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

In some circumstances a wrongdoer may receive a benefit or profit arising from the wrongdoing while little, if any, loss or harm arises to the victim of the wrongdoing. Whereas the law generally forbid a person from suing unless a loss or harm has occurred per no harm, no foul principles, a valid lawsuit may involve claims for the illegitimate benefits or profits arising from the misconduct of 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

There may be circumstances where a person commits a criminal fraud or a civil fraud, among other wrongs, without causing harm or loss to the wronged person and yet benefits or profits arise in favour of the wrongdoer.  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 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.