Law Quarterly Review: Goff and Jones

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Law Quarterly Review
2020
Is subrogation a remedy for unjust enrichment?
Rory Gregson*
Subject: Restitution
Keywords: Remedies; Subrogation; Unjust enrichment;

Cases:
Swynson Ltd v Lowick Rose LLP (In Liquidation) (formerly Hurst Morrison Thomson LLP)
[2017] UKSC 32; [2018] A.C. 313; [2017] 4 WLUK 238 (SC)
Investment Trust Companies (In Liquidation) v Revenue and Customs Commissioners [2017]
UKSC 29; [2018] A.C. 275; [2017] 4 WLUK 268 (SC)
Menelaou v Bank of Cyprus Plc [2015] UKSC 66; [2016] A.C. 176; [2015] 11 WLUK 82
(SC)
*L.Q.R. 481 I. Introduction
D owes a debt to X. C’s money is paid to X, discharging D’s debt.1 In these circumstances,
the law might give C new rights against D, which resemble X’s extinguished rights against
D.2 This is called subrogation to extinguished rights, which this article will call
"subrogation" for short. C is said to be subrogated to X’s extinguished rights.
This is a strange thing for the law to do. C might deserve rights against D, but why should
these rights resemble X’s extinguished rights? If the parties wanted C to acquire X’s rights
then they could choose to transfer X’s rights by assignment. But parties never choose to
subrogate C to X’s extinguished rights, so subrogation is not justified by intention or
contract.3 Instead, English law says that subrogation is a remedy for unjust enrichment. This
was the view of the House of Lords in Banque Financière de la Cité and was affirmed by a
majority of the Supreme Court in Menelaou.4 It is also endorsed by Burrows,5 Goff and
Jones,6 and Mitchell and Watterson’s leading text on subrogation.7
However, some commentators dissent from this view8 and, in the past five years, the
Supreme Court has started to reconsider its position. In Menelaou, Lord Carnwath was "less
convinced with respect of the case for ‘rationalising’ the older [subrogation] cases ‘through
the prism of unjust enrichment’".9 Lord Neuberger primarily treated subrogation as a remedy
for unjust enrichment10 but was: *L.Q.R. 482
"attracted to the view that [subrogation] could be justified on the alternative basis of an
orthodox proprietary claim rather than on unjust enrichment".11
Next, in Swynson, Lord Sumption stated that:

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"it would be unwise to … try to fit the subrogation cases into any broader category of unjust
enrichment. It is in many ways sui generis".12
Most recently, in Prudential, the court held that "subrogation … is arguably based on a
different principle".13
So, who is right? Is subrogation a remedy for unjust enrichment or not? This article argues
that subrogation is not a remedy for unjust enrichment in the sense that is usually assumed,
since it is not governed by the same rules as other remedies for unjust enrichment. In light of
this, judges and scholars need to reconsider what the law of unjust enrichment is, and how it
is unified.
To substantiate this argument, the article is structured as follows. Part II defines subrogation.
Part III considers what judges and scholars mean when they say that subrogation is a remedy
for unjust enrichment. It is generally assumed that there are two consequences of subrogation
being a remedy for unjust enrichment: first, that a claim for subrogation raises the unjust
enrichment questions; and secondly, that a claim for subrogation is governed by unjust
enrichment’s rules. Parts IV and V show that the second consequence is not true. The recent
Supreme Court decisions in Swynson 14 and Investment Trust Companies 15 show that
subrogation is governed by different rules to other remedies for unjust enrichment. Part VI
considers the implications for subrogation and unjust enrichment. Part VII concludes.
II. What is Subrogation?
There are two types of subrogation: to subsisting rights, and to extinguished rights.16 This
article is concerned only with the latter, which it calls "subrogation" for short. This type of
subrogation was defined in the first paragraph of the article. It should be added that X’s rights
—and those C acquires by subrogation—may be personal or proprietary.17
The classic case is Butler v Rice.18 D owned a house, subject to X’s charge. Acting behind
D’s back, D’s husband, Mr Rice, asked C for a loan to pay off X’s charge. C thought that Mr
Rice owned the house, so agreed to the loan in exchange for a new charge over the house. C
therefore paid the loan monies to Mr Rice, who paid X, discharging X’s charge. When D
discovered the arrangement, she refused to execute a charge in favour of C. On the face of it,
then, C’s loan was unsecured. *L.Q.R. 483
However, Warrington J. held that, because C’s loan had been used to pay off X’s charge, C
was subrogated to X’s extinguished charge. In other words, C acquired a new charge, which
resembled that which X used to have. Subrogation meant C was secured after all.
III. Subrogation as a Remedy for Unjust Enrichment
Unjust enrichment is an independent source of rights and obligations alongside contract and
tort.19 The rights which the law creates in response to unjust enrichment may be called the

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remedies for unjust enrichment.20 There are several. The most common is a personal
obligation to make monetary restitution, which means that D must pay C a sum of money
equal to D’s unjust enrichment at C’s expense.21 It has been suggested that other remedies
for unjust enrichment include a constructive trust,22 rescission,23 and subrogation to
extinguished personal and proprietary rights.24
It is generally assumed that there are two consequences of subrogation being a remedy for
unjust enrichment: first, that a claim for subrogation raises the unjust enrichment questions;
and secondly, that a claim for subrogation is governed by unjust enrichment’s rules.25 Each
will be examined in turn.
1. Questions
It is uncontroversial that:
"a court must first ask itself four questions when faced with a claim for unjust enrichment as
follows. Has the defendant been enriched?
Was the enrichment at the claimant’s expense?
Was the enrichment unjust?
Are there any defences available to the defendant?"
26
Accordingly, if subrogation is a remedy for unjust enrichment, then it follows that a claim
for subrogation is properly analysed by reference to these four questions.27 Indeed, Lord
Steyn’s speech in the subrogation case of BFC was the first judicial *L.Q.R. 484
endorsement of the idea that unjust enrichment claims should be analysed by reference to the
four questions.28
2. Rules
In addition, the idea that subrogation is a remedy for unjust enrichment is often followed by
the idea that subrogation duplicates a "direct" unjust enrichment claim on the same facts, and
that subrogation is therefore redundant. A "direct" claim seems to be one decided "by direct
application of the principles of unjust enrichment", "without relying on subrogation".29 In
other words, a direct claim is a claim for personal monetary restitution of an unjust
enrichment.
For example, Birks wrote that "within the law of restitution [subrogation] really adds nothing
to the number of techniques already identified",30 and Lord Carnwath agreed in Menelaou.31
Mitchell and Watterson take a more nuanced position. They write that subrogation to
personal rights duplicates "a direct personal claim in unjust enrichment"32 whereas

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subrogation to proprietary rights does not:
"In principle, [C]’s position should be improved by [subrogation] only in cases where [X]’s
rights were proprietary. A claimant who is entitled to subrogation should always also have a
direct personal claim of his own, making [subrogation to X]’s personal rights redundant. The
courts have sometimes failed to recognize this, or have chosen to ignore it, and have
permitted [C] to ‘acquire’ extinguished personal rights while simultaneously denying them
direct claims. This is incoherent and self-contradictory … [D]iscrepancies of this kind cannot
be justified once it is recognized that [C]’s direct personal claim to restitution and his claim to
be subrogated to [X]’s personal rights rest on a common basis." 33
For Mitchell and Watterson, then, "the same limits" should apply to "subrogation to [X]’s
personal rights" as apply to "a direct personal claim in unjust enrichment".34 Furthermore,
subrogation to proprietary rights is different only because it gives C proprietary rights; in all
other respects the authors present subrogation to proprietary rights as governed by the same
rules as subrogation to personal rights and direct claims. Burrows35 and Goff and Jones36
take the same position.
Thus, the authors present the rules which govern direct claims as also governing subrogation.
For example, Goff and Jones says that:
"As an equitable remedy designed to reverse unjust enrichment, a [subrogation] claim … may
be defeated or limited by any defence or bar that *L.Q.R. 485 will defeat or limit any cause
of action in unjust enrichment. These include [the defence] of change of position".37
Similarly, Mitchell and Watterson suggest that:
"In principle … any recognized ground of restitution should be capable of justifying

subrogation in appropriate circumstances. But, equally clearly, only a recognized ground of
restitution should be capable of supporting the remedy of subrogation: in this respect it is no
different from any other remedy for unjust enrichment." 38
The "recognized ground[s] of restitution … capable of justifying subrogation" seem to be the

same as those capable of justifying a direct claim: the authors write that "secondary liability,
ignorance, mistake and failure of consideration … are the grounds which can most commonly
support a subrogation claim in practice",39 and they also suggest that these grounds can
support a direct claim.40
They also reason in the opposite direction: because subrogation and direct claims are
governed by the same rules, the rules which govern subrogation must also govern direct
claims. For example, in some subrogation cases, the only sense in which an enrichment
comes at C’s expense is that it would not have accrued "‘but for’ [a] defective transfer from
C’s wealth".41 Birks, Mitchell, and Watterson therefore argue that this is the test for whether
an enrichment comes at C’s expense in direct claims.42
Consequently, the dominant view is that subrogation and direct claims are governed by the

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same rules except for the rules determining whether C acquires personal or proprietary rights.
But even here, Mitchell and Watterson write that:
"As the law develops, it is to be hoped that the courts will look across from the [cases of]
subrogation [to proprietary rights] to other cases where proprietary remedies have been
awarded in response to unjust enrichment, with a view to developing a consistent view of the
circumstances in which proprietary restitution should be awarded." 43
Some cases also support the idea that subrogation duplicates a direct claim in unjust
enrichment. In BFC, Lord Steyn’s view was that: *L.Q.R. 486
"[O]n an application of established principles of unjust enrichment [C is] entitled to succeed

… But, if it were necessary to do so, I would reach the same conclusion in terms of the
principles of subrogation".44
In Menelaou, a case of subrogation to proprietary rights, Moses L.J. stated that:
"There is, as Professor Burrows suggests, no need to duplicate the reasoning in relation to
both unjust enrichment and subrogation; the answer should be the same: see per Lord Steyn
in [BFC]".45
In addition, Lord Clarke analysed C’s subrogation claim by applying the rules applicable to
direct claims.46
In Swynson, Lord Neuberger recognised that C claimed to be "subrogated to [X]’s [personal]

claim against [D]"47 but then did not mention subrogation again, dismissing C’s claim
because there was "no good reason for upholding the present unjust enrichment claim given
that it is not within the normal scope of such claims".48 Both Lord Mance and Lord
Neuberger applied the rules for direct claims laid down by the Supreme Court in ITC.49
In short, the prevailing view is that subrogation is governed by the same rules as direct claims
in unjust enrichment (except possibly the rules determining whether C acquires personal or
proprietary rights). Subrogation (to personal rights) therefore duplicates a direct claim in
unjust enrichment and is redundant.
However, this view is wrong. It has been challenged by several scholars. For example, in a
more recent publication, Watterson has argued that subrogation and direct claims respond to
different enrichments.50 Moreover, the next two sections will show that two recent Supreme
Court decisions are inconsistent with subrogation being governed by the same rules as direct
claims.
IV. Swynson
One of those Supreme Court decisions is Swynson. There, X loaned money to EMSL on the
basis of D’s negligent due diligence report. EMSL defaulted. C made a new loan to EMSL,
which it used to repay X’s loan. This meant that X suffered no loss as a result of D’s

