2. The forfeiture rule

Origin and development of the rule

Cleaver v Mutual Reserve Fund Life Association

  1. 2.1 The forfeiture rule is consistent with the long-standing legal maxim that no one can derive an advantage from his or her own criminal wrongdoing. The rule was first enunciated in the 1891 decision of the English Court of Appeal in Cleaver v Mutual Reserve Fund Life Association (Cleaver).1
  2. 2.2 In Cleaver, the Court held that a woman who had been convicted for murdering her husband could not claim the proceeds of her husband’s insurance policy. Lord Esher MR stated that ‘[t]he rule of public policy in such a case prevents the person guilty of the death of the insured, or any person claiming through such person, from taking the money’.2
  3. 2.3 Lord Justice Fry agreed:

It appears to me that no system of jurisprudence can with reason include amongst the rights which it enforces rights directly resulting to the person asserting them from the crime of that person.3

  1. 2.4 He observed that, although there may have been no authority directly asserting that it existed, the public policy rule had been illustrated in Fauntleroy’s Case.4 In that case, the House of Lords considered whether an insurance company had to pay money due under a life insurance policy upon the death of a policy-holder who had been convicted and hanged for forgery. The House of Lords held that there was no obligation to pay as directed by the policy-holder because his death was brought about by his having committed a capital felony.
  2. 2.5 Lord Justice Fry described the rule in Cleaver as a principle of public policy that should be applied broadly:

This principle of public policy, like all such principles, must be applied to all cases to which it can be applied without reference to the particular character of the right asserted or the form of its assertion… It would equally apply, it appears to me, to the case of a cestui que trust asserting a right as such by reason of the murder of the prior tenant for life or of the assured in a policy; and it must be so far regarded in the construction of Acts of Parliament that general words which might include cases obnoxious to this principle must be read and construed as subject to it.5

  1. 2.6 Having been formulated in Cleaver, the principle was established as an absolute rule in In the Estate of Hall.6 In that case, the rule was held to apply to both manslaughter and murder. Lord Justice Hamilton said:

[It is] [t]rue that [Cleaver] was a case of murder, but I do not think that, by using terms wide enough to cover manslaughter, the members of the Court supposed themselves to be speaking obiter, or were in fact doing so. The principle can only be expressed in that wide form. It is that a man shall not slay his benefactor and thereby take his bounty; and I cannot understand why a distinction should be drawn between the rule of public policy where the criminality consists in murder and the rule where the criminality consists in manslaughter.7

  1. 2.7 This statement was approved, and the forfeiture rule was effectively endorsed, by the joint judgment of the High Court of Australia in Helton v Allen.8

Subsequent development

  1. 2.8 The forfeiture rule emerged following the statutory abolition of the common law doctrines of forfeiture: attainder, forfeiture, corruption of blood and escheat. Attainder and escheat provided for the property of a convicted murderer or any other felon to be forfeited to the Crown; corruption of blood prevented an attainted person from inheriting or transmitting land. The Forfeiture Act 1870 abolished all of these doctrines in England for ‘any treason or felony’.9 Equivalent legislation was introduced in Victoria in 1878.10 The forfeiture rule provided a policy setting for judicial decision making in place of the old doctrines.11
  2. 2.9 Following the formulation of the rule in Cleaver, courts in Australia and the United Kingdom sought to clarify when it applies, how it operates and the consequences for the distribution of the deceased person’s estate.
  3. 2.10 In the Estate of Hall established that the rule applies to manslaughter as well as murder but it is less clear whether it applies to all forms of manslaughter, including when arising from negligent, inadvertent or involuntary acts or omissions.
  4. 2.11 Cleaver concerned benefits under a life insurance contract. It is well settled that the rule also applies to the distribution of the deceased person’s estate either under a will12 or, where there is no will, under a statutory scheme.13 In addition, the scope of the rule extends beyond the deceased person’s estate to the rights over property that a killer co-owned with the victim as joint tenants.14 However, as discussed in Chapter 4, various approaches are taken to determining how the property should pass, and to whom.
  5. 2.12 The application of the rule is determined by the court in its civil jurisdiction, usually when determining how the deceased person’s estate should be distributed. This would follow the conclusion of any criminal proceedings but the guilty person need not have been convicted of a crime. In Helton v Allen,15 the High Court held that the rule may apply to a person who has been acquitted in criminal proceedings and that, moreover, the acquittal would not be admissible as evidence of the person’s innocence.
  6. 2.13 There is an exception to the forfeiture rule at common law.16 A person who is found not guilty because of mental impairment will not be prevented from taking a share of the deceased’s estate. They have not been convicted of a crime because they did not know the nature and quality of the act they committed, or that what they were doing was wrong.
  7. 2.14 Although these features of the rule can be distilled from the cases, there has been, and remains, uncertainty about its scope and effect. Looking back on the origin and development of the rule a century after Cleaver, President Kirby observed:

