Anonymized Summary of Appellate Judgment

Factual and Procedural Background

This appeal arises from a trial judgment given by Judge Farnhill on 5 June 2024, concerning a shareholders' agreement ("SHA") entered into on 13 February 2020 between the Appellant, Company A and Company B. The SHA regulated the rights and governance of a company that had acquired a hospital business (referred to in the agreement and below as "The Hospital").

The Appellant was a consultant surgeon at The Hospital and held significant historic involvement in the predecessor company, Company C, as a director and shareholder. Prior disputes among key individuals in Company C and financial difficulty led to administration of Company C in February 2020. An investor associated with Company A agreed to invest in a new company (Company B) which purchased the Hospital. At or shortly before execution of the SHA, there was a short pre-meeting at which control of Company B's board was insisted upon by the investor's vehicle (Company A) and a contested discussion occurred about the Appellant's entitlement to a large block of A shares recorded in the SHA. The Appellant in fact only held one A share at incorporation, though the SHA recorded that the Appellant held a much larger number of A shares.

Shortly after the SHA was executed, tensions between the Appellant and the directors appointed by Company A escalated. The Appellant was dismissed as an employee (described by the trial judge as "wholly misconceived"), resigned as director and employee with pay in lieu of notice, and thereafter Company A caused Company B to allot to itself the A and B shares that the SHA had attributed to the Appellant.

The Appellant issued proceedings on 13 October 2021 alleging breaches of the SHA by Company A (including the allotment of A and B shares to Company A, purported termination of the SHA, and refusal to recognise an appointment of a director the Appellant sought to make). The trial judge found that Company A had committed a number of admitted breaches, that they were material and persistent (and some repudiatory), but that those breaches had been capable of being remedied and in fact had been remedied; accordingly the trial judge declined to make declarations that a Deemed Transfer Notice under clause 7.1(d) of the SHA had been served. The Appellant appealed from that judgment.

Legal Issues Presented

1. Whether a shareholder who commits a material or persistent breach of the SHA is to be treated as having served a Deemed Transfer Notice under clause 7.1(d) regardless of whether the breach is remedied, unless the Company's board serves a notice to remedy.
2. Whether a repudiatory breach of the SHA is necessarily incapable of remedy for the purposes of clause 7.1(d).
3. Whether the recitals to the SHA gave rise to a contractual estoppel binding the parties to the fiction that the Appellant held the larger block of A shares for the purposes of construing obligations under the SHA and the consequences of that (if any).
4. Whether the trial judge wrongly excluded the pre-existing relationship between the Appellant and the investor (and the investor's family) from consideration in construing the SHA and assessing remediability.
5. Whether the trial judge was wrong to conclude that Company A's breaches were remediable.

Arguments of the Parties

Appellant's Arguments

• The Appellant submitted that clause 7.1(d) should be read so that the relevant "event" is the commission of the material or persistent breach itself. On that construction, once a breach of that character has been committed the shareholder is deemed to have served a Transfer Notice unless (a) the breach is remediable, (b) a notice to remedy is served by the board and (c) remediation has not been achieved within 10 Business Days. In the absence of any notice to remedy (which did not occur here) remediation should be irrelevant and a Deemed Transfer Notice arises automatically.
• The Appellant argued that this construction is supported by the wording of clause 7.1 which refers to events occurring "immediately before any of the following events" and uses the term "within 10 Business Days". The Appellant accepted that this could create a "twilight period" but said that such a period is not unprecedented in contract law.
• The Appellant contended that repudiatory breaches cannot be "capable of remedy" for the purposes of clause 7.1(d), so that the board's service of a notice to remedy was not a precondition to deeming a Transfer Notice where the breaches were repudiatory.
• The Appellant also contended that the recitals to the SHA gave rise to a contractual estoppel that the Appellant held the larger block of A shares for the purposes of interpreting rights under the SHA.
• The Appellant submitted that the trial judge had failed to take account of the pre-existing relationship between the Appellant and the investor when assessing remediability and that the judge under-weighted the seriousness, motive and broader impact of the breaches; in particular the Appellant argued that the allotments and delay in returning shares could not have been remedied within 10 Business Days.

