Beware of trap purchase pitfalls

Evidence of representations made during a trap purchase may be crucial in proving passing off or misleading and deceptive conduct. However as the decision in Nick Scali Limited v Super A-Mart Pty Ltd [2010] FCA 1130, illustrates, a failure to provide a respondent with a timely opportunity to investigate the circumstances in which such representations were made may significantly affect the probative value of such evidence.

Scali had alleged that Super A-Mart had engaged in misleading and deceptive conduct and passing off and in support of those allegations filed evidence of certain statements made by sales assistants within Super A-Mart’s stores. The statements were made in the context of trap purchases made on behalf of Scali.

Super A-Mart submitted that the Court should exercise its discretion under section 135(a) of the Evidence Act 1995 (Cth) to exclude the evidence on the basis that is probative value was outweighed by the danger that it would be unfairly prejudicial. In this regard it relied on Scali’s failure to comply with what was described as a rule of practice in relation to evidence of trap orders in passing off cases that timely notice be given of the intention to rely on such evidence.

Yates J, having reviewed the authorities dealing with this practice, considered that there was no rule of admissibility but rather that “in certain circumstances, the failure to give timely notice of the intention to adduce such evidence is a factor going to the weight to be given to the evidence of the trap order.” His honour noted that the circumstances in which the trap order is made may be critical, such that:

the opportunity, if any, afforded to the party against whom the evidence is to be adduced to undertake timely investigation of those circumstances may be necessary in order to persuade the Court that the evidence of the trap orders provides a satisfactory basis from which findings of fact can be made.

Yates J considered that the trap orders in question were unusual in that they involved extended conversation about the price, qualities and origin of the goods being compared and that the evidence “does not exhibit the qualities of actual or latent ambiguity of language that sometimes attend evidence of trap orders”.

Despite Super A-Mart’s submission that it had been put in a position of unfairness because its sales assistant was unable to recall the details of the relevant conversation, the Court held that the evidence should be admitted. His Honour did however note that the matters raised by Super A-Mart were relevant to an overall assessment of the events deposed to.