UK Supreme Court rules Forthwell could not have recovered Rogano restaurant's lost profits from landlord Pontegadea in transferred loss claim

The UK Supreme Court handed down judgment on 17 September 2026 in Forthwell Limited v Pontegadea UK Limited ([2026] UKSC 33), unanimously ruling that Forthwell could not recover, from its landlord, lost profits suffered by its wholly-owned subsidiary Lynnet Leisure (Rogano) Ltd following flooding and an electrical fire at the historic Rogano restaurant premises in Glasgow in December 2020 and January 2021. The case concerned a lease of 11 Exchange Place, Glasgow, originally dated 1996. Forthwell held the tenant's interest and had granted Lynnet a licence to occupy the premises, under which Lynnet traded as the Rogano Restaurant and Bar. After flooding caused an electrical fire and left the building unsafe, Forthwell and landlord Pontegadea UK Limited could not agree on the scope of repairs. Forthwell claimed that Pontegadea's failure to repair caused Lynnet to suffer loss of profits, and sought to recover those losses through the doctrine of 'transferred loss', which allows a contracting party in certain circumstances to recover losses sustained by a third party. The parties settled the dispute on the eve of the Supreme Court hearing in May 2026, but the court, sitting in Glasgow, refused Forthwell's application to withdraw the appeal. Five justices, led by Lord Doherty (with whom Lord Reed, Lord Stephens, Lady Simler, and Lord Hodge agreed), held that the transferred loss claim was ill-founded. Lord Doherty reasoned that Forthwell and Lynnet had freely organised their affairs through separate corporate personalities and that no exception to the general rule applied. He also noted that the licence to Lynnet appeared to have been in breach of a sub-letting prohibition in the lease. Brodies LLP (Glasgow) instructed counsel for Forthwell and Burness Paull LLP (Aberdeen) instructed counsel for Pontegadea.

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