Court of Appeal considers whether repudiatory breach capable of remedy under English law contract

In Kulkarni v Gwent Holdings Ltd (2025), the Court of Appeal held that a repudiatory breach was capable of remedy under the contract in question, making a practical rather than technical assessment of whether the breach could be rectified going forward.

Shareholders' dispute 

The dispute arose in relation to a shareholders' agreement (SHA) between a consultant surgeon, Rohit Kulkarni, and Gwent Holdings Ltd, concerning the operation of an independent hospital. The SHA was part of a rescue transaction following the financial collapse of the hospital's previous corporate owner.

The SHA contained a compulsory transfer provision at clause 7.1(d), deeming a shareholder to have served a transfer notice if it committed "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".

Following the deterioration of the relationship among the shareholders regarding the running of the hospital, Gwent decided to:

• allot 1,651 A shares, which were intended for Kulkarni, to itself;
• allot 2,000 B shares to itself;
• terminate the SHA; and
• refuse to recognise Kulkarni's appointment of Mr Hussain as a director, as he was entitled to do under the SHA (although it later backtracked and approved the appointment).

Kulkarni issued proceedings, arguing that as a result of these actions, Gwent had breached the SHA under clause 7.1(d), such that a transfer notice should be deemed to have been served.

By the time of the trial, Gwent admitted that its actions in relation to the A shares, the B shares and termination of the SHA were breaches that were "material" pursuant to clause 7.1(d), and that the breaches relating to the A shares and termination were repudiatory.

At first instance, the judge held that the first three breaches were not only "material", but "persistent" (under clause 7.1(d)) and that the delay in appointing Hussain as director was also a "material" and "persistent" breach. However, the judge also found that all the breaches were capable of being remedied and had in fact been remedied. Kulkarni was not, therefore, entitled to the declaration he sought. Kulkarni appealed.

The central question for the Court of Appeal was whether the breaches, even if they were repudiatory, could be remedied and, if so, whether Gwent's remedial efforts were effective. 

Repudiatory breach can be remediable

Gwent did not dispute that the breaches relating to the A shares and the purported termination were repudiatory. However, the Court of Appeal rejected Kulkarni's argument that repudiatory breaches are never capable of remedy, agreeing with the judge that "the fact that certain of the breaches of the SHA were repudiatory in nature…did not, in itself, render them irremediable for the purposes of clause 7.1(d)".

The court said that the parties could have specified in the SHA that repudiatory breaches were irremediable. However, clause 7.1(d) did not state this, nor did it distinguish between repudiatory and other breaches. In fact, it did not use the word "repudiatory" at all, requiring only a "material or persistent breach". A "material or persistent" breach might well also be repudiatory, the court said, but the clause still proceeded on the basis that such a breach might be "capable of remedy".

The court distinguished the common law position in Buckland v Bournemouth University (2010), which held that repudiatory breaches cannot be "cured", because that case did not consider whether a breach is "capable of remedy" under a contractual provision. When a contract does provide for remediation of a breach, the court should consider the question in a "practical rather than technical" way, in which common law rules on repudiation have no place. 

Can the breach be rectified?

The court followed Schuler v Wickman (1974), in which the House of Lords said that "remedy" means to "cure so that matters are put right for the future" rather than to "obviate or nullify the effect of a breach so that any damage already done is in some way made good". Therefore, the fact that irremediable damage might have been done does not mean that a breach will result in irremediability.

That said, not every breach will be remediable because it might be a case of not being able to put the genie back into the bottle – examples of irremediability include publication of confidential information, anti-social behaviour causing lasting harm, and enduring prejudice.

In this case, the court agreed with the judge and held that all four breaches were not only capable of remedy, but had in fact been remedied:

• The share allotments were reversible and had in fact been reversed by Gwent.
• The purported termination of the SHA had not resulted in any practical change because the parties continued performance of the SHA as if no termination had occurred (in the judge's words "the genie never truly left"). The breach could be easily remedied in any event by Gwent accepting that its notice to terminate was ineffective.
• The delayed appointment of Kulkarni's nominated director placed Kulkarni in the position he should have been in for the future. In any event, an earlier appointment would not have affected the running of the company. 

Therefore, no transfer notice was deemed to have been served by Gwent and the appeal was dismissed.

Osborne Clarke comment

The Court of Appeal's decision provides some helpful guidance on dealing with breaches of contract. The court has confirmed that contractual provisions on remedying breaches operate entirely independently of common law repudiation principles, and it endorsed the practical, forward-looking test when determining if a breach, whether repudiatory or not, is capable of remedy. 

When drafting an agreement containing breach remedy provisions, for the sake of clarity it is worth thinking about stating explicitly that repudiatory breaches will not be considered remediable if there are scenarios envisaged for which the innocent party will want to be able to exercise its common law rights in relation to repudiatory breach quickly and easily without having to argue about whether the breach is remediable. This case did not concern contract termination; however, that is  a key aspect of repudiatory breach. Excluding repudiatory breaches from the remedial provisions could be helpful if, for example, the innocent party wishes to terminate for repudiatory breach under the common law and the wrongdoer decides to try and remedy the breach under the contract before termination is effected. 

That said, including such a provision is not strictly necessary, given that termination for repudiatory breach is a common law principle, separate to what the contract might provide on remedying breaches. Under the common law, as Buckland made clear, if a party commits a repudiatory breach, it does not have the option of remedying it so that the contract continues as if nothing happened because what happens next is entirely in the hands of the innocent party who can choose either to affirm or terminate the contract. Even if the wrongdoer makes amends, the innocent party still has the right either to affirm or terminate. However, that will only apply if the breach is truly repudiatory, that is, it is so severe that it deprives the innocent party of substantially the whole benefit of the contract. If the wrongdoer succeeds in remedying the breach, there will be questions as to whether the breach satisfies that test and is truly repudiatory in nature.

In any event, taking action early is key, whether the wrongdoer wishes the contract to continue and decides to try and remedy the breach, believing the breach not to be repudiatory in nature, or the innocent party wishes to terminate for repudiatory breach. However, careful thought needs to be given to the nature of the breach before doing anything, particularly on the part of the innocent party who can find itself liable for wrongful termination if it purports to terminate for repudiatory breach, but it turns out that the breach is not repudiatory.