The Commercial Court yesterday ordered retail franchise operator and distributor Musgrave to pay a Hong Kong company €725,000 for goods the Irish business used in consumer promotions.
The case is related to another action in which Musgrave is suing the Hong Kong company, Kay El, for €6.4 million. Kay El may yet counter-claim against the Irish company.
Last night a Musgrave statement said that the claim arose from unpaid debts on a sale-or-return agreement it has with Kay El for goods that the latter supplied. Kay El supplied Musgrave's retail division, MSVC, with household goods and other items used in customer promotions in the Irish company's SuperValu and Centra franchise chains.
The two companies have had a relationship for the last nine years, but have fallen out over the terms of the agreement. Kay El claims that Musgrave broke a condition that made the Hong Kong company its exclusive supplier for commercial promotions.
Musgrave acknowledged in court yesterday that it used other suppliers but it says it has not broken the terms of its deal with Kay El.
Musgrave had a sale-or-return deal with Kay El, meaning that the latter would take back any of the goods that the Irish company had not sold.
However, as a consequence of what it says is the breach of its exclusivity agreement, the Hong Kong group has not been taking return of the goods from Musgrave. Musgrave owed Kay El the €725,000 for goods that the Hong Kong company supplied to it. However, the Irish company withheld this and wanted the figure included in its overall €6.4 million claim.
Kay El sought the payment of the cash in court yesterday, and Mr Justice Kelly awarded the company its €725,000 plus costs and interest against Musgrave.
In a statement, Musgrave said that it had asked the court to use the €725,000 to reduce Kay El's indebtedness to MSVC. "MSVC always accepted Kay El's ultimate entitlement to this amount and it has been fully provided for," it said.
A Kay El spokesman last night said that the Irish company owed it the money for goods it bought, and had agreed to pay for by way of bills of exchange. He pointed out that the court agreed that Musgrave had to make this payment. He also indicated that if Musgrave planned to continue with its claim for €6.4 million, Kay El would begin a counter-claim of its own.
Musgrave operates the Super Valu and Centra convenience store and supermarket franchises around the State. It is one of the three largest biggest grocery groups in the State.
