Kiko UK Limited v Jamino Limited & Anor [2026] EWCA Civ 513

[2026] EWCA Civ 513Case No CA-2025-001696
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2025] EWHC 1510 (Comm)
ON APPEAL FROM
THE BUSINESS AND PROPERTY COURTS
LONDON CIRCUIT COMMERCIAL COURT (KBD)
His Honour Judge Cadwallader
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 30/04/2026
Before
LORD JUSTICE NEWEYLORD JUSTICE PHILLIPSLORD JUSTICE COBB
Between
KIKO UK LIMITEDClaimantJAMINO LIMITED (in liquidation)DefendantPIANOFORTE HOLDINGS S.p.A.Defendant- and -, JAMINO LIMITED (in liquidation) First Defendant PIANOFORTE HOLDINGS S.p.A.Second Defendant/Respondent for KIKO UK LIMITED Claimant/Appellant
John Robb (instructed by Bermans Limited) for AppellantGrace Cheng (instructed by William Sturges LLP) for RespondentHearing Hearing date: 24 February 2026
Approved JudgmentThis judgment was handed down remotely at 10.30am on Thursday, 30 April 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................
[1]This appeal raised short points as to the proper interpretation of a deed of guarantee and indemnity executed by the parent company of the assignee of a commercial lease in favour of the assignor of that lease.[2]The appellant assignor (“Kiko”) contended that, on a proper interpretation of the deed, the respondent parent company (“Pianoforte”) was obliged to indemnify Kiko against the costs and expenses arising from Kiko being required to enter into a new lease by the landlord of the premises, Pontegadea UK Ltd (“Pontegadea”), following the disclaimer of the lease by the assignee, Pianoforte’s subsidiary, the first defendant (“Jamino”). That was because, Kiko claimed, the disclaimer constituted a “failure” by Jamino to pay rents or observe the tenant covenants under the lease, and thereby triggering Pianoforte’s liability to indemnify Kiko.[3]Pianoforte disputed that contention, asserting that the disclaimer was not a “failure” under the deed and that, in any case, the costs of Kiko entering into the new lease did not “arise from” the disclaimer.[4]This issue (among others) was tried before His Honour Judge Cadwallader, sitting as a judge of the London Circuit Commercial Court (“the Judge”). In his reserved judgment dated 20 June 2025, the Judge concluded that Pianoforte’s interpretation was correct, and that Pianoforte was not liable to Kiko for the costs of entering into the new lease. The Judge granted Kiko permission to appeal.[5]I would allow the appeal for the reasons set out below.

