Claiming Disgorgement Remedy

Question: Can a victim of wrongdoing in Ontario sue for disgorgement even if they did not suffer a financial loss, but the wrongdoer still made a profit or benefit from the wrongdoing?

Answer: Cross Legal Services can help Ontario consumers understand when a court may order disgorgement or other restitutionary relief for “profiting from wrong” even where you cannot show a traditional compensable loss, because disgorgement focuses on removing the wrongdoer’s ill gotten gains instead of fully compensating harm;   in Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., 2020 ONSC 6534, the court explained that disgorgement may be available where there is an underlying legal wrong and ordinary damages are inadequate, and it is often reserved for breaches of fiduciary duty or trust, but can apply in exceptional cases involving other legal wrongs;   if you believe someone benefited from fraud, a breach of trust, or another misconduct with limited or no measurable loss, call (289) 443-0675 to discuss your situation with a paralegal at Cross Legal Services.

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.

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

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.