the termination breach had no operative effect because repudiation was not accepted; and the directorship breach was remedied by the appointment of Mr Hussain. The absence of an express or implied duty of trust and confidence meant that alleged misconduct outside the agreement could not make those breaches irremediable.
7. The claimant was entitled only to a declaration that the Hussain Breach was material and persistent. No transfer notice was deemed served, no valuation process was required, the claim for £80,000 and interest failed, and rectification of the register was refused.