The factual background

[6]On 2 November 2016 Kiko took a 10-year lease (“the Lease”) of part of the ground and first floors of 48 Oxford Street, London, W1D 1BF (“the Premises”).[7]On or about 30 September 2019 Kiko assigned its interest in the Lease to Jamino, a wholly-owned subsidiary of Pianoforte. At about the same time Kiko entered into two written agreements: i) A Guarantee and Indemnity Agreement with Jamino and Pianoforte, executed as a deed (referred to as the Parent Company Guarantee or “the PCG”); ii) An Authorised Guarantee Agreement (“the AGA”) with Jamino and Pontegadea by which Kiko covenanted that Jamino would perform the obligations of the tenant under the Lease.[8]Jamino began defaulting on its obligations under the Lease in 2021, resulting in Kiko incurring (and discharging) liabilities to Pontegadea under the AGA, including quarterly rent. Kiko commenced these proceedings on 17 January 2024, claiming reimbursement of those sums by Jamino and Pianoforte.[9]On 22 May 2024 Jamino was placed in creditors’ voluntary liquidation. On 28 June 2024 Jamino’s liquidator gave notice disclaiming Jamino’s interest in the Lease (“the Disclaimer”). By virtue of section 178(4)(a) of the Insolvency Act 1986 (“IA 1986”), the liabilities of Jamino under the Lease thereupon ceased. However, by virtue of section 178(4)(b) of the IA 1986, the rights and liabilities of Kiko, Pianoforte and Pontegadea under and in respect of the Lease (save as against Jamino) were deemed to continue. Section 178(4) of the IA 1986 is set out in paragraph 28 below.[10]On or about 26 July 2024, Pontegadea required Kiko to enter into a new lease of the Premises (“the New Lease”) in accordance with clause 4 of the AGA, which provided that:
“…if (prior to any lawful assignment of the Assignee of the Lease) the Lease is disclaimed, then the Landlord [Pontegadea] may within three months after any such disclaimer by notice in writing require the Tenant [Kiko] to accept a new lease of the demised premises … and in such case the Tenant shall pay the Landlord’s costs of the preparation and granting of such new lease and shall accept such new lease accordingly and will execute and deliver to the Landlord a counterpart of it.”
[11]The New Lease was completed on 15 November 2024, terminating the rights and liabilities of Kiko, Pianoforte and Pontegadea under and in respect of the disclaimed Lease which had been deemed to be subsisting to that point by virtue of section 178(4)(b) of the IA 1986.[12]On 8 November 2024 and 12 January 2025 Kiko amended its claim against Pianoforte to include the historic costs and expenses it had incurred and the future costs and expenses it would incur as a result of being required to enter into the New Lease.[13]On 20 January 2025 Kiko obtained summary judgment against Pianoforte for £969,380.12 plus interest of £71,333.99 in respect of part of its claim for reimbursement of sums paid to Pontegadea under the AGA (see the judgment of HHJ Pelling KC at [2025] EWHC 720 (Comm)). The claim for the balance of the sums Kiko claimed to have paid, its claim for certain legal costs and the new claim for costs and expenses in respect of the New Lease proceeded to trial before the Judge.[14]In the light of his reserved judgment, the Judge entered judgment for Kiko in the further sum of £419,394.53 by way of reimbursement of sums paid by Kiko to Pontegadea and £23,000 for prospective litigation expenses.[15]As already stated above, the Judge dismissed Kiko’s claim for compensation for costs and expenses arising out of being obliged to enter the New Lease. The Judge determined, however, that had the claim succeeded in principle, he would have assessed the historic expenses as £378,243.63 (rent and other charges paid under the New Lease) and £39,575 (legal expenses incurred) and future losses as £849,000 (future rent and other charges, discounted to reflect the sum the Judge assessed was likely to be received by sub-leasing the Premises) and £15,000 (further expenses of attempting to enter a sub-lease).[16]In the event, Kiko did not succeed in sub-leasing the premises, but did agree to surrender the New Lease for a reverse premium. As a result, Kiko contended that if its appeal were successful, it should have judgment for the sums found by the Judge, suitably adjusted down to reflect the surrender rather than the assumed sub-lease. In its skeleton argument Kiko stated that the figure of £849,000 should be reduced to £723,320.49, but in oral argument Mr Robb gave the relevant figure as £726,338.25. That discrepancy could not immediately be explained. It was left that, should the appeal succeed, the parties would supply the correct figure.

