Out of Court Settlement Fixes Kym Ellery’s Fashion Faux-Pas

April 30, 2013 Published by

Both the fashionably and legally inclined watched on last week as Australia’s most fashionable case unfolded in the Victorian Supreme Court.

Retail giant Myer originally toted Sydney-based designer Kym Ellery to court in January over a breach of contract, after the 29 year old entered a deal with its rival, David Jones, in November last year. Myer sought to enforce a three year exclusivity clause, which was allegedly breached 18 months into the contract. In response, Ms Ellery’s legal team argued that the contract was a restraint of trade.

Image: Andrew Malone

The clause in dispute prevented Ms Ellery from supplying her clothing to any other Australian retailer with 15 or more stores. However, the contract allegedly did not oblige Myer to buy Ms. Ellery’s designs, leaving the designer in a potentially sticky financial situation. Whilst it seemed like a big corporate retailer bullying a little designer, it was actually another round of the Myer / David Jones war in disguise.

Like a fly in a fashionable web, Ms Ellery was confronted with a tough decision after signing with David Jones. According to a number of sources, Myer revised its original $187,000 agreement with the designer, offering her $1.5M to remain exclusive. However Ms Ellery’s legal team revealed that the offer was fashionably late and it would have cost the designer more to breach her new contract with David Jones than to breach the original agreement with Myer or even accept its revised offer.

Myer had previously sought injunctions to prohibit Ms Ellery’s designs from appearing at the David Jones launch earlier this year, but later dropped its application. The store had also dumped the designer from judging its Fashion on the Fields competition around the time the David Jones contract was signed.

The fashion show court proceedings ended last Tuesday in an anticlimax for spectators, with the parties reaching an out of court settlement. It’s apparently a win-win situation: Ms Ellery is to pay Myer’s legal costs and will continue stocking both department stores. This case serves as a chic reminder that sometimes disputes are best settled off the runway out of court, as the legal uncertainties can often result in unanticipated financial and reputational consequences.

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