The Forfeiture Rule: Report (html)

1. Background

This reference

1.1 On 29 October 2013, the Attorney-General, the Hon. Robert Clark, MP, asked the Victorian Law Reform Commission, under section 5(1)(a) of the Victorian Law Reform Commission Act 2000 (Vic), to review the common law rule of forfeiture and to report

by 15 September 2014. The terms of reference are on page vi.

The forfeiture rule as it applies in Victoria

1.2 The forfeiture rule is a rule of public policy that a person who unlawfully kills another cannot acquire a benefit as a consequence of the killing. The killer forfeits any entitlement to inherit from the victim, either under the victim’s will or, if no will disposes of all of the estate, under intestacy law.^[1] If the killer and victim were co-owners of property as joint tenants, the rule prevents the property from passing to the offender.^[2]

1.3 The rule was created by the courts and has no statutory basis. It applies where the court is satisfied, in civil proceedings, that the killing was unlawful. There is no requirement for the person to have been convicted in criminal proceedings, where guilt must be proved beyond reasonable doubt. The rule may be applied to a person who has been acquitted, or has not been prosecuted at all, if it is proved to the court, on the balance of probabilities, that the person unlawfully killed the deceased person.^[3] The only exception is if the person responsible has been found not guilty because of mental impairment.^[4]

1.4 If an unlawful killing falls within the scope of the forfeiture rule, it will apply regardless of the moral culpability of the person responsible. For example, both a premeditated murder carried out with the intention of obtaining a financial benefit, and a suicide pact in which one of the parties survived, would attract the application of the rule and have the same consequences for the offender in terms of their succession rights.

1.5 The forfeiture rule was first enunciated in the 1891 decision of the English Court of Appeal in Cleaver v Mutual Reserve Fund Life Association.^[5] Over time, courts have sought to clarify when it applies, how it operates and the consequences for the distribution of the deceased person’s estate. In Victoria, concern has been raised about four aspects of the rule:

• There is doubt about whether the rule applies in Victoria to every unlawful killing that results from an inadvertent, involuntary or negligent act or omission.^[6]

• Applying the rule inflexibly, regardless of the moral culpability of the person responsible, is not always in the interests of justice.

• The effect of the rule on the forfeited benefit, and how it should be re-directed,

can be unclear and lead to unjust consequences for third parties.

• The judiciary has not had either the power or the opportunity to address these problems.

Legislative responses in other jurisdictions

1.6 Similar concerns about the scope and effect of the forfeiture rule have arisen in other jurisdictions. In some cases, they have led to legislative reform.^[7] Legislation introduced in the United Kingdom, the Australian Capital Territory, New South Wales and New Zealand is of particular relevance to Victoria.

1.7 The legislative reform in these jurisdictions has taken either of two approaches:

• the introduction of a judicial discretion to modify the effect of the rule

• codification of the common law rule.

Statutory judicial discretion

1.8 In 1982, the United Kingdom gave the court statutory power to modify the effect of the rule if required by the justice of the case, unless the offender was convicted of murder. The Australian Capital Territory and New South Wales later introduced similar legislation.

1.9 The relevant legislation is:

• the Forfeiture Act 1982 (UK) (‘the UK Act’)

• the Forfeiture Act 1991 (ACT) (‘the ACT Act’)

• the Forfeiture Act 1995 (NSW) (‘the NSW Act’).

1.10 The legislation was introduced in response to concern about the harsh effect of inflexibly applying the forfeiture rule. It 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.

1.11 In the United Kingdom, the courts have modified the effect of the rule where the unlawful killing formed part of the offender’s response to ongoing domestic violence^[8] and where there was a failed suicide pact.^[9] The New South Wales Supreme Court has used its statutory discretion to modify the effect of the rule in cases of diminished responsibility and dangerous driving.^[10] There are no reported applications under the ACT Act to modify the effect of the rule.