The relevant contractual provisions

[17]Clause 2.2 of the PCG provided as follows:
“The provisions of this agreement shall take effect on the date of the Assignment and shall continue until the end of the term of the Lease (however it may end) and during any statutory continuation of it, or until the Assignor is fully released from all liability under the [AGA].”
[18]Kiko’s claim was brought pursuant to clause 3.2 of the PCG, which provided as follows:
“The Assignee’s Guarantor [Pianoforte] covenants … to indemnify and keep indemnified the Assignor [Kiko] (including for the avoidance of doubt any costs and liabilities of the Assignor arising under any Authorised Guarantee Agreement) arising from any failure by the Assignee [Jamino] either: 3.2.1. to pay any of the rents reserved by the Lease and any interim rent determined under the LTA 1954 (if applicable); or 3.2.2. to observe or perform any of the tenant covenants of the Lease.”
[19]The Judge observed at [18] that “some words are missing [from clause 3.2]” and that some words should be inserted. The following additional wording (underlined) was accepted by both parties for the purposes of this appeal:
“The Assignee’s Guarantor [Pianoforte] covenants … to indemnify and keep indemnified the Assignor [Kiko] from [or “against” or “in respect of”] all [or “any”] costs and liabilities (including for the avoidance of doubt any costs and liabilities of the Assignor arising under any Authorised Guarantee Agreement) arising from any failure by the Assignee [Jamino] either: 3.2.1. to pay any of the rents reserved by the Lease and any interim rent determined under the LTA 1954 (if applicable); or 3.2.2. to observe or perform any of the tenant covenants of the Lease.”
[20]Clause 4.1.8 of the PCG addressed the consequences of a disclaimer of the Lease as follows:
“4.1. The liability of the Assignee’s Guarantor shall not be reduced, discharged or otherwise adversely affected by: … 4.1.8. the disclaimer of the liability of the Assignee under the Lease.”
[21]The Judge rejected Kiko’s case on clause 3.2 for three reasons [56]-[57]. First, the Disclaimer was not “a failure to pay the rent or observe or perform any of the tenant covenants of the lease” under clause 3.2 of the PCG. Secondly, as a result, Kiko’s obligation to enter into the New Lease did not arise from a failure by Jamino to perform the Lease. Thirdly, Pianoforte was not in breach, so it was not obliged to indemnify Kiko for its losses.[22]The Judge’s analysis in relation to the first reason was as follows: i) The relevant question was whether Kiko’s obligation to enter into the New Lease “arose from a failure or failures by Jamino to perform the Lease” [49]. ii) The Disclaimer was not a “failure” to perform the ongoing liabilities under the Lease because “its effect [was] to determine the ongoing liabilities” [51]. iii) It might have been different had Pianoforte undertaken to indemnify Kiko against “non-performance”, but the Disclaimer was not a “failure to perform” the Lease [52].

The Judge made two points in relation to the second reason:

[23]i) There was nothing in the language of clause 3.2 of the PCG to exclude the obligations under the New Lease from the clause 3.2 indemnity because “[a] thing may arise from more than one thing” [48]. ii) It was the Disclaimer that gave rise to Kiko’s obligation to enter into the New Lease [50], but it was an act of Jamino’s liquidator, rather than Jamino itself [51].[24]The Judge rejected Kiko’s submission that clause 3.2 indemnified Kiko against any costs or liabilities arising from the AGA. Instead, he considered that the indemnity only covered costs and liabilities arising from Jamino’s failure to perform the Lease (including those arising under the AGA) [49].[25]Given his view that Jamino had not failed to perform the Lease under clause 3.2, the Judge concluded that Pianoforte was not obliged to indemnify Kiko against its losses resulting from being required to enter into the New Lease [58].

The grounds of appeal

[26]Kiko advanced five grounds of appeal in support of its case that the Judge misinterpreted clause 3.2 of the PCG: i) First, the Judge erred in holding that the Disclaimer by Jamino’s liquidator did not constitute a “failure by the Assignee to pay any of the rents reserved by the Lease … or to observe or perform any of the tenant covenants of the Lease” under clause 3.2. ii) Secondly, the Judge was wrong to hold that the Disclaimer was not “a failure to perform the ongoing liabilities” because the effect of section 178(4) IA 1986 was the Lease continued to subsist as between Kiko and Pianoforte after the Disclaimer. iii) Thirdly, the Judge construed “arising from” in clause 3.2 too narrowly. He should have concluded that Pontegadea’s demand that Kiko enter into the New Lease “arose from” Jamino’s failure to perform the Lease. iv) Fourthly, the Judge erred by interpreting clause 3.2 contrary to commercial common sense and clause 4.1.8 of the PCG. The Judge’s construction resulted in the indemnity provision of the PCG being unavailable to Kiko in precisely the scenario where the PCG was most likely to be needed, namely the insolvency of the assignee. v) Fifthly, the Judge’s construction of clause 3.2 failed to give effect to the words “including for the avoidance of doubt any costs and liabilities of the Assignor arising under any Authorised Guarantee Agreement”. He should have concluded that any liabilities arising under the AGA fall within the scope of the indemnity provision of the PCG. The relevant legal principles Contractual interpretation

The relevant legal principles

[27]The relevant principles of contractual interpretation were not in dispute. As explained by Lord Hamblen and Lord Leggatt JJSC in FCA v Arch Insurance (UK) Ltd [2021] UKSC 1 at [47], the core principle is that a contract:
“… must be interpreted objectively by asking what a reasonable person, with all the background knowledge which would reasonably have been available to the parties when they entered into the contract, would have understood the language of the contract to mean.”

