Last Updated: , 68 days ago.
Can I sue in Ontario to recover improper profits or disgorgement even if my financial loss was small?
In Ontario, you may be able to claim disgorgement if the other party profited from wrongdoing under the “profiting from wrong” theory of unjust enrichment, even where you had little or no corresponding deprivation, but the court generally looks for an underlying legal wrong and may treat disgorgement as a fairness-based, restitutionary remedy rather than compensatory damages. In Pharmascience v. Novartis Pharmaceuticals Canada Inc., 2020 ONSC 6534, the court explained that disgorgement is typically reserved for breaches of fiduciary duty or trust, though exceptional cases can support it for certain crimes, contract breaches, or torts, depending on how the wrongdoing enabled the defendant’s gain. If you are considering an Ontario claim for disgorgement tied to improper profits, a paralegal at PKM Legal Services can help you assess the facts, the “underlying legal wrong,” and what evidence to gather. Call (519) 410-5250 to book a quick review today.
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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.
Note: For immediate help, please contact PKM Legal Services by phone at: (519) 410-5250 to retain services or to discuss any specific questions that you may have.
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
Disgorgement remedy, as a stripping of ill gotten gains from a wrongdoer, was well explained within the Pharmascience Inc. v. Novartis Pharmaceuticals Canada Inc., et al, 2020 ONSC 6534, case wherein it was stated:
[19] Under the “profiting from wrong” theory of unjust enrichment, disgorgement may be available if the defendant has committed “an underlying legal wrong against a plaintiff, and the ordinary damages remedy for the underlying wrong is inadequate”. As the Court of Appeal noted, disgorgement in these cases is typically reserved for when there has been a breach of fiduciary duty or a breach of trust. However, in exceptional cases, disgorgement as a restitutionary remedy can also be granted where the “underlying legal wrong” is a crime or a breach of contract or a tort.[6] In cases premised on “profiting from wrong”, the concept of “corresponding deprivation” takes on a slightly different meaning. A plaintiff may be able to prove a corresponding loss by showing that the defendant’s gain was “made possible” by the defendant’s wrongful act towards the plaintiff rather than proving a direct or indirect transfer of wealth.[7]
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 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.
NOTE: A significant quantity of online searches utilising “lawyers near me” or “best lawyer in” frequently indicate a demand for prompt and competent legal assistance, rather than a precise professional designation. In Ontario, licensed paralegals are governed by the same Law Society that regulates lawyers and can represent clients in specific legal proceedings. Advocacy, legal assessment, and procedural adeptness are fundamental to this role. PKM Legal Services provides legal representation within its licensed authority, focusing on strategic positioning, evidentiary preparation, and compelling advocacy with the goal of achieving effective and beneficial outcomes for clients.
