The Forfeiture Rule: Report (html)

2. The need for legislative reform in Victoria

Introduction

2.1 This chapter discusses aspects of the operation and effect of the rule that have caused concern and which, in turn, indicate the most appropriate scope and content of any legislative reform in Victoria. These are:

• lack of clarity about the scope of the rule

• concern about harsh outcomes in some cases

• uncertainty about the effect of the rule

• limits on the judiciary’s ability to change the rule.

2.2 The Commission concludes that Victoria should introduce a Forfeiture Act that reinforces the rule, describes the unlawful killings to which it applies, clarifies its effect, and provides for the court to provide relief in individual cases where required by the justice of the case.

Lack of clarity about the scope of the rule

2.3 The principle that no one who unlawfully kills another can benefit financially from the death is a simple concept that is easily understood. How it relates in practice to a particular homicide is not always as clear.

2.4 The rule as it applies in Victoria is set out in Estate of Soukup.^[1] In that case, Justice Gillard reiterated that:

• the rule applies in murder and manslaughter cases

• the rule does not apply where the person responsible had a mental impairment at the time the crime was committed

• the application of the rule to manslaughter cases does not depend upon moral culpability or any other factor.

2.5 However, Justice Gillard left open the question of whether the rule applies to every manslaughter case. He suggested that the rule does not apply if the person was not guilty of deliberate intentional and unlawful violence or threats of violence resulting in death.^[2]

2.6 Distilling the details of when and how the rule applies can be difficult and has challenged courts for a long time. As long ago as 1920, the rule was already causing confusion. After considering the authorities from the United Kingdom and concurrent developments in United States law, Justice Harvey observed in the New South Wales case Re Tucker that:

The whole doctrine seems to me to be in a very unsatisfactory condition; it is an extraordinary instance of Judge-made law invoking the doctrine of public policy in order to prevent what is felt in a particular case to be an outrage; but I cannot distinguish, consistently with these judgments, one case from the other.^[3]

2.7 Divergent views about the scope of the forfeiture rule have created controversy as well as confusion. Thirty years ago, courts began to make exceptions in view of the nature of the crime and the offender’s moral culpability.^[4] This was a departure from the traditional formulation of the rule that the High Court had endorsed in the leading case of Helton v Allen.^[5] However, in Victoria the rule has applied inflexibly since Justice Gillard reaffirmed the traditional formulation in Estate of Soukup.^[6]

2.8 Justice Gillard said that he did not share the concern of academics and some judges that the parameters, ambit and rationale of the rule are ill-defined and difficult to apply. He found the rationale clear and unambiguous and its application in homicide cases certain.^[7] Nevertheless, the concern to which he alluded remains evident today.

2.9 Participants at the Commission’s roundtable on how the forfeiture rule operates in practice expressed different opinions as to whether the rule applies to unintentional, involuntary and inadvertent acts.^[8] They pointed out that the lack of certainty makes it difficult for legal practitioners to advise their clients. It encourages parties to litigate in order to ascertain inheritance rights in ambiguous cases, which increases costs to the estate, delays distribution to innocent beneficiaries and prolongs the emotional pressure on all concerned. Similar sentiments were conveyed in submissions.^[9]

2.10 Cases to determine whether the forfeiture rule applies can be costly, most often to the deceased person’s estate. The Elder Law and Succession Committee of the New South Wales Law Society estimates that proceedings to obtain judicial advice, including the costs of retaining a solicitor, obtaining counsel’s opinion and filing fees amount to approximately $10,000 to $15,000.^[10]

2.11 While views differ about the scope of the rule, the Commission found overwhelming support for providing clarity and certainty in legislation. None of the comments received in submissions and consultations expressed a preference to maintain the status quo, where the pace and extent of further clarification depends on the facts of the cases that come before the court.

Concern about harsh outcomes in some cases

2.12 Discussion about the scope of the rule commonly arises in response to particular cases where the automatic and inflexible application of the rule is at odds with changes in community attitudes.

