The judge had to decide whether the most serious kinds of breach (so-called repudiatory breaches) are ever capable of remedy.

The Court of Appeal has examined whether material and persistent breaches of a shareholders’ agreement triggered a compulsory share transfer mechanism in that agreement, or whether that mechanism did not come into effect until the contractual period for remedying the breaches expired.

In doing so, the court examined whether very serious breaches of contract – so-called “repudiatory breaches” – can ever in fact be remedied or, rather, are “irremediable”. (For more detail on repudiatory breaches of contract, see the box “What is a repudiatory breach of contract?” below.)

What happened?

Kulkarni v Gwent Holdings Ltd and anor [2025] EWCA Civ 1206 concerned a shareholders’ agreement (SHA) between a company and its two shareholders – Mr Kulkarni and another company (Gwent).

The SHA contained compulsory transfer provisions, which required a shareholder (which we will refer to as a “defaulting shareholder”) to offer their shares to the other shareholder(s) if any of several specified events occurred. In particular, clause 7.1 of the SHA stated:

“A Shareholder is deemed to have served a Transfer Notice under clause 6.4 immediately before any of the following events:

…

(d)        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).”

At first instance, the High Court found that Gwent had committed four material or persistent breaches of the SHA, which included causing the company to allot two batches of shares to Gwent, refusing to permit Mr Kulkarni to appoint a director to the company’s board, and purporting to terminate the SHA. Gwent also admitted that two of those breaches were “repudiatory”.

On the face of it, therefore, each of the four breaches could, in principle, trigger a deemed share transfer notice from Gwent, requiring Gwent to offer its shares in the company to Mr Kulkarni.

However, the High Court also found that all four breaches were capable of being remedied, and that Gwent had, in fact, remedied them. As a result, Gwent was not deemed to have served transfer notice to offer its shares to Mr Kulkarni.

Mr Kulkarni appealed to the Court of Appeal. He argued that a repudiatory breach of contract can never be remedied. Because (as Gwent had admitted) two of the breaches were repudiatory, they could not have been remedied, and so Gwent should be deemed to have served a transfer notice.

What did the Court of Appeal say?

The court disagreed with Mr Kulkarni. It found that a breach of contract is not incapable of remedy merely because it is “repudiatory”.

The judges examined case law and concluded that, when deciding whether a particular breach of contract is capable of being remedied, the court must adopt a “practical rather than technical” approach. In other words, the court will look at the breach in question and ask whether, for practical purposes, there is any way to put the breach right.

The judges specifically noted that the concept of “remedy” is generally forward-looking. It does not require a party to rearrange events such that the breach never happened in the first place. Parties cannot be expected to do the impossible and rewrite the past. As the court noted from previous judgments, “the moving finger writes and cannot be recalled”.

Instead, a party “remedies” a breach if they bring it to an end, so that “matters are put right for the future” not that the effect of the breach is nullified or obviated and any damage done is made good.

The court recognised that, according to this approach, some kinds of breach will indeed be incapable of remedy, or “irremediable”. For example, once confidential information is disclosed in breach of non-disclosure obligations, it is practically impossible to make it confidential once more. The breach of confidentiality cannot be remedied.

However, in this case, all four breaches (and certainly the two that had been admitted as being repudiatory) had been remedied.

It is important to bear in mind that the principles above are general ones, and that the precise position for a breach of contract will always depend on the wording of the contract and, if that wording is ambiguous, the parties’ intentions.

In this case, the court noted that clause 7.1(d) of the SHA specifically referred to “material and persistent” breaches and contemplated that the board might serve a notice to require those kinds of breach to be remedied.

Although “material and persistent” is not synonymous with “repudiatory”, the court noted that a material and persistent breach “plainly … might well be repudiatory”. The parties had therefore contracted in the contemplation that a shareholder might commit a repudiatory breach, and that that repudiatory breach might be remedied.

What does this mean for me?

Although the decision concerns a rather technical point, it provides some useful guidance to contract parties and legal advisers on how to approach a breach of contract.

It is also a useful reminder that, in the context of force share transfer provisions, which are inherently expropriatory in nature, the courts are generally reluctant to cut down a party’s property rights if the contract does not contain clear wording to that effect.

We can take some useful practical points from the judgment.

• Draft for different scenarios. The drafting of the SHA in this case was not particularly unusual, but it is always worth considering how matters should unfold in the event of a breach. If some types of breach (whether repudiatory, material, persistent or some other description) are to give rise to immediate consequences, the contract should state this. There may be value in dealing with remediable and irremediable breaches in separate provisions.
• Use crystal clear language. This is particularly important for compulsory share transfer mechanisms, which, by their nature, involve taking a party’s property (its shares in a company) away from it. Although the defaulting party will receive a price for its shares, on a serious breach, this price will often be lower than market value – perhaps as low as the amount originally paid for the shares on subscription, or (for very serious breaches) even a nominal sum (such as £1). These arrangements should be spelled out explicitly in the contract to avoid any doubt.
• Remedy quickly. A party that commits a breach of contract may wish to consider how it can put that breach right (i.e. remedy it) and (if it is minded to remedy the breach) how quickly it can do that. Some breaches are not capable of remedy, but, even if that turns out to be the case, a party in default is likely to find more favour before a court if it has made efforts to rectify its breach.
• Withdraw quickly. An innocent party on the end of a repudiatory breach should consider its options swiftly and carefully. A repudiatory breach could provide an opportunity to escape from an unprofitable or burdensome arrangement. However, the innocent party will need to communicate its intention to terminate before the defaulting party has an opportunity to remedy the breach and may need to work through any contractual steps (such as formally requiring the defaulting party to remedy the breach) before it can withdraw. Often, the earlier this begins, the better.
• Take legal advice before acting. An innocent party must be careful not to place itself in a position of repudiatory breach. If an innocent party purports to terminate a contract on the basis of a repudiatory breach, but the breach later turns out not to be repudiatory, the innocent party will, by attempting termination, itself be committing a repudiatory breach. It is, therefore, important to seek advice to ensure that termination is an appropriate response in the circumstances.

Access the Court of Appeal’s decision in Kulkarni v Gwent Holdings Ltd that a repudiatory breach of contract is capable of being remedied