A group of owners with hotel rooms in Auckland’s $100 million waterfront Sofitel are continuing their battle against businesses owned by the city’s wealthy Pandey family, winning a partial victory for documents to be handed over.
The long-running fight is perhaps the ultimate case of neighbours battling each other because many overseas-based hotel room owners are pitched against Pandey businesses, yet both parties own rooms in the very same building.
The dispute last year went to the Supreme Court but was back before the High Court at Auckland in October in a new application, just ruled on this month.
The Pandeys own commercial units and 89 hotel rooms or suites in the 191-room building.
The mainly overseas owners have the balance.
The plaintiffs - Wong Sun Een and others in the building at 21 Viaduct Harbour Ave - brought the latest action.
Of 191 units, 175 are residential units and 16 are commercial: those parts of the building, other than guest rooms and hallways, that are needed to operate a hotel including reception, back-of-house office, kitchens, restaurant, bar and laundry.
A previous court ruling in 2020 noted plaintiff Een and the 84 others owned 85 of the 175 residential units or rooms, controlling about 45 per cent of the total units there.
The Pandey businesses operate their pool of rooms as the Sofitel Auckland Viaduct Harbour while the plaintiffs who brought the latest case before the court have been running their rooms under the Marsden hotel brand.
The Pandeys have most of the properties while the plaintiffs have a minority of rooms.
Websites for both businesses now say that due to flood damage, the hotels are temporarily closed.
Associate Justice Clive Taylor’s March 7 decision ruled the Pandey businesses must disclose some but not all documents to the plaintiffs, represented by barrister Phil Rice.
The mainly overseas-based plaintiffs claimed in the latest action that the Pandeys established a new hotel within the unit title development without first getting a special resolution from the body corporate granting a licence of the common property.
They claimed that the Pandeys had disregarded their statutory obligations and had unilaterally undertaken a refit of the common property, starting a new hotel in the building without the plaintiffs’ involvement and in a way intended to cause the plaintiffs economic loss.
But the Pandeys disagreed.
The only interaction between the Sofitel Hotel and the common property was for people to pass over that common property from time to time, the Pandey defence said.
Murray Davison, a manager employed by the Pandey group of companies, swore an affidavit against the plaintiff’s discovery applications.
“He deposes that the categories of documents the plaintiffs seek amount effectively to the whole of the operations of the Sofitel Hotel,” the ruling said.
“He says the breadth of the categories and the varied document types included in each category means the task of collating the documents would be burdensome. IT consultants would need to be engaged,” Judge Taylor said.
Davison said some of the documents were commercially sensitive and had information of a competitive nature.
“The plaintiffs operate in competition with the defendants in that they lease their units to another party that operates a hotel in the same building. The plaintiffs have a vested interest in that other party being as profitable as possible,” the ruling noted.
The Pandeys run CP Group - a wealthy hotel and property-owning business originally established by Charles Pandey and now headed by Prakash Pandey.
Pandey Viaduct Quays, Pandey Viaduct Suites, Pandey Viaduct Suites Two, Pandey Viaduct Suites Three and Custom Street Hotel were some of the defendants in the latest case brought by the minority of hotel room owners.
The building opened last decade as a Westin, with its famous no-smoking policies.
In the Supreme Court last year, it was that smaller 81-unit plaintiff group which had victory.
The larger body corporate associated with the Pandeys was denied the opportunity to appeal against the appeal court’s decision to challenge how the business was running.
“The owners of the majority of the units now operate a Sofitel Hotel from the units they control, while the units of the respondents who own 81 of the residential units are not involved in the Sofitel operation.
“The litigation leading to the present case is a part of a wider dispute between the owners of the majority of the units and the respondents,” the Supreme Court ruling noted last year.
A High Court decision said the building was completed in 2007 but in 2020, Prakash Pandey placed Viaduct Quays Hotel into voluntary liquidation due to challenges from the pandemic.
The lease agreement with Accor Hotels which had run the property from 2012 was terminated. The hotel was shut in July 2020 with job losses but then reopened.