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negligence, so X could not recover damages from D.51 ESML then went into liquidation, so
could not repay C’s loan.
C argued that D had been unjustly enriched at his expense. To remedy this, C sought to be
subrogated to X’s discharged right to sue D for negligence. The court unanimously denied the
claim. Giving the leading judgment, Lord Sumption stated that: *L.Q.R. 487
"it would be unwise to draw too close an analogy with the role of mistake in other legal
contexts or to try to fit the subrogation cases into any broader category of unjust enrichment.
It is in many ways sui generis … [T]he law of unjust enrichment is generally concerned to
restore the parties to a normatively defective transfer to their pre-transfer position.
Subrogation, however, does not restore the parties to their pre-transfer position. It effectively
operates to specifically enforce a defeated expectation. [Subrogation] may be equally capable
of analysis in terms of failure of basis for the transfer. Restitution on that ground ordinarily
requires that the expectation should be mutual, whereas this is not a requirement for equitable
subrogation. But some cases … cannot without artifice be analysed in any other way, since
[C] does not seem to have been mistaken about anything. His expectation was simply
defeated by some subsequent external event. What this suggests is that the real basis of
[subrogation] is the defeat of an expectation of benefit which was the basis of [C]’s consent
to the payment of the money for the relevant purpose. Mistake is not the critical element. It is
only one, admittedly common, explanation of how that expectation came to be disappointed."
52
On the facts, C had not "bargain[ed] for a right to recover substantial damages from [D]"53
and so was not "defeated in his expectation of some feature of the transaction for which he
may be said to have bargained".54 Accordingly, C’s subrogation claim failed. Lord Mance
and Lord Neuberger also gave substantive judgments and reached the same result for
essentially the same reasons.55
Importantly, Lord Sumption identified a number of differences between the rules governing
subrogation and the rules governing other remedies for unjust enrichment. Other remedies
restore the parties to their pre-transfer position, whereas subrogation does not.56 The unjust
factor of failure of basis usually requires C’s basis to be shared with D, whereas subrogation
does not.
The unjust factor of mistake also operates differently to normal. It usually requires an
incorrect belief or tacit assumption about the past or present; a misprediction of the future is
not actionable.57 But subrogation seems exempt from this rule. Lord Sumption stated that
subrogation requires C to be "defeated in his expectation of some feature of the transaction
for which he may be said to have bargained".58 This is consistent with many previous
subrogation cases which identified the unjust factor as C’s mistaken assumption that a future
event would take place. *L.Q.R. 488 59
Furthermore, in Swynson the Supreme Court held that C made a mistake—he believed or
assumed that the law was such that, if he discharged EMSL’s debt to X, D would remain

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liable for its negligence—that this mistake caused D to be enriched, and that C was not a risk-
taker.60 Ordinarily, this would be enough for the unjust factor of mistake to render D’s
enrichment unjust. However, the court held that D’s enrichment was not unjust because C
was not "defeated in his expectation of some feature of the transaction for which he may be
said to have bargained".61
As such, subrogation does not seem to be governed by the unjust factors of mistake and
failure of basis. Instead, C must prove an unjust factor which is unique to subrogation:
"defeat of an expectation of benefit".62 In other words, subrogation relies on a different
unjust factor to direct unjust enrichment claims, and so subrogation is governed by different
rules to direct claims.
However, Lord Sumption is wrong to say that C’s defeated expectation is the unjust factor in
"all cases" of subrogation.63 Watterson observes that subrogation cases "mostly" fall into
three fact patterns: "lending" cases, "misappropriation" cases, and "common liability"
cases.64 Lord Sumption’s unjust factor can explain only lending cases. This will be
demonstrated by reference to each of the three groups of case in turn.
First, in lending cases, C’s loan to D (or a fourth party) is paid to X, discharging X’s rights
against D. C may then be subrogated to X’s extinguished rights against D. Examples include
Butler, BFC, Menelaou, and Swynson.65 As Lord Sumption explained, the results and
reasoning of these cases fit well with an unjust factor based on C’s defeated expectation.66
Secondly, in misappropriation cases, money held by a fiduciary for C is—without C’s

consent—paid to X, discharging X’s rights against D.67 C is then subrogated to X’s
extinguished rights against D. Given C’s lack of consent, C generally has no expectation of
any benefit. Accordingly, the unjust factor triggering subrogation in these cases cannot be C’s
defeated expectation of a benefit as Lord Sumption suggests.68
The unjust factor in misappropriation cases is variously described as C’s "ignorance" of D’s
enrichment, C’s "powerlessness" to prevent it, C’s "lack of consent’, or the fiduciary’s "want
of authority".69 However, some doubt whether the law of unjust enrichment recognises any
of these unjust factors.70 Virgo offers *L.Q.R. 489 an alternative: subrogation is not a
remedy for unjust enrichment, and instead vindicates C’s equitable proprietary rights.71 But
there are also powerful criticisms of this view.72
Thirdly, in common liability cases, C pays X, discharging C and D’s common liability to X.
C is then subrogated to X’s extinguished personal and proprietary rights against D, insofar as
D ought to have borne the burden of the common liability.73 This right is enshrined in s.5 of
the Mercantile Law Amendment Act 1856, and accrues whether or not C knew of X’s rights.
For example, if C’s payment extinguished X’s security over D’s asset, then C is subrogated to
X’s extinguished security even if C was unaware of its existence.74 As such, subrogation in
common liability cases can give C more than it expected, so C’s defeated expectation cannot
be the unjust factor triggering subrogation as Lord Sumption suggests.

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The cases usually justify subrogation in common liability cases on the ground that D should
have borne (part of) the burden of the liability which C discharged.75 This has been
described as the unjust factor of "legal compulsion"76 or "secondary liability".77 However,
Burrows and Mitchell take the view that, while this justifies subrogation giving C personal
rights, it cannot justify subrogation giving C proprietary rights, and C’s statutory right to
subrogation to proprietary rights in all common liability cases is unjustified.78
In sum, lending cases require C to prove an unjust factor which is unique to subrogation:
defeat of an expectation of a benefit. Consequently, in these cases subrogation is governed by
different rules to direct unjust enrichment claims. A different unjust factor must trigger
subrogation in misappropriation and common liability cases. However, it is difficult to
identify what those unjust factors are, and so difficult to tell whether they differ from those
governing direct claims. *L.Q.R. 490
V. ITC
On the same day as Swynson, the Supreme Court gave judgment in another case: ITC.79
There was no subrogation claim in ITC, but the decision creates even more differences
between the rules governing direct unjust enrichment claims and the rules governing
subrogation.
1. The ITC rules
Before ITC, there was an emerging consensus that the test in direct claims for whether an
enrichment came at C’s expense was one of "economic reality",80 or whether there was a
"sufficient causal connection" between C’s loss and D’s gain.81 It was easy to say that
subrogation was governed by these tests. In subrogation cases, C’s money is paid to X,
discharging D’s liability to X. D is enriched by its discharge from liability to X.82 This
release from liability is—as a matter of "economic reality"—at C’s expense; there is a
"sufficient causal connection" between the payment of C’s money to X and D’s release from
liability.83
However, these expansive tests were rejected in ITC.84 There, the customer bought services
from the managers. As part of the price, the customer paid VAT to the managers. The
managers accounted to the Revenue for the VAT. It then transpired that the services ought to
have been exempt from VAT. The customer sought to recover the VAT from the Revenue.
The Supreme Court denied the customer’s claim. Giving the only judgment, Lord Reed held
that an enrichment is at C’s expense only if "there has been a transfer of value".85 He
continued:
"The expression ‘transfer of value’ is, however, also too general to serve as a legal test. More
precisely, it means … that [D] has received a benefit from [C] … [and C] suffered a loss

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through his provision of the benefit." 86
This test is "usually"87 —or possibly only88 —satisfied "where the parties have dealt
directly with one another, or with one another’s property", such as where C pays D.89 There
are "a number of situations" in which there is no "direct transfer", *L.Q.R. 491 but "which,
for the purposes of the rule, the law treats as equivalent to a direct transfer".90 These include:
"cases … in which a set of co-ordinated transactions has been treated as forming a single
scheme or transaction for the purpose of the ‘at the expense of’ inquiry, on the basis that to
consider each individual transaction separately would be unrealistic";91
"situations where [D] receives property from a third party into which [C] can trace an
interest";92 and
cases "where [C] discharges a debt owed by [D] to a third party".93
On the facts, there was a transfer of value from the customer to the managers, and from the
managers to the Revenue. However, "[t]hese two transfers [could not] be collapsed into a
single transfer of value" from the customer to the Revenue.94 The customer could not rely on
any of the equivalents to a direct transfer:
"since the payments made by [the customer] formed part of the Managers’ general assets, to
do with as they pleased, it is impossible to trace those payments into the payments
subsequently made by the Managers to the [Revenue. In addition,] there is no question of the
transactions … comprising a single scheme".95
Therefore, the Revenue’s enrichment was not at the customer’s expense, so the customer had
no claim against the Revenue.96
The rules laid down in ITC were affirmed in Swynson and Prudential.97 As a result, there are
three unanimous Supreme Court decisions rejecting the generous "economic reality" and
causal tests in favour of ITC ’s narrower rules.
However, subrogation is not governed by the ITC rules. To demonstrate this, subpart 2 below
shows that subrogation cases do not fit ITC ’s requirement of a transfer of value. Subpart 3
shows that subrogation cases do not fit ITC ’s directness rule. Subparts 4 and 5 show that
Lord Reed’s equivalents to a direct transfer cannot reconcile subrogation cases with these
rules. Subpart 6 shows that ITC ’s rule against incidental benefits does not apply to
subrogation. Subpart 7 confirms these conclusions by considering the House of Lords’
decision in BFC. Subpart 8 summarises.
2. Transfer of value
In ITC, Lord Reed treated cases where C pays X, discharging D’s debt to X, as exemplifying
a transfer of value from C to D.98 One might therefore conclude that subrogation cases