The difficulty was that the [forfeiture] rule was devised by judges to solve the necessities of particular cases. It developed without a great deal of consideration, either of its scope, or of its exceptions, or of its fundamental underlying rationale. The result has been controversy as to the scope, uncertainty about the exceptions, and confusion as to
the rationale.17

Departure from the inflexible application of the rule

  1. 2.15 A fundamental point of controversy has been whether, at common law, the court has discretion not to apply the rule in a manslaughter case in view of the nature of the homicide, or the moral culpability of the killer.

Application to different forms of manslaughter

  1. 2.16 In the 1970 case of Gray v Barr,18 the English Court of Appeal applied the forfeiture rule to a man who had accidentally shot his wife’s lover.He had been acquitted in criminal proceedings of murder and manslaughter but, in subsequent civil proceedings in the High Court, Justice Lane found manslaughter and applied the rule.19
  2. 2.17 Although the Court of Appeal upheld this decision, it recognised that there are circumstances where, in the event of manslaughter, it would not be appropriate to apply the rule. Lord Justice Salmon said:

I am not deciding that a man who has committed manslaughter would, in any circumstances, be prevented from enforcing a contract of indemnity in respect of any liability he may have incurred for causing death or from inheriting under a will or upon the intestacy of anyone whom he has killed. Manslaughter is a crime which varies infinitely in its seriousness. It may come very near to murder or amount to little more than inadvertence, although in the latter class of case the jury only rarely convicts.20

  1. 2.18 Lord Denning agreed with the following test, set out by Justice Lane, for determining when to apply the rule:

The logical test, in my judgment, is whether the person seeking the indemnity was guilty of deliberate, intentional and unlawful violence or threats of violence. If he was, and death resulted therefrom, then, however unintended the final death of the victim may have been, the court should not entertain a claim for indemnity.21

  1. 2.19 The test in Gray v Barr did not modify the application of the rule in that case, and did not have a meaningful impact on the rule generally.22 In R v National Insurance Commissioner, Ex parte Connor, the English High Court considered whether Mrs Connor, who said that she had killed her husband by accident during an argument, was entitled to a widow’s pension. Mrs Connor had been convicted of manslaughter and placed on probation for two years. Although it took account of the Gray v Barr test and endorsed Lord Justice Salmon’s comments about the need to be able to apply the rule more flexibly,23 the court applied the forfeiture rule because ‘the killing was deliberate, conscious and intentional’.24
  2. 2.20 The automatic and inflexible application of the forfeiture rule was at odds with developments in family law during the 1970s. The decision in R v National Insurance Commissioner, Ex parte Connor in 1981 gave impetus to the introduction of the UK Act the following year.25 The UK Act gives the court statutory discretion to take into account the circumstances of the case when applying the rule and is discussed later in this chapter.

