Buyers Beware. Sellers Beware. The lessons to be learnt from Patarkatsishvili and Hunyak -v- Woodward-Fisher.
The principle of “caveat emptor” – let the buyer beware, has long been a guiding tenet in the context of property transactions. The principle places the onus on a buyer of property to find out everything it wants or needs to know about the property, before buying it or becoming committed to buying it.
However, the case of Patarkatsishvili and Hunyak -v- Woodward-Fisher highlights that there is a fine line between the steps a buyer must take to satisfy itself about the property and the information a seller must disclose.
Judgment was given in the case of Patarkatsishvili and Hunyak -v- Woodward-Fisher on 10 February 2025, and it serves as a stark reminder to all those involved in the buying and selling of property of the importance of honesty and diligence during the process.
Background to the case
The property in question is Horbury Villa, Ladbroke Road, London, W11, an early Victorian property in a sought-after residential area between Notting Hill and Notting Hill Gate, in West London.
Mr Woodward-Fisher (the seller) had undertaken extensive redevelopment work to the property including replacing and installing new insulation that contained wool. In 2018 the seller noticed a problem with clothes moths (tineola bisselliella) in Horbury Villa, which had caused damage to expensive clothing. As a result, the seller obtained two quotations from pest control companies, Rentokil and Environ, to deal with the problem. Each company’s quotation for a treatment plan was at a price of around £10,000.
The seller decided to go forward with Enivron, who visited a number of times and did various treatments, but the problem did not go away at the end of the initial treatment plan. Consequently, Environ came back to do more treatments, in addition to producing a report dated 16 May 2018, in which they opined that the cause of the moth problem was an infestation of moths in the natural wool insulation in the house.
Although Environ recommended further treatments, Environ confirmed to the seller that the problem with the clothes moths would not go away unless all insulation was removed and replaced. A further report dated 25 June 2018 confirmed Environ’s conclusion. Whilst the seller negotiated for a further spray treatment to be done, the seller did not remove the insulation.
Whilst this was going on, the house was being marketed for sale.
Ms Patarkatsishvili and Mr Hunyak (the buyers) viewed Horbury Villa 6 or 7 times between the Spring of 2018 and November 2018. The buyers made an offer to buy Horbury Villa for £31,500,000. This was not the price that the seller had been hoping to achieve, but in February 2019, a sale of Horbury Villa for £32,500,000 was agreed, subject to contract.
The seller and buyers engaged in the usual pre-exchange enquiries and surveys and eventually exchanged contracts for the purchase of Horbury Villa on 7 March 2019. Following which, the buyers visited Horbury Villa on at least 2 further occasions before the completion of the purchase took place on 2 May 2019. The buyers saw no clothes moths on any of their visits.
Issue around misrepresentation
The question the High Court was faced with, was whether the seller had misrepresented the buyers when answering three pre-contractual enquiries as to the existence of any vermin infestation or hidden defects in the property.
The High Court also considered this question in combination with whether the seller’s failure to disclosure reports confirming the extent of the clothes moth infestation, within the insulation of Horbury Villa, had misrepresented the buyers.
The standard three pre-contractual enquiries, along with the answers provided by the seller were:
- 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 works 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 buyers must rely on the results of its own survey, inspection and professional advice. - Please supply a copy of any report concerning any matter referred to above or otherwise concerning the fabric of the property.
Save as may have been disclosed, there are none. - 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 such defects, so no warranty can be given in this regard, and the buyers must rely on the results of its own survey, inspection and professional advice.
The high courts decision
The High Court held that the seller had made fraudulent misrepresentations when claiming that he did not know of any vermin infestation or any hidden defect in Horbury Villa, particularly in light of at least two reports (which the seller had argued were not reports, but this was given short shrift) from pest control companies confirming there was a serious moth infestation within Horbury Villa’s insulation (and clothes moths were determined to be vermin).
As a result, the High Court held that the buyers were entitled to rescind the contract, the effect of which is that the contract for the sale of Horbury Villa is set aside, and the buyers and the seller are to be put back into the position in which they were before the contract was made.
Accordingly, the High Court further held that the seller was required to pay back to the buyers £32,500,000 (less around £6,000,000 to recognise the buyers use of the property following the purchase). The buyers are also to receive around £4,000,000 in additional damages pertaining to the clothes moth infestation, including £15,000 for damage to clothing and circa £3,700,000 paid in stamp duty.
Closing thoughts and a warning
This case should serve as a warning to sellers of property seeking to take advantage of the principle of “caveat emptor”. Sellers of property should be conscious of seeking to take advantage of this principle and should disclose all known issues and defects, in light of the High Court’s ruling given the potential ramifications of not doing so i.e. that the transaction can be unravelled and costs awarded to the buyer.
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