CA-2024-001924 - [2025] EWCA Civ 1206

I have already cited a number of cases bearing on when a breach of contract will be “capable of remedy”.

We were referred to two further authorities in this context. One of them was Phoenix Media Ltd v Cobweb Information Ltd (16 May 2000, unreported) (“Phoenix Media”). In that case, an agreement between Cobweb and Phoenix Media included, as clause 15, a provision requiring the parties to act in good faith in their dealings. It also contained a clause allowing for termination if a party was “in material breach … and shall have failed (where the breach is capable of remedy) to remedy the breach within 30 days of the receipt of a request in writing from the party not in breach, to remedy the breach”: see paragraph 22. Cobweb tried to terminate the agreement pursuant to this provision, but Neuberger J held the attempt to have been ineffective. While he considered there to have been breaches, he was not satisfied that the breaches were material or that, even if they were, they were irremediable: see paragraph 72.

Neuberger J said in paragraph 60:

“Materiality and irremediability are different concepts but there is a degree of overlap between them. Thus, if one considers the consequences of the breach, [counsel for Cobweb] contends that [Phoenix Media]’s breaches were deliberately committed and dishonestly concealed. It seems to me that, if that is right, it would be a factor which would go to both materiality and irremediability; materiality because it would make the breaches graver, and irremediability because it would be easier to argue that the breaches irrevocably and negatively impacted upon what would otherwise be an ongoing business relationship involving trust and confidence between the parties, as clause 15 reflects. Nonetheless, they are different concepts.”

Neuberger J further said, in paragraph 72:

“In one sense, irremediability of a breach is impossible. The example that is frequently given is this: if there is an obligation on a tenant to paint in the fifth year of the term and he fails to do so, that is irremediable because, even if he paints thereafter, he has not painted in the fifth year of the term. Yet failing to paint in the fifth year of the term is clearly remediable. To my mind, therefore, irremediability has to be interpreted in a common sense way.”

We were also taken to Suisse Atlantique Société d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967] AC 361 (“Suisse Atlantique”). There were issues in that case as to whether there had been a repudiatory or “fundamental” breach of a contract and, if so, whether that prevented the guilty party from relying on a clause limiting liability. In the course of his speech, at 394, Viscount Dilhorne said:

“Breach of a charterparty by the detention of the vessel beyond the laydays by the charterers may, in my view, take on the character of a fundamental breach. If, for instance, there was a delay of many weeks in the loading of the vessel the consequence would be that the voyages, though in fact consecutive, would be totally different from those contemplated by the contract. Further, if it was established that a breach, though of itself not of sufficient duration as to lead to the conclusion that the performance of the contract became totally different from that contemplated, was committed deliberately and wilfully with the object of reducing the number of voyages accomplished, the breach might, in my opinion, take on the character of a fundamental breach. It is only in this connection, in determining whether there has been repudiatory conduct, that, in my opinion, the wilfulness of the breach has any relevance.”

In a similar vein, Lord Reid said at 397-398:

“The appellants allege that the respondents caused these delays deliberately (i.e., with the wilful intention of limiting the number of contractual voyages). They do not allege fraud or bad faith. This allegation would appear to cover a case where the charterers decided that it would pay them better to delay loading and discharge and pay the resulting demurrage at the relatively low agreed rate, rather than load and discharge more speedily and then have to buy more coal and pay the relatively high agreed freight on the additional voyages which would then be possible. If facts of that kind could be proved I think that it would be open to the arbitrators to find that the respondents had committed a fundamental or repudiatory breach. One way of looking at the matter would be to ask whether the party in breach has by his breach produced a situation fundamentally different from anything which the parties could as reasonable men have contemplated when the contract was made. Then one would have to ask not only what had already happened but also what was likely to happen in future. and there the fact that the breach was deliberate might be of great importance.”

Lord Upjohn also thought that wilfulness could be relevant to whether a breach was fundamental or repudiatory. He said at 429:

“My Lords, in view of the introduction in the questions posed by the arbitrator of the impact of a presumed wilful default, for my part I think it is only necessary to say that it seems to me as a matter of general principle that wilful default in connection with the matters we are now considering is relevant and relevant only to one matter, that is to say, whether in fact the owners can establish a fundamental breach. In cases such as this, where there has been no breach of any fundamental term, the question as to whether there has been a fundamental breach must be a question of fact and degree in all the circumstances of the case, but one of the elements in reaching a conclusion upon that matter is necessarily the question as to whether there has been a wilful breach, for as a practical matter it cannot be doubted that it is easier to find as a fact, for such it primarily is, that the charterers are evincing an intention no longer to be bound by the terms of the contract and are therefore guilty of repudiatory conduct if it can be established that the breaches have been wilful and not innocent.”

For his part, Lord Wilberforce pointed out at 431 that the expressions “fundamental breach” and breach going “to the root of the contract” were used to denote “two quite different things, namely, (i) a performance totally different from that which the contract contemplates, (ii) a breach of contract more serious than one which would entitle the other party merely to damages and which (at least) would entitle him to refuse performance or further performance under the contract”. At 435, Lord Wilberforce said:

“The ‘deliberate’ character of a breach cannot, in my opinion, of itself give to a breach of contract a ‘fundamental’ character, in either sense of that word. Some deliberate breaches there may be of a minor character which can appropriately be sanctioned by damages: some may be, on construction, within an exceptions clause (for example, a deliberate delay for one day in loading). This is not to say that ‘deliberateness’ may not be a relevant factor: depending on what the party in breach ‘deliberately’ intended to do, it may be possible to say that the parties never contemplated that such a breach would be excused or limited: and a deliberate breach may give rise to a right for the innocent party to refuse further performance because it indicates the other party’s attitude towards future performance. All these arguments fit without difficulty into the general principle: to create a special rule for deliberate acts is unnecessary and may lead astray.”

Finally, Lord Hodson focused on the clause limiting liability. He said at 414:

“On the construction of this contract I am of opinion that the parties have agreed to limit the damages payable for detention at the agreed demurrage rate and that there is no reason for not so limiting them whether or not there was an intention on the part of the respondents wilfully to limit the number of voyages.”