Rohit Kulkarni v Gwent Holdings Limited & Anor

A contractual provision deeming a shareholder to have served a transfer notice after a material or persistent breach must be construed according to its wording and commercial context.

Where the breach is capable of remedy, notice to remedy and failure to remedy within the specified period are required before the deeming provision operates. A repudiatory breach is not necessarily incapable of remedy for this purpose. Remediability is ordinarily assessed practically rather than technically, by asking whether the breach can be cured for the future or its mischief redressed. Seriousness and enduring prejudice may matter, but motivation will not usually be decisive.

The appeal arose from a judgment of the High Court, Business and Property Courts, Business List (ChD), given by Richard Farnhill sitting as a Deputy High Court Judge: [2024] EWHC 1357 (Ch).

The appellant and respondents were parties to a shareholders’ agreement containing compulsory transfer provisions. The High Court found that several breaches were material and persistent, but capable of remedy, and therefore held that no deemed transfer notice had arisen. The appeal concerned the construction of the notice-and-remedy mechanism, the remediability of repudiatory breaches, contractual estoppel arising from the recitals, the relevance of pre-existing personal relationships, and the remediability of the individual breaches.

The Court of Appeal unanimously dismissed the appeal.

1. Construction of clause 7.1(d). A material or persistent breach did not itself trigger a deemed transfer notice where it was capable of remedy. The Board first had to serve a notice to remedy with the required Shareholder Consent, and the breach had to remain unremedied for 10 Business Days. The clause did not create the proposed interim or twilight period. The expropriatory effect of compulsory transfer provisions also supported a cautious construction, consistently with the approach in Re Coroin Ltd [2013] EWCA Civ 781.
2. Repudiatory breaches. A repudiatory breach was not necessarily incapable of remedy under clause 7.1(d). The contractual meaning of capable of remedy was distinct from the common-law rule, explained in Bournemouth University Higher Education Corpn v Buckland [2010] EWCA Civ 121, that a repudiatory breach cannot be unilaterally cured by the contract-breaker.
3. Remediability. The ordinary inquiry was practical rather than technical: whether matters could be put right for the future or the mischief caused by the breach could be redressed. Past effects did not automatically make a breach irremediable. Enduring prejudice, lasting stigma, fear or anxiety could do so, but wilfulness and motivation would not usually be material. The seriousness of a breach could be relevant, but the Court would be slow to interfere with the trial judge’s factual and evaluative assessment.
4. Application. Returning the A and B shares could reverse the relevant breaches. The purported termination had changed nothing in practical terms. The delayed appointment of Mr Hussain could be remedied going forward, and earlier appointment would not have altered the Company’s governance arrangements. The recitals did not create a relevant contractual estoppel, and the parties’ prior personal relationship did not alter the assessment of remediability in this commercial agreement.

• Court of Appeal (Civil Division) — Appeal dismissed: [2025] EWCA Civ 1206.
• High Court, Business and Property Courts, Business List (ChD) — The Deputy High Court Judge found material and persistent breaches, but held that they were remediable and that no deemed transfer notice had arisen: [2024] EWHC 1357 (Ch).