In Patarkatsishvili & Hunyak v. Woodward-Fisher [2025] EWHC 265 (Ch), failure to disclose in replies to enquiries details of a moth infestation of internal wall insulation amounted to fraudulent misrepresentations entitling the buyers to rescission.

Background

The following is a very high-level summary of the facts:

• The seller had undertaken extensive works to the property in 2012/13. The works included the installation of wool-based insulation in the internal walls and ceiling voids.
• In 2018, the seller's wife noticed a problem with clothes moths and engaged the services of a pest control company. Later that year, the company issued two reports opining that the cause of the problem was a moth infestation of the wool-based insulation and advising that the only way to eradicate the problem would be to remove that insulation. Around the same time, the property was being discretely marketed for sale.
• In 2019, the seller provided replies to pre-contract enquiries to the buyers' solicitor – the relevant replies are set out below. Subsequently, the buyers bought the property for £32.5 million. Within days of moving in, the buyers noticed a problem with moths and engaged their own pest control experts.
• In 2020, the buyers were advised by their pest control experts that the problem was a moth infestation of the insulation. Works were undertaken to locate and remove the insulation which ultimately eased but did not entirely eradicate the problem. Later that year, the buyers discovered that the seller had engaged a pest control company to undertake moth treatment work in 2018.
• In 2021, the buyers' lawyers issued a letter of claim for fraudulent misrepresentation.

The relevant replies to enquiries

2.1 Has the property ever been affected by …. vermin infestation …

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 the 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 decision

A claim for misrepresentation must establish that there has been a misrepresentation by one party which has induced another party to enter a contract as a result of which they have suffered loss. To be a fraudulent misrepresentation, the party making the false representation must have done so knowingly, without belief in its truth or recklessly careless as to whether it is true or false.

Based on the particular facts of the case, the High Court held that the replies amounted to fraudulent misrepresentations entitling the buyers to rescind the contract and claim damages.

Takeaway points

While each case will turn on its own particular facts, the following points arising from this case are of note:

• Enquiries should not be read restrictively but should be approached with context in mind. For example, the reference in enquiry 2.1 to "vermin" was not to be determined solely by reference to dictionary definitions but from the contextual viewpoint that "the purpose of the enquiry was clearly to discover whether there had at any time been, or there is, a problem with an infestation of creatures that had damaged or might damage the property, could affect adversely enjoyment of the property, or give rise to expense to eradicate them". Taken from this viewpoint, an infestation of moths was an infestation of vermin.
• There was nothing to warrant restricting the reference in enquiry 2.3 to "defects in the property" to structural defects or to defects hidden by chattels. An infestation of the insulation was a defect that was not apparent on inspection and so should have been disclosed.
• Qualifying wording such as "no warranty can be given in this regard and the buyer must rely on the results of its own survey, inspection and professional advice" will not cure, or absolve the party providing replies from, any misrepresentation arising from the prior wording that "the seller is not aware". That this is a well-established point is evident from the fact that it formed no part of the considered judgment in this case. If a party providing replies intends that the buyer should rely upon its own investigations, it should not proffer a response predicated by a statement as to its own awareness of a point.
• The fact that the buyers in this case had not personally read the replies did not defeat their claim. Both their lawyers and their agent had read them on their behalf, with the agent communicating to one of the buyers that there were no red flags nor reasons not to proceed with the purchase.
• The court confirmed that while there may be bars to rescission (the remedy of unravelling the sale of the property to restore the parties to their former positions), this did not mean that, in the absence of such bars, the court retained any residual discretion that it could exercise on the basis it would be fairer to leave the buyers to recover damages. One possible bar to rescission is where the claimant (i.e. the buyers in this case) could not offer counter restitution to the seller – that was not the case here as the buyers could (with the court's help) transfer legal and beneficial ownership of the property back to the seller. The difficulties the seller faced in repaying the purchase price to the buyers was not a bar to rescission. Instead, the practical approach in this case was to transfer the property back to the seller, for the seller to sell it and then use the proceeds to repay the buyers – the buyers being protected in the interim by an equitable lien over the property.
• The decision is a reminder that the consequences of a fraudulent misrepresentation are severe. The buyers were entitled to rescission (i.e. the unravelling of the sale of the property), interest on the purchase price plus damages for losses arising from the transaction, including consequential losses "without any limit on the basis of foreseeability or loss" provided they were causally connected with the deceit.