In a landmark decision on February 10, 2025, the High Court ruled in favour of Iya Patarkatsishvili and her husband, Dr. Yevhen Hunyak (the Buyers), allowing them to rescind the purchase of their £32.5 million Notting Hill mansion due to a severe moth infestation.
The court found that the Seller, property developer William Woodward-Fisher, had provided false information regarding the property's condition in replies to enquiries and failed to disclose the serious moth infestation as part of the due diligence process on the sale.
The case signifies the importance for sellers to ensure they act with integrity and honesty during the disclosure process on property sales and reinforces that it is not simply a case of ‘caveat emptor’ (buyer beware).
A full copy of the judgment can be found at the National Archives.
Background to the Case
The Seller bought the Victorian property in 2012 for £10.4 million and subsequently invested over a further £10 million on an extensive redevelopment project to extend and refurbish the property to create a seven-bedroom home boasting amenities such as a pool, spa, gym, wine room, library, and cinema.
The Seller and his wife lived in the property for 3 years before they contemplated selling. In 2018 Mrs Woodward-Fisher noticed a problem with clothes moths had caused damage to her expensive clothing. This led to the Seller instructing pest control to investigate the issue and a report revealed that there was lamb’s wool in the insulation in the ceiling voids which may have been partially infected prior to installation. Environ were subsequently instructed to attend the property and carried out various treatments costing in the region of £10,000 but which failed to resolve the issue. Environ produced a report that determined the only solution would be to remove the insulation entirely and replace with synthetic insulation. The Seller failed to do so and instead proceeded to market the property with Knight Frank.
In May 2019, the Buyers acquired the property and shortly after moving in, they discovered a significant moth infestation; the couple claimed that they were having to kill over 100 moths a day resulting in them having to move out of the property in 2020. In March 2020 VGB Construction Limited (‘VGB’) were instructed to carry out works to replace the woollen insulation in the roof voids with synthetic insulation which cost over £270,000. Despite this, the moth issue remained and the couple sought quotes from several local pest control companies to implement a pest prevention programme, one such company being Environ. It subsequently came to light that Environ had previously been employed by the Seller back in 2018 and full disclosure was made of the previous reports issued confirming that the insulation needed to be replaced.
Legal Proceedings
The Buyers sued the Seller for fraudulent misrepresentation, alleging that he had knowingly incorrectly answered three pre-contract enquires and failed to disclose prior moth issues when responding to pre-sale enquiries about potential vermin infestations.
The relevant enquiries were as follows:
2.1
Has the property ever been affected by woodworm, dry rot or other timber infestation or decay; defects in drainage, water pipes, gas pipes or electrical wiring; damp; Subsidence, landslip or heave; any structural building or drainage defect; vermin infestation; asbestos.
The Seller is not aware of any such matters affecting the property since the renovation and extension works were undertaken and completed but has not had the property surveyed for such matters so no warranty can be given in this regard and the buyer must rely on the results of its own survey, inspection and professional advice.
2.2
Please supply a copy of any report concerning any matter referred to in 2.1 above or otherwise concerning the fabric of the property.
Save as may have been disclosed in documentation provided, there are none.
2.3
Is the seller aware of any defects in the property which are not apparent on inspection (due to the presence of furniture, carpets, cupboards etc?)
The seller is not aware of any such defects but has not had the property surveyed for any so no warranty can be given in this regard and the buyer must rely on the results of its own survey, inspection and professional advice.
The Seller disputed that the replies to enquiries were misrepresentations and denied that he knew or suspected they were false. It was further contended that he had addressed previous moth problems and believed they had been resolved before the sale. He also argued that moths did not constitute "vermin" and thus were not relevant to the enquiries.
The couple sought a rescission of the sales contract and a refund of the purchase price, costs and damages totalling £36 million.
Court's Decision
The High Court Judge Mr. Justice Fancourt determined that the Seller had provided false answers regarding the property's condition and had not honestly disclosed the serious infestation which was sufficient to establish fraudulent misrepresentation. The judge noted that while the Seller may not have intentionally deceived the Buyers, he was eager to sell the house and knew that disclosing the infestation could jeopardise the sale.
Consequences of the Ruling
The court ordered the rescission of the sale (i.e. the cancellation of the sales contract), requiring the Seller to refund the £32.5 million purchase price to the Buyers, minus approximately £6 million to account for the Buyer's use of the property since the purchase. Additionally, he was ordered to pay about £4 million in damages related to the infestation, including £15,000 for ruined clothing and £3.7 million for stamp duty, bringing the total payout to around £30 million. All in all a costly lesson for the Seller and a stark warning for sellers across the market about the risks of acting dishonestly or failing to provide full disclosure in replies to enquiries.
Implications for Property Transactions
This ruling underscores the critical importance of full disclosure in property transactions. Sellers are obligated to provide accurate and honest information about a property's condition, including any known infestations or defects and any reports pertaining to them. Failure to do so can result in significant legal and financial consequences, as demonstrated in this case. The decision serves as a cautionary tale for property developers and sellers about the risks of concealing known issues during property sales.
Client Alert 2025-050
