Caterpillar Property Limited & Anor v Park Cakes Limited [2026] EWCA Civ 575 13 May 2026
James Andrews-Tipler has appeared for the successful tenant respondent Park Cakes Limited (bakers and suppliers of the iconic Colin the Caterpillar Cake) in an expedited leapfrog appeal to the Court of Appeal addressing an important and novel point of law under the LTA 1954.
The issue was whether an unexercised tenant’s option to renew the tenancy constitutes an agreement for the grant of a future tenancy to the tenant, within the meaning of s.28 LTA 1954, which would take the tenancy outside the protection of Part II LTA 1954 and prevent renewal of the tenancy otherwise than by exercise of the option.
The tenant held two tenancies of factory premises on identical terms (mutatis mutandis) each containing such an option.
The landlords asserted that the tenant’s sole right of renewal lay through exercise of the options – which, inter alia, would have resulted in a new tenancy at a rent determined by a fixed formula liable to be substantially higher than the market rent that would be fixed upon an application to the Court applying s.34.
As reported here, the tenant had succeeded at first instance before District Judge Bond in the County Court at Leeds (Business and Property) (20 March 2026) and obtained declarations that the tenants’ tenancies enjoyed protection under the Act, with the result that the tenant could decline to exercise the options and seek to renew under the Act instead should it wish.
There was previously no authority on this point, and s.28 has received almost no judicial attention since it was introduced in its current form over 70 years ago.
Given the novelty of the point, the landlords inevitably sought permission to appeal; and in the absence of any higher authority dealing with this novel point, the tenant faced the invidious prospect of an appeal (and indeed a likely second appeal) not being resolved prior to the deadline for exercise of the options (in mid-June 2026).
This would have left the tenant stuck between the rock of exercising the options – an irrevocable act that would have resulted at best in less favourable terms of renewal than might have been obtained under the Act – and the hard place of letting the deadline pass without any higher authoritative confirmation that a renewal via the Act would still be possible.
The tenant neatly avoided this trap by applying to the County Court for a transfer direct to the Court of Appeal under CPR 52.23(1), on the grounds the appeal raised an important and novel point of principle and there was a compelling reason for the Court of Appeal to hear it.
On 24 March 2026 the District Judge (with the blessing of Mr Justice Leech, Vice-Chancellor of the County Palatine of Lancaster) authorised a transfer and abridged time for the landlord to file an appellant’s notice.
On 22 April 2026 Andrews LJ agreed to accept the appeal and granted expedition upon the tenant’s application (in line with the guidance given in Unilever Plc v Chefaro Proprietaries Ltd [1995] 1 W.L.R. 243, CA) to the effect that expedition was necessary to avoid the Respondent suffering irremediable prejudice by taking an irrevocable decision and the risk that the appeal would be academic thereafter without a prompt decision.
Following the hearing on 8 May 2026 before Lewison, Asplin and Laing LJJ the landlords’ appeal was unanimously dismissed.
Giving the judgment of the Court, Lewison LJ fully endorsed the judgment of DJ Bond, emphasising:
- The mere grant of an option imposes no obligation on the grantee, and an obligation on the grantor contingent upon successful exercise of the option. Successful exercise of the option would require strict compliance with any conditions to which it is subject (Finch v Underwood (1876) 2 Ch D 310) before a binding agreement is reached.
- The landlords were therefore mistaken to characterise any option to renew as an effective entitlement to the grant of a new lease. In many cases the right to renew under an option is likely to be more precarious than its right to renew under the 1954 Act: compare an option to renew conditional upon all covenants to repair having been complied with, and the right to seek a new lease which can be defeated on the equivalent statutory ground only by showing there are substantial breaches in view of which the tenant ought not to be granted a new tenancy.
- On a proper construction of the Act, whilst an option to renew is an agreement, it is not an agreement for the grant of a future tenancy to the tenant. At the point of grant the tenant has not entered into a binding commitment to take a new lease. Such agreement is reached only where the option is fully exercised and a mutually enforceable agreement to grant a new tenancy arises.
- Following Spiro v Glencrown Properties Ltd [1991] Ch 537 it was correct, given the purpose of the Act to give protection to business tenants, to approach the matter primarily from the perspective of the tenant and to regard the option as an irrevocable offer rather than a conditional contract.
In view of the limited hesitation the Court had in reaching its unanimous decision, the point may now be regarded as authoritatively settled.
Commercial tenants throughout England and Wales may rest assured that bargaining for options will not prejudice their security of tenure under the Act, and that renewal can be effected through whichever method the tenant chooses.
The cake can be had and eaten too.
James advised the tenant from the outset and appeared, alone and without a leader, at first instance and before the Court of Appeal, instructed by Nicola Charlton and Elisha Langridge of Womble Bond Dickinson (UK) LLP.
Download: Caterpillar Property Limited & Anor v Park Cakes Limited [2026] EWCA Civ 575
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