Ernst & Young has claimed a final victory in its long-standing dispute with lorry group Freightliner.

The House of Lords has rejected a petition for leave to appeal in the case, meaning E&Y is now sure of avoiding a possible £350m liability.

Freightliner petitioned the Lords in December last year after it failed to recoup losses from its auditors over work undertaken at its former subsidiary ERF. It had been thought that the matter was all wrapped up when Freightliner was refused leave to appeal. The failure of the petition to appeal marks the absolute end to the action, it is understood.

The firm had audited ERF but a £100m hole was discovered in the company’s balance sheet after it was sold to German truck maker MAN.

At the original trial in 2005, CFO Stephen Ellis made stark admissions that he had concealed trading losses, deliberately misled E&Y and made several false journal entries that gave rise to an £18m discrepancy. He also admitted he continued to defraud the company for more than a year after it had been sold, by which time E&Y was no longer the auditor.

MAN successfully sued Freightliner, ERF’s former owners, but Freightliner was unsuccessful in action against its auditors, after the Court of Appeal upheld a decision of the High Court, in September, that the firm was not liable for its audit work at ERF.

The court did note that there was a potential issue about auditors signing off accounts that a company hopes to use in order to sell a business.

Sources close to Freightliner said the Lords, who generally take up cases which are of general interest to the public, did not give any reason for their decision apart from their refusal to hear the matter.

‘Ernst & Young welcomed that decision,’ an E&Y spokesman said.