Auditors expecting an increase in litigation cases amid the financial crisis were offered some relief yesterday when a multi-million pound negligence case against accountancy firm Moore Stephens by one of its former clients was thrown out of the House of Lords. The case, brought against the firm by failed trading company Stone & Rolls in 2007, was originally for £90m, but the lawyers at law firm Barlow Lyde & Gilbert managed to get the claim substantially reduced. It was alleged that Moore Stephens was negligent over its audit of the company run by Croatian businessman Zvonko Stojevic in the years from 1996 - 1998. The claim was one of the largest in the UK to be brought using litigation funding, provided by third parties who have no direct interest in the claim. It was argued by the firm that the claim should be struck out as Stone & Rolls committed the fraud and was not the victim. Stone & Rolls plunged into liquidation in 2002 after it was successfully sued by a European bank that was a victim of the fraud. Liquidators of Stone & Rolls then tried to recoup the lost money from its auditors Moore Stephens. The decision at the House of Lords yesterday was split by three to two. Speaking at the ruling, senior law lord Lord Phillips of Worth Matravers said: 'It does not seem just that, in these circumstances [Stone & Rolls] should be able to bring a claim in respect of the very conduct that [it] had set about inducing.' But law lord Lord Mance argued: 'The world has sufficient experience of Ponzi schemes operated by individuals owning "one man" companies for it to be questionable policy to relieve from all responsibility auditors negligently failing in their duty to check and report on such companies' activities. The speeches of my noble and learned friends in the majority have that effect.' Clare Canning, partner at law firm Mayer Brown, told Accountancy 'The big point is the fact that even in quite limited circumstances, someone who has been fraudulent and set up a fraudulent vehicle and as a result has lost money, can no longer have a go at the auditors and that's quite a big deal. 'It's a common sense thing that a company that has perpetrated a fraud and had losses as a result can't seek to recoup that from the auditor.' Manning said that looking forward this case will 'up the ante' for looking into fraud and working out how frauds work. 'Auditors will try to explore this and expand it going forward,' she said, but added that each case will be fact specific and this doesn't set a precedent for future liability claims.