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

The Judge concluded in paragraph 459 of the Judgment that, “[b]oth as a matter of practicality and as a matter of principle, in my view the A and B Shares breaches were remediable”. The Judge had said in paragraph 455:

“As I have noted, the test is a practical one – could the breach be put right for the future – and so the practicalities are significant. Here, as a practical matter it plainly was straightforward to reverse the allotment and issue of both the A and B Shares. Reversing an erroneous allotment and issue of shares to Gwent could not, in my view, reasonably be said to give rise to a conflict of interest for Gwent’s appointed director, Andrew Lewis. In such circumstances, Gwent controlled the board under clause 14.5, such that the board of [the Company] could move swiftly. Gwent also held the overwhelming majority of the shares in [the Company] and could pass the necessary resolutions without cooperation from other shareholders. This is not judging the situation with hindsight; that was obvious at the time of the breach.”

With regard to the Termination Breach, the Judge said in paragraph 462 of the Judgment:

“The issue for Mr Kulkarni is that the SHA did continue in force. Put another way, the Termination Breach did nothing at all; on Mr Kulkarni’s case it did not even give him a right to accept the renunciation that it represented. Even if that is wrong and the breach could have been accepted, Mr Kulkarni did not do so and so under the elective theory nothing changed with the SHA. Of course, the breach gave Mr Kulkarni a right to claim damages, but he has not done so and in any event, a breach that sounds in damages is by definition remediated by an award of those damages. Certainly the breach was a serious one, given its repudiatory nature, but even serious breaches can be remedied, especially those that have changed nothing. It was not so much a question of putting the genie back in the bottle; the genie never truly left.”

As for the Hussain Breach, the Judge said this:

“464.

I have noted above that exclusion from management may well be irremediable. The difficulty for Mr Kulkarni on the facts, however, is that the breach of clause 13.2 is not what excluded Mr Kulkarni from the management of [the Company]. He ceded management control to Gwent in principle on 7 February 2020 and legally on executing the SHA on 13 February 2020. The exclusion of Mr Kulkarni from the entire process of management was plainly still wrongful and a breach of the SHA. If he suffered loss he would be entitled to damages; it may be that he would be entitled to an injunction to remedy the situation going forward, and indeed at one point he sought such relief in these proceedings. But at no stage could he exercise control over the affairs of the company for reasons wholly unrelated to any breach by Gwent.

465.

Mr Butler suggested that the denial of access to information was itself sufficient prejudice to show the breach was irremediable. Again, I accept that the denial of access to information on the management and affairs of [the Company] was wrongful. I further accept that at least some prejudice is likely to flow from that breach. But the test is not prejudice looking back but, rather, whether the situation can be remedied going forward. It is not suggested, even with Mr Hussain having been a director for over a year, that anything has come out that Mr Kulkarni now wishes he had known sooner. Moreover, it would have made no difference to the running of [the Company], whatever Mr Kulkarni might have gleaned, because Andrew Lewis by the time of the breach had formed a clear view that Mr Kulkarni had nothing of value to add and I am certain would simply have ignored him; by virtue of clause 14.5 of the SHA, there was nothing that Mr Kulkarni could do about that. He repeatedly tried to lobby Mr Lewis and failed, and I see no reason to think by the time of the Hussain Breach, that anything he might have learnt was either unknown to Mr Lewis or would have influenced him in any way.

466.

By the time of the [Hussain] Breach, Mr Kulkarni was frozen out of management decisions by Gwent, which Gwent was able to do by virtue of clause 14.5 of the SHA. The [Hussain] Breach was wrongful, because it froze Mr Kulkarni out of the process as a whole, not simply the final decision-making, but it was also gratuitous; 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].”

The Judge had said in paragraph 448 of the Judgment:

“Mr Butler further submitted that the time period of 10 Business Days within which remediation was to be achieved is relevant to assessing whether a breach is remediable. Something that would take longer than 10 Business Days to remedy could not be considered remediable for the purposes of clause 7.1(d). It seems to me that as a simple matter of logic that must be correct.”