Repudiation and Remediability: The Court of Appeal gives guidance on the phrase ‘capable of remedy’

In a key decision on the meaning and effect of the contractual effect of the phrase ‘capable of remedy’ the Court of Appeal has just handed down its judgment in Kulkarni v Gwent Holdings Ltd [2025] EWCA Civ 1206.

As well as providing clarity as to the effect and scope of the decision in Bournemouth University Higher Education Corpn v Buckland [2010] EWCA Civ 121, [2011] QB 323, this case is a useful touchstone for practitioners in all areas of contract law as to the precise meaning of the phrase ‘capable of remedy’. This will be of particular note to property practitioners in the realm of forfeiture and section 146 notices.

Andrew Butler KC and Hugh Rowan appeared for the Appellant instructed by Acuity Law.

Introduction

The Court of Appeal has just handed down its judgment in the case of Kulkarni v Gwent Holdings Ltd [2025] EWCA Civ 1206. This case was a multi-million pound shareholders’ dispute arising from a shareholders’ agreement (“SHA”) entered into in February 2020 between Mr Rohit Kulkarni (a consultant surgeon and former medical director of St Joseph’s Independent Hospital), Gwent Holdings Ltd (controlled by Mr David Lewis), and St Joseph’s Independent Hospital Ltd (“NewCo”). The agreement followed the financial collapse of the hospital’s previous owner, with Mr Kulkarni and Gwent as the principal shareholders in NewCo.

The Dispute

Mr Kulkarni claimed that Gwent had breached the SHA in several ways, including:

• Procuring NewCo to allot shares to itself that should have gone to Mr Kulkarni (“A Shares Breach” and “B Shares Breach”).
• Purporting to terminate the SHA (“Termination Breach”).
• Refusing to recognise Mr Kulkarni’s nominee as a director (“Hussain Breach”).

The key was whether these breaches were sufficient to trigger a deemed transfer clause whereby Gwent’s would be deemed to have given notice to sell its shares to Mr Kulkarni. The trigger for this right was defiend as follows:

“the Shareholder committing a material or persistent breach of this agreement which, if capable of remedy, has not been so remedied within 10 Business Days of notice to remedy the breach being served by the Board (acting with Shareholder Consent)”

The dispute was the subject of a 10-day High Court trial in April 2024. In a detailed judgment Richard Farnhill, sitting as a deputy Judge of the High Court ([2024] EWHC 1357) found that each of the breaches was “material” and “persistent” (in some cases Gwent had admitted as much). However, the Judge also found that the each of these breaches were capable of remedy, and in fact had been remedied.

Key Issues on Appeal

The appeal focused on three main issues:

1. Construction of the Deemed Transfer Clause: Did a material or persistent breach automatically trigger a compulsory share transfer, or was a formal notice to remedy required first?
2. Remediability of Repudiatory Breaches: Are repudiatory breaches (those so serious as to justify termination) always incapable of remedy?
3. Whether the Breaches Were Remediable: Could the breaches in question be remedied, and if so, were they in fact remedied?

The Court of Appeal’s Decision

1. Notice to Remedy Required

The Court (Newey LJ, with whom Asplin and Lewis LJJ agreed) upheld the High Court’s interpretation: for a remediable breach, a compulsory transfer of shares is not triggered unless the company’s board serves a notice to remedy the breach and the breach is not remedied within 10 business days. No such notice was served in this case, so no compulsory transfer was triggered.

While this argument was based pure principles of construction turning on the wording of this the SHA, it is nonetheless a useful benchmark for how the Courts may interpret deeming clauses of this nature.

2. Repudiatory Breaches Can Be Remediable

It had been admitted by Gwent that various of the breaches were in fact repudiatory. However, the Court of Appeal’s previous decision in Bournemouth University Higher Education Corpn v Buckland [2010] EWCA Civ 121, [2011] QB 323 had shown that where a party commits a repudiatory breach of contract such a breach cannot be cured by the contract breaker. This decision sat uneasily with other dicta, such as Woodchester Lease Management Services Ltd v Swain & Co[1999] 1 WLR 263, where it had been assumed that a repudiatory breach was capable of remedy.

Newey LJ drew a sharp distinction between the question of remediation in a contractual context and for the purposes of the election to terminate or affirm a contract. The latter case, with which Buckland was concerned, cannot be ‘cured’ by the contract breaker and the innocent party retains the “right to go”. However, for the purposes of a contractual (or per the case law a statutory) provision, the question of remediability is a practical rather than technical question, in which common law rules as to repudiation have no place.

3. Remediability of the Breaches

The Court conducted a detailed review of the key authorities in this area and drew out a number of useful principles:

1. Whether a breach is capable of remedy is a practical rather than a technical question;
2. ‘Remedy’ means “cure so that matters are put right for the future”, this requires a “practical approach” asking “whether and how the mischief caused by the breach can be redressed”;
3. Not every breach is capable of remedy, and the existence of “enduring prejudice” is important to the question of remediability; and,
4. The “wilfulness” of a breach will not usually matter to the question of remediability (although it may in the context of whether it was fundamental or repudiatory).

On the facts as found below, the Court concluded that the breaches were capable of remedy and had in fact been remedied. For example, the improper allotment of shares was reversed, and the nominee director was eventually appointed. The fact that some remedial steps took longer than 10 business days was immaterial, as the 10-day period only starts running from the service of a notice to remedy, which never occurred.

Comment

As well as providing clarity as to the effect and scope of the decision in Buckland, this case is a useful touchstone for practitioners in all areas of contract law as to the precise meaning of the phrase ‘capable of remedy’. This will be of particular note to property practitioners in the realm of forfeiture and section 146 notices.

Andrew Butler KC and Hugh Rowan appeared for the Appellant and were instructed by Acuity Law.

You can read the approved judgment here.