Source: New Zealand Parliament – Hansard
LAN PHAM (Green): Thank you, Madam Chair. Good morning. I really take the Minister’s comments about wanting clarity with this bill, and I would love to hear from the Minister whether he would consider the adoption of this amendment to clause 14. Now, this is clause 14(2A), which seeks to replace the word “dishonestly” from (2A). So this is “A misrepresentation made dishonestly must always be taken as showing lack of reasonable care.” Now, the Green Party proposed to replace this word with “fraudulently”. We’re doing this because the word fraudent—”fraudulently”, if I can get that out properly—sets a more appropriate, clear, and specific standard for policy holders to actually show reasonable care. Now, these policy holders—we know that they have this duty of reasonable care not to make a misrepresentation when actually entering into these insurance contracts. And an honest mistake, really, I don’t think, should be grounds to deny insurance cover. The bill actually previously stated that misrepresentation made fraudulently must be taken as a lack of reasonable care. However, we really disagree with the select committee’s change to this to replace “fraudulently” with the weaker and vaguer term of “dishonestly”.
What we’re really clear about, when it came to submissions that came before select committee, was the submission from the Insurance Council of New Zealand, and they argued that fraud and dishonesty are really different concepts. They stated that—and this is a quote from their submission—”Dishonesty and fraud are related but distinct concepts. Dishonesty is a broad term that refers to actions that are not honest or lack integrity and can manifest in many ways, including lying, omitting important information, or otherwise misleading someone.”, whereas they say, “Dishonesty does not necessarily involve a deliberate attempt to deceive for personal gain.” Now, this is really serious definition content, and I think it’s really important that we take the advice of the experts in this field and actually clarify these definitions. So I’d love to hear from the Minister whether he would consider the adoption of this amendment to improve the clarity.
Hon ANDREW BAYLY (Minister of Commerce and Consumer Affairs): Yeah, thank you. Again, we’ve actually traversed this statement. I’ve discussed it before, but just to reiterate what I covered previously, it is an important definition, and the member’s right to raise it, but there are different tests, and they’re quite distinct, and one has a criminal implication; one has a civil implication. Fraud is used in civil compared to criminal cases, so the meaning is much less clear. The criminal standard of fraud describes crimes for personal gain or depriving someone of something by deceit. This implies criminal behaviour proved to a criminal standard of proof, which is different from civil, by the way, and which would not be appropriate here. The civil law standard of fraud, which we have focused on why it is in civil law. It’s been quite deliberate why we’ve used this definition, because the test is different and it’s actually much, much more appropriate, because we’re not talking about criminal stuff; we’re talking about a civil thing. And, actually, like the bill, the UK legislation uses “dishonestly” to discourage deliberate wrongdoing. So, again, I’ll just reiterate, we have covered it, but it is quite a deliberate approach.
