Hopetoun Tea Rooms ex-owners and Block Arcade in fresh war of words

An ugly dispute between The Block Arcade and the Hopetoun Tea Rooms’ ex-owners has dragged on, as a new website attracted threats of defamation action.

Hopetoun Tea Room. Picture: David Crosling

The owner of The Block Arcade is threatening defamation action over a website which purports to tell the “truth” about a long-running conflict that saw the Hopetoun Tea Rooms exit the opulent arcade.

A former co-owner of the Hopetoun Tea Rooms has also been hit with at least two intervention orders as the drawn-out dispute becomes increasingly bitter.

The tensions have also generated claims former Hopetoun Tea Rooms owners Kon and Kelly Koutoumanos are trying to sabotage the new cake shop that has gone into The Block Arcade by posting fake online reviews about it.

That business is called the Block Arcade Tea Rooms 1892 but heritage protection rules means the Hopetoun Tea Rooms signage remains.

The Hopetoun Tea Rooms. Picture: Alex Coppel

The Koutoumanoses, whose lavish cake display was one of the city’s most photographed attractions, lost a legal battle against their landlord in 2019 over a failed business expansion and were ordered to pay $1.5m.

They sold the business in late 2020.

The pair has now launched a website where they say they will tell their side of the story for the first time, alleging they are the victims of “landlord interference, unconscionable conduct, conspiracy, corruption, professional misconduct, at a minimum.”

The website details a long list of complaints including a massive rent hike and efforts to prevent the pair from selling the business.

“It was clear that The Block Arcade wanted me out of their arcade, and an attempt to take over my business,” the website says.

Mr Koutoumanos declined the comment to the Herald Sun other than to say the couple would not be intimidated by legal threats of defamation and was simply telling their side of the story.

Furniture is removed from the Hopetoun Tea Rooms at The Block Arcade on Collins Street. Picture: Andrew Henshaw

The businessman has been hit with at least two intervention orders – one by Block Arcade owner Grant Cohen and another by a builder who did work on the failed expansion of the cake shop – over the past year.

Mr Cohen said the contents of the website were highly defamatory and he was seeking legal advice on the matter.

“We will get our lawyers involved and do what needs to be done,” he said.

“They (the Koutoumanoses) went to VCAT and were not successful. Anyone who comes into contact with them – the builder, the administrator, their lawyers – they have a falling out with.”

Mr Cohen provided the Herald Sun with a letter from April 2019 which details an offer from The Block Arcade to halve the outstanding debt owned by the Koutoumanoses and give them until the end of the year to find acceptable third party buyer for the business.

The Koutoumanoses put the business, which ran the tea room, into liquidation following their legal loss in 2019.

The new owner is in the process of relaunching the cake shop at a location on Bourke St.