2.13 Professor Prue Vines highlighted these attitudinal changes in her submission:

In the eighteenth century the death penalty was notoriously available for about 300 crimes, even though the prerogative of mercy was often exercised. Today we distinguish culpability for murder from manslaughter etc and views about the level of culpability have changed over time. It is clear that the idea that a wife who kills her husband after he has badly abused her over many years is regarded today as far less culpable than she would have been in the past. Assisting a suicide is also regarded as far less culpable, particularly when there is a terminal illness involved, than it was in the past. These differing ideas about culpability need to be reflected in the legislation in some way, especially in relation to the question of whether the forfeiture rule should be applied wholesale or modified.^[11]

2.14 Changes in community views towards family violence have had a marked influence on judicial decisions to depart from the traditional formulation of the rule. In Public Trustee v Evans,^[12] the rule was not applied to a woman who had killed her husband after he had assaulted her and her daughter and then said that he was going to kill the children. It was also not applied in Re Keitley,^[13] where a woman killed her husband out of fear that he would kill her.

2.15 In Troja v Troja,^[14] the court held that a woman who had been convicted of manslaughter for killing her husband was precluded from benefiting under his will. The decision was not unanimous and, in his dissenting judgment, President Kirby stated that:

The knowledge of domestic violence allowed to judges, and of the circumstances in which conduct, although manslaughter, can sometimes be morally virtually blameless, requires of them a rule of sufficient flexibility which accords with the justice of the case. Otherwise, the law becomes a vehicle for serious injustice.^[15]

2.16 The unfair effects that the rule can have in family violence cases was a driving reason for introducing legislation that gives the court a discretion to modify the effect of the rule in the Australian Capital Territory and New South Wales: the Forfeiture Act 1991 (ACT) (‘the ACT Act’) and the Forfeiture Act 1995 (NSW) (‘the NSW Act’). On tabling the Bill in the Legislative Assembly, the Attorney-General of the Australian Capital Territory said that the rule can operate harshly where a death occurs as a result of actions by a ‘battered spouse’.^[16] Parliamentary debate on the New South Wales legislation also suggested that relief from the application of the rule could be warranted in cases of assisted suicide,^[17] suicide pacts,^[18] and culpable driving.^[19]

2.17 In its submission to the Commission, the Crime Victims Support Association maintained that the forfeiture rule should apply without exception.^[20] Other submissions to the Commission conveyed two distinct levels of concern about the harsh effect that the rule can have.

2.18 The first level of concern is that applying the rule to some crimes is inappropriate and unnecessary because of the nature of the act. On this view, specific forms of homicide should be excluded from the scope of the rule. Those suggested included: assisted suicide and suicide pacts;^[21] accidental death, including where arising from negligence in a car accident;^[22] killings resulting from a negligent act or omission;^[23] murders perpetrated within the context of family violence where the charge of defensive homicide would have later been available;^[24] and infanticide.^[25]

2.19 The second level of concern is that sometimes a person has committed a crime to which the rule should normally apply but it is not in the interests of justice to apply it. A number of submissions proposed that the court should have a statutory discretion, such as provided by the ACT and NSW Acts, to allow modification of the effect of the rule on a case-by-case basis.^[26] The Institute of Legal Executives (Victoria), for example, submitted that any exceptions to the rule should be made after judicial consideration of the circumstances:

There are many different forms of killing—some intentional, some intentional but without any intention to profit (ie suicide pacts), some accidental, some effected in

self-defence (ie Re Keitley); and only a Court hearing all of the facts would be in a position to consider the relevance of all of the different applicable factors in deciding whether or not the rule should apply.^[27]

Uncertainty about the effect of the rule

2.20 Once the forfeiture rule has been applied, the court must determine how to dispose of the benefits that the person responsible for the death otherwise would have been entitled to receive. These may include inheritance or property rights transmitted by the deceased person’s will, on intestacy or by survivorship. The offender may also have stood to benefit from the deceased person’s superannuation fund or life insurance policy or could have been entitled to claim for family provision,^[28] or a pension.

2.21 Courts have responded in a variety of ways. Their decisions have had consequences for the person responsible, the deceased person’s estate, innocent third parties with an interest in the deceased person’s property, and descendants of the person responsible whose interest in the estate derives from that person.

2.22 While solutions have been tailored to the circumstances of the case, this approach can create uncertainty, delay the distribution of the estate, and increase the legal expenses borne by the estate.

