The forfeiture rule is a common law principle which provides that a person, who is criminally responsible for the death of another, will forfeit their right to benefit from the estate of that person – to profit from crime. The forfeiture rule has been modified by equity and statute inconsistently throughout Australian jurisdictions.
The cases below illustrate how the modifications of the rule have produced inconsistent outcomes in case law throughout different jurisdictions.
On 26 May 2016, in the matter of the Estates of the late Michael John Smith and Kim Melina Smith, the Victorian Supreme Court ruled that the forfeiture rule did not apply to a situation where the son of the deceased caused the death of his parents, on the basis that he was found to be under a condition of mental impairment at the time of killing. The son who clubbed his parents to death in 2011, while suffering from chronic paranoid schizophrenia, will now inherit almost half their $1.1 million estate.
At para [7] his Honour Derham As J observed: ‘It is common ground between the parties that because Brett was found not guilty of the murder of his parents by reason of mental impairment, the forfeiture rule does not apply to him so that he is still entitled to inherit the share of his parents estates left to him under their wills’
21 days prior to the Victorian Supreme Court judgement, on 5 May 2016, in the Estate of Raul Novosadek the New South Wales Supreme Court did order forfeiture in a case involving very similar facts (in respect of the killings) where there was also a finding of ‘not guilty’ by reason of mental illness.
The discrepancies between the two judgements are attributed to the fact that in Victoria, the common law principle of forfeiture has been abrogated in cases involving killing while suffering from mental impairment. This is the position of most Australian States and Territories.
However, the Forfeiture Act in NSW specifically allows for judicial discretion in cases of manslaughter where ‘the justice of the case’ requires it. The NSW Act was amended in 2005 to prevent mentally ill murderers from profiting from their crime by applying the forfeiture rule. The rule holds firm in NSW where there is a finding of not guilty of murder and the Court is satisfied that justice requires the rule to be applied as if the offender had been found guilty of murder.
In a report by the Victorian Law Reform Commission in 2014, it was stated:
“The forfeiture rule is an expression of the ‘fundamental principle that crime should not pay, and it conveys the community’s strongest disapproval of the act of homicide…[but] at common law, the rule is hard and fast…[it can] operate unfairly because it is applied inflexibly and without regard to the moral culpability of the person responsible for the unlawful killing.”
A case involving similar fact circumstances would likely be resolved by the Supreme Court of the Australian Capital Territory, in line with the judgement of our Supreme Court counterpart in New South Wales. This is because The Forfeiture Act in ACT has a similar provision to NSW which allows the Supreme Court to modify the effect of the forfeiture rule if satisfied that, having regard to the conduct of the offender and of the deceased and to any other circumstances that appear to the court to be material, the justice of the case requires the effect of the rule to be modified.

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