Justin Higgo KC and Tom Braithwaite appeared for the successful First Defendant, Gwent Holdings Ltd, in Kulkarni v Gwent Holdings Ltd & Anor [2024] EWHC 1357. By his judgment, Richard Farnhill, sitting as Deputy Judge of the High Court, rejected Dr Kulkarni’s claim to been entitled to trigger a contractual right in a shareholders’ agreement so as to compulsorily acquire Gwent’s shares in a private hospital, which Gwent had saved from insolvency by its investment. The pre-emption right in issue was dependent upon the commission of a ‘material or persistent breach’, which, if capable of remedy, had not been remedied following service of a notice to remedy. On the basis that Gwent had committed certain breaches of the shareholders agreement which it had admitted were repudiatory in nature, Dr Kulkarni had sought to argue that such repudiatory breaches were, by their nature, necessarily incapable of remedy. He based that argument on the proposition that repudiatory breaches are treated as being incapable of remedy at common law, inasmuch as a party in breach who has committed a repudiatory breach cannot deprive the innocent party of his right to make an election to affirm the contract or bring it to an end: Bournemouth University Corporation v Buckland [2010] EWCA Civ 121. 

The Judge rejected that argument. He noted that the Court of Appeal had, on at least two separate occasions, assumed that a breach of contract that was repudiatory in nature might be capable of remedy for the purposes of such a contractual provision (Crane Co v Wittenborg (AS) (unreported 21 December 1999) and Force India Formula One Team Ltd v Etihad Airways PJSC [2010] EWCA Civ 1051), and the Judge accepted Gwent’s argument that Dr Kulkarni was advancing a ‘false equivalence’ between the position under the contract and the rule at common law. He further held that where, as in the present case, Dr Kulkarni contended that he was unable to accept a repudiatory breach so as to bring a multi-party contract to an end, and in any event had elected to affirm in order to rely upon the contractual right of compulsory acquisition, the fact that a breach was repudiatory in nature did not render it incapable of remedy. Accepting Gwent’s submission that the test for whether a breach was capable of remedy was essentially a forward-looking and practical test, he held that that the breaches alleged were remediable, and had in fact been remedied by Gwent.

Justin Higgo KC and Tom Braithwaite were instructed by Ed Husband and Frankie Bristow of VWV Solicitors.