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satisfy ITC ’s requirement of a transfer of value. *L.Q.R. 492
This is too quick. It is true that C pays X in some subrogation cases.99 But many cases are
more complicated. Three fact patterns must be distinguished: first, where C pays a fourth
party who then pays X; secondly, the complex facts of Menelaou; and thirdly, where C pays
D who then pays X. ITC ’s requirement of a transfer of value from C to D is not satisfied in
any of these fact patterns. This will be demonstrated for each in turn.
First, in cases like Butler, C pays a fourth party, who then pays X, discharging D’s liability to
X.100 In ITC, the "two separate transactions—first, between the [customer] and the
Managers, and secondly between the Managers and the [Revenue]"101 —could not "be
collapsed into a single transfer of value" from the customer to the Revenue.102 Analogously,
in Butler, there were two separate transactions: first, C paid Mr Rice, then secondly, Mr Rice
paid X. But subrogation succeeded despite this; subrogation does not seem to be governed by
ITC ’s requirement of a transfer of value.
Secondly, Menelaou is even more problematic. There, C had a charge over Rush Green Hall,
the property of D’s parents. D’s parents decided to sell Rush Green Hall, and use the
proceeds to buy a new property, Great Oak Court, from X. C released its charge over Rush
Green Hall in exchange for a new charge over Great Oak Court. However, D’s parents
registered Great Oak Court in D’s name. D had not consented to C’s new charge, which was
therefore invalid. However, the Supreme Court held that C was subrogated to X’s discharged
unpaid vendor’s lien.
The problem is that there were three transactions: the release of C’s charge; the sale of Rush
Green Hall; and the payment to X from the proceeds, discharging D’s liability to X under the
unpaid vendor’s lien. If the two transactions meant that there was no transfer of value in ITC,
then a fortiori there was no transfer of value in Menelaou, where there were three
transactions. But, again, subrogation succeeded despite this; subrogation does not seem to be
governed by ITC ’s requirement of a transfer of value.103
Finally, "the standard subrogation situation" is where C makes a loan to D which D uses to
pay off its debt to X.104 C is then subrogated to X’s extinguished rights against D. When C
pays the loan monies to D, there is a transfer of value from C to D.105 For subrogation,
however, the relevant enrichment is not D’s receipt of the monies. Rather, it the discharge of
D’s debt to X.106 C is linked to this discharge only via two transactions: the transaction
between C and D (when C pays D) and the transaction between D and X (when D pays X,
discharging D’s debt). Thus, analogously to ITC, there are two transactions interposed
between D’s enrichment and C. Consequently, there was no transfer of value from C to D
*L.Q.R. 493 in respect of the discharge of D’s debt. As such, there is a transfer of value
from C to D in these cases, just not in respect of the discharge of D’s debt. Accordingly, ITC
might justify some remedy for unjust enrichment in these cases, but not subrogation.
On the face of it, then, there is no transfer of value in many subrogation cases. Consequently,
it seems that direct claims require a transfer of value whereas subrogation does not;

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subrogation seems to be governed by different rules to direct claims. This conclusion might
be rebutted if subrogation cases fitted into one of Lord Reed’s "equivalents" to a transfer of
value, such as "co-ordinated transactions", or tracing.107 However, this possibility will be
rejected in subparts 4 and 5.
3. Directness
In addition to requiring a transfer of value, the Supreme Court in ITC held that the transfer
"usually"—perhaps always—must be "direct".108 Lord Reed gave examples, but did not
define "direct".109 Goff and Jones explains that it is "[b]roadly" understood to mean that:
"claims should not be allowed against … parties who have been enriched through the action
of a third party who has himself dealt with [C]".110
In every subrogation case, a payment to X discharges D’s liability to X. This requires X to

accept the payment.111 One view is that subrogation offends the directness rule, presumably
on the grounds that D is enriched through the action (accepting payment) of a third party (X).
For example, in Prudential, the Supreme Court held that:
"as a general rule, a cause of action based on unjust enrichment is only available in respect of
a benefit which [C] has provided directly to [D] (the only true exception identified being
subrogation following the discharge of a debt, which is arguably based on a different
principle)." 112
On this strict view, no subrogation case complies with ITC ’s directness rule.
However, a more generous view was endorsed by Lord Reed in ITC:
"Although it is [X] who receives the payment from [C], [D] is directly enriched, since the
payment discharges his debt: the enrichment is not the payment which [X] receives, but the
discharge which [D] receives. *L.Q.R. 494 " 113
On this more generous view, C directly enriches D, despite X’s involvement. Accordingly,
many subrogation cases fit ITC ’s directness rule.
But, even if the more generous view is correct, cases like Butler and Menelaou still do not fit
the directness rule. In those cases, a fourth party pays X, discharging D’s debt to X. The more
generous view allows X to drop out. But even then the fourth party, "not C, is the direct
provider of D’s enrichment", as Burrows observes.114 He therefore accepts that "some
examples of subrogation are exceptions to the ‘direct providers’ rule".115
In sum, on either the strict view or the generous view, subrogation does not seem to be
governed by ITC ’s directness rule. Again, subrogation and direct unjust enrichment claims
seem to be governed by different rules.
4. Co-ordinated transactions

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On the face of it, then, subrogation is not governed by ITC ’s requirement of a (direct)
transfer of value. In ITC, however, Lord Reed explained the subrogation cases of BFC and
Menelaou as exemplifying facts "equivalent to a direct transfer":116
"These are cases in which, for the purpose of answering the ‘at the expense of’ question, the
court has treated a set of related transactions, operating in a co-ordinated way, as forming a
single scheme or transaction, on the basis that to answer the question by considering each of
the individual transactions separately would be unrealistic." 117
Accordingly, Lord Clarke was correct in Menelaou to say that:
"[T]he two arrangements, namely the sale of Rush Green Hall and the purchase of Great Oak
Court, were not separate but part of one scheme".118
Therefore, there was a transfer of value from C to D.
This "co-ordinated transactions" reasoning is not persuasive. If the transactions could be

collapsed into a single scheme in Menelaou, then the same could be said of the transactions
from the customer to the managers, and from the managers to the Revenue in ITC. The
Supreme Court, however, expressly rejected this.119 The co-ordinated transactions rule
therefore appears over-inclusive, catching ITC when it should not.
There are at least two potential solutions to this problem, but neither works. The first looks at
the parties’ relationship, whereas the second looks to their intention. Each will be considered
in turn.
First, Burrows suggests Menelaou:
"can perhaps be justified as turning on the close family relationship involved (parents and
daughter) so that [C] regarded there as being a single scheme *L.Q.R. 495 involving the
conferral of a benefit by them in return for real security. It was, arguably, a pure matter of
form not substance that the conferral of the benefit and the provision of the security were in
two transactions involving different parties rather than one transaction involving the same
parties".120
This reasoning could be used to distinguish ITC —where there was no "family
relationship"—explaining why the transactions were co-ordinated in Menelaou and not ITC.
This argument, however, contradicts Swynson. There, Mr Hunt and his company were
distinct legal persons,121 so loss to the former could not be treated as loss to the latter.122
By analogy, in Menelaou, D and her parents were—however "close" their relationship—
distinct legal persons, so the conferral of a benefit on the former cannot be treated as the
conferral of a benefit on the latter.
Indeed, in Swynson, Mr Hunt owned and controlled his company,123 but his loss could not
be regarded as his company’s loss. In contrast, parents do not own and control their (adult)
children so, a fortiori, the conferral of a benefit on an (adult) child cannot be treated as the
conferral of a benefit on the parents.

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The "close family relationship" is therefore not enough to explain why the transactions were
co-ordinated in Menelaou. The distinction between Menelaou and ITC must be something
else.
A second possibility is suggested in Goff and Jones:
"the intentions of the relevant participants, and commonly, the party or parties initiating the
sequence of transactions, seem to be fundamentally important … [I]f [D]’s enrichment was
the intended result of that sequence, then the [transactions are co-ordinated]".124
For instance, the transactions were co-ordinated in Menelaou because:
"the mutual understanding, of [C and D’s] parents, was that [C] would release its charge, to
enable the sale of [Rush Green Hall] and the purchase of [Great Oak Court] for [D], over
which [C] would obtain a new charge".125
This, however, does not distinguish ITC. When the customer paid tax on the managers’
services, the customer intended this tax ultimately to reach the Revenue.126 As a result,
intention cannot explain why the transactions were co-ordinated in Menelaou but not ITC.
All of this reveals a deeper problem with Lord Reed’s co-ordinated transactions rule: it is
uncertain. Lord Reed gave little guidance as to when the rule applies and, as this discussion
has shown, the rule can be interpreted in different ways.127 As *L.Q.R. 496 Leung and
Wong put it, "the ‘single composite transaction’ language seems at times more conclusionary
than it is explanatory".128
To sum up, co-ordinated transactions reasoning is over-inclusive and uncertain. It is an

unsatisfactory way of reconciling the subrogation cases with ITC ’s requirement of a direct
transfer of value. As a result, it still seems that subrogation cases are not governed by the ITC
rules, and so subrogation is governed by different rules to direct claims.
5. Tracing
If co-ordinated transactions reasoning cannot establish a direct transfer of value in

subrogation cases, perhaps tracing can. Tracing is:
"the process by which [C] demonstrates what has happened to his property, identifies its
proceeds and the persons who have handled or received them, and justifies his claim that the
proceeds can properly be regarded as representing his property".129
In ITC, the Supreme Court held that "situations where [D] receives property from a third
party into which [C] can trace an interest" are "equivalent" to direct transfers of value.130 By
symmetry,131 situations where D’s debt is discharged using property into which C can trace
an interest could be considered "equivalent" to direct transfers of value. Accordingly, tracing
can establish the equivalent of a direct transfer of value in subrogation cases, satisfying the
ITC rules.

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This fits the reasoning in Boscawen v Bajwa.132 There, D owned property, subject to X’s
charge. D agreed to sell the property to the buyers. C agreed to loan the buyers funds for the
purchase, in exchange for a charge over the property. C paid the loan to the buyers’ solicitors,
who paid it to D’s solicitors. D’s solicitors were authorised to pay the monies to X on
completion of the sale of the property. However, D’s solicitors acted too soon, and paid the
monies to X before completion, partially discharging X’s charge. The sale then fell through,
completion never took place, and so C’s security failed. C therefore sought to be subrogated
to X’s extinguished charge.
The Court of Appeal held, with Millett L.J. delivering the only judgment, that the buyers’
solicitors had held the loan monies on trust for C.133 C could then trace the monies from the
buyers’ solicitors, through D’s solicitors, and into the discharge of X’s rights against D.134
This enabled C to show that X’s rights had been *L.Q.R. 497 discharged at its expense, and
so "[D]’s unjust enrichment was at [its] expense".135 As a result, C was subrogated to X’s
extinguished rights against D.136
Consequently, tracing seems to explain how subrogation cases satisfy ITC ’s requirement of a
direct transfer of value. On closer inspection, however, it fails to do so for two reasons. First,
tracing is not possible in some subrogation cases. Secondly, even where it is possible, tracing
cannot establish a transfer of value. Each point will be examined in turn.
To begin with, Hedley and Watterson each observe that tracing was not possible in some
cases in which subrogation was awarded.137 Baroness Wenlock is a good example.138
There, C paid money to D, a company, as a loan. D paid some of this money to X,
discharging its debt to X. It then transpired that D’s agreement to borrow money was ultra
vires and void, so D was not contractually liable to repay C. Nevertheless, the Court of
Appeal held that C was subrogated to X’s extinguished rights, such that D was liable to repay
C.
However, when C paid the loan monies to D, D acquired full legal and beneficial ownership
of them, and C lost any entitlement to them.139 This prevented C from tracing the money any
further.140 C cannot trace through D’s payment to X, so cannot trace into the discharge of
X’s charge. Accordingly, C cannot use tracing to show that the discharge of X’s charge came
at its expense.
To avoid this conclusion, C could argue that D held the loan monies on trust for C until they
were paid to X, extinguishing X’s charge. This "Quistclose" trust141 would enable C to trace
into the discharge of X’s charge.142 However, on the facts of Baroness Wenlock, it is not
obvious that a Quistclose trust existed, especially as the court did not specify whether the
loan monies were segregated from D’s other assets. While segregation is not necessary for a
Quistclose trust,143 it is good evidence of one.144
In Baroness Wenlock, then, tracing may not be possible. The same applies to many other
subrogation cases.145 If tracing is not possible, then it cannot establish a direct transfer of
value. Yet subrogation succeeds despite this. Subrogation, *L.Q.R. 498 therefore, may not