Consideration of moral culpability

  1. 2.21 Australia did not pursue the approach conveyed by the test in Gray v Barr, which focuses on the presence of deliberate, intentional and unlawful violence. During the 1980s a number of cases in Australia advanced the view that the court had discretion in applying the rule.
  2. 2.22 These were cases where a person had been killed in the context of family violence and the court decided not to apply the rule in view of the killer’s low level of moral culpability.26 This is in contrast to the traditional formulation of the rule, whereby moral culpability is not taken into account.
  3. 2.23 In Public Trustee v Evans,27 the rule was not applied to a woman who had killed her husband after he had assaulted her and her daughter, and had then told her that he
    was going to kill the children. Justice Young observed that:

The rule we are applying here is essentially a judge-made rule, it is a rule of public policy and it is open to a judge whilst recognising the importance of all that has been said beforehand, to make the pronouncement if he thinks it appropriate as to the limitations of the rule for his particular age.28

  1. 2.24 Although the rule was applied in Public Trustee v Fraser 29 to prevent a son who had killed his mother from inheriting from her estate, Justice Kearney agreed with the comments made by Justice Young in Public Trustee v Evans.Justice Kearney considered that the court had a discretion to grant relief against the effect of the rule in view of the nature of the crime and the moral culpability of the offender:

I consider the fundamental question is to determine whether the taking of a benefit by a person through his crime would be unconscionable as representing an unjust enrichment of that person so as to attract the public policy rule.30

  1. 2.25 In Re Keitley31 and Miliankos v Miliankos,32 the Supreme Court of Victoria followed the approach taken in New South Wales in Public Trustee v Evans and Public Trustee v Fraser. In Re Keitley, Justice Coldrey declined to apply the rule where a woman, Mrs Keitley, had killed her husband out of fear that he would kill her. Justice Coldrey noted that the trial judge had accepted that Mrs Keitley’s level of moral culpability was ‘much less than is normally encountered in this court’.33 He concluded that:

It is neither possible nor desirable to seek to lay down a list of factors that may give rise to relief from the forfeiture rule. Suffice to say that the present case is not one in which the rule should operate to prevent the granting of probate.34

  1. 2.26 Miliankos v Miliankos concerned an application by a man for a declaration that his younger brother, who had killed their father, had forfeited any claim to the benefit of their father’s estate. Justice Nathan applied Re Keitley and considered that the fundamental question for the court was:

[t]o determine whether the taking of a benefit by the younger brother through his crime would be unconscionable as representing an unjust enrichment to him so as to attract the rule of public policy, that is, the judge made rule that a person should not benefit from the commission of a crime.35

  1. 2.27 He declined to make the declaration because the moral culpability which should attach to the younger brother was of a low order, and ‘not of such a high order that the public policy is best served by saying he should become disentitled to a share of his father’s bounty’.36

Reinstatement of the traditional formulation

  1. 2.28 The exploration of alternatives to the traditional formulation of the rule in Australia fuelled uncertainty about when the rule applied and disagreement about whether modifying the rule was a matter for the courts or the legislature.
  2. 2.29 The traditional formulation was reaffirmed in New South Wales by the Court of Appeal in Troja v Troja.37 Mrs Troja had been convicted of the manslaughter of her husband. She argued that the forfeiture rule should not apply because her motive in killing her husband had not been to benefit from his estate and, in view of her moral culpability, it was not unconscionable for her to retain her entitlement under his will. The Chief Judge in Equity rejected these arguments in the initial civil proceeding. Mrs Troja appealed the decision.
  3. 2.30 The appeal was dismissed, although the decision was not unanimous. While President Kirby favoured the approach taken in Public Trustee v Evans and Public Trustee v Fraser,38 Justice Mahoney noted that the traditional formulation of the rule was long established and had been affirmed and applied by superior courts. He did not consider it proper
    to limit it to cases of intentional wrong, nor to take into account the motive.39 Justice Meagher reiterated that the rule is absolute and inflexible and he strongly
    criticised attempts to modify it.
  4. 2.31 The Supreme Court of Victoria later also endorsed the strict application of the forfeiture rule and rejected the reasoning followed in Re Keitley and Miliankos v Miliankos. In Estate of Soukup, Justice Gillard traced the rule from Fauntleroy’s Case. He noted that the High Court had held in Helton v Allen40 that the forfeiture rule applied to manslaughter, and he agreed with the majority of the Court of Appeal in Troja v Troja.41 He added that:

