At the end of July, the Supreme Court of Canada released a major
decision about disgorgement—the remedy that restores the
defendant's “wrongful gain” to the plaintiff,
even where the plaintiff may not have suffered any damages at
all.
In Atlantic Lottery Corp. v. Babstock, 2020 SCC 19, the
majority of the Court made a number of important rulings that limit
the ability of plaintiffs to claim disgorgement against a
defendant. These rulings include that:
- Disgorgement is an equitable remedy,
not an independent cause of action;
- In order for a plaintiff to claim
disgorgement for the defendant's negligence, the defendant
must have caused the plaintiff's damages; and
- Only in exceptional circumstances is
disgorgement available for a breach of contract.
