Cook v Deeks 1916 1 AC 554

The resources of the company must not be used by the directors and the officers for their personal benefit. If a director or officer contravenes this fiduciary duty, a breach has been executed.

It is also necessary that company property also encompasses the intellectual property and the business secrets of the company. Consequently, to highlight such fiduciary duty, the case of Cook V Deeks 1916.

Case Facts for Cook v Deeks 1916:

The directors of Toronto Construction Company had a disagreement with another director, who is Cook. The majority of the directors were able to carry out a project using the name of the company.

After which, they then diverted the project to another company in order to exclude Cook from the project, and the new company itself.

The shareholdings of the directors were then put to use by carrying out a resolution that Toronto Construction Company does not have anything to do with the new project, which then automatically excluded Cook from the project.

Case Issue:

Was there a breach of the fiduciary duty of the directors by diverting the business endeavor of Toronto Construction Company to another company?

Case Decision:

The court ruled that indeed the majority directors and the shareholders breached their fiduciary duty making the resolution they have made to invalidate.

The reason was the majority of directors and shareholders must always bear in mind that even though they are in control of most of the business activities of the company, they are not free to forgo the company’s interests.

The case is significant as it exemplifies that there is a limitation on the powers of the majority members of an enterprise especially in the process of exploiting the business endeavors of the enterprise.