Is a repudiatory breach incapable of being remedied? Appeal judges say ‘no’
Very serious breaches typically bring the contract to an end with the aggrieved party having the right to compensation. However, such repudiatory breaches can potentially be remediable, following an interesting decision from the Court of Appeal.
It means businesses should be cautious about assuming a certain outcome following a repudiatory breach by one party - the consequences may not be as clear as you think.
A repudiatory breach is where the actions of the defaulting party are so serious as to allow the innocent party to affirm or to terminate the contract, and to claim damages for the breach. Fundamentally, the party in breach cannot - at common law - cure or remedy a repudiatory breach of contract themselves.
In other words, the ball is entirely in the court of the innocent party.
What happened in this case?
In Kulkarni v Gwent Holdings Ltd and Another [2025] EWCA Civ 1206 , the contract at the centre of a very high value dispute was a shareholders’ agreement. It was alleged that one shareholder (Gwent) had materially breached the SHA in several ways. Gwent had accepted it had been in repudiatory breach.
However, had its breaches triggered a compulsory share transfer mechanism under the SHA which stated:
“..the Shareholder committing a material or persistent breach of this agreement which, if capable of remedy, has not been so remedied within 10 Business Days of notice to remedy the breach being served by the Board (acting with Shareholder Consent)”.
No notice had in fact been served on Gwent by the innocent party (B). B argued that a repudiatory breach of the SHA was necessarily incapable of remedy for the purposes of clause 7.1(d). Therefore, there was no need for A to have served a notice to remedy on Gwent.
The Court of Appeal rejected that proposition, finding that the judge was correct in concluding that "[t]he fact that certain of the breaches of the SHA were repudiatory in nature … did not, in itself, render them irremediable for the purposes of clause 7.1(d)".
The parties could have stated in the clause that a repudiatory breach was to be considered irremediable, but they did not do so – in fact, the word ‘repudiatory’ was not used at all.
Furthermore, the principle that a repudiatory breach of contract cannot be 'cured' by the party in breach is a different issue to whether such breach is ‘capable of remedy’.
Correct approach
The court made clear that when deciding whether a breach is capable of remedy within the meaning of a contractual provision (or a comparable statutory one), a practical – common sense – approach rather than a ‘technical’ approach should normally be adopted.
Applying that approach in this case, it was found that the breaches in question could be reversed by returning the shares, thus removing the ‘mischief’ caused by the breaches.
What does this mean?
Businesses need to know that a repudiatory breach is not necessarily incapable of remedy, even though a party in breach cannot remedy its own breach. There could be circumstances where an aggrieved party is unable to end the contractual relationship, notwithstanding a repudiatory breach.
The decision is, at its core, a reminder of the fundamental tenets of contractual interpretation. The court applied a common sense approach to the breach and its consequences, looking at the circumstances and the intentions of the parties before reaching a practical solution.
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