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

Subject to the point which I address in paragraphs 122 to 125 below, it seems to me that the Judge was not only entitled, but right, to hold that the various breaches were “capable of remedy”.

As the Judge said, it was obvious at the time that the A Shares Breach and the B Shares Breach could be reversed by returning the shares to the Company. Adopting the “practical rather than technical” approach which the authorities require, moreover, the return of the shares will have remedied the breaches. They ensured that “matters [were] put right for the future” and removed the “mischief” caused by the breaches.

So far as the Termination Breach is concerned, “the genie never truly left”, as the Judge said. The Termination Breach had “changed nothing” in practical terms and all that can have been needed to remedy it was acceptance by Gwent that its notice to terminate was ineffective.

With regard to the Hussain Breach, Mr Hussain’s ultimate appointment as a director will, for the future, have put Mr Kulkarni in the position that he should and would have been in if the appointment had been carried into effect promptly. The situation could thus be “remedied going forward”, as the Judge said. The Judge recognised that, in principle, exclusion from management can have irremediable consequences, but he found, with good reason, that in the circumstances of this case it would have made no difference to the running of the Company if Mr Hussain had become a director earlier. As the Judge said, “having Mr Hussain in place would not have changed the terms of the SHA and would not have given Mr Kulkarni any influence over [the Company]”.

As for the contention that the Judge failed properly to have regard to the seriousness of the breaches, he expressed the view in paragraph 435.3 of the Judgment that “[t]he more serious the breach, the harder it will be to remedy”. Plainly, therefore, the Judge was proceeding on the basis that the seriousness of a breach could matter. Mr Kulkarni’s complaint has to be about the weight that the Judge attached to seriousness on thefacts as he found them. As I have noted, however, this Court is slow to interfere with such assessments and findings, and we would not be justified in doing so here.

Turning to motivation, I have said that, in my view, the motivation for a breach will not normally be important. In the present context, moreover, the Judge concluded that Mr Andrew Lewis’s actions were not motivated by personal animus. The Judge said:

“280.

To achieve his goal of financial stability Andrew Lewis needed to pin matters down, including Mr Kulkarni. But Mr Kulkarni did not want to be pinned down; he hoped that something would turn up to resolve matters, that Mr Lewis would come through on the agreement that Mr Kulkarni thought they had reached. Initially Andrew Lewis knew of no such agreement and found Mr Kulkarni evasive, someone who did not honour his significant debts. Mr Kulkarni offered no clarity when it would have been easy for him to do so. Over time Andrew Lewis came to understand that something had been agreed, but that something was unclear and, I think he genuinely (and rightly) believed, unenforceable ….

281.

… A sense of mistrust built on both sides. That spilled over in June 2020 when Andrew Lewis, tired of what he saw as Mr Kulkarni’s constant evasion and prevarication and concerned by his imminent return to the Hospital, decided to force matters.

282.

He unquestionably went about that in entirely the wrong way, but the question is not so much his methods as what they reveal. I accept that by this stage he wanted Mr Kulkarni out of the business, but not because of some visceral dislike of Mr Kulkarni, less still because of unfortunate first impressions. Andrew Lewis took a business view that whatever Mr Kulkarni added to the business could be readily replaced. He did not rate him as a director ….

283.

Andrew Lewis concluded something needed to be done, and he was the one to do it. One does not have to accept that Andrew Lewis was right on all or any of those points to see that they were within the range of decisions that the management of a business frequently has to consider. Where Andrew Lewis went wrong, and I accept he went badly wrong, was in the way he chose to implement his view, but that showed poor management and judgement, rather than some personal animus. In my view this was purely the breakdown of a business relationship.”

There remains to be considered the contention that the A Shares Breach and the B Shares Breach were not “capable of remedy” for the purposes of clause 7.1(d) because, supposing that they could be remedied at all, they could not be remedied “within 10 Business Days”. In that connection, Mr Butler stressed that the Judge had accepted that “[s]omething that would take longer than 10 Business Days to remedy could not be considered remediable for the purposes of clause 7.1(d)” and that Gwent had not challenged that conclusion in this Court.

Mr Butler relied in support of his argument on what actually happened. The Company’s solicitors proposed the return of the relevant shares on 24 September 2021, Gwent agreed on 27 September and a written shareholders’ resolution was passed on 29 September, but the buy-back of the shares still was not completed until 26 October and the stamped SH03 relating to stamp duty was still awaited on 9 November. The process thus took more than 10 business days, Mr Butler pointed out.

The short answer here is, I think, that it is not apparent that the buy-back was not capable of being achieved in 10 days. No particular period had to pass between the shareholders’ resolution and completion. Nor was there any necessity for the submission of the SH03 and appropriate payment to be delayed beyond 10 business days. Even if (as may well be the case) it could be foreseen that HM Revenue and Customs would not process the SH03 all that speedily, that seems to me immaterial. The allotments to Gwent will already have been reversed.

There is a further point. Even on the assumption that the Judge was correct to accept that “[s]omething that would take longer than 10 Business Days to remedy could not be considered remediable for the purposes of clause 7.1(d)”, the 10-day period would, as it seems to me, run from service of a notice to remedy. It is good enough, I think, that the breach can be remedied within 10 business days by the time any notice to remedy is served. No such notice having been served in the present case, the 10 business days limit must be immaterial.