Doctrine of Subrogation

Equitable Remedy Pursuant To Doctrine Of Subrogation

Grahoui v. Yassine, 2017 ONSC 5108 (CanLII)

[208] The doctrine of subrogation and the availability of an equitable charge as a remedy thereunder is not as limited as Ms. Ghraoui submits.

[209] Dictionary definitions of subrogation include the following:

a. Subrogation. The substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor. For example, a surety who has paid a debt is, by subrogation, entitled to any security for the debt held by the creditor and the benefit of any judgment the creditor has against the debtor, and may proceed against the debtor as the creditor would: Black’s Law Dictionary, Eighth Edition.

b. Legal Subrogation. Subrogation that arises by operation of law or by implication in equity to prevent fraud or injustice: Black’s Law Dictionary, Eighth Edition.

[210] Legal authors describe the equitable remedy of subrogation as follows:

“Subrogation is equitable assignment. The right comes into existence when the surety becomes obligated, and this is important as affecting priorities; but such right of subrogation does not become a cause of action until the debt is fully paid. Subrogation entitles the surety to use any remedy against the principal which the creditor could have used, and in general to enjoy the benefit of any advantage that the creditor had, such as a mortgage, lien, power to confess judgment, to follow trust funds, to proceed against a third person who has promised either the principal or the creditor to pay the debt.” Laurence P. Simpson, Handbook on the Law of Suretyship 205 (1950).

“Subrogation simply means substitution of one person for another; that is, one person is allowed to stand in the shoes of another and assert that person’s rights against the defendant. Factually, the case arises because, for some justifiable reason, the subrogation plaintiff has paid a debt owed by the defendant.” Dan B. Dobbs, Law of Remedies 4.3. at 404 (2d ed. 1993).