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Sender:
Andrew Tettenborn
Date:
Thu, 17 Apr 1997 14:46:22 +0100
Re:
Subrogation

 

Many thanks Lionel for making available generally the text of Commercial Union v Surrey in the BC courts.

Isn't the case right, but for a rather more straightforward reason than that given by the BCCA?

The point is this: pace the BCCA, I doubt whether the case is really about subrogation to the owner's right of retention at all. Indeed, I find it difficult to understand the idea of being subrogated to a right of set-off. Set-off is a right not to pay a debt one would otherwise owe; how this right can be transferred to, vested by law in, or allowed to be exercised by, someone who doesn't owe a penny in the first place is beyond me.

Surely, when CU, the surety, completed the road contract for Surrey, it did obtain a right of subrogation, but this was to rights vested in the contractor, not the city** - namely, the right the contractor would have had to be paid had it completed the contract. If so, CU fell to be treated analogously to an assignee of the contractor's rights; and since such an assignee is specifically subordinated to the materialmen's interests, so also should be the surety CU.

 

Andrew Tettenborn.

**True, it may seem odd to talk about a surety being subrogated to a right of the debtor, not the creditor: but it is not unheard-of. Compare the situation of a surety to one of several concurrent debtors: if he pays off the whole debt, doesn't he take over his debtor's right to contribution from the other debtors?


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