BALANCING OF ACCOUNTS IN BANKRUPTCY APPLIES TO ADJUDICATION

In Integrated Building Services Engineering Consultants Ltd (t/a Operon) v PIHL UK Ltd [2010] CSOH 80, [2010] BLR 622 Lord Hodge held that Scots law entitles a defender to invoke the principle of balancing of accounts in bankruptcy as a defence to an action to enforce the decision of an adjudicator. The result achieved by the invocation of this principle is similar to that obtained by Mr Justice Edwards-Stuart in Straw Realisations (No 1) Ltd v Shaftsbury House (Developments) Ltd (above p 1) but is achieved by a different means. It is done by refusing to grant summary judgment rather than, as is the case in England, granting summary judgment and then imposing a stay of execution. It should also be noted that Scots law appears to permit the principle of balancing of accounts to be invoked where the party to whom the sum is paid is on the verge of insolvency (‘vergens ad inopiam’), although it is unlikely that the principle will be invoked if the allegation of insolvency is seriously contested by the party seeking to enforce the decision of the adjudicator.