Equity’s response to fiduciary wrongdoing is neither rigid nor confined to compensating loss. This entry examines the discretionary remedies available to courts, covering equitable compensation and disgorgement to removal and constructive trusts, and the distinct principles that govern when each remedy is appropriate.
Introduction
In the preceding entry, we explored how breach of fiduciary duty is established, what sorts of conduct may give rise to breach, and distinguished between the gain-based vs loss-based remedies that exist within equitable relief. This entry will discuss the discrete equitable remedies that may be available upon breach of fiduciary duty.
Unlike common law damages, equitable remedies for breach of fiduciary duty are not available as of right, but are discretionary and flexible. Accordingly, Courts must determine which relief is best suited to remediate the wrong suffered by the vulnerable. While it is beyond the scope of this entry to enumerate all the differences between common law and equity,[1] it will suffice to note that equity’s response to a fiduciary’s breach tends to be guided by restitutionary principles, whether gain-based or loss-based relief is determined as most appropriate.
Equitable Remedies Available for Breach of Fiduciary Duty
Removal and Replacement
Upon a finding of breach of fiduciary duty, the Court and claimant may consider removing and replacing f the fiduciary who has breached their duty.
The Court’s authority for removal, and the corresponding analysis, varies from one fiduciary context to another. For example, and as discussed in my previous blog,[2] removal of an Estate Trustee is brought pursuant to section 37 of the Trustee Act,[3] and is guided by the several factors as enumerated by the relevant jurisprudence.[4] Alternatively, the Court’s authority to remove an attorney for property is grounded in it inherent parens patriae jurisdiction and general supervisory authority over fiduciaries.[5]
Common to both analyses, is that the interests of the vulnerable is placed at the forefront of the considerations.
Loss-Based Relief
Equitable Compensation
Equitable compensation is the primary loss-based remedy to be considered where the breach of the fiduciary has caused loss to the vulnerable party, rather than resulted in a gain to the fiduciary.
Equitable compensation, operates according to restitutionary principles, as it attempts to restore the vulnerable back to the position they would have occupied had the breach never occurred. While this sounds nearly identical to the common law principle of restitutio in integrum, equitable compensation differs from common law damages because of the “unique foundation and goals of equity”.[6] Further, it is implemented in effort to deter wrongdoing and enforces the trust at the heart of the fiduciary relationship.[7]
As explained by the Ontario Court of Appeal in Stirrett v. Cheema,[8] the determination of compensation is not only guided by placing the claimant back to the position they would have been in had the breach not occurred, but also to restore the lost opportunity caused by the fiduciary’s breach.[9] Losses and lost opportunity are assessed at the date of trial and with the benefit of hindsight, regardless if that opportunity could have been foreseen at the time of breach.[10] Further, if equitable compensation were not already powerful enough, the Court is to presume that the claimant would have made the most favourable use of the trust property.[11]
That said, causation remains essential, as only losses that, on a common sense view, were caused by the breach will be compensable.[12]
Gain-Based Relief
Account of Profits & Disgorgement
Where equitable compensation focuses on the vulnerable’s loss, the aim of disgorgement and/or an accounting of profits, aims to strip any and all wrongful gain acquired by the fiduciary’s as a result of their breach.[13]
Accordingly, an accounting of profits is to be considered where the fiduciary breaches their duty, accrues a gain as a result of their breach, regardless of whether the beneficiary suffered any corresponding loss.[14]
As articulated in Strother v. 3464920 Canada Inc., the rationale underlying such remedies is meant to be “prophylactic” by appropriating any gains made through a breach, equity teaches faithless fiduciaries that disloyalty does not pay by eliminating any financial gain accrued in the course of breach.[15] The second purpose is restitutionary: where profits rightly belong to the vulnerable, and have been wrongly appropriated by the fiduciary, disgorgement serves to restore what was taken.
While disgorgement and an account of profits are often conflated, they differ in important respects. Namely, disgorgement is the broader gain-based remedy that strips a wrongdoer of profits having been recognized in both equitable and common law contexts, whereas the account of profits is purely an equitable remedy which was historically confined to fiduciary and confidential relationships.[16]
In the fiduciary and equitable context, disgorgement operates much like an account of profits, but the concept extends further. In Strother, the Supreme Court awarded disgorgement to the claimant which had the effect of disgorging profits earned by a solicitor even though it resulted in a windfall to the vulnerable.[17]
Both remedies require a causal connection between the breach and the profits claimed, and Courts will apportion gains where only part of the profit is attributable to the breach
Constructive Trust
The constructive trust is a proprietary remedy that attaches to specific assets and vests beneficial ownership of the property in the claimant. Generally, proprietary interests awarded via equitable remedies are only done so where the claimant demonstrates that the award of a monetary remedy is insufficient to restore the claimant back to the position they would have been but for the breach.
A constructive trust may be imposed where good conscience so requires. That assessment is informed by situations where constructive trusts have been recognized historically, by the dual rationales of doing justice between the parties and maintaining the integrity of trust-dependent institutions, and by the absence of any indication that imposition would be unfair to the defendant or third parties.
