Rayner v Pethick

The appeal in Rayner v Pethick involved the plaintiffs, who had obtained a judgment in their favour, seeking an order for the defendants to pay their costs for the entire action. The defendants cross-appealed against the refusal of the Magistrate to award them costs on an indemnity basis. The crux of the appeal centred around the interpretation and application of the Evidence Act 1929 (SA) concerning "without prejudice" communications made during settlement negotiations. The primary legal issue was whether the Magistrate was entitled to rely on such communications when determining the costs order, and if the "without prejudice" correspondence could be admitted as evidence under Section 67C(2) of the Evidence Act.

The Court examined whether the "without prejudice" correspondence constituted an agreement for the settlement of the action. It was noted that neither party had acted on any such agreement during the trial, nor had they attempted to enforce it. The defendants argued that the correspondence showed the parties were ad idem, but this argument was rejected as there was no evidence of a mutual consent to the terms of the agreement. The Court held that without such consent, the correspondence could not be used to demonstrate the terms of any settlement, nor was it admissible under Section 67C(2)(a) of the Evidence Act. The Court distinguished this case from Chapman v Allan & Draper, where it was held that there must be mutual consent at the time of tender for a document caught by Section 67C to be admissible. In the present case, there was no suggestion that such consent had been given or withdrawn.

The Court concluded that the Magistrate was not entitled to rely on the "without prejudice" correspondence in making the costs order. The appeal was allowed, and the cross-appeal was dismissed. Consequently, the defendants were ordered to pay the plaintiffs' costs of the whole action. The Court emphasised the importance of mutual consent in determining the admissibility of "without prejudice" communications in the context of costs orders.