Claiming Disgorgement Remedy

Question: Can I ask a paralegal to include a disgorgement claim in an Ontario lawsuit if the other party profited from wrongdoing without causing me much measurable loss?

Answer: SFG Paralegal Services LLP can help you evaluate whether a “profiting from wrong” (unjust enrichment) theory supports a disgorgement remedy in your Ontario matter, which can let the court order the wrongdoing party to give up ill-gotten gains even where your own damages are limited.   Generally, disgorgement is more likely when there’s an underlying legal wrong and ordinary damages are inadequate, often involving breach of fiduciary duty or breach of trust, though courts may consider exceptional cases linked to crimes, breach of contract, or torts.   In Pharmascience v. Novartis, 2020 ONSC 6534, the court explained disgorgement may be available where there is an underlying legal wrong and corresponding deprivation may be shown by linking how the defendant’s gain was made possible by the wrongful act.   Call (888) 398-0121 to book a consultation with an Ontario paralegal to discuss the facts, evidence of the other side’s gains, and which claims to plead.

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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.

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 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.