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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Is There a Type of Legal Compensation Available From a Wrongdoer Who Profits From 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

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.