Moore Stephens (A Firm) v Stone & Rolls Ltd (In Liquidation)

Moore Stephens (A Firm) v Stone & Rolls Ltd (In Liquidation)

The company's claim is barred by the ex turpi causa principle because it relies on its own fraud, which is attributed to it through its sole directing mind and will. The Hampshire Land principle does not apply as the company was not the victim but the perpetrator of the fraud. The 'very thing' argument does not override the public policy bar of ex turpi causa. The claim must be struck out as a matter of law.

Parties
Appellant: Moore Stephens (a firm); Respondent: Stone & Rolls Limited (in liquidation)
Jurisdiction
England and Wales
Judgment Date
18 June 2008
Procedural Posture
Civil Appeal / Appeal From Summary Judgment/strike Out Application
Outcome
Appeal allowed; claim struck out
Legal Topics
Attribution of Knowledge to Companies, Illegality Defence (ex Turpi Causa), Auditor's Duty of Care, Liquidation and Claims by Insolvent Companies
Company Law Tort Law Professional Negligence Attribution of Knowledge to Companies Illegality Defence (ex Turpi Causa) Auditor's Duty of Care Liquidation and Claims by Insolvent Companies

Case Brief

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Parties

Moore Stephens (a firm)

Appellant

Stone & Rolls Limited (in liquidation)

Respondent

Procedural Posture

Civil Appeal / Appeal From Summary Judgment/strike Out Application

Legal Issues

  1. 1 Whether the ex turpi causa principle bars a claim by a company against its auditors for losses arising from the company's own fraud
  2. 2 Whether the fraud of the company's sole director should be attributed to the company
  3. 3 Whether the 'very thing' argument defeats the ex turpi causa defence

Ratio Decidendi

The company's claim is barred by the ex turpi causa principle because it relies on its own fraud, which is attributed to it through its sole directing mind and will. The Hampshire Land principle does not apply as the company was not the victim but the perpetrator of the fraud. The 'very thing' argument does not override the public policy bar of ex turpi causa. The claim must be struck out as a matter of law.

Court Disposition

Appeal allowed; claim struck out

Orders

  • The appeal is allowed.
  • The claim by Stone & Rolls Limited against Moore Stephens is struck out.