Carpet maker Cavalier Corporation seeks deposit from Kinleith over failed $24.6m deal to sell factory
Carpet maker Cavalier Corporation is seeking a nearly $2.5 million deposit after a deal to sell its South Auckland manufacturing plant fell through last year.
Kinleith Land and Infrastructure Limited, which is owned by investment company Kinleith Continuation and directed by David Henry, had entered into a $24.6m sale and purchase agreement for the factory.
However, Cavalier later said its wholly-owned subsidiary, Cavalier Bremworth, terminated its contract with Kinleith for an alleged failure to pay its deposit under the agreement by deadline.
It later sold the plant to wealthy property investor Ben Cook for $25.5m. Now, Cavalier wants the $2.46m deposit it says Kinleith agreed to pay.
But in the High Court at Auckland today barrister Brian Henry – representing his son’s firm – argued for Cavalier’s statutory demand for the deposit to be set aside, claiming the carpet company had “gone behind our backs” to secure its bigger deal with Cook.
He told Associate High Court Judge Dani Lee Gardiner that Cavalier misrepresented and misled Kinleith.
Henry argued Cavalier’s right to the deposit was voided because it had cancelled its agreement with Kinleith. He said the disagreement needed to be settled at trial.
“When you look at the facts and you look at what’s happened, there are issues that need to go to trial,” Henry added.
Cavalier’s lawyer acting for Bremworth, commercial litigator Kirsten Massey, said her client “absolutely denies” Henry’s allegations of fair trading breaches.
Henry “put a lot of weight” on a statement made by Cavalier to the NZX and comments by its chief executive Paul Alston to the Herald in November last year being factually misleading, Massey said.
“Kinleith is in default under the sale and purchase agreement and now has 12 working days to remedy the default,” Cavalier said in its NZX statement.
“In the meantime, Cavalier will be exploring all options, including the legal remedies that are available to it should Kinleith fail to remedy the default within the stipulated timeframe.
“Despite the disappointing development, Cavalier is confident that it will be able to sell the Auckland property, especially with the buoyant property market and the level of interest expressed by other interested parties.”
Alston told the Herald: “There wasn’t a deposit paid. It was all based on them getting all of the funding and paying all at once … We’ve been given every assurance that they will settle and they have 12 days to do so. If they don’t then we are getting advice to see what our options are.”
However, according to his affidavit, Alston said the statement and comments “accurately reflected my continued optimism at that point” in the deal.
After the nearly two-hour hearing, Associate Judge Gardiner reserved her decision.
In September last year Cavalier reported a net loss after tax of $21.5m, which it blamed on the Covid-19 lockdown.
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