Conclusion
The key takeaway is that equitable remedies for breach of fiduciary duty are discretionary and responsive to the nature of the wrong, with the protection of the vulnerable party and the integrity of the fiduciary relationship remaining central.
Where the breach causes loss, equitable compensation seeks to restore both the position that would have been occupied but for the breach and, where appropriate, lost opportunities; where the fiduciary has obtained a wrongful gain, an account of profits or disgorgement may strip that gain even in the absence of a corresponding loss.
In appropriate circumstances, the Court may also remove and replace the fiduciary or impose a constructive trust where monetary relief is inadequate and proprietary relief is justified. Ultimately, the availability and scope of relief turns on the particular circumstances of the breach, including causation, the nature of any loss or gain, and the equitable principles engaged.
—
[1] If you are interested in reading more about the differences in Equitable Compensation, Equitable Damages, and Common Law Damages, feel free to check out my blog – Found Here.
[2] Removing an Estate Trustee in Ontario: What Every Beneficiary Needs to Know | WEL Partners Blog.
[3] Trustee Act, R.S.O. 1990, c. T.23.
[4] See La Calamita v. La Calamita, 2024 ONSC 4219 (CanLII), at para 95, which aptly summarizes the authoritative jurisprudences and factors for consideration.
[5] Teffer v. Schaefers, 2008 CanLII 46929 (ON SC), at paras 21-24.
[6] Canson Enterprises Ltd. v. Boughton & Co., 1991 CarswellBC 269, at para 61.
[7] Southwind v. Canada, 2021 SCC 28 (CanLII), at para 66 (“Southwind”).
[8] Stirrett v. Cheema, 2020 ONCA 288 (CanLII).
[9] Southwind, at para 70.
[10] Ibid., at para 74.
[11] Ibid., at para 79.
[12] Canson Enterprises Ltd. v. Boughton & Co., [1991] 3 S.C.R. 534, 1991 CanLII 52 (SCC), at p 556.
[13] Ibid., at p 543–544.
[14] Canadian Aero Service Ltd. v. O’Malley, [1974] S.C.R. 592, 1973 CanLII 23 (SCC).
[15] Strother v. 3464920 Canada Inc., 2007 SCC 24, at paras 74–76 (“Strother”).
[16] Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, at para 24.
[17] Strother, at para 77.
Written by: Grant Swedak
Posted on: August 13, 2026
Categories: Commentary, Fiduciary Relationships Series
Equity’s response to fiduciary wrongdoing is neither rigid nor confined to compensating loss. This entry examines the discretionary remedies available to courts, covering equitable compensation and disgorgement to removal and constructive trusts, and the distinct principles that govern when each remedy is appropriate.
Introduction
In the preceding entry, we explored how breach of fiduciary duty is established, what sorts of conduct may give rise to breach, and distinguished between the gain-based vs loss-based remedies that exist within equitable relief. This entry will discuss the discrete equitable remedies that may be available upon breach of fiduciary duty.
Unlike common law damages, equitable remedies for breach of fiduciary duty are not available as of right, but are discretionary and flexible. Accordingly, Courts must determine which relief is best suited to remediate the wrong suffered by the vulnerable. While it is beyond the scope of this entry to enumerate all the differences between common law and equity,[1] it will suffice to note that equity’s response to a fiduciary’s breach tends to be guided by restitutionary principles, whether gain-based or loss-based relief is determined as most appropriate.
Equitable Remedies Available for Breach of Fiduciary Duty
Removal and Replacement
Upon a finding of breach of fiduciary duty, the Court and claimant may consider removing and replacing f the fiduciary who has breached their duty.
The Court’s authority for removal, and the corresponding analysis, varies from one fiduciary context to another. For example, and as discussed in my previous blog,[2] removal of an Estate Trustee is brought pursuant to section 37 of the Trustee Act,[3] and is guided by the several factors as enumerated by the relevant jurisprudence.[4] Alternatively, the Court’s authority to remove an attorney for property is grounded in it inherent parens patriae jurisdiction and general supervisory authority over fiduciaries.[5]
Common to both analyses, is that the interests of the vulnerable is placed at the forefront of the considerations.
Loss-Based Relief
Equitable Compensation
Equitable compensation is the primary loss-based remedy to be considered where the breach of the fiduciary has caused loss to the vulnerable party, rather than resulted in a gain to the fiduciary.
