Lessons in Property Disputes: A Legal Examination of the £32.5M Mansion Case

Iya Patarkatsishvili and Yevhen Hunyak v William Woodward-Fisher

Introduction              

Judgement has been handed down in the case of Iya Patarkatsishvili and Yevhen Hunyak (the Claimants) v William Woodward-Fisher (the Defendant) by a judge in the High Court on the 10 February 2025. The case concerned whether there was a misrepresentation in the Defendant’s replies to pre-contract enquiries in the sale of a property for £32,500,000.

Background

• The property was substantially renovated by the Defendant during his ownership where he resided prior to the decision to sell the property.
• In early 2018, the Defendant’s partner noticed a problem with moths within the house that had damaged expensive clothing.
• The Defendant obtained quotes from two companies, one of which they employed for a treatment plan that commenced 5 March 2018. None of the initial treatments were successful.
• The company returned and produced a report dated 15 May 2018 that stated the cause of the moths is likely to be an infestation within the natural wall insulation used at the property and that it would not be resolved until this was removed.
• Sale of the property was agreed in February 2019 for £32,500,000 to the Claimants. The conveyancing process proceeded as normal  with exchange of contracts taking place 7 March 2019 and completion on the 2 May 2019.
• The Claimant made numerous visits to the property prior to their offer to purchase and throughout the conveyancing process. They saw no moths during their visit.
• Within days of moving in, the claimants noticed numerous moths in the property and  commissioned treatment at the property which resulted in a report that recorded a carpet moth infestation. Over the next few months, the Claimants employed several companies to deal with the moths at the property.
• In September 2020, the claimants approached a company that advised them that they had carried out treatment at the property prior to their ownership.
• The company provided the Claimant copies of the reports that they had shared with the Defendant, dated May and June 2018 in which they had identified the problem with the moth infestation as being the wool insulation in the property.
• A claim was issued December 2021.

Summary

The Claimants alleged that the Defendant falsely answered their pre-contract enquiries and concealed a moth infestation of the insulation in the house. This induced the Claimants to buy the property for £32,500,000.

The Claimants sought an order for repayment of the purchase price with interest, damages for losses to which they had incurred in buying the house and trying to remedy the infestation.

There were three replies to the pre-contract enquiries that were found to be false. These were:

1. The Defendant did not know of any vermin infestation in the house;
2. Had not received any report on vermin infestation or on the fabric on the property, other than what had already been disclosed by the Defendant; and
3. That the Defendant did not know of any hidden defect in the property.

The Defendant disputed that any misrepresentations were made and that the Claimants had not relied upon the replies to the pre-contract enquiries. The Defendant argued that the Claimants were barred from recission of the contract due to the fact that they had excessively delayed bringing their claim.

While the Claimants did not have direct knowledge of those replies, their solicitors did. The replies were provided along with a report on title and the Claimants were advised that there were no red flags and it was fine to proceed with the purchase. Therefore, the Claimants did rely upon the replies in buying the house.

The defendant had put forward three defences: delay, affirmation, and impossibility of restitution. The defences were based on the following:

1. The Defendant contended that Claimants had known of the claim for misrepresentation from June 2020 or earlier and had not elected to rescind until May 2021, therefore causing delay;
2. By  continuing to live in the property and carry out substantial works, improvements and renovations the Claimants had affirmed their purchase;
3. Restitution was argued to have been impossible based on the fact the Defendant was unable to repay the purchase price as the Claimants had altered the property in such a way that it was not possible for them to give back the thing that he had sold them.

Delay:

The claim was delayed from October 2020 until May 2021, before the Claimants had made the election to rescind. The court considered that this was not sufficient based on the following:

• The Claimants had not excessively delayed in bringing their claim;
• The length of the delay had no particular consequence adversely or in favour of either party;
• It was understandable the Claimants wanted to consider their rights and options before pursuing a claim for misrepresentation;
• The Claimants sought advice from numerous experts before making their decisions. Such advice takes time.

Affirmation:

The defence of affirmation, amounts to, the Claimants having been taken to have made an irrevocable choice to treat the contract of sale as remaining in place through their actions or lack there off. The Defendant had argued that by the Claimants continuing to live in the property and carry out works, they had affirmed the transfer of legal title and contract.

Restitution:

The Defendant claimed he was not able to repay the purchase price so the title could not be re-transferred.

However, this was not what the Claimants were seeking; they were not proposing to sell the property back but to return the title with the protection of a lien or equitable charge in favour of the Claimants. This results in the effect of a legal mortgage, that will be redeemed when the Defendant sells the property. Rescission was not barred.

Held

The Claimants were awarded damages, including the stamp duty land tax and other costs paid on the purchase of the house and all costs incurred in seeking to eliminate the infestation.

The Claimants right to repayment will be protected by an equitable lien on the house in the meantime.

The Defendant was held to have known there was or may have been a serious infestation of moths requiring removal of the natural insulation in the house. The Defendant had received and read at least two reports from pest control companies dated 16 May 2018 and 25 June 2018, which informed his wife of the infestation and the need to remove the infested insulation.

The exact costs will be determined at a later hearing.

Practical Considerations / Conclusion

While this was a residential matter, it clearly outlines the importance of disclosure during the purchase and sale of a property, whether it is residential or commercial. A seller should ensure that the information provided in the pre-contract enquiries is clear, accurate, and reflects the position of the property and any potential issues during their ownership.

If unsure of whether something is relevant or must be provided to the buyer, you should raise it directly with your solicitor, however in any event the best course of action is to provide the buyer with all the information so that they can make an informed decision.

The court’s decision to rescind the contract shows the serious repercussions of misrepresentation being found in the conveyancing process.

If you have any questions and/or would like advice in relation to commercial property, please contact Tom Jones or your usual Dixcart contact on: hello@dixcartuk.com.