The ACT Supreme Court has issued a “special costs order” against IAG after the insurer rejected a $100,000 offer from a plaintiff to settle a car accident claim before the matter went to court for a resolution.

Chief Justice Helen Murrell, who handed down her decision last week, had in May awarded $370,501 in compensation to Nyssah Ryrie, who suffered a serious lower back injury from the 2015 accident.

Ms Ryrie made a claim for costs on a “party and party” basis after the court awarded her the damages. She wants the costs to be paid until August 17 2018, the day she made the $100,000 mandatory final offer (MFO) as required under the Road Transport (Third Party Insurance) Act (TPI Act).

Such costs, when awarded, are usually to cover for expenses incurred in running and preparing a case as well as non-recoverable outlays such as solicitor fees. The winning party is generally entitled to claim for “party and party” costs.

A spokesman for IAG says the insurer is still reviewing the judgment, which can be appealed.

Chief Justice Murrell says in her ruling “it was unreasonable” for IAG, the second defendant in the case, to reject the $100,000 offer to settle the claim.

The insurer had instead made a counter-offer of $50,000, comprising of $20,000 for economic losses and $30,000 for other loss.

IAG says the plaintiff’s use of the words “pain and suffering” in her offer did not comply with the TPI Act, which replaced the terms with “non-economic loss” in 2013.

The insurer also submitted it was not unreasonable to reject the offer as it was made before the receipt of expert medical evidence that changed the complexion of the case including the plaintiff’s need for a spinal fusion operation.

But Chief Justice Murrell rejected the defence put forth by the insurer.

“Based on the material known to the insurer at the time when offers were made, it was unreasonable for the insurer to reject the plaintiff’s offer,” she said.

“Even if the plaintiff’s offer was technically non-compliant with the TPI Act… the vast difference between the amount offered and that recovered shows that, prima facie, it was unreasonable for the insurer to reject the plaintiff’s offer and make an offer of only $50,000.”

She also did not agree with the insurer that there was insufficient medical information available to show the plaintiff suffered serious back injury after the accident.

Available medical records showed the plaintiff had sought frequent treatments before she made the $100,000 settlement offer in August 2018. She had consulted a specialist about chronic pain in her spinal level and discussed the option of spinal fusion to treat the injury.

Chief Justice Murrell says the plaintiff had made a “genuine offer of compromise” before the parties were forced to seek a resolution through the court.

“Having regard to the offers that were made on August 17 2018 and other discretionary matters, I order that the second defendant pay the plaintiff’s costs on a party and party basis until August 17 2018 and thereafter on an indemnity basis,” she ruled.

Click here for the decision.