Company A's Arguments

• Company A (as respondent) accepted at trial that it had committed the A Shares Breach, the B Shares Breach and the Termination Breach, that they were material (within clause 7.1(d)) and that some were repudiatory, but submitted that the clause requires a notice to remedy to be served and, where breaches are capable of remedy, the 10 Business Day period must run from such a notice. Because no notice to remedy was served here, the deeming condition was not satisfied.
• Company A relied on a practical approach to the meaning of "capable of remedy", and on authorities that a remediable breach requires the opportunity to be put right after a remediation notice. Company A pointed to the practical ease of reversing erroneous allotments or of accepting that a purported termination had no effect.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Meadows v Clerical Medical and General Life Assurance Society [1981] Ch 70	Cited as an example of situations where a "twilight period" (between an event and a later remedial step) may arise.	The opinion notes it as an analogy relied upon by the Appellant but does not develop a detailed application beyond acknowledging the analogy.
Re Coroin Ltd [2013] EWCA Civ 781; [2014] BCC 14	Principle that expropriatory restrictions on transfer should be construed narrowly; rights of property are not to be cut down by uncertain language.	Cited to support caution in adopting a wide interpretation of the SHA's compulsory transfer clause (clause 7.1).
Re Smith and Fawcett Ltd [1942] Ch 304	Authority on the construction of articles and the protection of the shareholder's prima facie right to transfer shares.	Referenced in the discussion (via Re Coroin) on construing share-transfer limiting provisions narrowly.
Greenhalgh v Mallard [1943] 2 All E.R. 234	Similar authority cited in relation to protecting transfer rights; cited in the context of interpreting restrictions on transfer.	Referenced in support of preferring a narrower meaning of an expropriatory clause.
Force India Formula One Team Ltd v Etihad Airways PJSC [2010] EWCA Civ 1051; [2011] ETMR 10	Example where a clause requiring a notice to remedy prior to termination was interpreted as requiring service of that notice; treated as supporting the view that no termination/deeming can occur without notice where clause so provides.	Cited as lending support to the trial judge's approach that a remediation notice is a necessary step before clause 7.1(d) can take effect in the case of a remediable breach.
Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235	Discussion of the meaning of "remedy" in clauses of this kind: "remedy" naturally means cure for the future rather than nullifying past effects.	Cited as the leading authority on remediability; the court applied its practical, future-focused meaning of "remedy".
Savva v Hussein (1996) 73 P&CR 150	Addresses whether remedy means restoring the past state or removing the mischief; supports the latter understanding.	Cited to support a practical approach to what it means for a breach to be "capable of remedy".
Crane Co v Wittenborg A/S (21 December 1999, unreported)	Example where a clause required notice and a period to elapse even in relation to substantial or repudiatory breaches.	Referred to as a case where courts proceeded on the basis that repudiatory breaches could fall within clauses requiring notice; used to support the view that such clauses can cover repudiatory but remediable breaches.
Woodchester Lease Management Services Ltd v Swain & Co [1999] 1 WLR 263	Assumed that a hirer's failure to pay (which might be treated as repudiatory) was nonetheless "capable of remedy" for purposes of a statutory/default notice regime.	Used in argument and cited by the court in support of a practical approach to remediability.
Stocznia Gdanska SA v Latvian Shipping Co (No 3) [2002] EWCA Civ 889; [2002] 2 All ER (Comm) 768	Discusses the consequences and alternatives when repudiatory conduct has occurred.	Referenced for principles about repudiation and the options open to the innocent party; cited in context of authority on remedies and choices after repudiation.
Akici v LR Butlin Ltd [2005] EWCA Civ 1296; [2006] 1 WLR 201	Indicates that some breaches (e.g. subletting, illegal/immoral user) may be incapable of remedy; endorses a practical approach.	Cited to show that, while many breaches are remediable, there are established exceptions; applied by the court in assessing remediability.
Bournemouth University v Buckland [2010] EWCA Civ 121; [2011] QB 323	Authority on the common-law rule that a repudiatory breach cannot be 'cured' so as to deprive the innocent party of the right to terminate.	Cited and distinguished: the court held that Buckland addresses common-law options upon repudiation but does not determine the meaning of "capable of remedy" in contractual notice/remedy provisions.
Wickland (Holdings) Ltd v Telchadder [2014] UKSC 57; [2014] 1 WLR 4004	Adopts a practical inquiry whether and how the mischief caused by a breach can be redressed; anti-social behaviour and stigma examples where breach is irremediable.	Applied as supporting the practical test for remediability and the need for value judgment in difficult cases.
Re Saul D Harrison & Sons plc [1994] 1 BCC 475	Discusses effect of shareholders' agreements on remedies available in unfair prejudice petitions.	Referred to in passing to note that remedies outside clause 7.1 (for example unfair prejudice petitions) may remain available.
Wood v Capita Insurance Services Ltd [2017] UKSC 24; [2017] AC 1173	On objective interpretation of contracts and use of background knowledge.	Cited for the principle that contract interpretation is objective and informed by the background known to a reasonable person at the time.
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896	Foundational authority on contractual interpretation and the use of background/context.	Cited to support the approach to interpretation taken by the court when considering the recitals and contract construction.
Henderson v Foxworth Investments Ltd [2014] UKSC 41; [2014] 1 WLR 2600	Addresses the court's reluctance to disturb findings of fact and evaluative assessments on appeal.	Cited to underline the appellate court's limited scope to interfere with factual and evaluative findings about remediability.
R (R) v Chief Constable of Greater Manchester [2018] UKSC 47; [2018] 1 WLR 4079	Authority cited on the standard for appellate interference with findings of fact.	Referenced to support the position that the appellate court should be cautious in overturning factual conclusions.
In re Sprintroom Ltd [2019] EWCA Civ 932; [2019] 2 BCLC 617	On appellate review of factual and evaluative findings in company/insolvency contexts.	Cited for similar appellate deference where findings involve evaluative judgments.
Expert Clothing Service and Sales Ltd v Hillgate House Ltd [1986] Ch 340	Authority in landlord/tenant context about treating technical arguments about remedy with realism.	Referred to in the discussion of interpreting "capable of remedy" practically rather than technically.
Hoffmann v Fineberg [1949] Ch 245	Addressed technical arguments about when a remedial act truly restores the position; cited in landlord/tenant authorities.	Referenced to support rejecting unrealistically technical arguments about remedy.
Phoenix Media Ltd v Cobweb Information Ltd (16 May 2000, unreported)	Discussed the relationship between materiality and irremediability and the effect of deliberate or dishonest conduct.	Cited to show that deliberate or concealed breaches may be factors making a breach more likely to be irremediable in context (especially where the contract requires good faith).
Suisse Atlantique Société d'Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967] AC 361	Discusses wilfulness and the character of a breach; distinction between deliberate breach and whether it is fundamental.	Referred to in the discussion of wilfulness as potentially relevant to whether a breach is repudiatory, but not determinative of remediability.
Rugby School (Governors) v Tannahill [1935] 1 KB 87	Example where continuing stigma precludes remediability (in that case, use as a brothel).	Cited as an example of the sort of conduct that can make a breach irremediable.

