It was decided by the Judicial Committee of the Privy Council, at that time the court of last resort within the British Empire, on appeal from the Appellate Division of the Supreme Court of Ontario, Canada.

They then passed a shareholder resolution declaring that the company had no interest in the contract.

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.

Giving the advice, The Lord Chancellor, Lord Buckmaster held 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, deliberately designed to exclude and used their influence and position to exclude, the company whose interest it was their first duty to protect... the benefit of such contract... must be regarded as held on behalf of the company... [It was] quite certain that directors holding a majority of votes would not be able to make a present to themselves.

This would be to allow a majority to oppress the minority....if directors have acquired for themselves property or rights which they must be regarded as holding on behalf of the company, a resolution that the rights of the company should be disregarded in the matter would amount to forfeiting the interest and property of the minority of shareholders in favour of the majority, and that by the votes of those who are interested in securing the property for themselves.