Department store Myer and fashion designer Kym Ellery have settled their legal dispute this morning which has played out in the Victorian Supreme Court over the last week.
Myer took Ellery to court claiming she breached an exclusivity contract by supplying its rival David Jones and had not supplied Myer with product for her winter and autumn collections.
In a statement, Myer said it had reached a “mutually agreed settlement” with Ellery and Ellery Land over the breach of Ellery’s exclusivity agreement.
Ellery said she was “sincerely sorry” for breaching her contract with Myer.
“I understand that the contract I had to exclusively supply Myer was to operate until 2014,” she said in a statement.
“I am sincerely sorry that I also agreed to supply another retailer on an exclusive basis outside of my agreement with Myer,” Ellery said.
“I truly regret making such a mistake and going forward I will honour my agreement with Myer and will extend my supply of the Ellery collection to Myer until 2015.”
Ellery said she was “grateful” to be allowed to also continue supplying her mainline collection to David Jones under the terms of the settlement deal.
“I am looking forward to now being able to focus on my work again,” she said.
Ellery and Myer have also reached a “mutually satisfactory position” regarding Ellery’s contribution towards the legal costs incurred by Myer in the proceedings.
With both sides engaging top legal teams including Queens Counsel for the legal battle, these costs are likely to be extensive.
Myer’s executive general manager of merchandise, Adam Stapleton, said Myer is “delighted” it will have the Ellery brand back.
“We have invested in Kym Ellery and the Ellery brand because we identified her potential as a talented Australian designer,” he said.
Sally Scott, partner at law firm Hall & Wilcox, told SmartCompany she was not surprised the case settled, as the vast majority of cases settle given the prohibitive costs, time and risk involved.
“Even if Myer would have succeeded in establishing that Ellery breached her exclusive contract, it is difficult to see what damages Myer could have proven,” she says.
“It therefore could have resulted in a hollow victory, and an expensive one at that.”
Scott says she questions Myer’s motives in pursuing Ellery, given that Ellery does not appear to have been a big money maker for Myer.
“The case appeared to be more about discouraging other defections,” Scott says.
“Myer has arguably succeeded with this goal already by issuing the case and obtaining so much media attention. It would be an appropriate time to settle.”
Scott says now other designers will think twice about defecting, while Ellery has gained a terrific profile from the media exposure of the case and is now seen as a brand in demand.
“The lesson for businesses is to be very careful about rushing into contracts, particularly exclusivity contracts,” she says.
“There may be a desire to get the deal done. However, businesses need to step back and consider the ‘what ifs’. What if this happens, what does the contract say?”
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
