The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:
Subrogation is an equitable mechanism aimed at preventing unjust enrichment by permitting one party to ‘step into the shoes’ of another and to bring an action in that other’s name.
For further guidance on unjust enrichment generally, see Practice Notes:
Restitution for unjust enrichment—elements of the claim
Defences to restitutionary claims
The term subrogation is:
‘…a convenient way of describing a transfer of rights from one person to another, without assignment or assent of the person from whom the rights are transferred and which takes place by operation of law in a whole variety of widely different circumstances. Some rights by subrogation are contractual in their origin, as in the case of contracts of insurance. Others, such as the right of an innocent lender to recover from a company moneys borrowed ultra vires to the extent that these have been expended on discharging the company's lawful debts, are in no way based on contract and appear to defeat classification except as an empirical remedy to prevent a particular kind of unjust enrichment.’ (Lord Diplock in Orakpo v Manson Investments)
Two common situations where subrogation arises are:
where one party has indemnified another against a loss, for which a third party is liable (ie A has indemnified B against a loss caused to B by C. A can ‘step into the shoes’ of B
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