Where do I stand legally regarding a lost phone?

Someone left their phone in our van a month ago. They tracked it online and and we found it. The bloke was very hard to communicate with in terms of arranging its return. We kept on suggesting dates to arrange to meet in London but he was never free. One point he offered money to deliver it to his home. Posting was an option that was avoided due to the risk of damage. On one occasion we took the phone into London with us in the hope that he would reply and agree to meet but it was not to be.

Basically, he got in touch today to say that he had getting notifications of fraudulent transactions on his bank account. It would seem the cards linked to them were in the cover of his phone, I believe that we were pick pocketed and the phone was stolen without our knowledge. It is not in the coast or bag that was worn that day. We did not notice the loss until the person contacted us to say their cards were being used.

Where do we stand legally? On one hand, this person mislaid their phone and has made it hard to return it to them. On the other hand, it was in our possession when it was stolen when we were trying to return it. If needs must I guess we can claim on our insurance, but I feel in light of the circumstances he should claim on his. Hoping to put an end to the matter as this has cost us a lot of ttime

The irony of losing a lost phone when trying to return it eh? Helpful answers only please