Superquinn has secured a High Court order for security of costs in an action taken against the supermarket group by Dolls Publishing Group Ltd. The publishing group is claiming damages for breach of contract in relation to the publication of a Superquinn food magazine.
Yesterday, Mr Paul Gardiner, for Superquinn, said his clients had agreed that Dolls Publishing Group Ltd would publish a magazine to be sold at checkouts and shops. Under an agreement, the publishers would receive the advertising revenue which the publication would generate and Superquinn would get the counter price.
The publishers would bear the costs of production of up to 25,000 copies and Superquinn would have a veto over the con- tent of the magazine.
Three trial copies were is sued in October, November and December 1996, which were satisfactory to Superquinn, but by Easter 1997, it became concerned about the viability of Dolls. Superquinn gave it a loan of £20,000.
By July 1997, Superquinn's concern was growing because it was being contacted by contributors to the magazine seeking payment even though the publishers were liable for the payments under the agreement.
The August edition was of an inferior quality and was not sold by Superquinn for that reason. The editor of the magazine had resigned before production because he had not been paid.
Superquinn had no confidence in the ability of the publishing company to continue with the project and the agreement between them was repudiated. Dolls was invited to tender for the further production of the magazine but did not.
Mr Gardiner said the publishing company did not dispute that it incurred debts of £70,000 before the contract's cancellation. He said it had never been viable in the first place and had traded on credit.
Mr Michael Peart, solicitor for Dolls, said his clients' impoverishment was due to the alleged wrongdoing of Superquinn. Following a report by Ernst and Young on his client's financial affairs, given to Superquinn, the supermarket chain gave the publishing project the green light.
A letter in June from Superquinn to Dolls confirmed that the magazine was to be continued and that the two parties would work together in the future. "We proceeded with our plans following that letter. We succeeded in getting an investor to put £40,000 into the company," Mr Peart said.
Following the investment, some debts were discharged and Superquinn was given a schedule of debts paid at that time, but Dolls was told on August 15th its contract was at an end and it was not invited to tender for further publications at a point when the invitation would have been meaningful.
Mr Peart said Superquinn was in breach of its agreement with his client and by doing so had put it out of business.
Mr Justice O'Sullivan said the onus was on Dolls to produce evidence to support the allegation that its impecuniousness was brought about by actions of the defendant. He was satisfied Dolls had not discharged that onus and directed it to provide security for costs in the action.