Cook v Deeks [1916] 1 AC 554 is a UK company law case, concerning the illegitimate diversion of a corporate opportunity

Corporate opportunity

The corporate opportunity doctrine is the legal principle providing that directors, officers, and controlling shareholders of a corporation must not take for themselves any business opportunity that could benefit the corporation...

.

In UK company law the case would now be seen as falling within the Companies Act 2006

Companies Act 2006

The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...

 section 175, with a failure to have ratification of breach by independent shareholders under section 239.

Facts

The Toronto Construction Co had four directors, Mr GM Deeks, Mr GS Deeks, Mr Hinds and Mr Cook. It helped in construction of railways in Canada

Rail transport in Canada

Canada has a large and well-developed railway system that today transports primarily freight. There are two major privately owned transcontinental freight railway systems, the Canadian National and Canadian Pacific Railway. Nation-wide passenger services are provided by the federal crown...

. The first three directors wanted to exclude Mr Cook from the business. Each held a quarter of the company's shares. Deeks, Deeks and Hinds took a contract with the Canadian Pacific Railway Company (for building a line at the Guelph Junction

Guelph Junction Railway

The Guelph Junction Railway is the first railway in the Commonwealth of Nations to be owned by a municipality, the city of Guelph, Ontario. The only other is Greater Winnipeg Water District Railway.-History:...

 and Hamilton

Hamilton, Ontario

Hamilton is a port city in the Canadian province of Ontario. Conceived by George Hamilton when he purchased the Durand farm shortly after the War of 1812, Hamilton has become the centre of a densely populated and industrialized region at the west end of Lake Ontario known as the Golden Horseshoe...

 branch) in their own names. They then passed a shareholder resolution declaring that the company had no interest in the contract. Mr Cook claimed that the contract did belong to the Toronto Construction Co and the shareholder resolution ratifying their actions should not be valid because the three directors used their votes to carry it.

Advice

The Privy Council

Privy council

A privy council is a body that advises the head of state of a nation, typically, but not always, in the context of a monarchic government. The word "privy" means "private" or "secret"; thus, a privy council was originally a committee of the monarch's closest advisors to give confidential advice on...

 advised that the three directors had breached their duty of loyalty to the company, that the shareholder ratification was a fraud on Mr Cook as a minority shareholder and invalid. The result was that the profits made on the contractual opportunity were to be held on trust for the Toronto Construction Co.

Lord Buckmaster said that the three had,

See also

• UK company law
• North-West Transportation Co v Beatty (1887) 12 App Cas 589
• Burland v Earle [1902] AC 83