2.23 State Trustees stated in its submission that clarifying the rule in legislation would guide personal representatives in administering deceased estates.^[29] The Office of Public Prosecutions noted that, if the effect of the rule were clearer, it could more accurately target the restraining orders obtained over property that a suspected unlawful killer stands to receive as a result of a homicide:

At the moment, when an offender jointly owns real property with the victim and inherits it pursuant to survivorship laws, it’s unclear as to the extent of the offender’s interest in that property given the uncertainty surrounding the application of the forfeiture rule. The current practical approach is to restrain the entire property and then deal with offender and beneficiaries’ property claims later on.^[30]

2.24 When recommending that New Zealand introduce legislation that codifies the forfeiture rule, the New Zealand Law Commission highlighted the need to set out clearly the effect of the rule in order to relieve the burden on estates.

The Commission accepts that without legislation New Zealand courts would, considering each problem as it arises, decide eventually all the unanswered questions. But leaving it to the judges has its price. It would be preferable, if practicable, to spare estates (often of only modest value) the considerable expense of legal proceedings. Resolving these proceedings often requires the involvement of many legal counsel… There are also the problems of delay. ^[31]

2.25 The Succession (Homicide) Act 2007 (‘the NZ Act’) codifies not only the application of the rule but its effect in a simple and accessible way. As such, it provides a point of reference in determining the most appropriate legislative response to uncertainty about the effect of the rule in Victoria.

A legislative rather than judicial responsibility

2.26 Because the forfeiture rule leaves the court no discretion to do other than apply the rule strictly and absolutely, any change to the rule is a matter for the legislature. Noting that the rule operated harshly in some cases, Justice Gillard directly called for legislative reform in Estate of Soukup:

I recommend to the Attorney-General that consideration be given to changing the law along the lines of the English Forfeiture Act and in this regard thought be given to authorising the courts to modify the rules to enable convicted persons to succeed to property on the principles set out in the Family Law Act or Pt IX of the Property Law

Act 1958.^[32]

2.27 Although some judicial officers, legal practitioners and academics have argued that the court already has the power, and responsibility, to ensure that the common law rule adapts to the needs of modern society, this is not the prevailing interpretation of the law in Australia.^[33]

2.28 Even if it were, cases that would present the court with an opportunity to clarify or alter the scope and application of the rule are rare. Many are resolved before coming before a judge, with the offender choosing to disclaim any interest in the estate rather than press their claim in court.^[34] Moreover, the circumstances in which the forfeiture rule should not be applied to a person who has unlawfully killed another, or who has unlawfully aided and abetted their death, are exceptional.

2.29 Certainly, submissions and comments made to the Commission convey the expectation that reform of the scope of the rule is a policy issue for Parliament.^[35] Similar sentiments were expressed by the New Zealand Law Commission at the conclusion of its review of the forfeiture rule:

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.^[36]

Model for legislative reform

2.30 The concerns raised in submissions and consultations related to the operation of the rule in particular circumstances. The rule itself was not questioned. It follows that any legislative reform in Victoria should be targeted at resolving those concerns while preserving the public policy principle.

2.31 The Commission’s consultation paper discussed three approaches to legislative reform and invited submissions on which option, combination of options, or other alternative is most suited to reforming the forfeiture rule in Victoria:

• Amend existing legislation to clarify the effect of the rule on the distribution of the killer’s share of the deceased person’s estate and other forfeited benefits arising from the victim’s death.

• Empower the court to modify the effect of the rule by introducing legislation that is similar to the ACT and NSW Acts.

• Replace the common law rule with a statutory code that specifies the unlawful killings that would lead to forfeiture, and the impact that this would have on the benefits to which the person responsible would have been entitled. This is the model adopted in New Zealand.

2.32 Each option responds to one or more issues that underpinned calls for legislative reform, but none provides a complete response.

Amendments to existing legislation

2.33 The first option, to amend existing legislation, could co-exist with either of the other two. It would provide greater certainty to executors and administrators in administering the deceased person’s estate and managing non-estate assets that would have passed to the offender on the deceased person’s death. There was general support for this option and comments focused on specific amendments to the Administration and Probate Act 1958 (Vic), the Wills Act 1997 (Vic) and the Transfer of Land Act 1958 (Vic).^[37]

2.34 This option is a partial response because, although it clarifies the effect of the rule, it does not provide relief when the effect is unfair and nor does it assist in identifying when the rule applies.