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be governed by ITC ’s requirement of a direct transfer of value, and may be governed by

different rules to direct claims.
In addition, there is a more fundamental problem. Even in cases like Boscawen where C can
trace into the discharge of X’s rights against D, this cannot establish a transfer of value from
C to D,146 so cannot satisfy the ITC rules.
In ITC, the Supreme Court held that tracing could establish the "equivalent" of a direct
transfer of value:147
"Since the property [traced into] is, in law, the equivalent of [C]’s property, [D] is therefore
treated as if he had received [C]’s property".148
However, even if D received C’s property, this does not establish a transfer of value from C
to D, or its "equivalent". A transfer of value measures value abstracted from any particular
asset, whereas tracing identifies specific assets.149 Tracing operates independently of
whether an asset was valuable, or whether D was enriched, in direct contrast to a transfer of
value.150 Tracing "may give [C] a higher value claim against [D]" than a transfer of
value.151 Thus, transfers of value and tracing are different, not "equivalent" as Lord Reed
suggested in ITC.152 Accordingly, tracing cannot satisfy ITC ’s requirement of a direct
transfer of value.
To sum up, subpart 2 showed that subrogation is not governed by ITC ’s requirement of a
transfer of value, and subpart 3 showed that subrogation is not governed by ITC ’s directness
rule. Subparts 4 and 5 then showed that these conclusions cannot be escaped from using co-
ordinated transactions reasoning or tracing. In short, subrogation is not governed by ITC ’s
requirement of a direct transfer of value, and therefore subrogation is governed by different
rules to direct unjust enrichment claims.
6. Incidental benefits
Furthermore, subrogation is not governed by ITC ’s rule against incidental benefits. The rule
is that:
"[C] must … incur a loss through the provision of the benefit … That requirement will not
normally be satisfied where the provision of the benefit was merely an incidental or collateral
result of … the reason why the expenditure was incurred." 153
However, this rule does not seem to apply to misappropriation or common liability cases.
*L.Q.R. 499
First, in misappropriation cases like Boscawen, C’s money is—without C’s consent—paid to
X, discharging X’s rights against D. C had no reason to incur the expenditure, so D’s benefit
is "incidental or collateral to the reason why the expenditure was incurred". Therefore,
according to ITC ’s rule against incidental benefits, C’s claim should fail. Yet C’s
subrogation claim succeeds in misappropriation cases, so subrogation is not governed by ITC

Page16
’s rule against incidental benefits.
Secondly, the incidental benefits rule does not apply to common liability cases, in which C
and D owe a common liability to X, then C discharges that liability and is subrogated to X’s
extinguished rights against D. For example, in Niru Battery (No.2), C and D were jointly and
severally liable to X under a court judgment.154 C paid the whole of the judgment,
discharging D’s liability to X. The Court of Appeal held that C was subrogated to X’s
extinguished rights against D.
In these cases, C generally discharges the common liability because it wants to discharge
itself from liability and not because it wants to benefit D by discharging D from liability.
Accordingly, D’s benefit is "incidental or collateral to the reason why the expenditure was
incurred". Again, therefore, according to ITC ’s rule against incidental benefits, C’s claim
should fail. Yet C’s subrogation claim succeeds, so subrogation is not governed by ITC ’s
rule against incidental benefits.155
ITC ’s rule against incidental benefits is therefore another rule which applies to direct claims
but not subrogation.
7. BFC
BFC is also inconsistent with the ITC rules. D owned property, subject to X’s first charge
and OOL’s second charge. C agreed to loan money—via an intermediary—to D to partially
pay off X’s charge, provided that OOL was bound by a "postponement letter". Under that
letter, OOL would not demand repayment of its loan until after C had been repaid. C
performed its side of the bargain, before discovering that the postponement letter did not bind
OOL.
A priority dispute then arose between C and OOL. As the postponement letter did not bind
OOL, C could not rely on it to obtain priority. However, a unanimous House of Lords held
that C was subrogated to X’s rights, insofar as they were discharged, as against OOL.
Accordingly, C had priority over OOL.
In all other subrogation cases, C sought subrogation against D, the party discharged from
liability to X. BFC was different. There, the claim was against OOL, one of D’s other
creditors. This makes BFC even more difficult to reconcile with the ITC rules. Cutts observes
that OOL was not a party to any transaction, so it is difficult to show a transfer of value from
C to OOL.156 Furthermore, Burrows *L.Q.R. 500 suggests that OOL was "directly
benefited by D not C", and so the case is an exception to the directness rule.157
Lord Reed suggested that the payments from C to the intermediary and from the intermediary
to D were co-ordinated transactions,158 establishing the equivalent of a direct transfer of
value from C to D.159 However, this reasoning overlooks the fact that C’s claim was against
OOL not D. OOL was not party to any transaction, so co-ordinated transactions reasoning
cannot establish a transfer of value from C to OOL,160 even if the other problems with that

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reasoning are ignored.
For the same reason, tracing fails. Lord Hoffmann said that C could trace the loan monies
from C to the intermediary, from the intermediary to D, from D to X, and into the partial
discharge of X’s first charge.161 Again, however, this reasoning overlooks the fact that C’s
claim was against OOL. Tracing requires transactional links162 and OOL was not party to
any transactions.163 Consequently, tracing cannot establish the equivalent of a direct transfer
of value from C to OOL.
As such, there was no way of establishing a direct transfer of value from C to OOL in BFC.
Yet C’s subrogation claim against OOL succeeded, showing that subrogation does not require
a direct transfer of value, and so subrogation is governed by different rules to a direct unjust
enrichment claim.
Furthermore, BFC is not governed by ITC ’s rule against incidental benefits.164 C did not
partially pay off X’s first charge in order to increase the value of OOL’s second charge. In
fact, the ineffective postponement letter showed that C did not intend to improve OOL’s
position at all. Thus, the benefit received by OOL was "incidental or collateral to the reason
why the expenditure was incurred".165 Therefore, according to ITC ’s rule against incidental
benefits, C’s claim should have failed. But C’s subrogation claim succeeded, so BFC was not
governed by the rule against incidental benefits.
All in all, the facts of BFC did not satisfy the ITC rules.166 But C’s subrogation claim
succeeded despite this, showing again that the ITC rules do not apply to subrogation. *L.Q.R.
501
8. Summary
Before ITC, subrogation shared the same broad "at the expense of" rules as the rest of unjust
enrichment. However, in ITC, the Supreme Court rejected these expansive rules and laid
down narrower ones, into which subrogation does not fit. Subrogation does not share ITC ’s
requirement of a transfer of value from C to D. Subrogation is not governed by ITC ’s
directness rule, or its rule against incidental benefits. "Co-ordinated transactions" reasoning
and tracing are unsatisfactory ways of overcoming these difficulties. In short, the ITC rules
apply to direct unjust enrichment claims but not subrogation; direct claims are governed by
different rules to subrogation.
VI. Implications
To sum up the argument so far, in Swynson, Lord Sumption suggested that there are
differences between the rules governing subrogation and those governing direct unjust
enrichment claims. Subrogation does not restore the "pre-transfer position"167 and has a
unique unjust factor: "defeat of [C’s unilateral] expectation of a benefit".168 There is also

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another difference, which Lord Sumption did not identify: subrogation is not governed by the
ITC rules for establishing whether an enrichment came at C’s expense.
Why does this matter? As explained in Pt III, the orthodox view is that subrogation is
governed by the same rules as a direct unjust enrichment claim, and so subrogation duplicates
a direct claim and is redundant. Swynson and ITC show this orthodoxy to be wrong. The
rules which govern direct claims are different from the rules which govern subrogation. This
has implications for both direct claims and subrogation.
On the one hand, just because a rule applies to subrogation does not mean that it applies to
direct claims. So, Birks, Mitchell, and Watterson are wrong to rely on subrogation cases as
authority for a causal test for whether an enrichment came at C’s expense in direct claims.169
On the other hand, just because a rule applies to direct claims does not mean that it applies to
subrogation. Accordingly, Lord Mance and Lord Neuberger were wrong to apply the ITC
rules to the subrogation claim in Swynson.170 Part V showed that, although these rules
govern direct claims, they do not govern subrogation.
In particular, C’s loan to EMSL caused D’s liability in negligence to be "reduced to nil".171
However, C did not intend this, so Lord Mance’s view was that it was an incidental benefit
for D and therefore ITC ’s rule against incidental benefits barred C’s subrogation claim.172
Lord Sumption and Lord Neuberger were sympathetic to this idea, though they did not decide
the point.173 However, Pts V.6 and V.7 used the cases of Boscawen, Niru Battery, and BFC
to show that *L.Q.R. 502 subrogation is not governed by the incidental benefits rule. As
such, the Supreme Court was wrong to apply the incidental benefits rule to subrogation in
Swynson.
Furthermore, as subrogation is governed by different rules to those governing direct claims,

subrogation will rarely duplicate a direct claim and so will rarely be redundant. A direct claim
may succeed where subrogation fails, and subrogation may succeed where a direct claim
fails. In BFC, Baroness Wenlock, Butler and Menelaou subrogation succeeded, whereas the
ITC rules would now bar a direct unjust enrichment claim.
What does this mean for the debate over whether subrogation is a remedy for unjust
enrichment? As Pt III showed, it is generally assumed that there are two consequences of
subrogation being a remedy for unjust enrichment. The second consequence is that
subrogation is governed by the same rules as a direct unjust enrichment claim, so subrogation
(to personal rights) duplicates a direct claim and is redundant. Swynson and ITC show that
subrogation is not a remedy for unjust enrichment in this sense.
Nevertheless, the first consequence is that a claim for subrogation is properly analysed by
reference to the four unjust enrichment questions. This still may be true. In the words of Lord
Reed in ITC: "the questions are not themselves legal tests, but are signposts towards areas of
inquiry involving a number of distinct legal requirements".174 Consequently, subrogation
may raise the same questions as direct claims, even if different rules determine the answers.

