Irritancy (the Scottish equivalent of forfeiture) is often the last resort for a commercial landlord. It means finding a new tenant, having the premises cleared, running the risk of rates for a void premises and other inconveniences. But once its embarked on, it needs to be followed through consistently to court-based removal even after formal termination.  As demonstrated in 24 Drury Street Ltd v DST Prop Hold Ltd [2026] SAC (Civ) 9, not doing so can result not merely in waiver but also common-law oppression to the tenant and the failure of the whole process.

Warning notice doubts

In 24 Drury Street the tenant was in arrears of rent totalling £63k. The lease had an irritancy clause in standard terms with a 14-day period for payment after the service of a pre-irritancy warning notice. In mid-November 2020 the landlord served the warning notice. It demanded payment of £63k.

The tenant didn’t pay. Three months passed. Then in February the tenant’s solicitor queried the validity of the warning notice. The landlord’s solicitors rejected this. A week later they served the irritancy notice itself, terminating the lease. End of story, you might think.

But the landlord’s solicitors weren’t confident about the warning notice’s validity. So they served another warning notice on 22 March 2021. That too was queried. A third warning notice was served on 26 March. The arrears had mounted and the notice demanded payment of £113k stating that in the event of non-compliance “the Lease may be terminated”. It was sent with a covering letter stating that the notice was without prejudice to the validity of the first warning notice, the irritancy notice of 24 February 2021, and second warning notice.

Post-termination dealings with tenant

Oddly, there was no second irritancy notice. Instead the landlord changed the locks and boarded up the premises. In response the tenant’s principal pleaded that he would try to raise money for the rent. He obtained the money. By early July the principals of landlord and tenant spoke on the telephone with the former saying that if the £113k was paid the tenant could remain. In court the landlord denied that these conversations had taken place. Nevertheless in early July the money was paid by the tenant and accepted by the landlord.

In August emails passed between the two parties and they made arrangements for the tenant to be given new keys. These were given. The landlord’s principal told the tenant’s employee that all of the issues had been resolved, although this too was contested.

Raising of court proceedings

Again, one might think that ended matters. But no, for reasons not mentioned in the judgment, the landlord raised an action for declarator of irritancy and removing of the tenant, disputing the alleged conversations, and relying on the irritancy notice of February.

Tenant’s defence

The February irritancy notice was found to be valid but the tenant’s defences:

• the landlord had waived his right to rely on the notice; and
• that in any event to allow irritancy in these circumstances would be oppressive,

were upheld and the sheriff refused declarator and removing. The landlord appealed to the Sheriff Appeal Court arguing that the sheriff had erred in finding the conversations to have taken place and that there had been neither waiver nor oppression.

Challenge to findings of fact

The Sheriff Appeal Court rejected the challenge to the sheriff’s findings concerning the conversations. On the basis of the evidence it made a finding in fact that the tenant had relied on landlord’s assurance in the phone conversation that if payment was made it could remain.

Waiver of right to enforce

Looking to the issue of waiver, the court applied the standard test: objectively viewed, were there acts of the landlord which indicated the abandonment of the right to remove and which had been relied upon by the tenant?  It found that the telephone conversations by which the restoration was promised on payment of the sum were such acts. Waiver had been established.

Landlord’s oppressive conduct

More interestingly, the court also upheld the defence of oppression. This is rare. Applying the test of “impropriety of conduct on the part of the landlord which procures an unfair consequence on the tenant”, the court rejected a submission by the landlord that conduct after the giving of the irritancy notice was irrelevant. All conduct leading up to the landlord “seeking to exercise the right to irritate” was relevant.

The oppressive conduct began with the “without prejudice” second and third warning notices, covered the changing of the locks, the telephone calls, the acceptance of payment and ended with the permission of re-entry with an assurance that all issues had been resolved.

So where does that leave us ?       the conversations, once established as fact, were clearly indicative of waiver. However a common law defence of oppression is rarely successful: impropriety of conduct with an unfair consequence is a high test. All of the elements in 24 Drury Street are unlikely to occur again, together. Sending multiple warning notices for the avoidance of doubt, would by itself hardly quality as impropriety. Equally the mere acceptance post-termination of payment of the rent giving rise to the irritancy would not seem to qualify.

What about changing the locks – unauthorised by a court decree (a civil wrong or delict) – and then permitting re-entry ?

