Claiming Disgorgement Remedy

Question:Can I sue in Ontario to recover profits or gains the defendant made from a wrongdoing even if my losses were minimal?

Answer:Yes. In Ontario, a lawsuit can sometimes seek disgorgement, a restitutionary remedy that strips “ill gotten gains” so the wrongdoer does not profit from wrongdoing, even where you were harmed little or not directly enough to support ordinary damages. Under a “profiting from wrong” unjust enrichment approach, disgorgement may be available when there is an underlying legal wrong (often involving breach of fiduciary duty or breach of trust, but in exceptional cases it can extend to certain torts or contract breaches) and the court finds ordinary damages are inadequate. In Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., Pharmascience v. Novartis Pharmaceuticals, 2020 ONSC 6534, the court explained how disgorgement focuses on taking away gains made possible by the wrongful act, not just paying for corresponding loss. For guidance on whether your facts support disgorgement under Ontario law, contact Askew Paralegal Services at (289) 439-4740 for paralegal support and a free half-hour consultation.

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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.

Note: Please contact Askew Paralegal Services by phone at: (289) 439-4740 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.  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.