Adjudication, insolvency and the balancing of accounts

In Heis v Perth & Kinross Council [2013] CSOH 149, Lord Malcolm held that the pursuers were not entitled summarily to enforce the decision of an adjudicator. The pursuers were the administrators of a company which was in administration at the time of the adjudication and, if the decision of the adjudicator had been enforced, the defenders would have recovered only a small fraction of the sum they had been ordered to pay if they subsequently established in litigation that they were not liable to pay the sum they had been ordered to pay by the adjudicator. In such circumstances, enforcement would have effectively determined the rights of the parties (when the aim of adjudication is to resolve them on a provisional basis). Lord Malcolm would have reached this conclusion even if the principle of balancing of accounts had not been raised before the adjudicator, although he found on the evidence that the defenders had indeed raised the issue (and the failure of the adjudicator to address the defence sufficiently provided a further reason not to enforce the decision of the adjudicator).