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

Mr Kulkarni’s case is that, where a shareholder has committed a material or persistent breach of the SHA, he will be deemed to have served a Transfer Notice under clause 6.4 unless (a) the breach is remediable, (b) the Company’s board serves notice to remedy it and (c) it has not been remedied at the expiry of 10 business days. In the absence of such a notice to remedy, Mr Kulkarni maintains, remediation is irrelevant. A Transfer Notice will be deemed to have been served, with the consequences for which the SHA provides.

Mr Andrew Butler KC, who appeared for Mr Kulkarni with Mr Hugh Rowan, argued that support for Mr Kulkarni’s case can be found in the fact that clause 7.1 provided for a Transfer Notice to be deemed to have been served “immediately before any of the following events” and in clause 7.1(d)’s use of “within”. For the purposes of clause 7.1(d), Mr Butler submitted, the relevant “event” must be the commission of the “material or persistent breach”, not the expiry of the 10 business days. Further, the “within” in clause 7.1(d) indicates that any remediation must take place neither after nor before that period. It therefore cannot avail a shareholder who has committed a breach to remedy it in advance of a notice to do so having been served.

Mr Butler recognised that his approach gave rise to a “twilight period” in which, as a result of a “material or persistent breach”, a Transfer Notice would be deemed to have been served, but the deeming could be reversed if the Company’s board served notice to remedy and remediation was achieved in the next 10 business days. He contended, however, that a comparable “twilight period” can exist between the forfeiture of a lease and an application for relief from forfeiture (as to which, see e.g. Meadows v Clerical Medical and General Life Assurance Society [1981] Ch 70, especially at 75 and 78).

Mr Butler also accepted that, on Mr Kulkarni’s case, a wrongdoer who remedied his breach immediately, without waiting for service of a notice to remedy, could be worse off than one who delayed until a notice was served and then remedied “within 10 Business Days”. Mr Butler argued, however, that that consequence does not justify departure from the language of clause 7.1.

Mr Butler further made the point that, were the Judge’s construction of clause 7.1 correct, a wrongdoer could render clause 7.1(d) toothless. If, Mr Butler said, the wrongdoer prevailed on the Company’s board not to serve a notice, no Transfer Notice would ever be deemed to be served in the case of a remediable breach.