Hi Gareth,
Yes the car was sound before the service. It's in good nick and is still quite new which is why my Mother in Law is quite upset about what happened.
I can't fathom as to how an oil filter could be 'faulty' and this is the supposed cause of the oil leak. Apparently there's no lasting damage to the engine Audi are saying, probably because as soon as she had seen the warning light appear for 'engine oil pressure low' she pulled over straight away and switched the car off.
I was working nightshift at the time so i didn't get the chance to look at her car before it was recovered and she hasn't really recieved any empathy or apology for what happened. I'm not sure if that's because Audi are trying to cover their tracks in blaming a faulty part. I think she's going to write a letter of complaint about it.
Thanks for the reply!