Claiming Disgorgement Remedy

Question: What can a victim of wrongdoing claim in a lawsuit in Ontario if they suffered little or no loss but the wrongdoer gained profits from the misconduct?

Answer: In Ontario, if little or no direct loss occurred but the wrongdoer still profited, Askew Paralegal Services can help you bring a claim for disgorgement to strip the ill-gotten gains and remove the incentive to “profit from wrong” rather than focusing only on compensating losses.  As explained in Pharmascience v. Novartis Pharmaceuticals, 2020 ONSC 6534, disgorgement may be available under unjust enrichment principles where there is an underlying legal wrong and ordinary damages are inadequate, often arising from breaches of trust or fiduciary duties and sometimes in exceptional cases tied to crimes, breaches of contract, or torts.  Askew Paralegal Services helps Ontario clients understand whether “profiting from wrong” and corresponding deprivation fit their facts and how to frame the remedy to encourage a fair outcome, call (289) 439-4740 for a free half-hour consultation.

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.

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

Disgorgement remedy, as a stripping of ill gotten gains from a wrongdoer, was well explained within the Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., et al, 2020 ONSC 6534, case wherein it was stated:

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 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.