Moths and Misrepresentation

Judgment has been handed down in the case of Iya Patarkatsishvili and Yevhen Hunyak v William Woodward-Fisher [2025] EWHC 265 in the High Court. The case concerned whether there was misrepresentation in the seller's replies to pre-contract enquiries during the sale of a £32.5 million property.

What is misrepresentation?

A pre-contractual false or misleading statement of fact made during negotiations by one party to another that induced that party to enter into a contract. Fraudulent misrepresentation is taken seriously by the courts, who will look for evidence of the following:

a false representation was made to the claimant;
the defendant knew that the representation was false or was reckless as to whether it was true or not;
it was intended that the claimant rely on the false statement; and
the claimant suffered loss as a consequence of their reliance on the representation.

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The facts

In 2019, Iya Patarkatsishvili and Yevhen Hunyak (the "Buyers") purchased a £32.5 million luxury mansion in Notting Hill from a high-end property developer, William Woodward-Fisher. After acquiring the property, the Buyers uncovered a severe moth infestation and engaged a pest control company to deal with the issue. The company revealed that they had been hired by Mr Woodward-Fisher in 2018 and had previously produced reports recommending the removal of the wool insulation installed during Mr Woodward-Fisher's period of ownership. No such reports had been disclosed during the sale process, nor had there been any mention of the infestation within the pre-contract enquiries.

What was the Buyers' case?

The Buyers sued Mr Woodward-Fisher, requesting rescission of the contract for the purchase of the property on the basis of fraudulent misrepresentation, given that Mr Woodward-Fisher had falsely answered the pre-contract enquiries and had failed to disclose the reports. The Buyers argued that if the misrepresentations had not been made, then they would not have purchased the property.

What was the seller's case?

Mr Woodward-Fisher argued that his replies were not misrepresentations and denied knowledge of their falsity. He also claimed that the Buyers did not rely on these replies and that any right to rescind the contract was lost after completion.

What did the courts decide?

The court held that:

Mr Woodward-Fisher's contractors had acknowledged the moth infestation, making his denial of the issue a misrepresentation;
pest control reports received by Mr Woodward-Fisher were relevant and should have been disclosed; and
the infestation was not apparent on inspection, contradicting Mr Woodward-Fisher's claims.

It was therefore concluded that the seller knowingly made false statements and was reckless about the truth, resulting in liability for fraudulent misrepresentation. The court ordered rescission of the contract, restoration of the purchase price, and damages.

Despite the fact Mr Woodward-Fisher was not in a position to return the purchase price, the court found this was not in itself a defence to rescission. The court ordered the transfer of the property back to Mr Woodward-Fisher, subject to a lien or equitable charge in favour of the Buyers. This solution would provide Mr Woodward-Fisher with sufficient time to treat the infestation before marketing the property and obtaining the necessary funds to repay the Buyers.

Conclusion

This case is significant because it highlights the following:

Full, honest disclosure is paramount - While it is a residential matter, it outlines the importance for sellers to ensure they act with integrity and honesty during the disclosure process on property sales and reinforces that 'caveat emptor' (buyer beware) does not provide a seller the ability to conceal issues and/or mislead a buyer. Sellers must provide accurate and complete information about a property's condition in particular any known issues.
Clarification on provision of reports - The judge clarified that only written, not oral, reports needed to be provided to buyers in the context of pre-contract enquiries.
Significant financial risks of dishonest practices in property transactions - As the seller was found guilty of fraudulent misrepresentation, not only was the sale rescinded, but they were also required to refund approximately £26.5 million and pay £4 million in damages, including costs for ruined clothing and stamp duty.
Clarification on definition of 'vermin' - The court defined vermin as “animals or insects that are capable of infesting a residential house and causing a problem to the occupier or the house.” While reference is made to a 'residential house', it seems likely that this definition could also apply to commercial properties. This therefore broadens the scope of what must be disclosed to potential buyers.