Buyer beware

Caveat emptor (buyer beware) is one of the oldest principles in English law and can be traced back through hundreds of years of legal precedent. In the case of The King v Doctor Gouge (1615), it was applied as follows: “If one doth disseise me of land, and builds a house upon this land, I shall have a judgment for this, and he is not to go into the Chancery to be relieved for this … for in such cases the rule of law is this, caveat emptor.”

The message was clear: buyers take responsibility for the risks involved in purchasing property.

Caveat emptor

More recently, the limits of this principle were tested in Iya Patarkatsishvili and Yevhen Hunyak v William Woodward-Fisher [2025] EWHC 265 (Ch), also known as the moth case. The basic facts are well known. A mansion in Notting Hill was sold for £32.5 million. After moving in, the buyers discovered a massive moth infestation, which would have required a huge scheme of remedial works to cure. The buyers then sued the seller and sought an order requiring him to take back the property, due to statements made by the seller during the conveyancing process.

The reason why the court found in favour of the buyers – and why the usual principle of caveat emptor did not apply – was because the seller was found to have made false representations to the buyers. When asked whether the property had ever been affected by a “vermin infestation”, the seller answered in the negative. Similarly, he asserted that he had never obtained any reports in relation to vermin infestation at the property, and that he was not aware of any defects that would not have been apparent to the buyers upon inspection. These statements were all held to be false.

A party who has relied on a false representation that was made knowingly (in other words, fraudulently) by a counterparty when entering into a contract, is entitled to seek an order for rescission, nullifying the contract and restoring the parties to the position they were in before the contract was entered into. In the moth case, the court found that the seller had known that the statements he made were untrue – or, at the very least, he made them recklessly and without sufficient regard to their truthfulness.

Unravelling the issues

Various defences were raised by the seller during the 11-day trial. However, the presiding judge gave the seller’s arguments short shrift and found that the buyers were entitled to hand back the property to the seller and that they should in turn receive back the purchase price they had paid, together with damages for any additional losses.

The seller first sought to argue that the buyers were not actually aware of the misrepresentations in question and therefore could not have relied on them when deciding whether to purchase the property. However, the court held that the buyers’ conveyancing team had read and considered the relevant statements and advised their clients that they could safely proceed with the transaction, and that this was sufficient to establish reliance.

Then the seller tried to argue that the buyers had unduly delayed bringing their claim for rescission and therefore were not entitled to the remedy. However, the court held that although delay was a potential bar to rescission, the buyers had only been aware of their right to rescind for a period of 7.5 months before commencing court proceedings, which, in the circumstances, did not make rescission unjust.

The seller also attempted to argue that the buyers had affirmed the contract by remaining in the property after they had become aware of their right to rescind. However, the court held that the buyers could not have been expected to move out of the property merely to preserve their right to bring a claim, and that this was very different to a situation where a party was rejecting defective goods, which could easily be handed back.

Finally, the seller argued that the contract should not be rescinded because it would be impossible to restore the parties to their original positions. The court spent a great deal of time considering this argument but ultimately found in favour of the buyers. In particular, the court was not persuaded by the seller’s argument that he was unable to repay the purchase price. Instead, the court ruled that the property should be returned to the seller, to complete any necessary works before attempting another sale, with the buyers being granted a lien over the property in the meantime to secure the sums they were owed.

Lessons in the wings

This case highlights the importance of making sure that clients are aware of the consequences of making false representations during the conveyancing process. It also provides comfort to any purchasers of property who think they may have been induced into entering a contract based on false promises or misleading information.

So when acting for clients who are selling property, take care when advising them on the process of replying to enquiries. Similarly, when acting for buyers, carefully scrutinise any replies that are received, and where information appears to be incomplete – or where the buyer has any specific concerns about a property – ensure that you make further enquiries.

Of course, each case will turn on its individual facts – particularly, the precise wording of the questions put to a seller and the responses they give. However, the court’s approach when considering the representations in the moth case offers helpful guidance on how to approach similar situations in the future:

• The seller suggested that he did not consider moths to fall within the definition of “vermin”, which was the specific term used in the buyers’ enquiries. To ascertain the exact meaning of “vermin”, the court referred to various dictionary definitions and found that moths were likely to have been caught by the term. A commonsense reading of the word also suggests that a major moth infestation would probably be covered by “vermin” and the seller should, at least, have checked this response with his solicitor.
• The court gave detailed consideration to whether the seller had obtained any “reports” about the fabric of the property. Again, the court gave this expression a fairly broad interpretation, noting that it could include relatively informal written information relating to the property’s condition, history and repairs, as well as more detailed formal documents such as professional assessments or technical reports.
• The court considered whether the seller was right to state he was unaware of any “defects” in the property that would not have been visible to the buyers upon inspection. The seller attempted to argue that “defects” in this context meant only structural issues. This interpretation would have meant that the problem with the wool insulation – which led to the moth infestation – was not included. However, again, the court preferred the wider interpretation of the question, and held that the problematic insulation was a non-visible defect that the seller should have alerted the buyers to.

After the dust settles

With hindsight, it is easy to be critical of the seller, given his knowledge of the extent of the issues with the property, and to have sympathy for the buyers who faced such considerable disruption. But for solicitors, the moth case is a stark reminder that enquiries and replies are not just box-ticking exercises: they are a critical part of the conveyancing process and must be treated with utmost care and accuracy. Buyers need to feel confident in the advice they receive, while sellers must appreciate the risks of failing to disclose major issues when asked.

Attempting to answer a buyer’s specific questions in such a way that favours the seller’s position – and in doing so stretching the natural or most likely interpretation of the words used by the buyer – is rarely in a seller’s best interest. As the moth case illustrates, vague responses, narrow interpretations or omissions are likely to expose clients to serious legal and financial consequences.