Virtually There, you are arguing two different points.
If you are on a IAP, in cloud and the Aid Fails/Lose Tolerance/Instrument Fails etc AND are below the MSA you have to start climbing as you cannot guarantee your terrain separation. You cannot continue at your last altitude as you have no idea where you are. Especially so in places that where you are below the hills. The extreme example would be Queenstown. Would you as PIC whilst doing an approach there and lose the tolerance required whilst below hills continue on at your last altitude?
Now if you commence the Missed Approach and then become visual, you can abandon the missed approach, take on your own terrain separation and fly visually around for a circuit or land on the runway. The Caveat being that you are visual and can maintain that.
They are two different concepts. You cannot stooge along in IMC without knowing where you are hoping to break visual. If anything CASA could nail you on the PIC requirement of being responsible for the safety of flight. If you are below the MSA without a Position fix you are endangering the safety of the aircraft.