Disgorment damages are intended to strip the defendant of any benefits they obtained as a result of their wrong doing. As such, even if the plaintiff has not suffered any loss they can still be awarded disgorment damages.

In Penarth Dock Engineering Co v Pounds [1963] 1 Lloyd’s Rep. 359, The defendant bought a pontoon from the plaintiff’s dock company. The invoice covering the sale provided: “Although it is desirous to remove the pontoon as speedily as possible, no time limit is to be imposed.” Despite requests by the plaintiffs, the defendant did not remove the pontoon. The plaintiffs claimed damages. The court held that there was a duty to remove the pontoon within a reasonable time (12 months in this case). After the reasonable time the defendant was a trespasser and the plaintiff entitled to damages. These damages were based not on what the plaintiffs had lost but on the benefit the defendant had obtained by having the use of the pontoon.

In this case, there was no consideration for the defendant to have the pontoon for more than the reasonable time. As such, the defendant received additional benefit. As such, the plaintiff was entitled to a disgorgement claim.


–  –  –

This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.