Claiming Disgorgement Remedy

Question: Can I sue in Ontario to force a wrongdoer to give up profits gained from their wrongdoing even if my losses are small or hard to prove?

Answer: In Ontario, a lawsuit may seek disgorgement, a restitution remedy that can require a wrongdoer to surrender ill-gotten profits where ordinary damages are inadequate, even when your direct loss is limited, depending on the underlying legal wrong and the available evidence; Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., 2020 ONSC 6534 discusses when this “profiting from wrong” approach may apply.   To assess whether disgorgement is realistic in your situation and what forum and proof you’ll need, contact DK Legal Practice (Paralegal serving clients across Ontario) at (416) 906-6663 for a practical, cost-conscious plan focused on stopping the benefit and improving your outcome.

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

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

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

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.