Statutory judicial discretion

2.35 Many submissions favoured this option. It would provide a means of preserving the common law rule while allowing for individual exceptions where required by the justice of the case. Members of the legal profession and the judiciary in New South Wales told the Commission that the NSW Act works well.^[38]

2.36 However, a disadvantage of this model is that it does not reduce uncertainty about the scope of the rule. The introduction of the NSW Act has not fostered development of the rule at common law, and has possibly created confusion. The issue in proceedings under the NSW Act is whether the rule should be modified in the circumstances, rather than whether it applies. It follows that the court is unlikely to examine the boundaries of the rule in its decision. Further, the introduction of the NSW Act has led executors and administrators of deceased estates to incorrectly believe that an application needs to be made under that Act to determine whether the rule applies, even if the relevant offence

is clearly an unlawful killing for the purposes of the Act.^[39]

2.37 Another drawback is that the model does not clarify the effect of the rule. When the

New South Wales Attorney-General’s Department reviewed the NSW Act in 2002, the Public Trustee drew attention to the need for clarification:

The Public Trustee comments that, at present, there is some uncertainty as to the effect that modification orders may have on the administration of an estate. It is noted that one interpretation is that the share forfeited by the operation of the Act passes as on intestacy. The opposing interpretation is that the will is “read down” so that the remaining beneficiaries take portions of the share forfeited by the offender. It is also noted that this uncertainty would … usually be removed through specific substitutionary provisions in individual wills. However, these provisions are not found in all wills.^[40]

2.38 Additional concerns about this option were raised by the Crime Victims Support Association. In its submission, the Association said that judicial discretion would lead to subjective decisions, add to the costs of the deceased person’s estate and place more demands on the court’s resources.^[41]

Codification of the rule

2.39 This option would remove uncertainty about the scope and effect of the rule. The community’s views about which offences should attract the operation of the rule, and those which should not, would be conveyed in the legislation. The administration and distribution of the deceased person’s estate would be simplified, saving costs and time.

2.40 None of the submissions called for Victoria to enact legislation that replicates the NZ Act. However, Loddon Campaspe Community Legal Centre expressed a preference for statutory exceptions to the rule, rather than relying on judicial discretion:

Of those two approaches, we believe that codification and providing an exception is the most certain path and most likely to achieve consistency in Victoria, albeit at the cost of inconsistency with other Australian jurisdictions that provide for the exercise of judicial discretion in such cases.^[42]

2.41 A significant drawback of this option is that, alone, it would replace the inflexible common law rule with an inflexible statutory rule. There would continue to be no means of responding to individual cases where applying the rule would not be in the interests of justice.

Combining the options

2.42 Some submissions identified a need for more statutory guidance than provided by the ACT and NSW Acts, but stopping short of codification. Professor Prue Vines said that, if the court were given a discretion to modify the effect of the rule, it may still be useful to specify where the rule should not apply, to save the few people who might be affected by significant costs.^[43] Carolyn Sparke QC put the view that:

There is a clear need for a flexible regime in which a court can vary the strict application of the forfeiture rule. However, there is also a need for certainty. Therefore, there should be a clearly defined default position in any legislation rather than simply a broad-based discretion in the court.^[44]

2.43 A number of contributors to the Commission’s consultations recognised that elements of all three options could be incorporated into Victoria’s Forfeiture Act. ^[45] State Trustees called for legislation that codifies the rule but also provides for exceptions on a case-by-case basis:

Whilst setting the default outcomes for given types of cases, such codification should also include scope for applications to the court, in appropriate circumstances and

within specified timeframes, to apply, or modify the application of, forfeiture in the

particular case (including whether the killer should be treated as having predeceased

the deceased).^[46]

2.44 The Commission agrees that any legislation that Victoria introduces should both clarify the boundaries of the rule and allow the court to modify the effect of the rule in the interests of justice. Its preferred model:

• sets out the scope and effect of the forfeiture rule

• excludes offences to which it is inappropriate and unnecessary to apply the rule because of the nature of the act

• provides for the court, on application, to modify the effect of the rule where the justice of the case requires

• provides for consequential amendments to related legislation concerning the disposition of a deceased person’s assets.