Court's Reasoning and Analysis

The appellate court (delivered by Judge Newey with concurrences from Judge Asplin and Judge Lewis) analysed the appeal by addressing the principal issues identified at trial.

Construction of clause 7.1(d)

Clause 7.1(d) deems a shareholder to have served a Transfer Notice where the shareholder has committed "a material or persistent breach" of the SHA 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)". The trial judge had held that, where a breach is capable of remedy, a Deemed Transfer Notice cannot arise until the 10 Business Day remedy period has expired, and that the 10 Business Days runs from service of a notice to remedy; because no notice was served in the present case the deeming condition had not been satisfied.

The appellate court agreed with that construction. The court explained that the reference to an "event" in clause 7.1 need not be read as the moment of the breach for a remediable breach; it can sensibly be read as failure to remedy after the expiry of the 10 business days following service of a notice. The court rejected the Appellant's textual arguments (based on the phrase "immediately before" and the word "within") as unnecessary to the natural reading and inconsistent with sensible commercial outcomes: it would be odd to penalise a wrongdoer who promptly remedied a breach before any notice was served by deeming a Transfer Notice to have been served nonetheless.

The court also noted practical consequences of the Appellant's construction: because the board can only serve a notice to remedy with Shareholder Consent (which excludes the shares of any "Excluded Shareholder"), an innocent shareholder in control of a majority of A shares could prevent the service of a notice and thus allow a wrongdoer to avoid the deeming mechanism. The court treated that as an argument in favour of the trial judge's narrower construction.

The court further relied on authority (including Force India and Re Coroin) illustrating that expropriatory or transfer‑depriving provisions should be construed narrowly and that, in comparable contexts, courts have assumed the necessity of a remediation notice where the clause so provides.

Remediability of repudiatory breaches

The court addressed whether a repudiatory breach is necessarily incapable of remedy for the purposes of clause 7.1(d). The trial judge had rejected the submission that repudiatory breaches are per se irremediable for clause 7.1(d). The appellate court agreed. It emphasised that clause 7.1(d) proceeds on the basis that a "material or persistent" breach might be "capable of remedy" and that the parties could have specified that repudiatory breaches were to be treated as irremediable if they had intended that, but they had not used such language.

