Moths, mansions and misrepresentation

The recent (February 2025) High Court decision in the case of  Iya Patarkatsishvili and Yevhen Hunyak v William Woodward-Fisher brought together an interesting and unlikely combination – a mansion in an upmarket part of London, clothes moths and an attempt to unravel the sale of £32.5 million property on the grounds of fraudulent misrepresentation.

In this article, Mark Turner, Partner in our Dispute Resolution Team, explores this high-profile property dispute and what it means for buyers, sellers and their legal advisers.

Background

The property in question, Horbury Villa, was an unusually large and attractive property, in a sought-after residential area between Notting Hill and Notting Hill Gate, in West London. The seller, Mr Woodward-Fisher, had undertaken extensive renovations, including the  installation of natural wool insulation. Unfortunately for him, the insulation proved to be prime breeding ground for clothes moths.

By early 2018, the property was suffering from an infestation and various attempts to eradicate the moths had proved to be unsuccessful.

The following year, Mr Woodward-Fisher listed the property for sale. It was bought by Ms Patarkatsishvili and Dr Hunyak for £32.5 million.

As part of the usual purchase process, Mr Woodward-Fisher completed the standard pre-contract enquiries, in which he:

• Confirmed he was not aware of any vermin infestations at the property.
• Stated there were no reports of any such infestations.
• Declared he was not aware of any defects in the property.

As a result, when the purchase was completed, the buyers were completely unaware of the clothes moth infestation. However, within days of moving in, problems very quickly became apparent. Holes were discovered in expensive clothing and in his witness evidence Dr Hunyak referenced finding them in his wine glass.

By September 2020, the buyers began to suspect that the replies to the pre-contract enquiries provided by Mr Woodward-Fisher may not have been truthful. They instructed solicitors and in May 2021 High Court proceedings were issued against Mr Woodward-Fisher alleging fraudulent misrepresentation.

What is Misrepresentation?

At the core of the buyers’ claim was that Mr Woodward-Fisher had knowingly (i.e. fraudulently) provided answers to the pre-contract enquiries which he knew to be untrue, and that the buyers had relied on those answers in deciding to proceed with the purchase of the property.

Misrepresentation can take different forms – innocent, negligent and fraudulent but they all share the same common elements:

• a pre-contractual statement of fact is made;
• to a party intending to enter a contract; and
• the statement is relied on in deciding to enter into enter the contract, and
• the statement is false.

In this case, the judge, Mr Justice Fancourt, found that three of Mr Woodward-Fisher’s replies to pre-contract enquiries amounted to false representations. The judge concluded that Mr Woodward-Fisher did not honestly believe the replies given to two of the enquiries, and, in relation to the third, he was found to have acted recklessly.

In this context, “reckless” means that an Mr Woodward-Fisher either did not know or did not care whether the statement was true or false, or he deliberately took the risk that it could be false. Either way, it was found that he did not honestly believe what he was saying.

The usual remedy for fraudulent misrepresentation is damages – a sum of money to compensate the innocent party for the loss suffered as a result of the misrepresentation. However, in this instance, the judge decided to exercise his discretion to order recission of the contract for sale.

The effect of rescission is to unravel the contract. In this particular case, the court ordered that Ms Patarkatsishvili and Mr Hunyak were entitled to hand the property back to Mr Woodward-Fisher and receive a full refund of the purchase price of £32.5 million, with a lien (a type of legal charge) over the property remaining in place until the full purchase price had been repaid. Substantial damages were also awarded for various costs incurred due to the misrepresentation.

What does this case mean for sellers?

Obviously, the vast majority of property transactions are for much more modestly-valued properties where there is no need to worry about moths infesting natural wool insulation. However, the legal principles at the heart of this case apply every bit as much to the purchase of a more traditional three bedroom semi as they do to a multimillion pound mansion in a swanky London suburb.

The key takeaway is simple: sellers must provide honest answers to pre-contract enquiries. As Mr Justice Fancourt observed:

“There is no duty of disclosure on a seller of real property (caveat emptor), except to the extent that a failure to disclose would make information otherwise given to a buyer misleading or incomplete. What a seller does have to do is provide honest answers to pre-contract enquiries, if they answer them at all.”

Whilst the well-known principle of caveat emptor – “let the buyer beware” – still applies, sellers must be aware of the potential consequences of half-truths or outright dishonesty when disclosing information to prospective purchasers. If a seller is aware of an issue, they must disclose it if asked directly.

If you are unsure whether a given issue needs to be disclosed, speak to your conveyancer and let them advise you on what needs to be set out in replies.

It is also important to read all of the pre-contract enquiries together, rather than taking each in isolation. A question in one section of the enquiries may impact on one in another section and partial or dishonest answers may filter through the other replies you provide, as happened in this case.

Advice for buyers

Buyers should always read and consider a seller’s replies carefully. A seller is not under an obligation to volunteer every single piece of information – there are only required to reply honestly to the questions that are asked. A buyer should still be careful to investigate anything they are uncertain about in the property.

If further specific enquiries arise from replies to the standard enquiries, they should be raised before deciding whether to proceed to exchange of contracts, when you become committed to complete the purchase.

How can Butcher & Barlow assist?

If you need advice on misrepresentation in property transactions or commercial contracts, please contact Mark Turner, partner in our Dispute Resolution Team on 01606 334309 or at mturner@butcher-barlow.co.uk.

Whether you are buying or selling a property, or facing a dispute over a property, our experienced Dispute Resolution and Property Teams are here to guide you through every stage of the process. From ensuring you meet your disclosure obligations as a seller to helping buyers protect themselves from misrepresentation, we can offer practical legal advice tailored to your situation. Get in touch today to find out how we can help.