Mr Cook was employed by Ministry of Sound as a director. He handed in his notice in May 2007, to commence a new position with Warner Music. Mr Cook told Ministry of Sound that he would not be competing with the company in his new role. During his notice period a dispute arose surrounding his honesty in this regard. As a result of the dispute he took sick leave for stress. Ministry of Sound wrote to him to smooth things over and stated that it hoped he would be able to return to work.
Upon his return to work, Mr Cook was summarily dismissed following disciplinary proceedings on the grounds of dishonesty, breach of fiduciary duty, and for accepting a company loan of £100k after he had tendered his resignation. Ministry of Sound sought a declaration that his dismissal was lawful.
The Court of Appeal held that Ministry of Sound had accepted Mr Cook’s breach of the implied term of mutual trust and confidence. By expressing sympathy, his employer had affirmed the contract and could not rely on this breach as a reason for dismissal. Ministry of Sound should have reserved its position and provided some indication that it would pursue disciplinary proceedings against Mr Cook for the alleged dishonesty and breach of fiduciary duty. However, as Ministry of Sound has reserved its position in respect of the loan, it was entitled to rely on it as a reason for dismissal.
Cook v MSHK Limited and Ministry of Sound Recordings Limited