Claiming Disgorgement Remedy

Question: Is disgorgement available in Ontario when a wrongdoer profits from wrongdoing without the victim suffering a direct loss?

Answer: Yes, in Ontario you may be able to pursue a restitutionary disgorgement remedy where the wrongdoer “profits from wrong,” meaning there is an underlying legal wrong and ordinary damages are inadequate, with proof of “corresponding deprivation” tied to how the gain was made possible by the wrong, as described in Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., 2020 ONSC 6534.   If you are asking whether disgorgement fits your facts, Legacy Legal Services can help Ontario legal professionals and consumers assess claims for losses or ill-gotten gains in a way that supports fairness and deterrence; call (226) 246-3825.

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Can a Lawsuit Claim Improper Profits Gained By 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.