Equitable compensation, operates according to restitutionary principles, as it attempts to restore the vulnerable back to the position they would have occupied had the breach never occurred. While this sounds nearly identical to the common law principle of restitutio in integrum, equitable compensation differs from common law damages because of the “unique foundation and goals of equity”.[6] Further, it is implemented in effort to deter wrongdoing and enforces the trust at the heart of the fiduciary relationship.[7]
As explained by the Ontario Court of Appeal in Stirrett v. Cheema,[8] the determination of compensation is not only guided by placing the claimant back to the position they would have been in had the breach not occurred, but also to restore the lost opportunity caused by the fiduciary’s breach.[9] Losses and lost opportunity are assessed at the date of trial and with the benefit of hindsight, regardless if that opportunity could have been foreseen at the time of breach.[10] Further, if equitable compensation were not already powerful enough, the Court is to presume that the claimant would have made the most favourable use of the trust property.[11]
That said, causation remains essential, as only losses that, on a common sense view, were caused by the breach will be compensable.[12]
Gain-Based Relief
Account of Profits & Disgorgement
Where equitable compensation focuses on the vulnerable’s loss, the aim of disgorgement and/or an accounting of profits, aims to strip any and all wrongful gain acquired by the fiduciary’s as a result of their breach.[13]
Accordingly, an accounting of profits is to be considered where the fiduciary breaches their duty, accrues a gain as a result of their breach, regardless of whether the beneficiary suffered any corresponding loss.[14]
As articulated in Strother v. 3464920 Canada Inc., the rationale underlying such remedies is meant to be “prophylactic” by appropriating any gains made through a breach, equity teaches faithless fiduciaries that disloyalty does not pay by eliminating any financial gain accrued in the course of breach.[15] The second purpose is restitutionary: where profits rightly belong to the vulnerable, and have been wrongly appropriated by the fiduciary, disgorgement serves to restore what was taken.
While disgorgement and an account of profits are often conflated, they differ in important respects. Namely, disgorgement is the broader gain-based remedy that strips a wrongdoer of profits having been recognized in both equitable and common law contexts, whereas the account of profits is purely an equitable remedy which was historically confined to fiduciary and confidential relationships.[16]
In the fiduciary and equitable context, disgorgement operates much like an account of profits, but the concept extends further. In Strother, the Supreme Court awarded disgorgement to the claimant which had the effect of disgorging profits earned by a solicitor even though it resulted in a windfall to the vulnerable.[17]
Both remedies require a causal connection between the breach and the profits claimed, and Courts will apportion gains where only part of the profit is attributable to the breach
Constructive Trust
The constructive trust is a proprietary remedy that attaches to specific assets and vests beneficial ownership of the property in the claimant. Generally, proprietary interests awarded via equitable remedies are only done so where the claimant demonstrates that the award of a monetary remedy is insufficient to restore the claimant back to the position they would have been but for the breach.
A constructive trust may be imposed where good conscience so requires. That assessment is informed by situations where constructive trusts have been recognized historically, by the dual rationales of doing justice between the parties and maintaining the integrity of trust-dependent institutions, and by the absence of any indication that imposition would be unfair to the defendant or third parties.
Conclusion
The key takeaway is that equitable remedies for breach of fiduciary duty are discretionary and responsive to the nature of the wrong, with the protection of the vulnerable party and the integrity of the fiduciary relationship remaining central.
Where the breach causes loss, equitable compensation seeks to restore both the position that would have been occupied but for the breach and, where appropriate, lost opportunities; where the fiduciary has obtained a wrongful gain, an account of profits or disgorgement may strip that gain even in the absence of a corresponding loss.
In appropriate circumstances, the Court may also remove and replace the fiduciary or impose a constructive trust where monetary relief is inadequate and proprietary relief is justified. Ultimately, the availability and scope of relief turns on the particular circumstances of the breach, including causation, the nature of any loss or gain, and the equitable principles engaged.
—
[1] If you are interested in reading more about the differences in Equitable Compensation, Equitable Damages, and Common Law Damages, feel free to check out my blog – Found Here.
[2] Removing an Estate Trustee in Ontario: What Every Beneficiary Needs to Know | WEL Partners Blog.
[3] Trustee Act, R.S.O. 1990, c. T.23.
[4] See La Calamita v. La Calamita, 2024 ONSC 4219 (CanLII), at para 95, which aptly summarizes the authoritative jurisprudences and factors for consideration.
[5] Teffer v. Schaefers, 2008 CanLII 46929 (ON SC), at paras 21-24.
[6] Canson Enterprises Ltd. v. Boughton & Co., 1991 CarswellBC 269, at para 61.
[7] Southwind v. Canada, 2021 SCC 28 (CanLII), at para 66 (“Southwind”).
[8] Stirrett v. Cheema, 2020 ONCA 288 (CanLII).
[9] Southwind, at para 70.
[10] Ibid., at para 74.
[11] Ibid., at para 79.
[12] Canson Enterprises Ltd. v. Boughton & Co., [1991] 3 S.C.R. 534, 1991 CanLII 52 (SCC), at p 556.
[13] Ibid., at p 543–544.
[14] Canadian Aero Service Ltd. v. O’Malley, [1974] S.C.R. 592, 1973 CanLII 23 (SCC).
[15] Strother v. 3464920 Canada Inc., 2007 SCC 24, at paras 74–76 (“Strother”).
[16] Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, at para 24.
[17] Strother, at para 77.
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