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Subrogation can therefore be a remedy for unjust enrichment, even though it is governed by
different rules from those governing direct claims.175
If subrogation is a remedy for unjust enrichment in this sense, then there are implications for
the new wave of scepticism over whether unjust enrichment is a unified subject.176 Direct
claims and subrogation are both called remedies for unjust enrichment even though they have
different rules for determining what is "unjust", what is an "enrichment", and what is "at the
expense of" C. Can the unity of unjust enrichment survive with this level of diversity?
The answer depends upon why the question is being asked: for what purpose is unity sought?
177 One might try to unite claims which are governed by the same rules. The law of unjust
enrichment does not seem to do this: both direct claims and subrogation are called remedies
for unjust enrichment, yet they are governed by different rules.
Alternatively, one might try to unite claims which are justified by the same reason. Unjust
enrichment does not do this either, as Webb explains: *L.Q.R. 503
"Birks had initially employed ‘unjust enrichment’ as the generic conception of the event
which triggered rights to restitution … On this view … [t]o say that there has been an unjust
enrichment is simply to say that the facts support a restitutionary claim … Unjust enrichment
… without further elaboration, neither help[s] us to identify which enrichments must be given
up nor provide[s] a reason for requiring [D] to give up such enrichments.
Others propose a second, narrower conception of the unjust enrichment principle. This sees
the principle as explaining some but not all instances of restitutionary liability … This narrow
conception of the unjust enrichment principle … resembles a residual category, a collection
of cases held together simply by the restitutionary response and the fact that no other
identified principle explains them … [N]o matter how much material is excised from it,
unjust enrichment does not itself provide a reason for restitution." 178
This seems to be acknowledged by Goff and Jones:
"Whatever may be the underlying moral justifications for the award of restitution in these
cases, the ‘unjust’ element in ‘unjust enrichment’ is simply a ‘generalisation of all the factors
which the law recognises as calling for restitution’. In other words, unjust enrichment is not
an abstract moral principle to which the courts refer when deciding cases; it is an organising
concept that groups decided cases on the basis that they share a set of common features,
namely that in all of them [D] has been enriched by the receipt of a benefit gained at [C]’s
expense in circumstances that the law deems to be unjust. The reasons why the courts have
held [D]’s enrichment to be unjust vary from one set of cases to another, and for this reason
the law of unjust enrichment more closely resembles the law of torts (recognising a variety of
reasons why [D] must compensate [C] for harm) than it does the law of contract (embodying
a single principle that expectations engendered by binding promises must be fulfilled). In this
respect, ‘English law does not have a unified theory of restitution’." 179
This was approved by Lord Toulson in Barnes v Eastenders Cash & Carry Plc, in a judgment

Page20
with which all of the other members of the Supreme Court agreed.180
So, if remedies for unjust enrichment are not united by their rules or justification, how are
they united? One possibility is that the law of unjust enrichment is that which is best
exposited by using the four unjust enrichment questions. Legal education rarely includes
direct claims or subrogation in detail. Accordingly, few lawyers are familiar with them. The
four questions are therefore seen as helpful because they offer a simple structure which
makes it easier for judges and practitioners to find, apply, and discuss the relevant law.
*L.Q.R. 504 181
For example, Birks first proposed the four questions as "a common framework" and "shared
and stable pattern of reasoning" enabling "lawyers to converse about the subject".182
Similarly, in ITC, the Supreme Court held that:
"[the] four questions are … for ease of exposition. They are intended to ensure a structured
approach to the analysis of unjust enrichment, by identifying the essential elements in broad
terms. If they are not separately considered and answered, there is a risk that courts will resort
to an unstructured approach driven by perceptions of fairness, with consequent uncertainty
and unpredictability." 183
Furthermore, giving the judgment of the plurality in the High Court of Australia in Mann v
Paterson Constructions, Nettle J., Gordon J. and Edelman J. stated that:
"Unjust enrichment may be conceived of as a ‘unifying legal concept’ which serves a

‘taxonomical function’ that assists in understanding why the law recognises an obligation to
make restitution in particular circumstances. But it is in no sense an all-embracing theory of
restitutionary rights and remedies pursuant to which existing decisions are to be accepted or
rejected by reference to the extent of their compliance with its proportions." 184
Consequently, to use Cane’s terminology, calling subrogation a remedy for unjust enrichment
may be an "expository" classification and not a "dispositive" one.185 It is "expository"
because it raises the four unjust enrichment questions which "make it easier to understand,
expound and teach the law, and to make it more user-friendly for lawyers seeking to solve
real-life problems for clients".186 But it is not "dispositive" because it does not determine the
"criteria of success and failure" for C’s claim.187 On this view, direct claims and subrogation
may both be remedies for unjust enrichment in the sense that the rules of each are best
exposited by using the four unjust enrichment questions. The unity of the law of unjust
enrichment is an expository one.
However, this may be incorrect. This article has shown that the rules which govern direct
claims do not govern subrogation. But the rules which do govern subrogation still need to be
articulated. Once this is done, the four questions may be a distraction. If so, subrogation
would not even be a remedy for unjust enrichment in the sense that it is best exposited by
using the four questions.
In sum, the law as it stands poses a challenge to those who say that subrogation is a remedy

Page21
for unjust enrichment. They must explain what they mean, and how the unity of the law of
unjust enrichment survives.
VII. Conclusion
There is disagreement in the Supreme Court over whether subrogation is a remedy for unjust
enrichment. Sometimes, when judges and scholars say subrogation is a *L.Q.R. 505 remedy
for unjust enrichment, they mean that subrogation raises the four unjust enrichment questions.
If this is true, then labelling something as a remedy for unjust enrichment seems to be an
expository classification and not a dispositive one.
But sometimes, when judges and scholars say subrogation is a remedy for unjust enrichment,
they tie this to the idea that subrogation duplicates a "direct" unjust enrichment claim on the
same facts. Swynson and ITC show this to be mistaken: subrogation is not governed by the
rules which govern a direct claim. As a result, the rules which do govern subrogation need to
be articulated and critically evaluated. Subrogation needs attention in its own right, not just as
part of the law of unjust enrichment.
Rory Gregson
Balliol College, University of Oxford
L.Q.R. 2020, 136(Jul), 481-505
____________________________________________________________________________
*. I am grateful to Andrew Burrows, Clara Hurley, Pablo Letelier, Timothy Liau, Charles
Mitchell, Robert Stevens, Frederick Wilmot-Smith, participants at a meeting of the
Obligations Discussion Group at the University of Oxford, and an anonymous referee
for their invaluable comments. The usual disclaimers apply. I thank the Arts and
Humanities Research Council, Balliol College, and the Clarendon Fund for funding the
period in which this article was written.
1. e.g. Burston Finance Ltd v Speirway Ltd [1974] 1 W.L.R. 1648 at 1652B; [1974] 3 All
E.R. 735 Ch at 738a (Walton J.); Menelaou v Bank of Cyprus UK Ltd [2015] UKSC
66; [2016] A.C. 176 at [39] (Lord Clarke), [83] (Lord Neuberger) and [111] (Lord
Carnwath); Investment Trust Companies v Revenue and Customs Commissioners
[2017] UKSC 29; [2018] A.C. 275 at [49] (Lord Reed); Swynson Ltd v Lowick Rose
LLP [2017] UKSC 32; [2018] A.C. 313 at [18] (Lord Sumption).
2. Day v Tiuta International Ltd [2014] EWCA Civ 1246; [2015] 1 P. & C.R. DG10 at
[43] (Gloster L.J.); C. Mitchell and S. Watterson, Subrogation: Law and Practice,
revised edn (Oxford: Oxford University Press, 2007), at paras 3.15–3.18 and 8.05–
8.31.
3. Banque Financière de la Cité SA v Parc (Battersea) Ltd [1999] 1 A.C. 221 at 231E-

Page22
232B; [1999] 1 All E.R. 737 at 744j–745c (Lord Hoffmann); Mitchell and Watterson,
Subrogation: Law and Practice (2007), at para.3.01.
4. e.g. Banque Financière [1999] 1 A.C. 221 at 228C–F (Lord Steyn), 231H (Lord
Hoffmann) and 238H (Lord Clyde); Menelaou v Bank of Cyprus UK Ltd [2016] A.C.
176 at [18]–[37] and [49]–[50] (Lord Clarke) and at [61]–[99] (Lord Neuberger).
5. A. Burrows, The Law of Restitution, 3rd edn (Oxford: Oxford University Press, 2011),
at p.144.
6. C. Mitchell, P. Mitchell, and S. Watterson, Goff and Jones: The Law of Unjust
Enrichment, 9th edn (London: Sweet & Maxwell, 2016), at para.39-01.
7. Mitchell and Watterson, Subrogation: Law and Practice (2007), at paras 3.02–3.03.
8. e.g. P. Jaffey, The Nature and Scope of Restitution (Oxford: Hart Publishing, 2000), at
p.273; S. Hedley, Restitution: Its Division and Ordering (London: Sweet & Maxwell,
2001) at pp.119–148; C. Rotherham, Proprietary Remedies in Context (Oxford: Hart
Publishing, 2002) at pp.250–251; G. Virgo, The Principles of the Law of Restitution,
3rd edn (Oxford: Oxford University Press, 2016) at p.637; T. Cutts, "Modern Money
Had and Received" (2018) 38 O.J.L.S. 1 at 25.
9. Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176 at [108].
10. Menelaou [2016] A.C. 176 at [61]–[99].
11. Menelaou [2016] A.C. 176 at [59].
12. Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [30].
13. Prudential Assurance Co Ltd v Revenue and Customs Commissioners [2018] UKSC
39; [2019] A.C. 929 at [68] (Lord Mance, Lord Reed, and Lord Hodge).
14. Swynson Ltd v Lowick Rose LLP [2018] A.C. 313.
15. Investment Trust Companies v Revenue and Customs Commissioners [2018] A.C. 275.
16. e.g. Mitchell and Watterson, Subrogation: Law and Practice (2007), at paras 1.04–
1.10.
17. Banque Financière de la Cité SA v Parc (Battersea) Ltd [1999] 1 A.C. 221 at 228E–F
(Lord Steyn) and 237G–238A (Lord Clyde); Menelaou v Bank of Cyprus UK Ltd
[2016] A.C. 176 at [46] and [50] (Lord Clarke); Swynson Ltd v Lowick Rose LLP
[2018] A.C. 313 at [18] (Lord Sumption).
18. [1910] 2 Ch. 277.
19. Lipkin Gorman v Karpnale Ltd [1991] 2 A.C. 548; [1992] 4 All E.R. 512.
20. cf. P. Birks, "Rights, Wrongs, and Remedies" (2000) 20 O.J.L.S. 1.
21. Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176 at [55] (Lord Clarke) and [81]

Page23
(Lord Neuberger); Burrows, The Law of Restitution (2011), at pp.14–15; Mitchell,

Mitchell, and Watterson, Goff and Jones: The Law of Unjust Enrichment (2016), at
paras 1-35 and 1-41.
22. Burrows, The Law of Restitution (2011), at p.15; Mitchell, Mitchell, and Watterson,
Goff and Jones: The Law of Unjust Enrichment (2016), at para.37-51.
23. Burrows, The Law of Restitution (2011), at pp.16–21; Mitchell, Mitchell, and
Watterson, Goff and Jones: The Law of Unjust Enrichment (2016), at para.37-51.
24. See Pt I above.
25. See also Pablo Letelier, "A Wrong Turn? Reconsidering the Unified Approach to
Unjust Enrichment Claims" (2020) 136 L.Q.R. 121.
26. Benedetti v Sawiris [2013] UKSC 50; [2014] A.C. 938 at [10] (Lord Clarke). See also
e.g., Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176 at [18] (Lord Clarke);
Investment Trust Companies v Revenue and Customs Commissioners [2018] A.C. 275
at [24] and [41] (Lord Reed); Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at
[110] (Lord Neuberger).
27. e.g. Banque Financière de la Cité SA v Parc (Battersea) Ltd [1999] 1 A.C. 221 at
234B–G (Lord Hoffmann); Menelaou [2016] A.C. 176 at [18] (Lord Clarke); Swynson
[2018] A.C. 313 at [56] (Lord Mance) and [110] (Lord Neuberger); Burrows, The Law
of Restitution (2011), at p.145; Mitchell, Mitchell, and Watterson, Goff and Jones: The
Law of Unjust Enrichment (2016), at para.39-20.
28. Banque Financière [1999] 1 A.C. 221 at 226G–28D (Lord Steyn).
29. Burrows, The Law of Restitution (2011), at p.147. See also P. Birks, An Introduction to
the Law of Restitution, revised edn (Oxford: Clarendon Press, 1989), at p.191.
30. Birks, An Introduction to the Law of Restitution (1989), at p.93.
31. Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176 at [109] and [117].
32. Mitchell and Watterson, Subrogation: Law and Practice (2007), at para.8.32.
33. Mitchell and Watterson, Subrogation: Law and Practice (2007), at paras 3.08 and 8.32.
34. Mitchell and Watterson, Subrogation: Law and Practice (2007), at para.8.32.
35. Burrows, The Law of Restitution (2011), at pp.147–151, 155–156, 167 and 446; A.
Burrows, "‘At the Expense of the Claimant’: A Fresh Look" [2017] R.L.R. 167 at 182.
36. Mitchell, Mitchell, and Watterson, Goff and Jones: The Law of Unjust Enrichment
(2016), at paras 39-02–39-03.
(2016), at para.39-28. See also Mitchell and Watterson, Subrogation: Law and

Page24
Practice (2007), at paras 7.68 and 8.07.

