Claiming Disgorgement Remedy

Question: Is disgorgement available in Ontario when a wrongdoer profits from wrongdoing even if the victim did not suffer a measurable loss?

Answer:   Disgorgement may be available in Ontario through an unjust enrichment “profiting from wrong” theory when a plaintiff can show an underlying legal wrong and that ordinary damages are inadequate, with courts often reserving disgorgement for breaches of fiduciary duty or trust but allowing it in exceptional cases involving other wrongs like certain torts, crimes, or breach of contract, as described in Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., et al, 2020 ONSC 6534; in other words, disgorgement is a restitutionary remedy meant to prevent the wrongdoer from keeping ill-gotten gains rather than strictly compensating for a loss; if you are dealing with a situation where someone profited from misconduct without clear damages, Woodcock Legal Services can help you assess whether a disgorgement claim is viable and how to frame the evidence and remedies, call (613) 334-6721 for professional legal services in Ontario.

What Can a Victim of Wrongdoing Claim In a Lawsuit If the Victim Was Without the Suffering of a Loss But the Wrongdoer Received a Benefit or Profit From the 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.  Courts, seeking to discourage wrongful conduct, may order that the ill gotten gains be disgorged, meaning taken away, from the wrongdoer and granted to the victim.  Essentially, disgorgement remedy is used to ensure that a wrongdoer fails to benefit or profit from acts of wrongdoing especially in circumstances where the victim was unharmed, or suffered only little harm, by the misconduct of the wrongdoer.

Summary Comment

Disgorgement is a restitutionary remedy rather than a compensatory remedy, meaning that the law applies disgorgement as a matter of fairness rather than as a matter of making a victim whole for loss or harm suffered by the victim.