Auckland's Stamford Plaza is seeking $270,000 from a restaurant which has operated in its premises for many years but shut down in the last few weeks.
Marika Eastwick-Field, a Russell McVeagh partner representing the hotel, wrote to the lawyer for Thai Fusion trading as Grasshopper Bar and Restaurant. She sought payment of rent arrears, damages, costs and expenses.
But Bow Manoonpong and Eduardo Viterbo of the restaurant say their business was "forced out" when the hotel became one of the state's managed isolation quarantine facilities.
They had operated Grasshopper since 2007 and it had traded successfully through many ups and downs, they said.
Construction of the $4.4 billion City Rail Link had caused four years of disruption, although they "managed to survive."
But Covid and the hotel quarantining travellers meant the end.
"We have been forced out of business as a result of Stamford Plaza Hotel's decision to use the hotel as an MIQ facility. There was no communication or consultation from Stamford Hotel or the Ministry of Business, Innovation and Employment prior to the decision, considering we were located inside the hotel as a tenant," the two said.
"Our sales took a dive from a few thousands of dollars a day to $16 a day," the two said.
"We could not survive as customers stopped and also for fear of our staff. We closed the restaurant with six months of the lease remaining," they said.
But Stamford's lawyer Eastwick-Field said the $270,000 was owed: $154,800 was outstanding rent arrears to October this year, $77,000 lost rental, $31,000 for legal and other costs and $6000 for default interest on the arrears.
She said it was wrong to characterise Stamford's decision to operate as a managed isolation facility as self-interest. That move was made to avoid significant job losses that would have followed.
As well, the restaurant was not required to share any access or spaces with guests undergoing the two weeks of isolation. The legal fees were not inappropriate.
Tarun Abraham of the Stamford sent the Herald a statement from the landlord Stamford Hotels and Resorts.
This year had been challenging for many organisations and the landlord regretted that they have had no option but to take legal action against Thai Fusion for breach of obligations of its lease, that said.
"The landlords have at all times prior to and after the commencement of legal proceedings acted reasonably and appropriately, and will continue to do so whilst this matter is resolved through the courts," the statement said, citing Clement Ong of the business as a contact person.
The landlords had helped the restaurant, including agreeing to requests not to impose rent rises and granting a rent reduction.
"In fact, parties were already in discussions on rent relief that the landlords had offered, before Thai Fusion unilaterally terminated the lease," the statement said.
The restaurant was asked to provide catered meals to isolation guests, to supplement its income.
"The landlords are of the view that Thai Fusion has been opportunistic. [They were] already facing challenges in its business even before Stamford Plaza Auckland was appointed as an isolation facility and had prior to June/July 2020 requested to surrender the lease on more than one occasion," he said.
"By approaching the media, Thai Fusion is attempting to bring pressure to bear on the landlords, in the hope of avoiding their obligations under the lease," the statement said.
Jeff Walters, Thai Fusion's lawyer, said his client remained confident it was entitled to relief because Stamford had breached the duty it had to the tenant of quiet enjoyment.
It had become a managed isolation facility yet the restaurant was in the same building, he told the Russell McVeagh lawyer.
He disputed that there was no shared access with Stamford staff and the health and safety of the property was clearly a material concern to the restaurant as well as apartment owners in the building.