I am not saying that public policy is an inflexible concept incapable of changing with the views of right thinking people of the time. But on an issue like the present it is not for an individual judge to seek to ascertain and set what he thinks public policy should be in this day and age. To recognise an exception to the forfeiture rule in the terms enunciated by Coldrey J is to deny the rule’s existence.42

The rule as it applies in Victoria

  1. 2.32 In Estate of Soukup,43 Justice Gillard set out the common law rule of forfeiture as it applies in Victoria:

In my opinion, the law in this State in cases of succession to property pursuant to a will or on an intestacy and the forfeiture rule can be summarised as follows:-

(1) It is a rule of public policy that no person can enforce a right directly resulting to the person as a result of that person’s crime.

(2) The rule applies to situations where a person seeks to enforce a right to property arising under a will or as a result of legislation providing for distribution on an intestacy.

(3) That the rule applies in murder cases and manslaughter cases.

(4) It does not apply in cases where the beneficiary is insane at the time of the commission of the crime.

(5) In its application to manslaughter cases it does not depend upon moral culpability or any other factor.

(6) Whilst the beneficiary is precluded from taking under the will or on an intestacy, nevertheless he or she may be able to establish a right to property pursuant to some other branch of the law and in circumstances where the person does not benefit from his or her crime.44 

  1. 2.33 Although this summation re-affirmed that the traditional formulation of the rule applies in this state, there remain questions about the scope, application and consequences of the rule. These are raised in Chapters 3 and 4.
  2. 2.34 Significantly, Justice Gillard drew attention to the unresolved concerns about the inflexibility of the rule. He noted that the application of the rule can cause injustice and he recommended that consideration be given to changing the law, as was achieved in the United Kingdom by the introduction of legislation discussed in the next section.

Legislative responses

  1. 2.35 The United Kingdom, and later the Australian Capital Territory and New South Wales, responded to concern about the harsh effect of the forfeiture rule by giving courts a statutory power to modify the effect of the rule if the interests of justice demand it.
  2. 2.36 The UK Act, ACT Act and NSW Act leave the common law rule intact but provide that the court may modify the effect of the rule in exceptional circumstances.
  3. 2.37 In contrast, New Zealand has introduced legislation that replaces the common law rule. The NZ Act codifies the forfeiture rule and excludes from its operation killings caused by negligent acts or omissions, infanticide, suicide pacts and assisted suicides.45

United Kingdom

  1. 2.38 Although the Gray v Barr test allowed English courts some capacity not to apply the forfeiture rule if the person was not guilty of deliberate, intentional and unlawful violence or threats of violence, it did not provide for relief against the rule when the act was intentional but the killer had acted with lessened culpability.
  2. 2.39 Concern about the inflexibility of the rule led to a Private Member’s Bill being introduced to Parliament. The Bill was introduced to draw attention to the need for reform and its sponsors did not expect it to be passed. There was little debate or parliamentary awareness of its controversial nature.46
  3. 2.40 The UK Act enables a court to provide relief from the forfeiture rule. A person to whom the rule applies because they have unlawfully killed another, or have unlawfully aided, abetted, counselled or procured the death of another, may apply for an order that modifies the effect of the rule.47 However, the common law rule of forfeiture is still applied strictly to all persons convicted of murder.48
  4. 2.41 The court may not modify the effect of the rule unless it is satisfied that:

having regard to the conduct of the offender and the deceased and to such circumstances as appear to the court to be material, the justice of the case requires the effect of the rule to be so modified in that case.49

