Moore Stephens was the firm of chartered accountants hired to perform audits between 19. Mr Stojevic deceitfully siphoned assets of the company away and falsified accounts to show more profitable transactions than were real. In previous litigation, one of the main victims (a Czech bank, Komerční banka) had successfully sued both the company and Mr Stojevic. The company's creditors, acting in the name of the company, wished to sue the auditors for failing to detect the fraud, since both the company and Mr Stojevic were out of money. The firm requested that the claim be struck out even before any question of their negligence was raised. They argued that even if they had been negligent it would be contrary to public policy to let the company sue them, because that would involve breach of the principle that a claimant cannot come to court and make a plea whilst relying on his own illegal behaviour ( ex turpi causa non oritur actio).Īt the Commercial Court, Langley J held Mr Stojevic's actions and state of mind were to be attributed to the company. However, because detecting the fraud was the very thing the auditors were engaged to do, they would not be allowed to rely on the ex turpi causa defence to a negligence claim.Īt the Court of Appeal of England and Wales, Mummery, Keene and Rimer LJJ reversed Langley J's decision in part, holding that: Because they were the same thing, it was artificial to describe the company as a "victim" of the fraud, and therefore to let the company sue the auditor.
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