38. Mitchell and Watterson, Subrogation: Law and Practice (2007), at para.6.02 (emphasis
in original).
39. Mitchell and Watterson, Subrogation: Law and Practice (2007), at para.6.02. See also
Burrows, The Law of Restitution (2011), at pp.147–148, 150–151 and 167; Mitchell,
paras 39-24–39-27.
40. Burrows, The Law of Restitution (2011), at p.86; Mitchell and Watterson, Subrogation:
Law and Practice (2007), at paras 6.03–6.12, 6.38–6.40 and 6.73–6.79; Mitchell,
para.1-25.
(2016), at para.6-70. See also Pt V of this article below.
42. P. Birks, Unjust Enrichment, 2nd edn (Oxford: Oxford University Press, 2005), at
pp.96–98; Mitchell, Mitchell, and Watterson, Goff and Jones: The Law of Unjust
Enrichment (2016), at paras 6-53 and 6-70.
43. Mitchell and Watterson, Subrogation: Law and Practice (2007), at para.8.47. See also
C. Mitchell, "Unjust Enrichment" in A. Burrows (ed.), Principles of the English Law of
Obligations (Oxford: Oxford University Press, 2015), at para.3.282; Mitchell, Mitchell,
and Watterson, Goff and Jones: The Law of Unjust Enrichment (2016), at para.39-31.
44. Banque Financière de la Cité SA v Parc (Battersea) Ltd [1999] 1 A.C. 221 at 228C–D.
45. Menelaou v Bank of Cyprus Plc [2013] EWCA Civ 1960; [2014] 1 W.L.R. 854 at [59]
citing Banque Financière [1999] 1 A.C. 221 at 228 (Lord Steyn); Burrows, The Law of
Restitution (2011), at p.147.
46. Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176 at [21], [27]–[32] and [36].
47. Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [94].
48. Swynson [2018] A.C. 313 at [120].
49. Swynson [2018] A.C. 313 at [56], [58], [67] and [89] (Lord Mance) and at [114]–
[115], [117] and [120] (Lord Neuberger) citing Investment Trust Companies v Revenue
and Customs Commissioners [2018] A.C. 275.
50. S. Watterson, "Subrogation" in Graham Virgo and Sarah Worthington (eds),
Commercial Remedies: Resolving Controversies (Cambridge: Cambridge University
Press, 2017), at pp.439–448. See also e.g., Hedley, Restitution: Its Division and
Ordering (2001), at pp.121 and 135–148; Cutts, "Modern Money Had and Received"
(2018) 38 O.J.L.S. 1 at 22–25.

Page25
51. Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [11]–[17] (Lord Sumption),
[45]–[54] (Lord Mance), and [92]–[108] (Lord Neuberger).
52. Swynson [2018] A.C. 313 at [30] (citations omitted).
53. Swynson [2018] A.C. 313 at [33].
54. Swynson [2018] A.C. 313 at [34].
55. Swynson [2018] A.C. 313 at [87]–[90] (Lord Mance) and [118]–[119] (Lord
Neuberger).
56. See also Investment Trust Companies v Revenue and Customs Commissioners [2018]
A.C. 275 at [42] and [49] (Lord Reed); Cutts, "Modern Money Had and Received"
(2018) 38 O.J.L.S. 1 at 23.
57. Dextra Bank & Trust Co Ltd v Bank of Jamaica [2001] UKPC 50; [2002] 1 All E.R.
(Comm) 193 at [29] (Lord Bingham and Lord Goff); Pitt v Holt [2013] UKSC 26;
[2013] 2 A.C. 108 at [104] (Lord Walker).
58. Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [34] (emphasis added).
59. e.g. Banque Financière de la Cité SA v Parc (Battersea) Ltd [1999] 1 A.C. 221 at
227D–F (Lord Steyn), 234G (Lord Hoffmann) and 235H (Lord Hutton); Menelaou v
Bank of Cyprus UK Ltd [2016] A.C. 176 at [21]–[22] (Lord Clarke); Swynson [2018]
A.C. 313 at [23]–[29] (Lord Sumption) and [86] (Lord Mance); Graham Virgo,
"Restitution and Unjust Enrichment in the Supreme Court: Reflections on Bank of
Cyprus UK Ltd v Menelaou" (University of Cambridge, 2016), University of
Cambridge Faculty of Law Research Paper No.10/2016, at p.11,
https://ssrn.com/abstract=2724024.
60. Swynson [2018] A.C. 313 at [33]–[34] (Lord Sumption), [78]–[82] (Lord Mance) and
[117] (Lord Neuberger).
61. Swynson [2018] A.C. 313 at [34] (Lord Sumption). See also at [83]–[89] (Lord Mance)
and [117]–[119] (Lord Neuberger).
62. Swynson [2018] A.C. 313 at [30].
63. Swynson [2018] A.C. 313 at [30].
64. Watterson, "Subrogation" in Commercial Remedies: Resolving Controversies (2017),
at pp.452–454. See also Mitchell, Mitchell, and Watterson, Goff and Jones: The Law of
Unjust Enrichment (2016), at para.39-01.
65. Butler v Rice [1910] 2 Ch. 277; Banque Financière de la Cité SA v Parc (Battersea)
Ltd [1999] 1 A.C. 221; Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176; Swynson
Ltd v Lowick Rose LLP [2018] A.C. 313.
66. Swynson [2018] A.C. 313 at [23]–[29].

Page26
67. e.g. Patten v Bond (1889) 60 L.T. 583 Ch.

68. M.J. Cleaver, "Equitable Subrogation in Australia and England" (2018) 29 J.B.F.L.P.
34 at 54: cf. Boscawen v Bajwa [1996] 1 W.L.R. 328; [1995] 4 All E.R. 769 CA which
had elements of both a lending and misappropriation case.
69. e.g. Burrows, The Law of Restitution (2011), at p.167; Mitchell, Mitchell, and
Watterson, Goff and Jones: The Law of Unjust Enrichment (2016), at para.39-25.
70. R.B. Grantham and C.E.F. Rickett, "Property Rights as a Legally Significant Event"
[2003] C.L.J. 717; R. Chambers and J. Penner, "Ignorance" in S. Degeling and J.
Edelman (eds), Unjust Enrichment in Commercial Law (Sydney: Lawbook Co, 2008),
at pp.260–274; W. Swadling, "Ignorance and Unjust Enrichment: The Problem of Title"
(2008) 28 O.J.L.S. 627; W. Swadling, "Policy Arguments for Proprietary Restitution"
(2008) 28 L.S. 506; Cutts, "Modern Money Had and Received" (2018) 38 O.J.L.S. 1 at
9.
71. Virgo, The Principles of the Law of Restitution (2016), at pp.15, 152–155, 559–565,
637 and 640. See also Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176 at [53]–
[54] (Lord Clarke), [59] and [100]–[104] (Lord Neuberger) and [108] (Lord Carnwath).
72. Birks, Unjust Enrichment (2005), at pp.21–38; Mitchell and Watterson, Subrogation:
Law and Practice (2007), at para.6.50; Burrows, The Law of Restitution (2011) at 195–
198 and 408; T.R.S. Cutts, "The Role of Tracing in Claiming" (University of Oxford
D.Phil. thesis, 2015), at pp.121–142, https://ora.ox.ac.uk/objects/ora:12239; Mitchell,
paras 8-16 to 8-19, 8-155–8-158, 8-164 and 39-19; Watterson, "Subrogation" in
Commercial Remedies: Resolving Controversies (2017), at p.463.
73. e.g. Niru Battery Manufacturing Co v Milestone Trading Ltd (No.2) [2004] EWCA Civ
487; [2004] 1 C.L.C. 882.
74. e.g. Mayhew v Crickett (1818) 2 Swans. 185 at 191; 36 E.R. 585 at 587 (Lord Eldon
C.).
75. Yonge v Reynell (1852) 9 Hare. 809 at 818–819; 68 E.R. 744 at 748–749 (Sir G.J.
Turner V-C); Duncan Fox & Co v North & South Wales Bank (1880) 6 App. Cas. 1 at
11 and 13 (Lord Selbourne C.); Re Downer Enterprises [1974] 1 W.L.R. 1460 at
1468C–1469A; [1974] 2 All E.R. 1074 at 1082b–h (Pennycuick V-C); Niru Battery
Manufacturing Co v Milestone Trading Ltd (No.2) [2003] EWHC 1032 (Comm);
[2003] 2 All E.R. (Comm.) 365 at [31] and [55] (Moore-Bick J.); Bofinger v Kingsway
Group Ltd [2009] HCA 44; (2009) 239 C.L.R. 269 at [7]–[8] (Gummow J., Hayne J.,
Heydon J., Kiefel J. and Bell J.).
76. Burrows, The Law of Restitution (2011), at p.148; A. Burrows, A Restatement of the
English Law of Unjust Enrichment (Oxford: Oxford University Press, 2012), at p.173.

