Claiming Disgorgement Remedy

Question: Can I sue in Ontario to ask for disgorgement of improper profits when I was wronged but did not suffer a corresponding loss?

Answer: Access Ontario Legal Services can help you assess whether a disgorgement (restitutionary) remedy is available to strip a wrongdoer of ill gotten gains under a “profiting from wrong” theory, typically where the defendant committed an underlying legal wrong and ordinary damages are inadequate, such as in cases involving a breach of fiduciary duty or breach of trust, and in exceptional situations where the wrong is a crime, breach of contract, or tort; in Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., 2020 ONSC 6534, the court explains when disgorgement may be ordered and how “corresponding deprivation” can be shown as the gain being made possible by the wrongful act rather than a direct transfer of wealth   If you are in Ontario and want to evaluate your options, contact Access Ontario Legal Services at (905) 302-1851 to discuss your facts with a paralegal.

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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

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 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.