1.1 This is the first report of the Community Law Reform Program. The Program was established by the Attorney General by letter dated 24 May, 1982 addressed to the Chairman of the Commission The letter included the following statement:
This letter may therefore be taken as an authority to the Commission in its discretion to give preliminary consideration to proposals for law reform made to it by members of the legal profession and the community at large. The purpose of preliminary consideration will be to bring to my attention matters that warrant my making a reference to the Commission under s.10 of the Law Reform Commission Act, 1967.
1.2 The Commission wrote on 9 June, 1982 seeking its first Community Law Reform references. By letter dated 28 July, 1982 the Attorney General referred three matters to the Commission the third of which is the subject of this report. The Commission's duty to inquire and report is prescribed in the following terms:
Insurance Contracts - Non-disclosure and Misrepresentation
To review section 18 of the Insurance Act, 1902 in the light of the common law relating to disclosure, non-disclosure and misrepresentation of fact in contracts of insurance.1
The background of the Community Law Reform Program is described in greater detail in the Commissions Annual Report for 1982.
1.3 The immediate reason for the Commission giving preliminary consideration to the subject matter of this report was the decision of the Supreme Court in Kolokythas & Anor. v The Federation Insurance Limited2 in October, 1980. In this case Mr. Justice Rogers, who is a part-time member of the Commission drew attention to an apparent defect in section 18 of the Insurance Act, 1902 which was enacted in 1974 to lessen the harshness of certain common law principles peculiar to insurance. Section 18 provides as follows:
(1) In any proceedings taken in a court in respect of a difference or dispute arising out of a contract of insurance, if it appears to the court that a failure by the insured to observe or perform a term or condition of the contract of insurance may reasonably be excused on the ground that the insurer was not prejudiced by the failure, the court may order that the failure be excused.
(2) Where an order of the nature referred to in subsection (1) has been made, the rights and liabilities of all persons in respect of the contract of insurance concerned shall be determined as if the failure the subject of the order had not occurred.
The facts of Kolokythas and the defect referred to are described in Chapter 2.
1.4 We record our thanks to Parliamentary Counsel Mr. D.R. Murphy for his assistance and advice on the form and content of the draft legislation submitted with this report in Appendix 1.
FOOTNOTES
1. For the full terms of reference see p.2 above.
2. [1980] 2 N.S.W.L.R. 663.
