Dinkum Donuts owner Shane Ayers said he was seeking $80,000 from the Brocklebank Family Trust for failing to provide a structurally sound premises for the full term of a lease.
The reimbursement was for lost wages and the cost of finding alternative premises.
In August 2011, Mr Ayers had a year remaining on a two-year lease for the doughnut shop in the building on the corner of King Edward St and Carey Ave.
Arthur Stone, of Arthur Stone Builder Ltd, said the trust and the Dunedin City Council contracted his company to paint the building's facade.
The painters discovered the facade had detached and structural engineers deemed the building unsafe.
The parapet had pulled away from the roof, Mr Stone said.
''Which left a gap the size of a fist.''
The structural damage could have been from a one-off event, such as the 2010 Canterbury earthquake, or a long-term lack of maintenance. Mr Ayers said he had to stop trading a week later when the building was closed.
He had business interruption insurance but a payout was declined due to a lack of maintenance of the building.
A year after closing, Mr Ayers opened another doughnut shop in nearby premises - which had more expensive rent.
''I had to start from scratch, basically.''
Mr Ayers said if the trust had helped him find another shop to lease and start trading again, he would not have involved lawyers.
Mr Ayers' wife, Jo, said they could take the trust to court but it was an expensive process and they still expected a fair deal.
''We were good tenants and we were there for nearly five years and religiously paid our rent every week - no problems - and then it's a slap in the face.''
The trust, in a letter through its solicitor, Stuart Anderson at Race and Douglas, said the gap was not a failure to provide long-term maintenance.
''There was a single event upon a date which could not be determined. There was no gradual deterioration, as there would have been more damage ... the DCC intervened to frustrate the lease.''
Mr Anderson, when contacted, could not provide details on how the council intervened.
Council chief building control officer Neil McLeod said the council's building services had never condemned the building and had not intervened to frustrate the lease.
''What happened was, while the owners of the building were carrying out some maintenance work, the owner discovered the building was quite poorly maintained and in a shoddy condition and they employed engineers and, as a result of that discovery, applied to us for a demolition consent.''
The trust had decided to demolish and rebuild, rather than repair the building, he said.
''They had found some issues with the building and they chose a solution for it. At no stage did the council condemn the building.''
Steve Brocklebank, the son of trustee Norma Brocklebank, who owns the building, said the trust's insurance company did not pay out either.
''They believed it was gradual decline and deterioration but, having said that, I find that hard to believe because the gap between the facade and the roof was quite significant.''
The damage could have been gradual deterioration, but was more likely a one-off event because a gradual gap would have exposed the tenants to the weather and the tenants never complained.
''We've never refused to repair anything and there's never been any indication there was a problem.''
The damage to the building had frustrated the lease, he said.
