Forthwell Limited v Pontegadea UK Limited

Why It Matters

The decision will set precedent on transferred loss damages, shaping contract litigation in Scotland and influencing comparable jurisdictions.

Key Takeaways

• Parties settled dispute hours before appeal, filing withdrawal late night.
• Court chose to hear appeal despite settlement, citing public interest.
• Central issue: recoverability of transferred loss damages under Scots law.
• Decision will affect related Simmers v Green Cat case pending outcome.
• Outcome could reshape contract damage principles across Scotland and beyond.

Summary

The Court of Session heard arguments in Forthwell Limited v Pontegadea UK Limited, an appeal from the Inner House concerning a defender’s reclaiming motion. Minutes before the hearing, the parties reached a settlement, filed a withdrawal application at 11:30 pm, and informed the registry.

Despite the settlement, the judges elected to continue the appeal, emphasizing that the case raises a novel point of law on “transferred loss” – whether a party can recover damages for profit loss suffered by an associated entity. The appeal was granted permission because of its general importance, and a dissent from Lord Malcolm underscores its significance.

Counsel highlighted the “highly unsatisfactory” timing, the court’s discretion, and the public interest, noting that a related case, Simmers v Green Cat, hinges on the same legal question. The inner‑house decision and the forthcoming judgment are expected to provide authoritative guidance.

A ruling will clarify Scots law on consequential loss, potentially aligning or diverging from English principles, and will affect future commercial disputes across Scotland. It also demonstrates the judiciary’s willingness to resolve unresolved legal issues even when the underlying dispute is settled.

Original Description

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

Case ID: UKSC/2025/0081

https://www.supremecourt.uk/cases/uksc-2025-0081.html

Hearing date: 20 May 2026.

Hearing location: City Chambers, Glasgow

Session: 1 and 2 of 2.

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.