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Rajah Lehal

Unplanned benefit can lead to a disgorgement claim.

October 26, 2016

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.

Litigation

Written by Rajah. Rajah Lehal is Founder and CEO of Clausehound.com. Rajah is a legal technologist and technology lawyer who is, together with the Clausehound team, capturing and sharing lawyer expertise, building deal negotiation libraries, teaching negotiation in classrooms, and automating negotiation with software.