Mark McInnes has returned to the country to defend allegations against him in a $37 million sexual harassment case, raising questions about what contractual obligations the former chief executive of David Jones (ASX: DJS) has to the Australian retailer its own defense in the case.

Mr McInnes tendered his resignation in June after admitting to inappropriate behavior that was "unbecoming of a chief executive to a female staff member" at two company functions.

"I have committed serious errors of judgment and have inexcusably let down the female staff member," Mr. McInnes said.

"I have also let down my partner, my family, all my staff, the board and our shareholders.

"I apologise to everyone I have let down."

Mr McInnes worked for David Jones for 13 years and was chief executive for the past seven years. He received a $2 million payout.

Kristy Fraser-Kirk, a former publicity co-ordinator of David Jones is seeking punitive damages for sexual harassment, asking for 5 per cent of the $700 million in profits the company made between 2003 and 2010 when Mr McInnes was chief executive. The 26-year old claims David Jones put her at risk by allowing a culture of harassment, and then made misleading public statements that her case was an isolated incident. She is also asking $2 million in punitive damages from Mr McInnes.

Mr Mc Innes' deed of release is confidential. He has obtained separate legal representation to David Jones.

The former David Jones' chief executive again apologised to Ms Fraser-Kirk and to company shareholders in a statement yesterday.

''I made mistakes and I have acknowledged those mistakes. Having said that, I reject many of the recent specific allegations and legally I have no alternative other than to vigorously contest them and I will,'' Mr McInnes said.

David Jones refused to comment on whether the former boss has contractual obligations to help the company in its defence. It also did not say where it would obtain the money the court may order, as questions emerged yesterday over whether David Jones' insurance covers punitive damages.

Legal experts, however, say it is unlikely the court will order the $37 million to be paid, and that the case will likely settle. Still, a possibility remains that some punitive damages may be awarded.