In previous litigation, one of the main victims (a Czech bank, Komerční banka) had successfully sued both the company and Mr Stojevic.

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).

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.

As a general rule a fraudster, individual or corporate, is legally liable for the losses that flow directly from the fraud and cannot blame such losses on the negligence of another person, such as the victim or whoever.In a split 3 to 2 ruling, the House of Lords dismissed the appeal and held by a majority that the auditors, Moore Stephens, could not be sued by the company's creditors.

Although each judge gave slightly different reasons, Lords Phillips, Walker and Brown held the ex turpi causa defence barred the company's claim against the liquidator for negligence.

[14] It is also suggested that this case also emphasises the need for the courts to ensure that the activities of the rogue do not warp the general principles of the law of professional liability.

[15] Commentators argue that Moore Stephens did not deliver a satisfactory result, because: However, the Law Commission recommended in its 2010 report on the illegality defence that no legislative change should be made in relation to claims for breach of contract, tort or unjust enrichment.