Page27
77. Niru Battery Manufacturing Co v Milestone Trading Ltd (No.2) [2003] 2 All E.R.
(Comm.) 365 at [31] (Moore Bick J.); Mitchell and Watterson, Subrogation: Law and
Practice (2007), at paras 6.03–6.04; Mitchell, Mitchell, and Watterson, Goff and
Jones: The Law of Unjust Enrichment (2016), at para.39-27.
78. C. Mitchell, The Law of Subrogation (Oxford: Clarendon Press, 1994), at pp.59 and
66; Mitchell and Watterson, Subrogation: Law and Practice (2007), at paras 8.39–
8.60; Burrows, The Law of Restitution (2011), at pp.148–150.
79. Investment Trust Companies v Revenue and Customs Commissioners [2018] A.C. 275.
80. Investment Trust Companies v Revenue and Customs Commissioners [2012] EWHC
458 (Ch); [2012] S.T.C. 1150 at [72] (Henderson J.); Menelaou v Bank of Cyprus Plc
[2014] 1 W.L.R. 854 at [48] (Floyd L.J.); cf. at [62] (Moses L.J.); Relfo Ltd v Varsani
[2014] EWCA Civ 360; [2015] 1 B.C.L.C. 14 at [92] and [96]–[97] (Arden L.J.), [103]
(Gloster L.J.) and [115] (Floyd L.J.); Investment Trust Companies v Revenue and
Customs Commissioners [2015] EWCA Civ 82; [2015] S.T.C. 1280 at [67] and [69]
(Patten L.J.); Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176 at [31] (Lord
Clarke) and [73] (Lord Neuberger).
81. Investment Trust Companies [2012] S.T.C. 1150 at [68] (Henderson J.); Menelaou
[2014] 1 W.L.R. 854 at [42] (Floyd L.J.); TFL Management Services Ltd v Lloyds TSB
Bank Plc [2013] EWCA Civ 1415; [2014] 1 W.L.R. 2006 at [57] (Floyd L.J.) and [61]
(Moses L.J.); Relfo [2015] 1 B.C.L.C. 14 at [83] and [95]–[96] (Arden L.J.), [103]–
[104] (Gloster L.J.) and at [115] and [122] (Floyd L.J.); Investment Trust Companies
[2015] S.T.C. 1280 at [67] and [69] (Patten L.J.); Menelaou [2016] A.C. 176 at [27]
(Lord Clarke).
82. Investment Trust Companies v Revenue and Customs Commissioners [2018] A.C. 275
at [49] (Lord Reed).
83. e.g. Filby v Mortgage Express (No.2) Ltd [2004] EWCA Civ 759 at [50] and [62] (May
L.J.); Menelaou [2016] A.C. 176 at [24]–[35] (Lord Clarke), [66] and [77] (Lord
Neuberger) and [141] (Lord Kerr and Lord Wilson).
at [37]–[38], [52], [56]–[57], [59]–[60] and [72] (Lord Reed).
85. Investment Trust Companies [2018] A.C. 275 at [42]–[43].
86. Investment Trust Companies [2018] A.C. 275 at [43].

Page28

95. Investment Trust Companies [2018] A.C. 275 at [72]
97. Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [56], [58], [67] and [89] (Lord
Mance) and [114]–[115], [117] and [120] (Lord Neuberger); Prudential Assurance Co
Ltd v Revenue and Customs Commissioners [2019] A.C. 929 at [68] and [102] (Lord
Mance, Lord Reed, and Lord Hodge).
at [49].
99. e.g. Niru Battery Manufacturing Co v Milestone Trading Ltd (No.2) [2004] 1 C.L.C.
882.
100. Butler v Rice [1910] 2 Ch. 277.
102. Investment Trust Companies [2018] A.C. 275 at [71] (Lord Reed).
103. E. Ball, "At the Claimant’s Expense" (2014) 130 L.Q.R. 13 at 16; Cutts, "Modern
Money Had and Received" (2018) 38 O.J.L.S. 1 at 23.
104. Burrows, "‘At the Expense of the Claimant’: A Fresh Look" [2017] R.L.R. 167 at 182.
See e.g., Baroness Wenlock v River Dee Co (No.2) (1887) 19 Q.B.D. 155 at 166 (Fry
L.J.); Chetwynd v Allen [1899] 1 Ch. 353 at 354; 80 L.T. 110 Ch; Halifax Plc v Omar
[2002] EWCA Civ 121; [2002] 2 P. & C.R. 26 at [4]–[5] (Jonathan Parker L.J.);
Anfield (UK) Ltd v Bank of Scotland Plc [2010] EWHC 2374 (Ch); [2011] 1 W.L.R.
2414 at [3]–[4] (Proudman J.); Day v Tiuta International Ltd [2014] EWCA Civ 1246 at
[4] (Gloster L.J.).
106. Investment Trust Companies [2018] A.C. 275 at [49] (Lord Reed).
107. Investment Trust Companies [2018] A.C. 275 at [48] and [50].
108. Investment Trust Companies [2018] A.C. 275 at [46] and [50] (Lord Reed); cf.
Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [114]–[116] (Lord Neuberger).

Page29
(2016), at para.6-17. See also Burrows, The Law of Restitution (2011), at pp.69–70;
Virgo, The Principles of the Law of Restitution (2016), at pp.105–106; Burrows, "‘At
the Expense of the Claimant’: A Fresh Look" [2017] R.L.R. 167 at 168 and 174.
111. e.g. Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] Q.B. 677 at
695G; [1979] 3 All E.R. 522 at 536a-b (Robert Goff J.).
112. Prudential Assurance Co Ltd v Revenue and Customs Commissioners [2019] A.C. 929
at [68] (Lord Mance, Lord Reed, and Lord Hodge). See also Menelaou v Bank of
Cyprus Plc [2014] 1 W.L.R. 854 at [60] (Moses L.J.); Rajiv Shah, "Indirect Enrichment
in the Supreme Court" [2017] C.L.J. 490 at 490 and 492.
at [49]. See also Ben McFarlane, "Unjust Enrichment, Property Rights and Indirect
Recipients" [2009] R.L.R. 37 at 49; Burrows, A Restatement of the English Law of
Unjust Enrichment (2012), at p.49; Virgo, The Principles of the Law of Restitution
(2016), at p.106. This is criticised by Mitchell, Mitchell, and Watterson, Goff and
Jones: The Law of Unjust Enrichment (2016), at para.6-18.
114. Burrows, A Restatement of the English Law of Unjust Enrichment (2012), at p.51. See
also e.g., Menelaou v Bank of Cyprus Plc [2014] 1 W.L.R. 854 at [60] (Moses L.J.).
115. Burrows, A Restatement of the English Law of Unjust Enrichment (2012), at p.51.
at [50].
118. Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176 at [25], approved in Investment
Trust Companies [2018] A.C. 275 at [65]–[66] (Lord Reed).
119. Investment Trust Companies [2018] A.C. 275 at [71]–[72] (Lord Reed).
120. Burrows, "‘At the Expense of the Claimant’: A Fresh Look" [2017] R.L.R. 167 at 174.
121. Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [1] (Lord Sumption).
122. Swynson [2018] A.C. 313 at [12]–[13] and [17] (Lord Sumption), [46]–[50] and [54]
(Lord Mance) and at [99] and [107]–[108] (Lord Neuberger).
123. Swynson [2018] A.C. 313 at [2] (Lord Sumption) and [38] (Lord Mance).
(2016), at para.6-39. See also, CMOC Sales and Marketing Ltd v Persons Unknown
[2018] EWHC 2230 (Comm) at [148] (Judge Waksman Q.C.).

Page30
(2016), at para.6-91, criticised by William Day, "‘At the Expense of’ in Unjust
Enrichment: Causal, Direct or Intentional Transfers of Value?" [2017] L.M.C.L.Q. 588
at 600.
126. F. Wilmot-Smith, "Taxing Questions" (2015) 131 L.Q.R. 531 at 535.
127. See also e.g., Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [114] (Lord
Neuberger); Shah, "Indirect Enrichment in the Supreme Court" [2017] C.L.J. 490 at
491–492.
128. J. Leung and S.Y. Wong, "Subrogation and Unjust Enrichment in the Supreme Court"
[2016] L.M.C.L.Q. 337 at 340.
129. Foskett v McKeown [2001] 1 A.C. 102 at 128D; [2000] 3 All E.R. 97 at 120g (Lord
Millett).
at [48] and [50].
131. e.g. Boscawen v Bajwa [1996] 1 W.L.R. 328 at 334B–335F (Millett L.J.); Swynson Ltd
v Lowick Rose LLP [2018] A.C. 313 at [58]–[61] (Lord Mance); Birks, An
Introduction to the Law of Restitution (1989), at pp.84, 96 and 390; Birks, Unjust
Enrichment (2005), at pp.298–299; Mitchell, Mitchell, and Watterson, Goff and Jones:
The Law of Unjust Enrichment (2016), at para.6.63; cf. Watterson, "Subrogation" in
Commercial Remedies: Resolving Controversies (2017), at p.452.
132. [1996] 1 W.L.R. 328.
133. Boscawen [1996] 1 W.L.R. 328 at 332F.
134. Boscawen [1996] 1 W.L.R. 328 at 335F–338A.
135. Boscawen [1996] 1 W.L.R. 328 at 334E–F.
136. Boscawen [1996] 1 W.L.R. 328 at 334B–335F.
137. Hedley, Restitution: Its Division and Ordering (2001), at pp.144–146; Watterson,
"Subrogation" in Commercial Remedies: Resolving Controversies (2017), at pp.454–
461.
138. Baroness Wenlock v River Dee Co (No.2) (1887) 19 Q.B.D. 155.
139. Watterson, "Subrogation" in Commercial Remedies: Resolving Controversies (2017),
at p.456. See also Westdeutsche Landesbank Girozentrale v Islington LBC [1996] A.C.
669 at 689G–690A; [1996] 2 All E.R. 961 at 973g–j (Lord Browne-Wilkinson);
Investment Trust Companies v Revenue and Customs Commissioners [2018] A.C. 275
at [70] and [72] (Lord Reed).
140. e.g. Boscawen v Bajwa [1996] 1 W.L.R. 328 at 334E (Millett L.J.); Investment Trust

Page31
Companies [2018] A.C. 275 at [70] and [72] (Lord Reed).

141. Barclays Bank Ltd v Quistclose Investments Ltd [1970] A.C. 567; [1968] 3 All E.R.
651.
142. e.g. Menelaou v Bank of Cyprus UK Ltd [2016] A.C. 176 at [100]–[103] (Lord
Neuberger) and [133]–[140] (Lord Carnwath); Re Beppler & Jacobson Ltd [2016]
EWHC 20 (Ch) at [118] (Hildyard J.); Watterson, "Subrogation" in Commercial
Remedies: Resolving Controversies (2017), at p.456.
143. Re Kayford Ltd [1975] 1 W.L.R. 279 at 282; [1975] 1 All E.R. 604 at 607d–e
(Megarry J.); Re Farepak Food and Gifts Ltd [2006] EWHC 3272 (Ch); [2008] B.C.C.
22 at [34] (Mann J.).
144. e.g. Barclays Bank Ltd v Quistclose Investments Ltd [1970] A.C. 567 at 579E (Lord
Wilberforce); Re Kayford [1975] 1 W.L.R. 279 at 282 (Megarry J.); Re Farepak [2008]
B.C.C. 22 at [34] (Mann J.); Investment Trust Companies v Revenue and Customs
Commissioners [2018] A.C. 275 at [70] (Lord Reed).
(2016), at para.6-70 citing, inter alia, Baroness Wenlock v River Dee Co (No.2) (1887)
19 Q.B.D. 155; Chetwynd v Allen [1899] 1 Ch. 353; Butler v Rice [1910] 2 Ch. 277.
See also Halifax Plc v Omar [2002] 2 P. & C.R. 26; Anfield (UK) Ltd v Bank of
Scotland Plc [2011] 1 W.L.R. 2414; Day v Tiuta International Ltd [2014] EWCA Civ
1246; cf. Birks, Unjust Enrichment (2005), at p.97.
146. Lionel Smith, "Unjust Enrichment, Property and the Structure of Trusts" (2000) 116
L.Q.R. 420; A. Burrows, "Proprietary Restitution: Unmasking Unjust Enrichment"
(2001) 117 L.Q.R. 412 at 417 (text to fn.29); Burrows, The Law of Restitution (2011),
at p.76; Burrows, A Restatement of the English Law of Unjust Enrichment (2012), at
pp.7–9 (separating transfers of value from tracing); Burrows, "‘At the Expense of the
Claimant’: A Fresh Look" [2017] R.L.R. 167 at 168 fn.10, 170–171 and 174 fn.41;
Day, "‘At the Expense of’ in Unjust Enrichment: Causal, Direct or Intentional Transfers
of Value?" [2017] L.M.C.L.Q. 588 at 601.
at [48] and [50].
149. Foskett v McKeown [2001] 1 A.C. 102 at 128D and 129E-G (Lord Millett).
150. Foskett [2001] 1 A.C. 102 at 129E-G (Lord Millett).
151. Burrows, A Restatement of the English Law of Unjust Enrichment (2012), at p.58.
at [48] and [50].

