SET-OFF LAW AND PRACTICE: AN INTERNATIONAL HANDBOOK. Ed by William Johnston and Thomas Werlen Oxford: Oxford University Press (www.oup.co.uk ), 2nd edn, 2010. lxxi + 576 pp. ISBN 9780199579716. £165.

Published date01 May 2011
Pages321-322
AuthorRoss Gilbert Anderson
Date01 May 2011
DOI10.3366/elr.2011.0042

“Set-off”, it is commonly said, is not a term of art in Scots law. The result has been a focus on particular types of set-off. Compensation, for instance, is covered in the commendably concise – contemporary law reformers, take heed – Compensation Act 1592 (APS, III, 573, c 61; RPS 1592/4/83). “A just and positive statute,” Lord Cunninghame remarked of it, “most creditable to the wisdom and sound views of the ancient Scottish legislature” (Donaldson v Donaldson (1852) 14 D 849 at 855). But the focus on compensation is to some extent unfortunate, not least because compensation is relatively unusual. Although it may be fair to say that compensation is a doctrine of the substantive law, compensation under the 1592 Act has to be pled and sustained in court. It is thus a doctrine for litigators and, in practical terms, expensive.

Other types of set-off, in contrast, are much more important. The Scots law of insolvency set-off (“balancing of accounts in bankruptcy”) is one area of daily practical importance which has been rather neglected by modern scholarship, although it has been the subject of a very useful recent decision by Lord Hodge: Integrated Building Services Engineering Consultants Ltd v Pihl UK Ltd [2010] CSOH 80, which confirms that it does apply on administration. One direct consequence of the lack of development of balancing of accounts in bankruptcy was that a recent gallant attempt to persuade the Royal Court of Guernsey that it should develop its law of insolvency set-off on the basis of the Scots law of balancing of accounts, failed: Flightlease Holdings (Guernsey) Ltd v Flightlease (Ireland) Ltd [2009] GLR 38 (a case involving two insolvent Swiss Air subsidiaries whose outstanding liabilities amounted to almost US$690m).

The book under review collects together national reports which each concisely describe the nature of the different types of set-off in that jurisdiction. Alas, there is no national report for Scotland (unlike in the companion volume, also edited by William Johnston, Security over Receivables: An International Handbook (2008); the Scottish chapter in the latter work is contributed by Mr Bruce Stephen of Brodies LLP). The Scots law of contractual set-off has been all but ignored in modern literature. But if Lord Rodger's judgment in Inveresk plc v Tullis Russell Papermakers Ltd [2010] UKSC 19 has given renewed impetus to this area of the law in general, this book may provide a helpful summary in English of the...

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