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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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 Vagans Legal by phone at: (416) 473-8472 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

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.  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 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.