  1. 2.42 The courts have modified the effect of the rule in a range of cases, including where the killer suffered from ongoing domestic violence and the killing formed part of the response to that violence;50 and where there was a failed suicide pact.51
  2. 2.43 The legislation does not modify the rule itself, but it has been attributed with indirectly inhibiting any further judicial development of it. The passage of the legislation removed pressure on the courts to change the law, and has shifted focus from the scope of the rule to the effect of its operation.
  3. 2.44 The UK Act does not deal with the consequences of the application of the rule. However, in 2011, following recommendations of the Law Commission,52 the Administration of Estates Act 1925 and the Wills Act 1837 were amended so that, for the purposes of applying the rule to the distribution of the victim’s estate, the killer is deemed to have died immediately before the victim.53

Australian Capital Territory

  1. 2.45 The ACT Act is closely based on the UK Act. It was introduced to ameliorate the harsh effects of the forfeiture rule where the killer has less moral culpability, particularly when the killing occurred in response to ongoing family violence.
  2. 2.46 When opening debate on the Bill in the Legislative Assembly, the Attorney-General, the Hon. Terry Connolly, said:

This Bill recognises … that there are circumstances in which the rule can operate harshly. For example, there may be cases in family situations where a death occurs as a result of the actions of a battered spouse in instances of domestic violence. In circumstances of this kind the courts have not always produced consistent rulings, in part because of the constraints which have been imposed by the perceived wide ambit of the forfeiture rule. The Forfeiture Bill aims to remove the doubt surrounding this kind of case and to ensure that the question of moral culpability is one which can be fully taken into account by the courts when assessing a claim against the deceased’s property.54

  1. 2.47 There was little debate on the Bill, and no opposition to it. Since then, no cases of applications to modify the effect of the rule under this legislation have been placed on the public record. The Commission would welcome any comments on the operation of this legislation.

 

Question

1 What has been the effect of the Forfeiture Act 1991 (ACT) on the application and operation of the forfeiture rule in the Australian Capital Territory?

 

New South Wales

  1. 2.48 The Bill for the NSW Act was introduced into Parliament 18 months after the decision of the Court of Appeal in Troja v Troja. The purpose of the Bill was explained as being to provide relief from the strict application of the rule in relation to particular types of unlawful killings such as those occurring in the context of family violence;55 assisted suicide;56 suicide pacts;57 and culpable driving.58 The Attorney-General said that:

The proposed legislation recognises that there are varying degrees of moral culpability in unlawful killings, and legislation is necessary to give judges sufficient discretion to make orders in deserving cases in the interests of justice.59

  1. 2.49 Although, like the ACT Act, the NSW Act was modelled on the UK Act, there were a number of refinements. Significantly, unlike the UK and ACT Acts, the NSW Act provides for any interested person to apply for the rule to be modified.60 Not only the killer but the executor or administrator of the deceased estate, a person claiming through the killer, or any other person with a special interest may make an application.61
  2. 2.50 In addition, unlike the ACT Act, the NSW Act specifies that the effect of the forfeiture rule may be modified in relation to joint tenancies. However, it does not provide what the effect of the rule is.62
  3. 2.51 Following passage of the legislation, the effect of the forfeiture rule has been modified at the court’s discretion in cases of diminished responsibility and culpable driving. By the time the NSW Act was reviewed in 2002, there had been only two reported decisions of the Supreme Court.63 To date, fewer than 20 cases have been reported.

Exception for people with mental illness

  1. 2.52 In 2005 the NSW Act was amended64 to ‘prevent mentally ill murderers from profiting from their crime by applying the forfeiture rule’.65
  2. 2.53 Following these amendments, if a person who has killed another is not subject to the forfeiture rule because they have been found not guilty by reason of mental illness, any interested person may make an application to the Supreme Court for an order that the rule apply as if the offender had been found guilty of murder.66 The Court may make this order if it is satisfied that the justice of the case so requires, having regard to the conduct of the offender and the deceased, the effect of the application of the rule on the offender or any other person and such other matters as the Court considers material.67
  3. 2.54 The Commission’s terms of reference require it to consider the exception to the forfeiture rule for people who are not guilty because of mental impairment, and this is discussed in Chapter 3.