Proposed reform

2.45 The Commission proposes that Victoria enact a Forfeiture Act that is based primarily on the ACT and NSW Acts. There are obvious benefits to the community in building on a tested model and following a similar path of reform as that followed by other Australian jurisdictions.

2.46 Like the ACT and NSW Acts, the Victorian Forfeiture Act would give the court a discretion to modify the effect of the rule. However, the Victorian Act would also describe the scope of the rule and its effect on the distribution of the deceased person’s estate and other property. The package of reform would include consequential amendments to the Administration and Probate Act, Wills Act, Transfer of Land Act and other legislation that regulates the disposition of a person’s assets after death.

2.47 The Commission also considers that, to place the new legislation alongside the common law, and inform the court when exercising its discretion, the purpose of the Forfeiture Act should be specified in the Act.

Recommendations

1  Victoria should introduce a Forfeiture Act that defines the scope and effect

of the common law rule of forfeiture and provides for the Supreme Court,

on application, to modify the effect if the justice of the case requires it.

2 The purpose of the Forfeiture Act should be set out in the legislation

and include:

(a) (a) to reinforce the common law rule of public policy that a person who has unlawfully killed another person cannot acquire a benefit in consequence of the killing and, in so doing, to:

(i) manifest the community’s denunciation of unlawful killing

(ii) deter persons from unlawfully killing others for financial gain

(b) (b) to modify the application of the rule to exclude offences where

justice requires

(c) (c) to provide for the effect of the rule to be modified if the justice of the case requires it in view of an offender’s moral culpability and responsibility for the offence

(d) (d) to codify the effect of the rule on rights of succession.

1. (1997) 97 A Crim R 103, 115.

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2. Ibid. The question of whether the rule should apply to unlawful killings arising from inadvertent, involuntary or negligent acts or omissions is discussed in Chapter 3. The Commission concludes that, in many cases, it should.

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3. Re Tucker (1920) 21 SR (NSW) 175, 181.

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4. Public Trustee v Evans (1985) 2 NSWLR 188; Public Trustee v Fraser (1987) 9 NSWLR 433; Permanent Trustee Co Ltd v Freedom from Hunger Campaign (1991) 25 NSWLR 140; Re Keitley [1992] 1 VR 583; Miliankos v Miliankos (Unreported, Supreme Court of Victoria, Nathan J, 24 March 1994). For a discussion of these cases, see Victorian Law Reform Commission, The Forfeiture Rule, Consultation Paper No 20 (2014) 9–10. Divergent views about the scope of the rule can be seen in the first case in which the rule was enunciated, Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147: Anthony Dillon, ‘When Beneficiary Slays Benefactor: The Forfeiture “Rule” Should Operate as a Principle of the General Law’ (1998) 6 Australian Property Law Journal 254.

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5. (1940) 63 CLR 691, 709 (Dixon, Evatt, McTiernan JJ).

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

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7. Ibid 118. Justice Gillard cited in this regard: Justice Harvey in Re Tucker (1920) 21 SR (NSW) 175 (23 December 1920); T G Youdan, ‘Acquisition of Property by Killing’ (1973) 89 Law Quarterly Review 235; and Ken Mackie, ‘Manslaughter and Succession’ (1988) 62 Australian Law Journal 616.

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8. Consultation 5 (Roundtable 1).

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9. Submissions 6 (Office of Public Prosecutions); 9 (State Trustees).

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10. Submission 13 (Elder Law and Succession Committee of the Law Society of New South Wales).

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11. Submission 1 (Professor Prue Vines).

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12. (1985) 2 NSWLR 188.

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13. [1992] 1 VR 583.

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14. (1994) 33 NSWLR 269.

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15. Ibid 285.

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16. Australian Capital Territory, Parliamentary Debates, Legislative Assembly, 19 September 1991, 3526 (Terry Connolly, Attorney-General).

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17. New South Wales, Parliamentary Debates, Legislative Council, 25 October1995, 2257 (Jeffrey Shaw, Attorney-General); New South Wales, Parliamentary Debates, Legislative Council, 20 November 1995, 3481 (Meredith Burgmann); New South Wales, Parliamentary Debates, Legislative Assembly, 7 December1995, 4473 (Andrew Tink, Faye Lo Po’).

