It's not every day that a £32.5m judgment is handed down for fraudulent misrepresentations contained in pre-contract enquiries, but on 10 February, that is what happened in the widely publicised case of Patarkatsishvili and another v Woodward-Fisher [2025] EWHC 265 (Ch). Apart from the court’s interesting discussion regarding the principles or misrepresentation and equitable remedies, the case serves as a wake-up call to sellers of any type of property that providing false replies to enquiries could have severe adverse consequences.

Facts

In 2013, the defendant completed extensive renovation works of their luxury home in west London. Subsequently in early 2018, a moth infestation was discovered at the property, embedded within the wool insulation which had formed a large part of the renovation works. Despite various pest control firms being engaged to remove the infestation, it was essentially confirmed in reports that the only solution would be the complete removal of much of the insulation works. Instead of pursuing this option, the defendant seller proceeded with periodic spray treatments and subsequently marketed the property for sale in 2019. 

During the sale process, the pre-contract enquiries included questions asking whether or not the property had ever been affected by vermin infestation, for provision of any reports concerning any vermin infestation, and whether or not the seller was aware of any defects in the property not apparent on inspection. Despite the continuing moth issue, the defendant replied that he was not aware of, and the property had not been surveyed for, such issues (despite reports having been prepared by the aforementioned pest control experts).

The sale proceeded…however, once the buyers discovered the truth, they sought recission, in other words, for the property to be handed back, with a full repayment of the purchase price plus interest and damages. They argued that the replies to enquiries were knowingly untrue (i.e., misrepresentations), and were consequently induced to purchase the property as a result of those misrepresentations. 

Court's findings 

The court found that the defendant's replies to enquiries did amount to misrepresentation. The judge clarified that the definition of "vermin" extended to both animals and insects which are "capable of infecting a residential house and causing a problem to the occupier of the house". This would therefore include moths. 

Despite the claimants themselves not having read the replies to enquiries, it was found they relied on the replies which had been reviewed by both the claimant's agents, wealth managers and legal advisors who proceeded to advise on the basis of the false information. The claimants successfully persuaded the court they would not have purchased the property had they known the truth regarding the moth infestation.

Even though the defendant was, at the time of judgment, not in a position to raise and consequently return the purchase price to the claimants, the court found this was not, in itself a defence to recission.  The court ordered the claimants to return title to the property back to the defendant, subject to a lien or equitable charge in favour of the claimants (offered by the claimants as a form of “counter restitution”). This would allow the defendant time to deal with the moth infestation before selling the property and obtain enough funds to repay the £32.5 million to the claimants (less an amount to take into account the years the claimants lived there), along with other substantial damages.   

Comment 

Whilst the "caveat emptor" (buyer beware) principle holds some weight in property transactions (with the expectation that buyers will conduct surveys, seek legal advice, make their own investigations etc), this does not negate a seller's duty to disclose defects or mislead a buyer with untrue statements in replies to enquiries. The judge made it clear that this case was an extreme one, and it is understood that the defendant may appeal. But it certainly emphasises the need for sellers to take extra care when reviewing and responding to property enquiries so as not to be hit with potentially significant liability down the line.