Old habits die hard. Some in Scottish domestic arbitration practice are no exception. One is an arbitrator’s issue of a completed draft award to the parties before making the actual award. But why having heard the parties, does an arbitrator have to go to the trouble and expense of giving them a draft decision ? Before 2010 there was a concern about clerical errors making an award challengeable. But now that’s covered by rule 58 of the statutory Scottish Arbitration Rules. There doesn’t seem to be any other reason. So why still do it ? Other jurisdictions don’t.

What’s more sharing drafts can give rise to trouble. That’s what happened in Arbitration Application No. 1 of 2025 [2026] CSOH 2.

The arbitration arose out of a commercial lease. The landlord claimed damages from the tenant for loss arising out of the tenant’s breach of their repairing obligations.

The arbitrator issued a direction requiring the parties to provide “notes” of the essential details of the dispute and matters which they required to have addressed. The landlord’s note identified as the issues the correct interpretation of the tenant’s obligations and the correct measure of its loss. The tenant’s note was in broadly similar terms. The arbitrator then directed the parties to provide written submissions on these matters. The submissions of both were directed to the correct interpretation of the tenant’s obligations. This was followed by a hearing. All seemed to be in order.

Following the hearing, the arbitrator issued a draft award. The draft was accompanied by an email inviting both parties to provide “comments or otherwise” within 14 days.

This triggered a further 10-page written submission from the tenant relating to the interpretation issue, a request that evidence be led as to the circumstances in which the lease was concluded before the decision on interpretation was made, and a challenge to the arbitrator’s proposed application of the case law on the repairing obligation. At the end there was some mention of the doctrine of mutuality of obligations (whereby one party may not perform its obligation while the other party is in breach of a corresponding obligation), together with one sentence that asserted that the landlord was not entitled to enforce the repairing obligations. It does not appear that any details of the landlord’s alleged breach were given.

The arbitrator then issued her award on the issue of interpretation and the tenant’s breach without addressing the “landlord breach” argument. The tenant appealed on the basis that this argument was an issue that had been put to her and that its non-mention was a serious irregularity.

The landlord argued that there was no irregularity as the argument should have been raised in response to her original direction to provide “notes” of the essential details. The tenant however pointed to the arbitrator’s email inviting parties to provide “comments or otherwise” on the draft without any restriction as to their scope. This had opened up a possibility for the tenant to draw her attention to a new issue for her determination. It had done so and “put” the “landlord breach” issue to her. In addition to not dealing with that issue she had also breached rule 55 of the Scottish Arbitration Rules (statutory arbitration law), which provides that if a draft award is issued, the arbitrator must consider representations “about the draft”.

The court found that there had been no serious irregularity and refused the appeal. But its reasoning is strained. It found that by the time of notification of the draft award the arbitrator “had made a decision on the matters put to her”. Plainly that could not have been the case: after all the award was a draft one. The arbitrator could still change her mind. The notification of a draft and the unrestricted scope of the comments that she invited is cogent evidence of this.

Then, the court interpreted the arbitrator’s email that supplied the draft award by finding that it was “implicit” that the invitation for “comments or otherwise” could not cover “new lines of argument or new submissions”. Thus, as the “landlord’s breach” issue was a new line of argument, the email did not open the door for the tenant to “put” it to the arbitrator and she did not breach her duty to consider all arguments “put” to her.

The court justified its interpretation of the arbitrator’s emailed direction by reference to the statutory objective of arbitration of disposing of disputes without undue delay and expense. But on the face of it the email was of very wide scope. It invited not just comments on the draft but on other matters. What were those other matters?

Finally rule 55 could not be interpreted as obliging an arbitrator to consider arguments not dealt with in the draft. Rule 55 was restricted to comments “about the draft”. If the draft did not deal with an argument, and it was put into the comments, the arbitrator had no duty to consider it. Rule 55 had not been breached.

Observations: Whatever one thinks of the result, the case highlights a number of points:

Firstly, given the arbitrator’s duty to resolve the case without undue delay, it remains unclear why a draft award was issued. Perhaps the parties asked for it. But why would they do so ? Is this just a case of following a practice that has been outdated since 2010 ?

Secondly, an arbitrator’s directions as to submissions (or “comments”) should be clear as to their scope. The court’s observation “I do not consider it surprising that the arbitrator’s email . . . does not make any stipulation as to the scope of submissions” does not take in the reality of arbitration. Parties should not be required to second-guess such an important matter. A stipulation of the scope for comment would have avoided the new “landlord breach” argument and the cost and delay of the court proceedings that followed.

As noted in Dundas and Bartos on the Arbitration (Scotland) Act 2010 (2^nd edn), the traditional rationale for the issue of draft awards, has, since the 2010 Act, ceased to exist. Is it not time to kick the draft award-habit ?