Inheritance and wrongful death – judicial discretion to reflect ‘community values’

The general (common) law recognises the operation of an unwritten rule of public policy that precludes a person who has killed another person from acquiring a benefit as a result of the death.

This unwritten rule has been tried and tested in many cases with attempts to relax the rule in certain circumstances such as extreme domestic violence.  In New South Wales, the unwritten rule and its operation is now reflected in the Forfeiture Act 1995 (NSW).  A recent helpful and somewhat novel decision of Lindsay J in the NSW Supreme Court (Court) case of Re Settree Estates: Robinson v Settree [2018] NSWSC 1413 exemplifies the involved considerations when determining the operation of the Forfeiture Act.

Forfeiture rule

The unwritten rule of public policy referred to above is known as the forfeiture rule.  The public policy was first identified by Fry L J in Cleaver v Mutual Reserve Fund Life Assurance [1892] 1 QB 147 at 156 when he stated:

“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 a crime of that person.”

In the context of deceased estates, the effect of the rule is that the killer cannot take under the victim’s will or the victim’s intestate estate.  The rule is also applied where one joint tenant has killed the other and where a beneficiary kills another beneficiary and so advances the killer’s interest in a trust.  The general law considered the rule to be absolute with no discretion to relax the rule in any circumstances.  This led to statutory reform and the introduction of the Forfeiture Act in 1995.

Forfeiture Act (Act)

The Act now provides the Court with the discretion, to modify or apply, where justice requires, the operation of the forfeiture rule.

The scheme of the Act revolves around important definitions in s3 of the Act and the possibility of a ‘forfeiture application order’ or a ‘forfeiture modification order’.

The Act defines the ‘forfeiture rule’ to be the unwritten rule of public policy that in certain circumstances precludes a person who has unlawfully killed another person from acquiring a benefit in consequence of the killing.

‘Unlawful killing’ is defined to include any homicide in or connected with NSW that is an offence.  It includes aiding, abetting, counselling or procuring such a homicide and unlawfully aiding, abetting, counselling or procuring a suicide.  The reference to suicide would cover assisting a terminally ill relative to die.

Importantly, the Act does not apply to an unlawful killing that constitutes murder.  The forfeiture rule will continue to be strictly applied in the case of outright murder.

The ‘benefit’ that is lost under the application of the forfeiture rule is defined to include any interest in property and any family provision entitlement under Chapter 3 of the Succession Act 2006 (NSW).  Property itself is a wide concept and is defined by statutory law to mean any legal or equitable interest (whether present, future, vested or contingent) in real or personal property, including money.

Where the Act applies in deceased estates, the issue is usually whether the Court should make a ‘forfeiture modification order’ or a ‘forfeiture application order’.

The Court can make a ‘forfeiture modification order’ under s5 to modify the effect of the forfeiture rule or make a ‘forfeiture application order’ under s11 to apply the forfeiture rule as if the offender had been found guilty of murder.  The Court can only modify or apply the rule if it is satisfied that justice requires such modification or application.  In determining what justice requires, the Court is to consider the following matters:

(a)        the conduct of the offender,

(b)        the conduct of the deceased person,

(c)        the effect of the application of the rule on the offender or any other person,

(d)        such other matters as to the Court appear material.

Applications for orders can be made by an ‘interested person’.  Such a person is defined in s3 to mean the offender, an executor or administrator, a beneficiary or any other person who has a special interest in the outcome of an application.  The Act provides time limits for the making of applications.

Re Settree Estates

Donald and Margaret Settree (parents) had two children, a daughter Wendy Robinson (Wendy) and a son Scott Settree (Scott).  Scott shot dead his parents on 3 December 2014 using an unauthorised prohibited 12 gauge pump-action shotgun.  The parents were considered loving parents and were blameless in the events that happened following a minor domestic dispute.

Scott was tried for the murder of his parents and was found not guilty by reason of mental illness.  An unusual aspect of the criminal trial was that the trial judge found Scott was fit to plead guilty to the charge of possession of an unauthorised prohibited firearm, being the shotgun he used to kill his parents.

The Wills of the parents appointed Wendy as executrix and left the estates in equal shares to Wendy and Scott.  The total value of both estates (including superannuation and life insurance proceeds) was about $4 million.  The not guilty of murder by reason of mental illness meant Scott stood to inherit about $2 million.  This was because of general law authority which has held that the forfeiture rule does not apply in the case of a person found not guilty of murder by reason of mental illness.

Wendy applied to the Court for orders that the forfeiture rule still apply to Scott even though he was found not guilty of murder by reason of mental illness.  Scott’s paternal aunt was appointed as his tutor to defend the proceedings on Scott’s behalf because Scott was ‘a person under legal incapacity’.

Wendy’s Court application was for a ‘forfeiture application order’ under s11 of the Act.  The aunt’s initial position on behalf of Scott was that she would consent to forfeiture of his inheritance provided his inheritance passed to his two sons.  However, Scott’s two sons did not want his inheritance and wanted it to pass to Wendy.  The aunt then withdrew her consent to the forfeiture of Scott’s inheritance.

One issue that had to be determined by the Court was whether the Court had the power to make, or to decline to make, a ‘forfeiture application order’ on terms and conditions.  The issue arose because such a power was expressly provided for in ‘forfeiture modification orders’ (ss5 and 6 of the Act) but not for ‘forfeiture application orders’.  The Court held that on the proper construction of the Act and s86 of the Civil Procedure Act 2005 (NSW), it had the power to make a ‘forfeiture application order’ on terms and conditions.

The Court also looked at the interconnection of the Act with the family provision jurisdiction by reference to general case law.  In determining what ‘justice requires’ it was open to the Court to draw upon the learning from the exercise of the Court’s discretion in family provision cases.  In family provision cases, decisions were based on “considerations of wisdom and justice ….. and contemporary community values”.

Factors that were relevant to the Court’s final orders included Scott’s mental illness, the view that his parents would not have wanted Scott left without provision from their estates in his poor financial position and the nature, scope and purpose of the Act.  The final orders made by the Court included ‘forfeiture application orders’ on the condition that an amount of $50,000 be set aside from each of the parent’s estates to be held on restricted trusts for Scott for his maintenance, education and advancement in life.

Implications for deceased estates

The Act provides competing mechanisms to determine who may benefit from a deceased person’s estate in the circumstances of an unlawful killing that does not constitute murder.  A contest about the application of the forfeiture rule in those circumstances is an additional hurdle that has to be overcome in the administration of estates and only adds to the estate’s legal costs. 

It remains to be seen what will be the impact of the increasing awareness of mental illness in society on the Court’s perception of contemporary community values in the context of cases involving mental illness and the forfeiture rule.

Executors and administrators of estates involving the possible application or modification of the forfeiture rule are always in a difficult position.  In appropriate circumstances, their best protection may be an application to the Court for judicial advice or for declarations as who is entitled to the estate as a result of the tragic event that may have happened.

Author: Gerard Basha