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18. New South Wales, Parliamentary Debates, Legislative Council, 25 October1995, 2257 (Jeffrey Shaw, Attorney-General); New South Wales, Parliamentary Debates, Legislative Council, 20 November 1995, 3481 (Meredith Burgmann).

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19. New South Wales, Parliamentary Debates, Legislative Council, 25 October1995, 2257 (Jeffrey Shaw, Attorney General); New South Wales, Parliamentary Debates, Legislative Council, 20 November 1995, 3481–2 (Meredith Burgmann).

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20. Submission 8 (Crime Victims Support Association).

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21. Submissions 3 (Janine Truter); 9 (State Trustees).

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22. Submission 1 (Professor Prue Vines).

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23. Submission 9 (State Trustees).

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24. Submission 11 (Loddon Campaspe Community Legal Centre).

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25. Submission 9 (State Trustees).

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26. Submissions 2 (Michael P Tinsley); 4 (Victoria Police); 10 (Law Institute of Victoria); 13 (Elder Law and Succession Committee of the Law Society of New South Wales); 14 (Property and Probate Section of the Commercial Bar Association); 16 (The Institute of Legal Executives (Victoria)); 17 (Carolyn Sparke QC). Consultation 15 (Supreme Court of Victoria—Judges).

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27. Submission 16 (The Institute of Legal Executives (Victoria)).

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28. A person for whom a deceased person had a responsibility to make provision can apply for a court order redistributing the deceased person’s estate in their favour. This can occur whether or not the deceased person made a will: Administration and Probate Act 1958 (Vic)

    s 91.

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29. Submission 9 (State Trustees).

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30. Submission 6 (Office of Public Prosecutions).

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31. Law Commission (New Zealand), Succession Law: Homicidal Heirs, Report No 38 (1997) 2.

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32. Estate of Soukup (1997) 97 A Crim R 103, 118. The reference is to the Family Law Act 1975 (Cth) and Part IX of the Property Law Act 1958 (Vic). Part IX of the Property Law Act dealt with property settlements between de facto partners. It was repealed in 2008 and this area of law is now also regulated by the Family Law Act.

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33. The prevailing view has been challenged by those who consider it is within the court’s power not to apply the rule. They see the rule as a principle of equity, where the court can decide whether it would be in accordance with good conscience to allow the killer to obtain a benefit in the circumstances. A view in a similar vein is that, as the rule is a creation of the common law, it is open to the courts to modify it as needed. See, for example: Chris Triggs, ‘Against Policy: Homicide and Succession to Property’ (2005) 68 Saskatchewan Law Review 117, 118; Phillip H Kenny, ‘Forfeiture Act 1982’ (1983) 46 Modern Law Review 66; Barbara Hamilton and Elizabeth Sheehy, ‘Thrice Punished: Battered Women, Criminal Law and Disinheritance’ (2004) 8 Southern Cross University Law Review 96, 97. Anthony Dillon has argued that it is a principle of general law that is not dependent on either the common law or equity jurisdictions: above n 4.

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34. Consultation 9 (Elder Law and Succession Committee of the Law Society of New South Wales).

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35. Consultation 16 (Roundtable 2).

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36. Law Commission (New Zealand), above n 31, 5.

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37. See Chapter 5 for a discussion of these proposed amendments.

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38. Consultations 7 (Supreme Court of New South Wales—Judges); 9 (Elder Law and Succession Committee of the Law Society of New South Wales).

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39. Tasmania Law Reform Institute, The Forfeiture Rule, Final Report No 6 (2004) 18. The comment was made by the New South Wales Public Trustee during a review of the NSW Act in 2002, and was cited in a submission to the Tasmania Law Reform Institute that was reproduced in the Institute’s report.

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40. New South Wales, Report on the Review of the Forfeiture Act 1995: New South Wales Attorney-General’s Department, Parl Paper No 72 (2002) 9. The Public Trustee is now known as the NSW Public Trustee and Guardian.

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41. Submission 8 (Crime Victims Support Association).

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42. Submission 11 (Loddon Campaspe Community Legal Centre).

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43. Submission 1 (Professor Prue Vines).

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44. Submission 17 (Carolyn Sparke QC).

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45. Consultation 5 (Roundtable 1); 15 (Supreme Court of Victoria—Judges).

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46. Submission 9 (State Trustees).

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