Lingerie store boss Mrs. Joyce Hayden has lost a legal battle against the owner of her former Hamilton business premises.

But her lawyer immediately signalled the war with Imperial Hotel Company may not be over.

Mr. Jai Pachai said Mrs. Hayden may appeal against a Supreme Court judge's decision to side with Imperial Hotel. "She is considering her position,'' he explained.

Mrs. Hayden had claimed damages against Imperial Hotel for alleged negligence and breach of a lease signed on August 28, 1984.

She accused her former landlord of allowing the Church Street premises to be infested with rats, and of failing to install proper electrical, plumbing and air conditioning systems. Other allegations included letting gas, water, smoke and dust to filter into the building.

Mrs. Hayden argued her business, La Femme, had suffered because of the problems. But yesterday Puisne Judge the Hon. Mr. Justice Ground threw out Mrs. Hayden's claim.

In his judgement, he said Mrs. Hayden should have tried to deal with her difficulties through arbitration at the time -- and not waited until nearly 10 years after the beginning of the lease.

He said there was no proof business sales fell after she moved to the Imperial Hotel building.

And he stressed Mrs. Hayden had not specified damages for each alleged problem, such as spoiled merchandise.

Mr. Ground's judgement followed a civil case earlier this year.

The Supreme Court heard Mrs. Hayden sold ladies' lingerie and men's undergarments.

The lingerie business was known as La Femme, and the men's side was called Hayden's.

Both were run from 16 Church Street, but in 1984 Mrs. Hayden switched La Femme to larger premises at the nearby Imperial Hotel building.

She signed a five-year lease, with an option to renew for a further two.

The court was told Mrs. Hayden borrowed $50,000 from a bank to carry out substantial changes to the premises.

But because of a number of problems, including rat infestation, she left the building in March 1986, moving La Femme back to 16 Church Street.

In her writ, Mrs. Hayden claimed Imperial Hotel breached the lease by not allowing her "quiet enjoyment of the premises'', and failing to keep the building in good repair.

She also argued rat infestation had caused her nervous shock.

Imperial Hotel, represented by Mr. David Kessaram, from Cox and Wilkinson, strongly contested her action.

Yesterday, Mr. Ground said he accepted Imperial Hotel's director Mr. Rolf Wittich was a "difficult, and at times intransigent landlord''.

However, he stressed Mrs. Hayden should have dealt with her problems through arbitration at the time.

"The plaintiff failed to take effective action to bring about an arbitration, but rather, having failed to obtain a contemporary adjudication of the facts, now seeks to try those issues nearly ten years after the commencement of the lease.'' Mr. Ground also said Mrs. Hayden did not specify how much she was claiming for each problem.

For instance, the value of damaged merchandise was not given to the court.

Instead the defendant, Imperial Hotel, was presented with a "wide ranging claim for overall damage''.

"For the reasons given above I consider that many of the problems pleaded by the plaintiff are not due or attributable to any breach of the landlord's covenants in the lease.

"In particular there was no warranty that the premises were fit for the plaintiff's purpose, and she took them as they were, and was herself responsible for their internal repair and decoration.'' Mr. Ground said he did attribute three of Mrs. Hayden's complaints to breaches of the lease.

These were the cost of altering the wiring, leakage from a brown liquid to the store room, and smoke from an upstairs night club.

"In respect of the first two of these the plaintiff pleads no head of loss.

"In respect of the third the plaintiff originally plead that she lost sales due to the merchandise smelling of smoke, and no doubt an element of this is present in the ultimate loss of profit claim.

"However, there is no separate tally of the actual garments so damaged, or their value.'' Mr. Ground added: "Any more general claim based on the overall effect of the state of the premises, and the problems the plaintiff experienced with them, upon her state of mind is not in my judgment sustainable in the context of a commercial leasing transaction, and that is so whether the plaintiff frames her claim in contract or in negligence.'' Yesterday Mr. Pachai said he was "disappointed and surprised'' by Mr.

Ground's ruling.

"On the one hand he finds that the defendant was liable to pay damages for breaches of the covenant, and then he goes on to dismiss her claim.''