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TARGET HOLDINGS V. REDFERNS
FACTS Prior to 15 May 1989 two adjoining plots of freehold land in Birmingham, together known as 60-64, Great Hampton Street, Hockley ('the property') were owned by Mirage Properties Ltd. ('Mirage'). On 15 May 1989 Mirage agreed, subject to contract, to sell the property to Crowngate Developments Ltd. ('Crowngate') at a price of PS775,000. A firm of solicitors, the defendants Redferns, acted as Crowngate's solicitors. On 9 June 1989 the plaintiff, Target Holdings Ltd. ('Target'), received two completed loan application forms signed by a Mr. Kohli on behalf of Crowngate. The applications were for loans totalling PS1,706,000 and stated the purchase price of the property to be PS2m. The application gave no particulars of the vendor. Target was never told that Crowngate had agreed to buy the property for PS775,000. The application was supported by a professional valuation of the property at PS2m. made by the second defendant, Alexander Stevens and Co. Ltd. Crowngate's scheme was that Mirage would sell the property to a Jersey company, Panther Ltd. ('Panther'), for PS775,000; Panther would then sell it to an English company, Kohli & Co. Ltd. ('Kohli and Co.') for PS1,250,000; and Kohli & Co. was then to sell the property on to Crowngate for PS2m., being the price at which Target believed Crowngate was purchasing the property. On 23 June 1989 Referns were instructed by Target to act for them. On 28 June 1989 Target transferred PS1,525,000 to Redferns without giving any express instructions to Redferns as to its release. It is common ground that Redferns had implied authority to pay the money to or to the order of Crowngate when the property had been conveyed to Crowngate and Crowngate had executed charges in Target's favour. On 29 June, without seeking Target's consent, Mr. Bundy transferred PS1,250,000 (namely the sum payable on the purchase by Kohli & Co. from Panther) to Panther, the bank account of which was controlled by its directors. Contracts for the sale of the property to Panther were signed by Mirage on 30 June, on which date Mirage also executed transfers to Panther. Also on that date Mr. Bundy instructed the directors of Reads to pay from Panther's bank account sums totalling
PS1,072,787.42, of which the sum of PS772,787.42 was to be paid to Mirage (being the sum due on completion. The contracts of sale to Kohli & Co. and to Crowngate were probably signed by those companies by 5 July. The legal charge of
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