Date: Fri, 1 Jun 2007 16:44
From: Vaughan Black
Subject: Supreme Court of Canada on disgorgement
Today the Supreme Court of Canada handed down its judgment in Strother v. 3464920 Canada Inc.
The part of the case that will be of most interest to participants in this discussion group is that of vicarious liability for disgorgement (or gain-based damages). The court held that the defendant law firm could be held liable for the gain-based damages assessed against the other defendant, a rogue partner, even though the firm did not itself receive those gains. However, the court said this result only followed because of a statute -- British Columbia's Partnership Act said that a firm should liable for "penalties" assessed against its partners acting in the ordinary course of business of the firm. The court indicated (at para. 103) that, were it not for the statute, a gain-based remedy against the law firm (which did not itself receive the gain) would not be appropriate.
There's a little bit of discussion about the disgorgement measure generally, but nothing very helpful.
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