Moths, Mansions and Multi-Million Pound Lies
A Luxury Sale, a Hidden Infestation
On 10 February 2025, the High Court delivered a gripping judgment in the case of Iya Patarkatsishvili and Yehven Hunyak v William Woodward-Fisher, a legal saga that captivated many due to its extraordinary circumstances and eye-watering financial implications. At the centre of this situation was a stunning £32.5 million mansion in the upscale neighbourhood of Notting Hill, but lurking within its walls was an unexpected menace: a moth infestation. What began as a dream home for the buyers quickly spiralled into a nightmare, leading to misconceptions, legal battles, and a substantial damages award that sent shockwaves through the property litigation sector.
The Claimants, eager to invest in their future, purchased the property in May 2019, as most they were enchanted by its beauty and potential. During multiple viewings, they noted no sign of any pest activity; everything appeared perfect. However, shortly after they moved in, a moth infestation began to rear its head. Unbeknownst to them, the Defendant had previously engaged pest control specialists, who traced the problem to wool insulation used during a renovation in 2012-2013. Reports had been drafted and a treatment strategy was only partially executed.
Despite this troubling knowledge, the Defendant answered “no” to three crucial pre-contract enquiries about past infestations, hidden defects, and undiscovered reports. The Claimants contended that these misrepresentations were pivotal in their decision to finalise the purchase. The Defendant defended his actions by asserting he had acted in good faith, denying any dishonesty.
Fraudulent Misrepresentation and the Right to Rescind
The high Court had its work cut out, examining an array of critical questions: Were the Defendant’s statements false? Did the Claimants rely upon them? Was There any dishonesty or recklessness involved? Ultimately, the Court determined that the Defendant had acted both dishonestly and recklessly, leading to a finding of fraudulent misrepresentation.
Moreover, the Court deemed the moth infestation a form of “vermin”, requiring disclosure. The insulation problem was classified as a latent defect, undetectable during a standard inspection. This pivotal ruling enabled the Claimants to rescind the contract effectively nullifying the sale and paving the way for them to recover the full purchase price along with interest and damages.
Defences Dismissed
The Defendant, in an attempt to stave off the consequences of his misrepresentation, presented three defences against the rescission. He claimed that rescission was infeasible due to the transfer of title and his inability to repurchase the property. Yet, the Claimants offered an inventive solution – establishing a workable mechanism to transfer the title back, securing a lien to ensure repayment.
Next, the Defendant cited delay, arguing that the Claimants took too long – 7.5 months – to seek rescission. However, the Court found this period reasonable, especially given the context of the Defendant’s fraudulent conduct. Lastly, the Defendant alleged the Claimants had affirmed the contract by continuing to occupy the property and undertake renovations. The Court dismissed this claim, ruling that such actions did not equate to a confirmation of the contract.
As a result, the Court awarded substantial damages to cover legal fees, Stamp Duty Land Tax, and various consequential losses, with further relief to be determined in a subsequent hearing.
Practical Lessons for Sellers and Buyers
This case sends a resounding message to property sellers: misrepresentations, whether intentional or careless, are subject to intense scrutiny. While sellers are not obliged to disclose information, any answers provided during pre-contract enquiries, must be honest and comprehensive. Misleading responses – especially in high-value transactions – can lead to severe legal and financial repercussions.
Although the ruling may seem to challenge the principle of “caveat emptor” (“buyer beware”), it firmly re-establishes that a seller’s dishonesty trumps this doctrine. When fraudulent misrepresentation is proven, buyers are entitled to be restored to their original position, irrespective of inspection rights or complexity of the contract.
This ruling also underlines the importance of timely action for buyers seeking rescission. Any delay or conduct implying acceptance of the contract terms could jeopardise their ability to unwind the agreement. In this case, the Claimants’ timeline was acceptable, but each individual circumstance dictates each case’s outcome.
Conclusion
This landmark ruling serves as a potent reminder for sellers to tread carefully when responding to enquiries, particularly in an era where due diligence is both rigorous and essential. For buyers, the decision reinforces the commitment of that English law to protect against deceitful practices, even within framework that emphasises buyer beware. The repercussions of this case will certainly echo in the real estate section for a while.
If you wish to discuss any of the above, please contact our Dispute Resolution Team below or call us on 01702 338338.
