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

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 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.