Disclaimer under IA 1986

[28]Section 178 of IA 1986 gives the liquidator of a company a power to “disclaim any onerous property”. Section 178 sets out the effect of such a disclaimer:
“(4) A disclaimer under this section— (a) operates so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the company in or in respect of the property disclaimed; but (b) does not, except so far as is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person.” (a) operates so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the company in or in respect of the property disclaimed; but (b) does not, except so far as is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person.”
[29]In Hindcastle Ltd v Barbara Attenborough Associates Ltd [1997] AC 70 (“Hindcastle”), the House of Lords considered the effect of section 178(4) on the guarantor of an insolvent tenant. As Lord Nicholls said at p. 93C-D:
“Disclaimer operates to determine the insolvent’s liabilities under the lease, but subject to a qualification: not so as to affect the rights or liabilities of other persons. Parliament has provided that the general rule shall not apply. The release of the insolvent debtor is not to discharge a surety from his liabilities to the lessor.”
[30]Lord Nicholls went on to explain the commercial rationale for that principle at pp. 93H-94A: “In the present context it is essential to have in mind that the fundamental purpose of an ordinary guarantee of another’s debt is that the risk of the principal debtor’s insolvency shall fall on the guarantor and not the creditor. … The very object of giving and taking a guarantee would be defeated if the position were otherwise”.[31]In the course of argument, Ms Cheng submitted that the effect of the parties’ agreement was that Pianoforte’s liability as guarantor terminated on disclaimer. It was, of course, open to the parties to make such an agreement. However, clear words would be required to persuade the court that they had in fact done so. Thus in Ex parte Walton; In re Levy (1881) 17 Ch D 746 at pp. 755-756, cited in Hindcastle at p. 91A, James LJ asked the following rhetorical question: “Take the case of a lease with a surety for the payment of rent. Could it ever be intended that the bankruptcy of the lessee was to release the surety?”.[32]The same principle was explained and applied by the Court of Appeal in Shaw v Doleman [2009] EWCA Civ 283, [2009] BCC 730. At p. 740F, Elias LJ accepted the submission (made at p. 739H) that “very clear words are necessary” to limit the guarantor’s liability as terminating on disclaimer because “[i]nsolvency or bankruptcy are precisely the circumstances when the guarantee is likely to become operative”. The proper interpretation of the PCG The meaning of “failure”

