Equitable Subrogation in Australia and England

Abstract

This article examines the law of equitable subrogation to extinguished rights. Although the law of Australia and that of England and Wales share much in common in this area over the last two decades a divergence has occurred. In England, subrogation is said to form part of the law of unjust enrichment. In Australia, this rationalisation of the case law has been rejected. This article reviews the divergence in light of the recent decisions of the Supreme Court of the United Kingdom in Menelaou v Bank of Cyprus Plc [2016] AC 176 and Lowick Rose LLP (in liq) v Swynson Ltd [2017] UKSC 32. The article isolates some practical and doctrinal implications of Menelaou and Lowick and argues that the latter entrenches but also subtly reformulates the English commitment to unjust enrichment. So understood, Lowick may form the basis for a principled reconsideration of the Australian aversion to reliance upon English subrogation cases. The article advances towards this position through an exploration of three themes: first, the broader theoretical controversies over the status of unjust enrichment (Part I); secondly, the historical development of equitable subrogation to extinguished rights (Part II); and thirdly, the doctrinal uncertainty generated by Menelaou and the restatements and reformulations of principle in Lowick (Part III). The article then offers some general reflections on the future development of equitable subrogation, which is of special importance to insolvency practitioners (Part IV).