Corporate Personality and Damages for Loss Caused to a Third Party Company: Forthwell v Pontegadea (UKSC)

With its recent decision in Forthwell Ltd v Pontegadea UK Ltd [2026] UKSC 33, handed down on September 17, 2026, the Supreme Court of the United Kingdom considered a particularly important issue of contract law: whether a contracting party can claim damages for loss suffered by a third party, and specifically by a company within the same group.


The case concerned the historic Rogano restaurant in Glasgow. Forthwell, the tenant of the property, had granted the use of the premises to its wholly-owned subsidiary, Lynnet Leisure, which operated the restaurant. Following severe flood and fire damage, the restaurant was unable to reopen, and Lynnet suffered a significant loss of profits. Forthwell sought to recover these losses from the landlord.

The Supreme Court dismissed the claim. It affirmed the general rule that a contracting party may recover damages for its own loss and not, in principle, for loss suffered by a third party. The Court declined to create a new, broader exception that would allow a parent company to claim losses sustained by its subsidiary, holding that such an exception would be vague and difficult to apply.

Of particular significance is the Court's observation that the separate legal personality of companies carries real legal consequences. Forthwell and Lynnet had chosen to structure their business activities through two separate corporate entities and could not, after the fact, bypass the consequences of that choice.

The decision is therefore of particular interest to corporate and contract law, especially in cases involving corporate groups, commercial leases, and claims for loss of profits. At the same time, it serves as a reminder that corporate personality is not merely a protective mechanism, but can also directly affect the scope of available contractual remedies. (source: UK Supreme Court/photo pixabay.com)

Read more about the Decision here

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