Conveyancing: Moths and all – why providing honest answers to pre-contract enquiries is so vitally important

A seller’s failure to disclose a major moth infestation at his London home to the couple who bought it from him has landed him with a hefty bill.

William Woodward-Fisher, the High Court judge decided, had given ‘false’ answers about the state of his home in pre-sale enquiries and failed ‘honestly to disclose’ the ‘serious infestation’ of moths.

As a result, he has been ordered to refund the £32.5 million purchase price and pay £5.1 million in damages as well as the couple’s legal costs after losing a legal battle with them.

This case vividly illustrates the importance of giving honest answers to pre-contract enquiries when selling a property and the issues that can arise if misrepresentation is proven.

What is the background to this moth infestation case?

At the same time as Mr Woodward-Fisher was marketing his property for sale in early 2018, his wife became aware of a problem with clothes moths.

Investigations by specialist pest control companies were arranged which revealed a moth infestation in the high wool-content insulation of the internal walls and ceiling.

Various treatments were carried out with at least two reports stating the need to remove the insulation to eradicate the problem.

However, when a couple became interested in buying the house, Mr Woodward-Fisher failed to disclose the problem in pre-contract enquiries stating that he was not aware of any vermin infestation and had not had ‘the property surveyed for such matters’.

The sale went ahead but within days of the buyers moving into the property, they noticed moths. They spent £300,000-plus on treatments and reports during which time they discovered Mr Woodward-Fisher had himself previously commissioned a report into the infestation.

As a result, alleging fraudulent misrepresentation on the pre-contract enquiry forms, the buyers sought a cancellation of the sale contract between Mr Woodward-Fisher and themselves as well as damages.

What did the court decide in this moth infestation pre-contract enquiry case?

The High Court found in the purchasing couple’s favour after concluding that the seller had fraudulently misrepresented the moth situation in pre-contract enquiries.

Having done so, the court went to great lengths to put the parties back into the position they would have been had the contract and sale of property never happened by ordering that the house was transferred back to the seller.

In effect, this means Mr Woodward-Fisher will have to refund the purchase price of £32.5 million, minus about £6.4m for the five years the buyers spent living in the house, but with interest and further compensation making his total bill much higher.

Judge Mr Justice Fancourt said: “The monies returned should be of the same value that they had in May 2019.”

What exactly are pre-contract enquiries in the conveyancing process?

Pre-contract enquiries on the Law Society’s Property Information Form, familiar to anyone who has ever bought or sold a property, are questions designed to provide more information about a property before contracts are exchanged.

They are a vitally important part of the process particularly because the concept caveat emptor or ‘buyer beware’ is still applicable in house buying.

Whilst a seller has a duty to provide accurate replies, they are actually under no legal obligation to provide information about a property.

If a buyer wants more detail, they must ask for it as part of their due diligence.

What this moth infestation case shows is that if it can be proved later that a seller’s dishonesty on the Property Information Form encouraged a buyer to go ahead, a claim for misrepresentation may stand.

What can we learn from this pre-contract misrepresentation case?

The lesson is clear – that Law Society Property Information form may not seem that important when all you want to do is get your sale moving but care should be taken to fill it in as honestly as you can.

As seller, you are under a duty to give accurate replies to the best of your knowledge as the buyer will be relying upon them.

This is important to avoid the possibility of future problems and litigation. A buyer’s obligation to check does not necessarily top a seller’s obligation to be truthful and accurate, as this moth infestation case shows.

As the court in this case concluded, what a seller must do is provide ‘honest answers to pre-contract enquiries, if they answer them at all’.

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