Moths, a mansion house and multi-million pound misrepresentations

On 10 February 2025 the hotly anticipated judgment, regarding alleged misrepresentations in respect of a moth infestation at a £32.5 million Notting Hill mansion house, was handed down (Iya Patarkatsishvili and Yehven Hunyak v William Woodward-Fisher).

Background

The case concerns a property which was purchased from the Defendant, Mr Woodward-Fisher, by the Claimants in May 2019 for the sum of £32.5 million. Despite having not noticed any evidence of a moth infestation during their various visits to the property prior to completion of their purchase, the Claimants argued that within days of moving in they began to be troubled by the presence of moths. The problem with house moths was not, however, something new. The Defendant and his wife had engaged specialists to assist them with moths in the property the previous year. Those specialists had prepared reports and proposed courses of action, one of which was pursued by the Defendant to address and manage the infestation which was understood to have been caused by woollen insulation used by the Defendant in his renovation of the property during 2012 and 2013. Despite this, when responding to three specific pre-sale enquiries concerning whether the property had ever been affected by particular issues including but not limited to a vermin infestation, the Defendant replied that he was not aware of any such issues and that there were no reports in existence which needed to be disclosed.

The Claimants argued that those replies were untrue (i.e, misrepresentations). They also claimed that they were induced to purchase the property as a result of those misrepresentations and that the Defendant had known them to be untrue. Mr Woodward-Fisher defended the claim and denied that he knew or suspected that the replies provided were false, and that the Claimants relied on the replies when proceeding with their purchase.

The court's findings

The Court highlighted eight principal issues that it needed to decide including whether the replies were false, whether the Claimants knew about and/or relied upon them when completing on their purchase, whether the Defendant knew his replies were untrue and whether, in principle, the Claimants were entitled to terminate the contract, a remedy known as rescission.

The Claimants sought recission of the sale contract, repayment of the full purchase price plus interest and damages for the losses that were caused by the alleged misrepresentations. In the alternative, if recission was unavailable or refused, the Claimants sought additional damages reflecting the difference between the value of the house in its current condition (with a moth infestation) and the price paid for it.

The Court held that the Defendant did not honestly believe his replies to two out of the three enquiries, namely that he was aware that there were reports in existence concerning the fabric of the property which were not disclosed to the Claimants, and he knew that there was a hidden defect in the property. He was also reckless about the truth of the third reply. Therefore, the Claimants established their case in fraudulent misrepresentation. Interestingly, the Court found on the facts that an infestation of moths is an infestation of vermin and that the infestation of the insulation was a defect in the property that was not apparent on inspection.

As fraudulent misrepresentation was established, the Claimants were entitled to the rescission of the contract. There were three potential Defences. The first was impossibility because, as things stood, the registered title to the property was in the name of the Claimants and the Court’s assistance would be required to re-register the property back into the name of the Defendant. The Defendant argued that because his financial position was such that he was unable to buy the asset back, practical justice could not be achieved and therefore rescission should not be permitted in the event the Claimants succeeded in their claim. 

To get round this, the Claimants presented a mechanism whereby they would return the ownership of the property to the Defendant, thereby enabling rescission of the contract to take effect, and accept a judgment for the monies due to them with a lien over the property to secure their entitlement.  There was also an allowance made in respect of the value of the benefit of the Claimants’ use of the house since they purchased it.

The second potential Defence to rescission was delay on the part of the Claimants in seeking to terminate the contract because of the moth infestation. The third reason was that the Claimants had affirmed the purchase by carrying on living at the property after having carried out substantial works to the property. The Court found that there was a period of 7.5 months between when the Claimants knew of their right to terminate the contract and electing to do so. The Court considered this was not a sufficient delay to make it unfair to terminate the contract for fraudulent misrepresentation.

Substantial damages were awarded in addition to rescission in an effort to reimburse the Claimants for the losses arising out of their purchase, including their legal fees and the Stamp Duty Land Tax that they paid. It is understood that the exact terms of relief and other consequential matters will be dealt with at a further hearing.

Practical implications of the judgment

The judgment stands as a warning to sellers involved in property transactions and the potential repercussions in the event of a seller making what are later found to be false representations when responding to pre-contract enquiries.

There is an argument that the Court’s findings cut against the principle of caveat emptor (“buyer beware”). However, the Court explained that there remains no duty of disclosure on a seller of real property except to the extent that a failure to disclose would make information which was otherwise given to a buyer misleading and/or incomplete. The Court also noted that what is required in property transactions is the provision of honest answers to pre-contract enquiries.

What is key is that if a seller chooses to answer a pre-contract enquiry, they must do so honestly. Whilst there were particular factual findings which led to the conclusion that moths were vermin for the purposes of pre-contract enquiries, sellers will need to be mindful that any answers provided to pre-contract enquiries must be truthful. The alternative is to refuse to answer an enquiry at all. However, taking such an approach could lead to a buyer pulling out of a transaction entirely.

The Court also reaffirmed the principle that any buyer looking to rescind a contract must to do without delay or risk losing their right to do so.

Given how high the stakes are for Mr Woodward-Fisher, one can only assume that an appeal is likely - his spokesperson is reported to have advised that he is exploring his grounds of appeal¹. For now, the world (and the moths) must wait to see what happens next in this case. 

¹ Financial Times article, “Billionaire’s daughter can hand back £33mn moth-infested mansion, High Court rules”, 10 February 2025