Moore Stephens (A Firm) v Stone and Rolls Ltd: CA 18 Jun 2008

The company claimed against its accountants for negligence in not discovering the substantial dishonesty of the claimant’s employee, its directing mind and sole shareholder.
Held: Rimer LJ said that the critical question was whether it was right to treat SandR as the villain or the victim. In the former case the fraud would be attributed to SandR; in the latter case it would not. He held that SandR was the villain and not the victim, Hampshire Land did not apply and ex turpi causa was a defence to SandR’s claim.

Mummery LJ, Keene LJ, Rimer LJ
[2008] EWCA Civ 644, [2008] Bus LR 1579, [2008] PNLR 36, [2008] 3 WLR 1146, [2008] 2 Lloyd’s Rep 319, [2008] 2 BCLC 461
England and Wales
Appeal fromStone and Rolls Ltd v Moore Stephens (A Firm) Comc 27-Jul-2007
The company claimed against its chartered accountants for negligence when acting as auditors. The sole directing mind of the company had used it as a vehicle for substantial frauds. The court was asked ‘whether and if so when can a claim by a . .
AppliedRe Hampshire Land Company 9-Jul-1896
A company had borrowed from a building society. The borrowing was not properly authorised by resolution of the shareholders in general meeting The court was asked whether whether the knowledge of the company secretary common to both the company and . .

Cited by:
Appeal fromMoore Stephens (A Firm) v Stone Rolls Ltd (in liquidation) HL 30-Jul-2009
The appellants had audited the books of the respondent company, but had failed to identify substantial frauds by an employee of the respondent. The auditors appealed a finding of professional negligence, relying on the maxim ex turpi causa non . .

Lists of cited by and citing cases may be incomplete.

Professional Negligence

Updated: 29 November 2021; Ref: scu.269977