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Wednesday, 9 May 1984
Page: 1813

Senator GARETH EVANS (Attorney-General)(12.30) —I re-enter this debate to meet Senator Archer's earlier challenge to give precedents where fraud has, in fact, been acknowledged in appropriate circumstances as something that need not bring catastrophic consequences legally to its perpetrator. I think particularly of section 7 of the South Australian Misrepresentation Act of 1971 which contains a clause giving a court power, in relation to contracts generally , where it considers it just and equitable to do so to override a rescission for innocent or fraudulent misrepresentation. There is an academic argument, not yet resolved in the courts, as to whether that section applies to insurance contracts, but it is there in the law and it gives that arbitral role to the courts to apply the traditional principles of equity about fairness and justice.

Senator Archer —Is there a definition of innocent fraud?

Senator GARETH EVANS —Innocent misrepresentation. There is a distinction between innocent and fraudulent misrepresentation. One cannot by definition have an innocent fraud. One can have a fraud which is very minute in its implications by comparison with the totality of the situation. That is the context to which we are addressing ourselves.

The other point I wanted to make is exactly that which I made the other day in the discussion in a similar debate on clause 32. That is that there is a very familiar precedent in insurance law for just the kind of matter that is involved here. That is under section 83 of the Life Insurance Act which overrides the insurer's capacity which he would otherwise have to avoid a life insurance contract totally on the ground of deliberate misrepresentation of a person's age . And one cannot argue that a misrepresentation as to age is not relevant to the risk that is being undertaken by the insurer. It is absolutely central to a life insurance contract. But what the law provides for-and it has been the law for a generation or more-is that a court in those circumstances can override the insurer's desire to avoid the contract entirely and apply some appropriate principle of proportionality.

It is really just an extension of that that is involved here. It is important to add a number of criteria which we have tried to do with this further amendment, to make very clear the law's distaste and, indeed, the Parliament's distaste for fraud in any form. But at the same time we have tried to acknowledge that situations may arise from time to time whereby someone has foolishly sought deliberately to misrepresent some aspect of a claim. We have sought to enable the court in those circumstances to take into account the harshness and the unjustness of wiping that person out completely and to make an appropriate adjustment. That is all that is involved. There are precedents for it, and I hope that the Senate will respond sympathetically.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 57 to 59-by leave-taken together.