Claiming Disgorgement Remedy

Question: In Canada, can I claim disgorgement or other legal compensation when a wrongdoer profits from wrongdoing but my loss was small or no harm occurred?

Answer: Yes. In Canada, a victim may seek disgorgement as a restitutionary remedy under a “profiting from wrong” theory of unjust enrichment when there is an underlying legal wrong and ordinary damages are inadequate, often framed around breach of fiduciary duty or breach of trust, though exceptional cases can involve certain crimes, breach of contract, or torts; in Pharmascience v. Novartis Pharmaceuticals, 2020 ONSC 6534, the court explains how disgorgement can require showing the defendant’s gain was made possible by the wrongful act rather than a straightforward deprivation.   For guidance on whether your facts support disgorgement and what evidence to gather, consult Woodcock Legal Services for professional legal services; call (613) 334-6721 to discuss next steps.

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Is There a Type of Legal Compensation Available From a Wrongdoer Who Profits From a Wrongdoing?

When a Wrongdoer Benefits or Profits From a Wrongdoing, the Victim of the Wrongdoing May Claim Disgorgement of the Benefits or Profits From the Wrongdoer.

Understanding Disgorgement Remedy Principles Involving Restitution For Wrongdoings Resulting In Ill Gotten Gains

There are some circumstances in which a wrongdoer receives a benefit or profit from the wrongdoing and yet the victim is without a corresponding harm or loss.  Generally, under legal principles akin to no harm, no foul concepts, a legitimate lawsuit permits compensation for the loss or harm suffered by the victim; however, in some circumstances it is proper to claim disgorgement of benefits or profits received by the wrongdoer.

The Law

The availability of the remedy of disgorgement was well explained within the case of Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., et al, 2020 ONSC 6534, wherein it was said:

Explained Principles

Imagine a situation where a person commits a criminal fraud or a civil fraud upon another person.  In some circumstances, the victim may experience little harm or was able to mitigate all or most of the harm that resulted from the fraud and thus little loss, if any occurs; however, the wrongdoer may have significantly benefited or profited from the fraud.  The law, applied by the courts, seeking to discourage and deter wrongful conduct, may order that the benefits or profits be disgorged from the wrongdoer and provided to the victim.  In this way the remedy of disgorgement ensures that the wrongdoer fails to benefit or profit from the wrongdoing and is, presumably, discouraged and deterred from engaging in wrongful conduct.

Summary Comment

Disgorgement is a form of restitution rather than compensation whereas disgorgement is applied in law as a matter of fairness rather than as a means for making whole the losses or harms of a victim.