The court surveyed authorities on remediability (Schuler v Wickman, Force India, Savva v Hussein, Akici, Telchadder and others) and concluded that the correct approach to "capable of remedy" is typically a practical rather than an unduly technical one, asking whether the mischief can be redressed so as to put matters right for the future. The court distinguished the separate common-law rule (as in Buckland) that a repudiatory breach gives the innocent party the choice to accept or affirm the contract; that common-law rule does not determine the contractual question of whether a breach is "capable of remedy" for the purposes of a clause such as 7.1(d).

Contractual estoppel arising from the recitals

The Appellant argued that the SHA's recitals (and schedule) created a contractual estoppel treating the Appellant as the registered owner of the larger block of A shares for the purpose of construing the SHA. The trial judge had accepted that the second recital literally stated the position set out in Schedule 1 but concluded that the Appellant could not show that the parties intended to be bound by that recital in the sense of treating it as an agreed fact contrary to reality. The appellate court agreed. It applied principles about "contractual estoppel" and the interpretation of recitals (citing Greer v Kettle and Chitty on Contracts) and held that a reasonable person would not conclude that the parties intended to bind themselves to accept inaccurately that the Appellant already held the larger number of shares. The court therefore rejected the estoppel argument and observed it to be unnecessary in any event because the materiality and persistence of the breaches did not turn on that point.

Relevance of the pre-existing relationship

The Appellant contended that the judge should have taken into account a prior friendship/business relationship between the Appellant and the investor's family when construing the SHA and when assessing remediability. The trial judge had treated the SHA as the product of a commercial negotiation and held the background relationship irrelevant to remediation. The appellate court agreed, noting the judge's factual findings that the investor had negotiated and acted in his commercial interests and that the SHA was a commercial agreement containing no fiduciary duty or obligation of good faith. The court concluded that the pre-existing relationship did not affect the construction of the SHA or the remediability analysis on the facts found.

Whether the specific breaches were remediable

The trial judge found that (i) the allotment to Company A of the A and B shares that should not have been allotted could be reversed by returning the shares to Company B (and that this was straightforward practically), (ii) the purported termination of the SHA had no practical effect (the SHA had continued in force) and so could be remedied by acknowledging its ineffectiveness, and (iii) the delayed recognition and appointment of the Appellant's nominated director could be remedied prospectively by installing that director.

The appellate court accepted that assessment on the facts. It emphasised the practical test of remediability (whether the mischief can be redressed and matters put right for the future) and held that the trial judge was entitled to find that reversing the allotments, acknowledging the ineffectiveness of the termination notice, and later appointing the nominated director were, in the circumstances, capable of remedy. The court also observed that while the time‑limit of 10 Business Days is relevant, the period runs from service of a notice to remedy, and no such notice was served here.

The court further explained that motive or wilfulness of a breach will not normally determine remediability; wilfulness may be relevant in particular contexts where it produces an irrevocable change, but the primary focus remains the practical ability to put matters right for the future. The court also reminded that appellate interference with evaluative findings about remediability is limited and must be justified by demonstrable error.

Holding and Implications

Holding: The appeal was dismissed. The appellate court agreed with the trial judge's conclusions that:

• the plain meaning of clause 7.1(d) requires a remediation notice to be served and the 10 Business Day period to run from that notice in the case of a breach that is capable of remedy;
• a repudiatory breach is not, as a matter of law, necessarily incapable of remedy for the purposes of clause 7.1(d); and
• on the facts found by the trial judge the admitted breaches were capable of remedy and had been remedied (or were remedied), so that no Deemed Transfer Notice under clause 7.1(d) had been served.

Implications: The direct consequence is that the trial judge's orders and findings stand and the Appellant's appeal fails. The SHA's clause 7.1(d) was interpreted in a way that requires a remediation notice (with the 10 Business Day period running from service) before a remediable breach can produce a Deemed Transfer Notice; that interpretation favours a narrower reading of a clause that can have expropriatory effect. The court emphasised that the question whether a breach is "capable of remedy" is generally a practical inquiry and that repudiation at common law (and the right of the innocent party to accept or affirm) is a distinct concept from the contractual question whether a breach falls within a contractual remedial provision. The opinion does not identify a novel legal rule but applies established authorities and principles to the contractual wording and the facts found at trial.

Core Ruling: APPEAL DISMISSED. No new precedent was established; the decision affirms the trial judge's factual findings and contractual constructions as described above.

---

Note on anonymization: All personal names in the original opinion have been replaced by consistent, generic placeholders in this summary (for example, "Appellant", "Company A", "Company B", "Company C", "Judge [Last Name]", and "Attorney [Last Name]") to preserve confidentiality while accurately reflecting the content of the provided opinion.