Changes to the application of the forfeiture rule: legislative changes & new case law

The Forfeiture Rule is the common law principle which provides that where a person is criminally responsible for a death of another, and that person is a material factor in the vesting of property in favour of that person, then the interest in that property is forfeited.

The practical application of the Forfeiture Rule is more often than not considered in the circumstances where the killer is the beneficiary of the slain benefactor. In those circumstances the Rule is restrictively stated as "a man shall not slay his benefactor and thereby take his bounty".

The application of the Forfeiture Rule is not limited to circumstances where the killing was a murder, nor to circumstances relating to the operation of a Will.

The broad public policy and common law underpinnings of the Forfeiture Rule means that it has application in wide circumstances including where a beneficiary has slain a fellow beneficiary and so gains an advancing of an interest or an additional gift under a Will.

The strict application of the Forfeiture Rule by Courts led directly to statutory reform. The Forfeiture Act 1995 (NSW) was introduced to avoid the strict application of the common law Forfeiture Rule in appropriate circumstances.

The Act provides the Supreme Court of NSW with the discretion to modify the operation of the Forfeiture Rule where justice requires it to be modified (for example, where a victim of domestic violence over many years snaps and kills the person who inflicted the violence). The Act provides for a mechanism in applying for "forfeiture modification orders" within 12 months of the death of the deceased person or alternatively leave for a late application - sections 7(1) and (2).

On 28 October 2005, some important amendments were made to the Forfeiture Act by the Confiscation of Proceeds of Crime Amendment Act 2005 (NSW). The Forfeiture Act now also provides for "forfeiture application orders" in addition to "forfeiture modification orders".

The thrust of the amendments are that an "interested person" can apply to the Supreme Court for a "forfeiture application order" in respect of an "offender". An "interested person" does not include an offender or a person claiming through an offender. An "offender" for the purposes of a "forfeiture application order" means a person who has killed another person and been found not guilty of murder by reason of mental illness.

An "interested person" can under the new section 11 apply to the Supreme Court for an order that the Forfeiture Rule apply as if the "offender" had been found guilty of murder. The Court may make an order applying the Forfeiture Rule to the "offender" if it is satisfied that justice requires the Rule to be applied.

In determining whether justice requires the Forfeiture Rule to be applied, the Court is to have regard to the following matters:-

• the conduct of the offender
• the conduct of the deceased person
• the effect of the application of the Rule on the offender or any other person
• such other matters as to the Court appear material.

Unless the Supreme Court grants leave for a late application, a "forfeiture application order" must be made within 6 months after the day on which it is determined that the offender was not guilty of murder.

Transitional rules provide that a "forfeiture application order" may be made in respect of a killing occurring before or after 28 October 2005 but only if the application of the Forfeiture Rule has not been finally determined by the Court in respect of that killing. The amendments do not apply to any Supreme Court determination of the application of the Forfeiture Rule that was made before 28 October 2005.

Amendments put to the test in Court

The transitional rules resulted in the recent amendments being considered in the Supreme Court case In The Estate of the Late Fiona Ellen Fitter & The Forfeiture Act 1995; Public Trustee of NSW v Fitter [2005] NSWSC1188. The case was heard on 9,10 and 11 November 2005.

On 16 October 2001, Fiona Fitter was killed when she was attacked with a knife by her husband George Fitter and her son Grant Fitter. The deceased's daughter, Kylie Fitter took part in the attack but did not inflict any wounds upon her mother. The attackers were charged with murder but were found not guilty by reason of mental illness.

The Public Trustee as administrator of the intestate estate of Fiona Fitter sought a ruling from the Court as to whether it was entitled to administer the estate without regard to the application of the Forfeiture Rule. The deceased's sister Ann Robb took part in the proceedings and cross claimed for a "forfeiture application order". Ann Robb was one of the driving forces behind the introduction of, and assent to, the recent amendments to the Forfeiture Act.

The Court made a "forfeiture application order" and held that the Forfeiture Rule applied to prevent the husband, son and daughter of the deceased sharing in the deceased's estate.

Implications for Estates

Where the operation of the Forfeiture Rule is relevant, the Forfeiture Act now provides competing mechanisms to determine who may benefit from the deceased's estate. A contest about the application of the Forfeiture Rule inevitably adds another hurdle to overcome in the administration of estates.