Dr Rohit Kulkarni v Gwent Holdings Limited & Anor

The court interpreted clause 7.1(d) of the Shareholders' Agreement (the SHA) objectively and held that service of a Board "notice to remedy" was a pre-condition to the 10-business day remediation period starting to run; absent service of that notice no deemed Transfer Notice arises. The judge held that repudiatory breaches do not, as a class, automatically count as irremediable for the SHA's remediation scheme: repudiatory breaches give the innocent party the usual election rights at common law but that does not prevent a defaulting party from curing a material breach for purposes of a contractual remedy provision.

The court found on the facts that the short "Pre-Meeting" on 7 February 2020 produced at best an inchoate and uncertain oral arrangement about the Claimant's shares; no binding agreement was concluded under which Gwent would gift or pay for the Claimant's 1,651 A shares. Recital (B) of the SHA did not give rise to an estoppel by deed preventing Gwent or SJIH from challenging that recital.

Four breaches were considered: the allotments to Gwent of A and B shares and the defendants' termination letter were repudiatory breaches admitted by the defendants and found to have been capable of remediation and in fact remedied (the allotments were unwound and the A shares later transferred to the Claimant on payment). The delay in recognising the Claimant's appointment of Mr Hussain was a material and persistent breach of the SHA; that declaration was granted. The Claimant was not entitled to a deemed Transfer Notice, not entitled to £80,000 from Gwent, and not entitled to rectification of the register as at 13 February 2020.

This was a first-instance contract dispute arising from the acquisition and reorganisation of St Joseph's Independent Hospital (SJIH) and the Shareholders' Agreement dated 13 February 2020 (SHA). The Claimant alleged breaches of the SHA by Gwent and SJIH relating to share allotments, an asserted termination, and refusal promptly to accept a director appointment. He sought declarations (including that a Transfer Notice was deemed served under clause 7.1(d) of the SHA and that valuers should be appointed), sums (an £80,000 claim in respect of 1,651 A shares) and rectification of the register.

Nature of the claim / relief sought: declarations under the SHA (including deemed Transfer Notice and appointment of valuers), a contractual claim for £80,000 (alleged payment for A shares by Gwent), and rectification of the company register; alternative declarations and remedies arising from alleged repudiatory conduct.

Issues framed:

• Interpretation of clause 7.1(d) (whether remediation can occur absent a Board "notice to remedy").
• Whether repudiatory breaches are, as a class, incapable of remediation for the purposes of clause 7.1(d).
• What was agreed at the Pre-Meeting and Main Meeting of 7 February 2020 and at the SJIH board meeting of 12/13 February 2020 (specifically whether a binding contract existed under which Gwent would provide the Claimant's A shares or funding equivalent to £80,000).
• Whether Recital (B) of the SHA attracted estoppel by deed.
• Whether the defendants were obliged to accept the Claimant's appointment of Mr Hussain immediately and whether the delay was material/persistent.
• Whether the A and B shares allotments and the termination letter were remediable, and whether remediation was in fact achieved.

Court's reasoning (concise): The judge applied established principles of contractual interpretation (reference to ABC Electrification and RTS Flexible Systems) and treated the clause 7.1(d) wording literally and commercially: the 10-business-day remedy period begins only after a Board notice to remedy is served. The court rejected the argument that repudiatory breaches are incapable of remediation for all purposes — Buckland was considered but the court held the central effect of repudiation (the innocent party's elective right) does not convert every repudiatory breach into something that cannot be remedied for other contractual mechanisms. On the facts, the short Pre-Meeting produced no sufficiently certain, supported agreement obliging Gwent to pay or gift the Claimant's A shares; contemporaneous minutes and conduct showed the Claimant expected to subscribe and pay. Recital (B) did not establish an estoppel by deed because the SHA and the transactional context showed the parties did not intend the recital to operate as a binding factual admission independent of the factual reality. The Hussain appointment was wrongly delayed beyond what was reasonable and the delay amounted to a material and persistent breach. The allotments to Gwent and the B shares allotment and the termination letter were repudiatory but capable of remediation; they were unwound and the A shares remitted into treasury and ultimately transferred to the Claimant on payment. Declarations and monetary/rectification relief claimed by the Claimant otherwise were refused.

Wider context: the judgment emphasises the limits of importing equitable concepts such as trust and confidence into a standard commercial SHA and the practical, forward-looking character of the remedial inquiry: whether a breach can be put right for the future rather than erased for the past.

First instance judgment: The court granted a declaration that the delay in recognising Mr Hussain’s appointment was a material and persistent breach of the SHA. The court rejected the Claimant’s principal contractual remedies: no deemed Transfer Notice under clause 7.1(d) (because no notice to remedy was served and the clause was construed objectively), no binding oral agreement that Gwent would gift or pay for the Claimant’s 1,651 A shares, no entitlement to £80,000 or interest, and no rectification of the register as at 13 February 2020. The A and B allotment breaches and the written notice purporting to terminate the SHA were repudiatory but were held capable of remedy and were remedied in the course of events; the Termination Breach was not accepted by the Claimant and so had no effect. The judge’s reasoning combined textual construction of the SHA with practical assessment of remediability and a careful evaluation of witness evidence.