The High Court was told yesterday that a legal dispute between Whelan's Frozen Foods and Dunnes Stores has been settled. Whelan's employs 477 people and their only customer has been Dunnes for the past 25 years.

Paul Gallagher, counsel for Whelan's, told the High Court that the case was settled and the matter was adjourned .

The action arose from Dunnes' alleged unilateral variation without reasonable notice of supply and warehousing contracts with Whelan's.

Dunnes' actions over the past year, Whelan's claimed, were calculated to force it out of business.

After three days of talks last week, Mr Gallagher, with Shane Murphy counsel for Whelan's, told Mr Justice Kevin Feeney on Friday that, "as far as the plaintiff is concerned, the case is now settled".

However, counsels Dermot Gleeson and Michael Cush, then told the judge: "My instructions are that the case is not settled."

In its proceedings, Whelan's Frozen Foods, Park West, Dublin, alleged Dunnes had, from the second half of 2005, conducted a concerted effort to put Whelan's out of business, either intentionally or as an illegitimate tool to drive down Whelan's rates by unilaterally breaking agreements and withholding millions of euro.

It contended that, last January it had received some €14 million in cheques from Dunnes and that 75 per cent of that sum represented monies "wrongfully withheld" by Dunnes from Whelan's.

Whelan's has been a major supplier to Dunnes for more than 25 years and was set up in 1981 to supply and warehouse products for Dunnes, its only customer.

The dispute between the companies arose after Whelan's claimed that Dunnes had unilaterally and without reasonable notice altered the terms of contracts between the companies in a manner which could lead to Whelan's being forced out of business.

Whelan's said reasonable notice was in the order of 12 months, given the number of its employees and its €15 million investment in the business.

Whelan's sought orders restraining Dunnes from proceeding with the unilateral variation of two contracts. The first, entered into on October 2005, was for warehousing and distribution of all frozen and chilled foods at agreed prices.

The second, of May 2003, related to the warehousing and distribution or textile products at agreed prices. An order for specific performance of the same contracts was also sought or, alternatively, damages for alleged breach of contracts.

It argued an implied term of both contracts was that they could only be varied by mutual agreement.

However, it claimed, Dunnes had notified Whelan's by email on November 18th, 2005, advising of further reductions in the rates which new reductions were backdated to November 1st, 2005. Whelan's said it had told Dunnes the new rates were not sustainable and would drive it out of business. However, it claimed, Dunnes proceeded to implement the new rates from December 20th, 2005.

Whelan's also sought orders for the restoration of credit terms which, it claimed, had existed prior to August 2005 with Dunnes or, alternatively, payments of some €3.5 million due to a change in those credit terms.

It also sought orders for the payment to it of further sums of some €3.1 million allegedly wrongfully withheld from it by Dunnes.

It alleged substantial shortfalls on payments received from Dunnes under the two contracts and that Dunnes had been unjustly enriched as a result of Whelan's being forced to incur losses and/or make certain payments under economic duress.