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Claiming Disgorgement Remedy
Involves Taking Benefits or Profits Away From a Wrongdoer
Question: Is there a type of legal compensation available if a wrongdoer profits from wrongdoing even when I didn’t suffer a direct loss?
Answer: Yes, in some cases you may be able to seek disgorgement, a restitutionary remedy that can require the wrongdoer to give up profits gained through a legal wrong, including under the “profiting from wrong” theory of unjust enrichment discussed in Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., 2020 ONSC 6534. Access Ontario Legal Services provides paralegal services in Milton, Ontario to help assess whether disgorgement may be available in your situation and what evidence is needed to pursue it.
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:
[19] Under the “profiting from wrong” theory of unjust enrichment, disgorgement may be available if the defendant has committed “an underlying legal wrong against a plaintiff, and the ordinary damages remedy for the underlying wrong is inadequate”. As the Court of Appeal noted, disgorgement in these cases is typically reserved for when there has been a breach of fiduciary duty or a breach of trust. However, in exceptional cases, disgorgement as a restitutionary remedy can also be granted where the “underlying legal wrong” is a crime or a breach of contract or a tort.[6] In cases premised on “profiting from wrong”, the concept of “corresponding deprivation” takes on a slightly different meaning. A plaintiff may be able to prove a corresponding loss by showing that the defendant’s gain was “made possible” by the defendant’s wrongful act towards the plaintiff rather than proving a direct or indirect transfer of wealth.[7]
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 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.
NOTE: A considerable quantity of online inquiries featuring “lawyers near me” or “best lawyer in” frequently illustrates a requirement for prompt and proficient legal assistance rather than pinpointing a particular professional designation. In Ontario, licensed paralegals are governed by the same Law Society that regulates lawyers and possess the authority to advocate for clients in specific litigation cases. Skills in advocacy, legal assessment, and procedural knowledge are fundamental to this role. Access Ontario Legal Services provides legal representation within its licensed parameters, focusing on strategic positioning, evidentiary preparation, and compelling advocacy aimed at securing effective and advantageous outcomes for clients.