The proper interpretation of the PCG

[33]The central issue in this appeal was whether the Disclaimer was a “failure” under clause 3.2 of the PCG (Grounds 1, 2 and 4). Mr Robb made four main points on this issue:(i) that the Judge’s interpretation ran contrary to the commercial purpose of the PCG, which was to protect Kiko from the risk of Jamino’s insolvency, as explained in Hindcastle;(ii) that clause 4.1.8 of the PCG made clear that the parties intended that the Disclaimer would not discharge Pianoforte’s liability as guarantor;(iii) that the natural and ordinary meaning of “failure” included a situation where Jamino disclaimed the Lease; and(iv) that the effect of section 178(4) of IA 1986 and Hindcastle was that Jamino was in breach of its obligations under the subsisting lease in the period up to 14th November 2024.[34]In response, Ms Cheng submitted(i) that the Judge’s interpretation was consistent with the commercial purpose of the PCG;(ii) that clause 4.1.8 needed to be construed in light of clause 2.2 of the PCG, which provided that the PCG “shall continue until the end of the term of the Lease (however it may end)”;(iii) that the Judge’s view that “failure” in clause 3.2 did not encompass the Disclaimer reflected the natural meaning of the word, the sense in which it was used in the AGA and the choice of the parties’ experienced legal teams; and(iv) that, despite section 178(4) IA 1986, it was open to the parties to agree that Pianoforte’s liability would end on disclaimer, which is what they had done.[35]When pressed in argument, however, Ms Cheng was unable to identify any sensible explanation as to why the parties would have agreed that Jamino’s disclaimer of the Lease would release Pianoforte from its obligations as guarantor. As Ms Cheng accepted, the result of her proposed interpretation would be that Pianoforte could agree to act as guarantor under the PCG one day, but put Jamino into liquidation and disclaim the Lease the next day, leaving Kiko without a remedy. Ms Cheng’s answer was that this arrangement might simply have been the best Kiko had managed to negotiate while attempting to assign the Lease, but that does not explain why the parties would have agreed that Pianoforte would provide the PCG, but structure it so that it would be unavailable to Kiko in precisely the situation (Jamino’s insolvency) where it was most likely to be needed.[36]Nor was Ms Cheng able to explain how her proposed interpretation could be reconciled with clause 4.1.8 of the PCG, which expressly provides that the liability of Pianoforte as guarantor would be unaffected by disclaimer of the Lease. Ms Cheng argued that clause 4.1.8 needed to be read in the context of clause 2.2, which provided that the PCG “shall continue until the end of the term of the Lease (however it may end) …”, contending that that entailed that the PCG ceased to have effect when the Lease was terminated by being disclaimed. But that ignores that clause 2.2 continued: “… and during any statutory continuation of it”, which would include a deemed continuation under section 178(4) IA 1986, and in any event further provided that the PCG would continue for so long as Kiko was liable under the AGA.[37]Mr Robb’s other points support that conclusion. Although we were taken to authorities on the meaning of “failure”, the crucial question remains its meaning within clause 3.2 and within the PCG as a whole. Against the commercial background, it is clear that Jamino’s disclaimer of the Lease constituted a “failure” because it would render Kiko liable under the AGA as a result of the actions or inactions of Jamino in relation to the Lease. That is precisely what clause 3.2 was designed to indemnify Kiko against.[38]It follows that the provisions of the PCG do not contain the “very clear words” that are required for a finding that the parties agreed that a guarantee should terminate on disclaimer. The provisions considered in Shaw v Doleman did not meet that threshold, and those terms did not contain anything equivalent to clause 4.1.8 in the PCG. The wording in the present case is, if anything, even further away from constituting the “very clear words” required to terminate liability on disclaimer.[39]It follows that Jamino’s disclaimer of the Lease constituted a “failure” within the meaning of clause 3.2.

The meaning of “arising from”

[40]The question of whether Kiko’s obligations under the New Lease “arose from” Jamino’s “failure” under clause 3.2 (Ground 3) can be dealt with relatively shortly. Mr Robb argued that the Judge had construed “arising from” too narrowly. Ms Cheng contended that the obligations did not “arise from” Jamino’s “failure” because Pontegadea could have sued Jamino, rather than requiring Kiko to enter into a New Lease.[41]In my judgment, Kiko’s obligations under the New Lease did “arise from” Jamino’s “failure” under clause 3.2. Ms Cheng was right to say that the Disclaimer (and consequent breach of clause 3.2) was not the immediate cause of Kiko entering into the New Lease. And it is true that the Disclaimer was the act of Jamino’s liquidator, rather than Jamino itself. However, in substance, the Disclaimer, Jamino’s failure to pay rents, the breach of clause 3.2 and Kiko being required to enter into the New Lease were all closely linked. Not only was the Disclaimer the reason why Pontegadea required Kiko to enter into the New Lease; it was also the sole basis of Pontegadea’s right to do so under clause 4 of the AGA.[42]Consequently, Kiko’s obligations under the New Lease did “arise from” Jamino’s “failure” under clause 3.2 of the PCG.

The meaning of “including any costs and liabilities arising under any AGA”

[43]The final issue was whether clause 3.2 provided an indemnity for any costs and liabilities arising under the AGA, regardless of whether those costs and liabilities had arisen from a “failure” by Jamino (Ground 5). Given my conclusions(i) that Jamino’s disclaimer constituted a “failure” under Clause 3.2 and(ii) that Kiko’s obligations under the New Lease “arose from” Jamino’s “failure”, Kiko’s appeal succeeds in any event and it is not necessary to determine Ground 5.

Conclusion

[44]If Newey and Cobb LJJ agree with my conclusion that the appeal should be allowed, I propose we invite the parties to agree the terms of an order, including the sums which should be included by way of judgment sums (as prefaced in paragraphs 15 and 16 above) and interest. To the extent that there are issues as to those sums (or as to the appropriate orders for the costs below and of this appeal), the parties should provide written submissions in the usual way.[45]I agree.[46]I also agree.