Forthwell Limited (Appellant) v Pontegadea UK Limited (Respondent)

Case summary

Case ID

UKSC/2025/0081

Parties

Appellant(s)

FORTHWELL LIMITED

Respondent(s)

PONTEGADEA UK LTD

Issue

In what circumstances can a party to a contract recover damages for a breach of that contract in respect of losses that were sustained not by the contracting party itself but by its subsidiary?

Facts

The Appellant is the tenant and the Respondent the landlord of premises in Glasgow which have traded as a restaurant, the Rogano, since 1935. The current lease was entered into in 1996, then assigned to the Appellant on 20 August 2013. Since that date, a wholly owned subsidiary of the Appellant has traded from the premises as the Rogano under a licence to occupy from the Appellant. On three occasions in late 2020 and early 2021, the premises were damaged by flooding and water ingress. An electrical fire rendered the electrics unsafe and the premises were left without heating. The Rogano, which had closed at the height of the Covid-19 restrictions, was not able to reopen. The lease requires the Respondent to maintain insurance for the premises and to rebuild any part of the premises which is damaged by an “insured risk”, including flooding. The Appellant argues that the Respondent is required to repair the premises or to pay damages for the cost of repairs, as well as damages for loss of profit in relation to the Rogano. The Respondent argues that the Appellant is not entitled to recover for loss of profit sustained by a third party, the Appellant’s subsidiary (the “Transferred Loss Issue”). The Outer House rejected the Respondent’s arguments and allowed the case to proceed to a proof before answer. The Inner House (Lord Malcolm dissenting) allowed the Respondent’s appeal in respect of the Transferred Loss Issue. The Appellant now appeals to the Supreme Court.

Date of issue

8 May 2025

Case origin

Appeal As of Right

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