By means of the doctrine of subrogation, one person is substituted for another in the exercise of that other’s rights against a third person. In particular, it is the process by which one party is substituted for another so that the first party may enforce that other’s rights against a third party. Mark Leeming (Faculty of Law, University of Sydney) has just published “Subrogation, Equity and Unjust Enrichment” as Sydney Law School Research Paper No 12/52 on SSRN. It is a version of his paper in Glister and Ridge (eds) Fault Lines in Equity (Hart Publishing, Oxford, 2012) 27-43 (collecting the papers from the symposium “Comparative Perspectives on Equity” held at the University of Sydney on 14 December 2010). This is the abstract:
Is “unjust enrichment” merely a unifying theme, or is it something more, a legal norm in its own right capable of supplying answers to particular cases? Or, if that is a false distinction, and indeed “unjust enrichment” may be either, then what approach is more likely to result in a legal system whose operation is clear, certain and coherent? This paper is directed to those questions. It notes the highly divergent approaches to a single doctrine – subrogation – in the House of Lords and the High Court of Australia, with a view to evaluating which mode of reasoning leads to clarity, transparency and coherence.
The divergence between the House of Lords and the High Court of Australia can be seen in the different approaches in Banque Financière de la Cité v Parc (Battersea) Ltd  1 AC 221,  UKHL 7 (26 February 1998) and Bofinger v Kingsway (2009) 239 CLR 269,  HCA 44 (13 October 2009) (I blogged about this case here and here). In the former, the House of Lords saw tight connections between unjust enrichment and subrogation; in the latter, the High Court of Australia not only rejected a large role for unjust enrichment analysis but also explained subrogation as applicable to a variety of circumstances. In this debate, Leeming defends Bofinger: “If a case for a new conceptual framework is to be made out, it needs to be justified, not proselytised”.
I agree with that comment, but I think that the terms of the debate are too circumscribed. In my view, it is not a straight choice between these two positions. Instead, subrogation is a rather protean doctrine, founded upon many different principles. For example, other than situations where there is an express or implied term to that effect in a contract (such as with insurance contracts; see Caledonia North Sea Limited v British Telecommunications plc (Scotland) 2002 SC (HL) 117, 2002 SLT 278,  UKHL 4 (7 February 2002)), it can arise by operation of law (i) to reverse unjust enrichment (BFC v Parc); (ii) on well settled established principles and in defined circumstances (Bofinger); (iii) when “reason and justice” demand that it should be (Highland Finance (Ireland) v Sacred Heart College of Agriculture  2 IR 180); (iv) when reflects the presumed or actual intention of the parties (Ghana Commercial Bank v Chandiram  AC 732,  UKPC 20 (20 June 1960)); or (v) as a matter of judicial discretion (Re Downer Enterprises  1 WLR 1460).
Attempts to fit the many different cases and approaches into a single over over-arching theory have not been very successful, making it highly unlikely that any single theory will successfully explain the whole field. Instead, both BFC v Parc and Bofinger can be right. It is hard to see how the facts in BFC v Parc could come within a recognised category of subrogation, so unjust enrichment can be deployed to justify the development of a new category of subrogation to cover the facts of the case. On the other hand, it is clear that the facts of Bofinger fell to be decided within an existing category, so it was unnecessary to explain that category in unjust enrichment terms or otherwise consider restitution doctrine.