Claiming Disgorgement Remedy

Question: Can I claim disgorgement or other compensation in Ontario when a wrongdoer profits from wrongdoing even if my direct damages are small?

Answer: Yes, in Ontario you may be able to pursue a disgorgement (restitutionary) remedy under a “profiting from wrong” theory when a wrongdoer’s gain was made possible by an underlying legal wrong and ordinary damages are inadequate, as discussed in Pharmascience, 2020 ONSC 6534.  Paralegals at Cross Legal Services help Ontarians assess whether your claim involves the right “underlying legal wrong” (such as breach of trust or fiduciary duty, and in exceptional cases other wrongful acts) and what evidence to gather about the ill-gotten gains to seek an order stripping those profits.  For practical next steps, call (289) 443-0675 to discuss your situation and avoid delays.

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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 Cross Legal Services by phone at: (289) 443-0675 to discuss any specific questions that you may have.

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.