Claiming Disgorgement Remedy

Question: Is disgorgement available in Ontario to recover profits a wrongdoer made, even if the victim did not suffer a direct financial loss?

Answer: Yes, a paralegal at Melville Legal in Ontario can help you assess whether you may seek disgorgement (a restitution-style remedy that strips ill-gotten gains) when someone profits from a wrongdoing, even where ordinary damages may be inadequate.  Courts applying a “profiting from wrong” theory may order disgorgement if there is an underlying legal wrong and the ordinary damages remedy is not sufficient, which is often seen in cases involving breach of fiduciary duty or breach of trust, but exceptional circumstances can include other wrongs like certain crimes or torts.  For example, in Pharmascience v. Novartis Pharmaceuticals, 2020 ONSC 6534, the court explained that disgorgement may be available where the defendant’s gain was made possible by the wrongful act toward the plaintiff rather than requiring a direct transfer of wealth.  If you want to understand what remedy you can pursue in your situation and what evidence you would need, call (289) 981-7712 to book legal help.

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.  The law, applied by the courts, seeking to discourage and deter wrongful conduct, may order that the benefits or profits be disgorged from the wrongdoer and provided to the victim.  In this way the remedy of disgorgement ensures that the wrongdoer fails to benefit or profit from the wrongdoing and is, presumably, discouraged and deterred from engaging in wrongful conduct.

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.