Codification of the rule

New Zealand

  1. 2.55 In 1997, the New Zealand Law Commission released a report on the forfeiture rule that recommended codifying the rule (referred to as ‘homicidal heirs laws’) in a single statute.68 The NZ Act is based on the Law Commission’s recommended draft legislation.
  2. 2.56 The NZ Act came into force on 17 November 2007.69 As yet, there are no reported cases.
  3. 2.57 The Act serves as a codified forfeiture rule, replacing the relevant ‘rules of law, equity and public policy’.70 The Law Commission considered that a statute that codified the
    rule would be clearer and more workable than the discretion conferred on courts by the United Kingdom model.71 It also observed that:

the question whether a particular class of killing is sufficiently abhorrent to attract the application of the bar on profits is one of policy, rather than one of legal technique. For this reason it should be settled clearly and completely by Parliament.72

  1. 2.58 The legislation has been described as ‘technical’,73 but it is aimed at reducing the difficulty of the work of trustees, the number of disputed estates and the negative impact on victims’ families.74 According to a member of the New Zealand House of Representatives who spoke during the parliamentary debates on the Bill, the ‘general principle’ was to prevent killers profiting from their misdeeds but also ‘not to adversely penalise them’.75
  2. 2.59 Unlike the common law rule as it applies in Victoria, where all unlawful killings are treated in the same way, the NZ Act provides exceptions for certain types of killings. Killings caused by a negligent act or omission, infanticide, killings in pursuance of a suicide pact, and assisted suicides are not included.76

United States of America

  1. 2.60 In the United States, the rule established to prevent a killer from benefiting from their wrongdoing is called the ‘slayer rule’.77 The rule reflects the moral principle of the sacredness of human life, the equitable principle of preventing unjust enrichment, and the legal principle that the slayer, as a third party, should not be permitted to interfere with the property of the victim.78
  2. 2.61 The slayer rule is seen as having originated in Riggs v Palmer,79 although the United States Supreme Court in the earlier case of New York Mutual Life Insurance Co v Armstrong 80 expounded a similar idea to the modern slayer rule.81
  3. 2.62 In Troja v Troja,82 President Kirby noted that the foundation for the slayer rule in the United States, established before the modern slayer statutes, is different to that in England and Australia.83 The American courts have approached the slayer rule as an intervention by equity ‘to prevent an unconscionable acquisition of property’ after the will or intestacy statute has operated as normal, so that the killer takes legal title to the property but holds it on constructive trust for someone with a better claim in equity.84
  4. 2.63 There has been disagreement as to whether or not the United States slayer rule has a retributive function.85 It has also been argued that the rule is aimed at deterring people from committing homicide for economic reasons.86 The slayer rule does not require that the killer forfeit any of their own property, including property irrevocably given to them by the victim before the killing.87
  5. 2.64 Every jurisdiction in the United States addresses the issue of a killer’s inheritance from their victim.88 All states except New Hampshire use legislation, although the New York legislation deals only with joint bank accounts.89 It has been argued that the ‘[l]egislatures have not moved boldly in this area’.90 It is important to note that ‘[w]hile slayer statutes are plainly designed to codify the common law slayer rule’, the common law underpinnings of the rule are still relevant.91
  6. 2.65 The Restatement (Third) of Restitution and Unjust Enrichment (2011), (‘Restatement of Restitution’) § 45, and the Restatement (Third) of Property: Wills and Other Donative Transfers (2003), (‘Restatement of Property’) § 8.4, are ‘effectively codifications of American common law principles by groups of experts’.92 Both Restatements provide that, in a case of enrichment as a result of homicide that is not dealt with by statute in the relevant state, the slayer rule applies.93 This is also the case where an issue is not dealt with in the Restatement of Property itself.94
  7. 2.66 The approaches taken in New Zealand and the United States to codifying the rule provide alternative models for the Commission to consider if recommending legislative reform for Victoria. Options for legislative intervention in Victoria are discussed in Chapter 5.

 

Footnotes

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