Claiming Disgorgement Remedy

Question:Can I claim disgorgement in an Ontario lawsuit when the other party profited from wrongdoing even if I did not suffer a clear loss?

Answer:In Ontario, a claim for disgorgement (sometimes framed as “profiting from wrong” under unjust enrichment) can be available where the defendant committed an underlying legal wrong against a plaintiff and ordinary damages are inadequate, even if the plaintiff’s harm is limited or hard to quantify.   Courts have described disgorgement as a restitutionary remedy that strips ill-gotten gains rather than compensating for loss, and it is typically reserved for breaches of fiduciary duty or breach of trust, but in exceptional cases it may be granted where the underlying wrong is a crime, breach of contract, or a tort.   Practically, you would focus the pleading and evidence on how the defendant’s gain was “made possible” by the wrongdoing (corresponding deprivation), and you should seek legal guidance early because the available remedy depends on the specific facts, the nature of the underlying wrong, and the inadequacy of compensatory damages.   If you are in Ontario and need help assessing whether disgorgement is realistic in your matter, Bulat Paralegal Service can guide you through the best claim structure at (705) 664-0334.

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Can a Lawsuit Claim Improper Profits Gained By 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.

Note: Please contact Bulat Paralegal Service by phone at: (705) 664-0334 to discuss any specific questions that you may have.

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

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.