Claiming Disgorgement Remedy

Question: In Ontario, can I claim disgorgement if I was wronged but suffered no measurable loss even though the wrongdoer profited from the wrongdoing?

Answer: If you’re in Ontario and the wrongdoer profited from a wrongdoing without you proving a matching loss, you may still pursue disgorgement, which is a restitution-style remedy aimed at stripping ill-gotten gains rather than fully compensating for loss; under the “profiting from wrong” theory of unjust enrichment, courts may allow disgorgement where there is an underlying legal wrong and ordinary damages are inadequate, with “corresponding deprivation” assessed by whether the gain was made possible by the wrongful act, such as in categories like breach of fiduciary duty, breach of trust, and in exceptional cases certain crimes, breaches of contract, or torts (see Pharmascience v. Novartis Pharmaceuticals, 2020 ONSC 6534).  For practical guidance on what facts to document and what remedy to plead, Paralegal services from Vagans Legal can help you evaluate your claim and next steps by calling (416) 473-8472.

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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

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.  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.