Page32

154. Niru Battery Manufacturing Co v Milestone Trading Ltd (No.2) [2004] 1 C.L.C. 882.
155. e.g. Day, "‘At the Expense of’ in Unjust Enrichment: Causal, Direct or Intentional
Transfers of Value?" [2017] L.M.C.L.Q. 588 at 594; Shah, "Indirect Enrichment in the
Supreme Court" [2017] C.L.J. 490 at 492; Burrows, "‘At the Expense of the Claimant’:
A Fresh Look" [2017] R.L.R. 167 at 176–177; Robert Stevens, "The Unjust Enrichment
Disaster" (2018) 134 L.Q.R. 574; cf. Burrows, A Restatement of the English Law of
Unjust Enrichment (2012), at p.55.
156. Cutts, "Modern Money Had and Received" (2018) 38 O.J.L.S. 1 at 22–23.
157. Burrows, The Law of Restitution (2011), at p.79. See also Timothy Liau and Rachel
Leow, "Proprietary Restitution" in E. Bant, K. Barker, and S. Degeling, Research
Handbook on Unjust Enrichment and Restitution (Edward Elgar Publishing,
forthcoming), at p.497.
at [61]–[62]. See also Banque Financière de la Cité SA v Parc (Battersea) Ltd [1999] 1
A.C. 221 at 227C (Lord Steyn), 238B (Lord Clyde) and 238G (Lord Hutton).
159. Investment Trust Companies [2018] A.C. 275 at [48] and [50], criticised by Day, "‘At
the Expense of’ in Unjust Enrichment: Causal, Direct or Intentional Transfers of
Value?" [2017] L.M.C.L.Q. 588 at 599–600.
160. Cutts, "Modern Money Had and Received" (2018) 38 O.J.L.S. 1 at 23.
161. Banque Financière de la Cité SA v Parc (Battersea) Ltd [1999] 1 A.C. 221 at 235C.
162. e.g. Foskett v McKeown [2001] 1 A.C. 102 at 128 (Lord Millett); Burrows, The Law of
Restitution (2011), at p.120; cf. Tatiana Cutts, "Tracing, Value and Transactions"
(2016) 79 M.L.R. 381 at 397–403; Mitchell, Mitchell, and Watterson, Goff and Jones:
The Law of Unjust Enrichment (2016), at paras 7-31–7-46.
163. e.g. Cutts, "Modern Money Had and Received" (2018) 38 O.J.L.S. 1 at 23; Liau and
Leow, "Proprietary Restitution" in Bant, Barker, and Degeling, Research Handbook on
Unjust Enrichment and Restitution (Edward Elgar Publishing, forthcoming), at p.497.
164. Day, "‘At the Expense of’ in Unjust Enrichment: Causal, Direct or Intentional Transfers
of Value?" [2017] L.M.C.L.Q. 588 at 600.
(2016), at para.6-53.
167. Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [30] (Lord Sumption).

Page33
168. Swynson [2018] A.C. 313 at [30] (Lord Sumption).

169. Birks, Unjust Enrichment (2005), at pp.96–98; Mitchell, Mitchell, and Watterson, Goff
and Jones: The Law of Unjust Enrichment (2016), at paras 6-53 and 6-70.
170. Swynson Ltd v Lowick Rose LLP [2018] A.C. 313 at [56], [58], [67] and [89] (Lord
Mance) and at [114]–[115], [117] and [120] (Lord Neuberger).
171. Swynson [2018] A.C. 313 at [89] (Lord Mance).
172. Swynson [2018] A.C. 313 at [67] and [88]–[89] (Lord Mance).
173. Swynson [2018] A.C. 313 at [20] (Lord Sumption) and [115] (Lord Neuberger).
at [41]. See also, A. Burrows, "In Defence of Unjust Enrichment" [2019] C.L.J. 521 at
526–530; Letelier, "A Wrong Turn? Reconsidering the Unified Approach to Unjust
Enrichment Claims" (2020) 136 L.Q.R. 121.
175. cf. e.g., Investment Trust Companies [2018] A.C. 275 at [38] and [50] (Lord Reed);
Prudential Assurance Co Ltd v Revenue and Customs Commissioners [2019] A.C. 929
at [68] (Lord Mance, Lord Reed, and Lord Hodge); Burrows, The Law of Restitution
(2011), at p.78; Burrows, A Restatement of the English Law of Unjust Enrichment
(2012), at p.51; Burrows, "‘At the Expense of the Claimant’: A Fresh Look" [2017]
R.L.R. 167 at 170–171 and 176–177; Burrows, "In Defence of Unjust Enrichment"
[2019] C.L.J. 521 at 542.
176. P.G. Watts, "‘Unjust Enrichment’—the Potion that Induces Well-meaning Sloppiness
of Thought" (2016) 69 C.L.P. 289; C. Webb, Reason and Restitution: A Theory of
Unjust Enrichment (Oxford: Oxford University Press, 2016); Cutts, "Modern Money
Had and Received" (2018) 38 O.J.L.S. 1; Stevens, "The Unjust Enrichment Disaster"
(2018) 134 L.Q.R. 574; L. Smith, "Restitution: A New Start?" in P. Devonshire and R.
Havelock (eds), The Impact of Equity and Restitution in Commerce (Oxford: Hart
Publishing, 2019).
177. Hedley, Restitution: Its Division and Ordering (2001), at p.227; F. Wilmot-Smith,
"Reasons? For Restitution?" (2016) 79 M.L.R. 1116 at 1117–1124.
178. C. Webb, "Property, Unjust Enrichment, and Defective Transfers" in R. Chambers, C.
Mitchell, and J. Penner (eds), Philosophical Foundations of the Law of Unjust
Enrichment (Oxford: Oxford University Press, 2009), at pp.341–344 (footnotes
omitted). See also, R. Stevens, "Is there a Law of Unjust Enrichment?" in Unjust
Enrichment in Commercial Law (2008), at p.15; Webb, Reason and Restitution: A
Theory of Unjust Enrichment (2016), Chs 1–2.
(2016), at para.1-08 (footnotes omitted); cf. Birks, Unjust Enrichment (2005), at

Page34
pp.16–17 and 107–108.

180. [2014] UKSC 26; [2015] A.C. 1 at [102].
181. R. Leow, "The Place of Unjust Enrichment in Singapore", The Place of Restitution in
the Modern Law: 30 Years after An Introduction to the Law of Restitution, 11 June
2019, University of Leeds; H. Scott, "Change and Continuity in the Law of Unjust
Enrichment" [2019] A.J. 470 at 488–489.
182. Birks, An Introduction to the Law of Restitution (1989), at p.19; Burrows, "In Defence
of Unjust Enrichment" [2019] C.L.J. 521 at 523.
at [41].
184. Mann v Paterson Constructions Pty Ltd [2019] HCA 32 at [199] (footnotes omitted).
185. P. Cane, The Anatomy of Tort Law (Oxford: Hart Publishing, 1997), at p.198.
186. Cane, The Anatomy of Tort Law (1997), at p.198.
187. Cane, The Anatomy of Tort Law (1997), at p.198.
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Is subrogation a remedy for unjust enrichment?

Keywords: Remedies; Subrogation; Unjust enrichment;

*L.Q.R. 481 I. Introduction

Next, in Swynson, Lord Sumption stated that:

II. What is Subrogation?

III. Subrogation as a Remedy for Unjust Enrichment

Was the enrichment at the claimant’s expense?

Was the enrichment unjust?

Are there any defences available to the defendant?"

subrogation to proprietary rights does not:

Similarly, Mitchell and Watterson suggest that:

"In principle … any recognized ground of restitution should be capable of justifying

The "recognized ground[s] of restitution … capable of justifying subrogation" seem to be the

"[O]n an application of established principles of unjust enrichment [C is] entitled to succeed

In Menelaou, a case of subrogation to proprietary rights, Moses L.J. stated that:

In Swynson, Lord Neuberger recognised that C claimed to be "subrogated to [X]’s [personal]

Secondly, in misappropriation cases, money held by a fiduciary for C is—without C’s

1. The ITC rules

through his provision of the benefit." 86

cases "where [C] discharges a debt owed by [D] to a third party".93

satisfy ITC ’s requirement of a transfer of value. *L.Q.R. 492

In every subrogation case, a payment to X discharges D’s liability to X. This requires X to

However, a more generous view was endorsed by Lord Reed in ITC:

Accordingly, Lord Clarke was correct in Menelaou to say that:

Therefore, there was a transfer of value from C to D.

This "co-ordinated transactions" reasoning is not persuasive. If the transactions could be

First, Burrows suggests Menelaou:

A second possibility is suggested in Goff and Jones:

For instance, the transactions were co-ordinated in Menelaou because:

To sum up, co-ordinated transactions reasoning is over-inclusive and uncertain. It is an

If co-ordinated transactions reasoning cannot establish a direct transfer of value in

be governed by ITC ’s requirement of a direct transfer of value, and may be governed by

’s rule against incidental benefits.

reasoning are ignored.

Furthermore, as subrogation is governed by different rules to those governing direct claims,

This seems to be acknowledged by Goff and Jones:

"Unjust enrichment may be conceived of as a ‘unifying legal concept’ which serves a

Balliol College, University of Oxford

L.Q.R. 2020, 136(Jul), 481-505

(Lord Neuberger); Burrows, The Law of Restitution (2011), at pp.14–15; Mitchell,

Practice (2007), at paras 7.68 and 8.07.

67. e.g. Patten v Bond (1889) 60 L.T. 583 Ch.

91. Investment Trust Companies [2018] A.C. 275 at [48].

Companies [2018] A.C. 275 at [70] and [72] (Lord Reed).

153. Investment Trust Companies [2018] A.C. 275 at [52].

168. Swynson [2018] A.C. 313 at [30] (Lord Sumption).

pp.16–17 and 107–108.

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