A wealthy couple, Dr Hunyak and Ms Patarkatsishvili, are trying to get their money back on the purchase of a £32.5m London home in 2019. Ms Patarkatsishvili is the daughter of a well-known Georgian businessman, Arkadiy (“Badri”) Patarkatsishvili, part of Boris Berezovsky’s circle, whose wealth was at one time estimated at USD12bn, and whose death in England in 2008 resulted in colourful and high-value disputes about his estate in the High Court in London. She and her husband are suing a property seller over a moth infestation at their family home in Notting Hill. 

Anyone who has had a moth problem can sympathise with the couple, who say they found moths in the food, in their clothes, and even floating in their wine – but this infestation is unusual as being linked to the fabric of the house: it is said that the moths breed in the sustainable woollen insulation behind the walls.

Dr Hunyak and Ms Patarkatsishvili are alleging fraudulent misrepresentation, i.e. that the seller knowingly misled them in advance of the sale as to whether the house had been subject to a pest infestation. 

A claim for misrepresentation (innocent, negligent or fraudulent) is distinct from a claim for breach of contract, though it arises from a dispute between contracting parties. It is based on statements of fact made before the contract, which are not included in the contract itself as warranties, but on which the buyer relied in entering into the contract, and which were false at the time they were made. The remedies available are either rescission of the contract (in this case, a full refund and return of the property – unusual in a real estate context) or damages (in this case, the cost of dealing with the moth problem, as well as the damage the moths have caused, e.g. to the couple’s expensive clothes). 

As anyone who has bought a home in the UK knows, the sale process includes a long list of pre-contract enquiries about the property from the buyer. These enquiries are typically based on standard forms, but the forms can be supplemented, particularly in relation to high-value properties. In this case, it appears that an enquiry was specifically made about vermin infestation, and the seller replied that he was not aware of any.

It is common for parties to try to exclude or limit misrepresentation claims as part of the contract, or at least to limit the availability of rescission. Such attempts may not always be effective, depending on the circumstances. In any event, liability for a party’s own fraudulent misrepresentation (a relevant statement of fact made either without believing it to be true, or recklessly as to its truth) cannot lawfully be excluded (for example, see our previous article: Can parties exclude or limit their own liability for fraud?). In this case, the seller claims the misrepresentation was not fraudulent, since he believed, on the advice of his solicitor, that moths are not “vermin”.

Claims for misrepresentation can of course occur in any context, not just in the context of real estate. They need to be explored in the context of any dispute between contracting parties where one considers it may never have entered into the contract but for a false statement of fact by the other beforehand. Representations can also be implied, so the whole course of pre-contract discussions, not only express statements, is relevant. Each case is, of course, very dependent on its own facts. We at Stevens & Bolton have deep experience of misrepresentation claims in a wide range of contracts, including sale of shares, manufacturing, and many more - so do get in touch if you are seeking support with a claim.