Myer has withdrawn an application for an injunction preventing Perth-raised, Sydney based designer Kim Ellery from defecting to its retail rival, allowing the fashion star to open David Jones' season launch next week.
Myer claims the Australian designer breached a supply and exclusivity contract by signing a new deal with David Jones, its main competitor.
According to a writ filed in the Victorian Supreme Court, Myer was informed last month that Ellery's label Ellery Land would not be fulfilling pending orders placed by Myer.
Myer sought damages along with orders compelling Ellery to fulfil her supply contract and an interlocutory injunction restraining her from selling her goods at David Jones until final orders were determined at trial.
But on Wednesday, Myer withdrew its summons seeking interlocutory orders ahead of an April 15 trial.
The step came after Ellery's lawyer, David Shavin QC, told Justice Michael Sifris the matter needed to be resolved ahead of the David Jones' Autumn/Winter launch next week to avoid "irreparable harm" to Ellery's company.
He said Ellery was to open the show as its keynote designer, with her garments to be worn by Miranda Kerr and other models.
Her garments were already featured in the store's new catalogue which had taken three months to produce, but unless the interlocutory injunction matter was resolved, David Jones would not feature Ellery Land in its show, and in turn, would not sell the products, he said.
"Not only will it mean that Ms Ellery's stock will not be sold at David Jones, which will mean administrators will have to be called in, but of course, Myer would have inflicted maximum possible damage on the David Jones launch," said Shavin.
"(Myer) would get the injunction by stealth.
"The defendant is the meat in the sandwich here in a fight between Myer and David Jones."
Shavin said the injunction sought by Myer at trial was unreasonable.
It freed Myer from any obligation "to buy a single dollar's worth of goods" from Ellery but "sterilised" her from any other department store.
"No court in equity would countenance a position such as that," he said.
Bart Carew, for Myer, said the trial would explore issues of credit and misleading conduct by Ellery.
He said the problems facing Ellery were of her own making.
Myer spokeswoman Jo Lynch said the store had never done anything contrary to its agreement with Ellery and wanted the relationship to continue.
"We've spent a substantial amount of time, effort and expense to nurture the brand, grow the brand and build goodwill in the brand," she said.
Ellery said she now looked forward to participating in the David Jones launch and supplying her collection to them from February.
"It is regrettable that Myer has taken action against Ellery," she said in a statement.
"Moving forward, we will continue to defend our position."