1.12 The NSW Act was amended in 2005^[11] to ‘prevent mentally ill murderers from profiting from their crime by applying the forfeiture rule’.^[12]

1.13 Following the amendment, 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 of New South Wales

for an order that the rule apply as if the person had been found guilty of murder.^[13]

Three applications have been made for an order of this type; all have been successful.^[14]

Codification of the rule

1.14 New Zealand has taken a quite different approach. The Succession (Homicide) Act 2007 (NZ) (‘the NZ Act’) codifies and replaces the common law rule in a single statute. It specifies when the rule may apply and how it affects the distribution of property to which the person responsible would otherwise have been entitled upon the deceased person’s death. It is based on draft legislation prepared by the New Zealand Law Commission.^[15]

1.15 The NZ Act serves as a codified forfeiture rule, replacing the relevant ‘rules of law, equity and public policy’.^[16] The Law Commission considered that a statute that codified the rule would be clearer and more workable than conferring a statutory discretion on the court.^[17]

1.16 The legislation has been described as ‘technical’,^[18] 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.^[19] 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’.^[20]

1.17 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 within the scope of the rule.^[21]

1.18 The NZ Act came into force on 17 November 2007.^[22] As yet, there are no reported cases.

Previous reviews of the rule by law reform bodies

1.19 Although this reference is the first public review of the forfeiture rule in Victoria, the Commission is able to draw upon the results of earlier reviews by law reform bodies, both in this state and in other jurisdictions. These bodies include:

• the Law Commission of New Zealand^[23]

• the Scottish Law Commission^[24]

• the Law Commission for England and Wales^[25]

• the Tasmania Law Reform Institute^[26]

• the former Victorian Law Reform Advisory Council.^[27]

1.20 The reports and other papers that these bodies have produced provide a rich account of the law and are recommended reading for anyone who wishes to explore the issues.

The Commission’s process

1.21 The Commission’s review was led by the Hon. Philip Cummins AM and a Division which he chaired. The other Division members were Bruce Gardner PSM, Dr Ian Hardingham QC, His Honour David Jones AM, Eamonn Moran PSM QC, Alison O’Brien and the

Hon. Frank Vincent AO QC.

1.22 On 18 March 2014, the Commission published a consultation paper that described the current law and identified possible reform options.^[28] The consultation paper sought written submissions on possible reforms.

1.23 Submissions were invited by 28 April 2014, though the Commission accepted contributions after that date. Seventeen submissions were received and can be viewed on the Commission’s website.^[29] They are listed at Appendix A.

1.24 Throughout the reference, the Commission consulted with legal practitioners, academics, community-based organisations and relevant government agencies.

1.25 Following the publication of the consultation paper, the Commission held two roundtable conferences. The first, on 24 March 2014, considered the forfeiture rule in practice. Participants discussed how well the forfeiture rule is targeted and how effectively it prevents an offender from taking a benefit. The second was held on 26 May 2014 to consider reform options.

1.26 The roundtables were attended by academics and legal practitioners with particular expertise and experience in this area of law, and representatives of the following organisations: the Crime Victims Support Association; the Family Violence and Sexual Assault Unit of the Department of Human Services; Forensicare; Land Victoria; the Law Institute of Victoria; the Loddon Campaspe Community Legal Centre; the Office of Public Prosecutions; the Office of the Public Advocate; the Property and Probate Section of the Commercial Bar Association; Seniors Rights Victoria; State Trustees; Victoria Legal Aid; and Victoria Police.

1.27 The Commission also met separately with judges of the Supreme Court of Victoria.

1.28 In addition, as the options being considered by the Commission included reforms based on New South Wales legislation and practice, discussions were held in Sydney with members and staff of the New South Wales Supreme Court, the Elder Law and Succession Committee of the Law Society of New South Wales, and Professor Prue Vines from the University of New South Wales. The research team also held discussions with staff of the New South Wales Trustee and Guardian and various legal practitioners in

New South Wales.

1.29 A number of other individuals and organisations were consulted during the course of the reference, and a full list is at Appendix B.

Structure of this report

1.30 Chapter 2 contains a broad overview of the need for legislative reform in Victoria, including the problems with the current law and options for reform. It concludes with the Commission’s recommendation for the enactment of a Victorian Forfeiture Act that is based on the UK, ACT and NSW Acts and also draws upon the NZ Act. The remainder of the report discusses the content of the new legislation.

1.31 Chapter 3 addresses the need for the proposed Forfeiture Act to clarify the scope of the forfeiture rule. The Act would describe the unlawful killings to which the rule applies, and those to which it does not. The basis of the distinction would be whether, because of the nature of the killing, justice requires that the rule be applied.

1.32 In Chapter 4, the Commission’s proposals for giving the court a discretion to modify the effect of the rule on a case-by-case basis, where required by the justice of the case, are discussed in detail.

1.33 Chapter 5 considers the effect of the forfeiture rule on the transfer of benefits on the death of the deceased person, including the consequences for innocent third parties. Various reforms are recommended. In most cases, they would take the form of consequential amendments to existing legislation and would be included in the package of reforms introduced by the Forfeiture Act.

1.34 Chapter 6 concludes the report.

1. In Victoria, property is distributed on intestacy in accordance with a scheme established by pt I div 6 of the Administration and Probate Act 1958 (Vic).

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2. Normally, when a joint tenant dies, the property passes to the surviving co‑owner or co‑owners and does not form part of the deceased person’s estate. See Chapter 5 for discussion of the effect of the rule on a joint tenancy.

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3. Helton v Allen (1940) 63 CLR 691.

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4. Estate of Soukup (1997) 97 A Crim R 103, 115.

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5. [1892] 1 QB 147.

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6. Estate of Soukup (1997) 97 A Crim R 103, 115.

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7. See the Commission’s consultation paper for more discussion about the development of the rule: Victorian Law Reform Commission,
   The Forfeiture Rule, Consultation Paper No 20 (2014) 6–16.

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8. Re K, decd [1985] Ch 85; Re K, decd [1986] Ch 180 (Court of Appeal).

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9. Dunbar v Plant [1998] Ch 412.

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10. R v R (Unreported, Supreme Court of New South Wales, Hodgson CJ in Eq, 14 November 1997) (diminished responsibility); Leneghan-Britton v Taylor [1998] NSWSC 218 (28 May 1998) (diminished responsibility); Straede v Eastwood [2003] NSWSC 280 (2 April 2003) (dangerous driving).

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11. By Schedule 4 of the Confiscation of Proceeds of Crime Amendment Act 2005 (NSW).

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12. New South Wales, Parliamentary Debates, Legislative Assembly, 21 September 2005, 18042 (Graham West). Note that Acting Justice Lloyd observed in Public Trustee of New South Wales v Fitter [2005] NSWSC 1188 (24 November 2005) [49] that this statement does not confirm the meaning of the Act and may even be contrary to the plain meaning. A murderer is not permitted in any circumstances to benefit from their crime, even if the court has a statutory discretion to modify the effect of the forfeiture rule. The effect of the amendment was to allow the rule to be applied to a person who has not committed a crime.

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13. Forfeiture Act 1995 (NSW) s 11.

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14. Public Trustee v Fitter [2005] NSWSC 1188 (24 November 2005); Fitter v Public Trustee [2007] NSWSC 1487 (13 December 2007);

    Guler & Ors v NSW Trustee and Guardian & Anor [2012] NSWSC 1369 (13 November 2012); Hill v Hill [2013] NSWSC 524 (7 May 2013).

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15. Law Commission (New Zealand), Succession Law: Homicidal Heirs, Report No 38 (1997).

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16. Succession (Homicide) Act 2007 (NZ) s 5(1).

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17. Law Commission (New Zealand), above n 15, 5.

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18. New Zealand, Parliamentary Debates, House of Representatives, 8 May 2007, 8987 (Christopher Finlayson).

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19. New Zealand, Parliamentary Debates, House of Representatives, 8 May 2007, 8988–9 (Lynne Pillay).

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20. New Zealand, Parliamentary Debates, House of Representatives, 8 May 2007, 8994 (Charles Chauvel).

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21. Succession (Homicide) Act 2007 (NZ) s 4(1) (definition of homicide). Assisted suicide is also defined in s 4(1). Infanticide is as defined in Crimes Act 1961 (NZ) s 178. Suicide pact is as defined in Crimes Act 1961 (NZ) s180(3).

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22. Succession (Homicide) Act 2007 (NZ) s 2.

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23. Law Commission (New Zealand), above n 15.

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24. Scottish Law Commission, Report on Succession, Scot Law Com No 124 (1989); Report on Succession, Scot Law Com No 215 (2009).

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25. Law Commission (England and Wales), The Forfeiture Rule and the Law of Succession, Law Com No 295 (2005).

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26. Tasmania Law Reform Institute, The Forfeiture Rule, Final Report No 6 (2004).

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27. Richard Boaden, ‘The “Forfeiture Rule”’ (Discussion Paper, Law Reform Advisory Council, 1995).

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28. Victorian Law Reform Commission, above n 7.

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29. Victorian Law Reform Commission, Forfeiture (17 July 2014) <http://www.lawreform.vic.gov.au/all-projects/forfeiture>.

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