



COURT OF APPEAL FOR ONTARIO

CITATION: Dhingra v. Dhingra, 2012
    ONCA 261

DATE: 20120424

DOCKET: C53965

Rosenberg, Cronk and Watt JJ.A.

BETWEEN

Ved Parkash Dhingra

Applicant (Appellant)

and

Paul
    (Vikas) Dhingra acting as Estate Administrator of the Estate of Kamlesh
    Kumari Dhingra

Respondent (Respondent in Appeal)

Eric M. Wolfman, for the appellant

Vito Scalisi, for the respondent

Heard: December 7, 2011

On appeal from the judgment of Justice Andra Pollak of
    the Superior Court of Justice dated June 16, 2011, with reasons reported at
    2011 ONSC 3741.

Rosenberg
    J.A.:

[1]

This appeal concerns the rule of public policy that a person who
    kills another cannot share in the deceaseds estate. The principal issue in
    this appeal is whether that rule applies where the beneficiary, in this case of
    an insurance policy, was found not criminally responsible on account of mental
    disorder in the death of the deceased. A second issue is the role played by the
Civil Remedies Act, 2001
, S.O. 2001, c. 28. The application judge Pollak
    J. held that the public policy rule applied.

[2]

For the following reasons, I would allow the appeal.

THE
    FACTS

[3]

In 1998, the appellant took out a group life insurance policy in
    the amount of $51,000. His wife was named as the beneficiary. Under the policy,
    his wife was also an insured and the appellant the beneficiary. The appellant
    had been suffering from a serious mental disorder for many years. According to
    the respondent, the appellants son, the appellant and his wife had been
    separated since 1992.

[4]

In 2006, the appellant killed his wife. He was tried on a charge
    of second degree murder and in 2008, he was found not criminally responsible on
    account of mental disorder. At that time, the appellant was 66 years of age.
    The Ontario Review Board ordered that the appellant be held in a medium-secure
    facility at Whitby Mental Health Centre. As a result of a subsequent order of
    the Board, the appellant was granted a conditional discharge and is now living
    in the community.

[5]

In May 2007, the respondent, acting on a Power of Attorney,
    submitted an Accidental Death Claim application claiming the proceeds of the
    insurance policy on behalf of the appellant. The insurer, Scotia Life, approved
    payment of the insurance proceeds to the appellant but did not immediately pay
    out the proceeds of the policy. After the criminal trial, the respondent, now
    acting as administrator of his mothers estate, requested that the proceeds should
    be paid to the estate.

[6]

In view of the conflicting claims, Scotia Life brought an
    application pursuant to s. 320 of the
Insurance Act
, R.S.O. 1990, c.
    I.8, to pay the proceeds of the policy into court. In 2009, an order was
    granted requiring Scotia Life to deposit the insurance proceeds into court. The
    appellant then brought an application to have the proceeds paid to him.

REASONS OF
    THE APPLICATION JUDGE

[7]

The application judge held that the law in Canada is as set out
    in
Ontario Municipal
    Employees Retirement Board v. Young
,
(1985), 49 O.R. (2d) 78
    (H.C.J.). She interpreted that decision as holding that the rule in some United
    States jurisdictions that the public policy rule only applies in the case of an
    intentional killing was not the law in Canada.  She referred to the following
    passage from p. 81 of the
Young
reasons:

These cases have been consistently
    followed by the Canadian Courts with one exception, in the case of a careless
    driving conviction to which I will be referring. There appear to be numerous
    American decisions that state that the rule of public policy prohibiting a
    person from benefiting from his own criminal act is only applicable if the
    killing is intentional.
Were I not
    bound by the English and Canadian decisions I would, in this case, have
    favoured following the American decisions and found in favour of Therese Vezina
    Young. She did not intend to kill her husband. He would have died shortly in
    any event and she would have had the benefit of the pension. However, in my
    view, the law is clear and she is not entitled to benefit.
[Emphasis added by application judge.]

[8]

The application judge held as follows:

Although
    the Applicant attempts to distinguish the Canadian jurisprudence relied on by
    Paul, and both parties submit that there is no jurisprudence directly on point,
    I find that the court's finding referred to above, is clear that the American
    jurisprudence is not applicable in Canada. Further, I agree with the Estate,
    that the law in Canada does not support the Applicant's submission that the
    public policy rule does not apply in this case.
The Applicant
    committed second degree murder of his ex-wife Kamlesh. Even though he was found
    not criminally responsible, he still physically committed the crime. There is
    no judicial support in Canada for the Applicant's submission that this Court
    ought to require a finding of intent to commit the crime in order to apply the
    public policy rule.  [Emphasis added.]

[9]

The application judge also referred to s. 17 of the
Civil Remedies Act
but did
    not find it necessary to consider that provision. I will return to the
Civil Remedies Act
later
    in these reasons.

[10]

The application judge therefore dismissed the appellants
    application to have the funds held in court paid out to him. She did not,
    however, make an order for the disposition of the funds. Thus, the funds remain
    held in court. The application judge ordered that the appellant pay the
    respondents costs, fixed at $7,127.78.

POSITIONS
    OF THE PARTIES

[11]

The appellant submits that the public policy rule
[1]
does not apply to a beneficiary who was found not criminally responsible on
    account of mental disorder. Even if the appellant were not entitled to the
    funds, the wifes estate would have no claim to the insurance proceeds as it is
    not a named beneficiary in the event of the wifes death. The appellant also
    submits that, in any event, costs should not have been awarded against him.

[12]

The respondent takes the position that the application judge
    properly held that the proceeds of the insurance policy should not be paid to
    the appellant in accordance with the public policy rule. He accepts that the
    estate is not entitled to the proceeds. He submits that the proceeds should be
    forfeited to the Crown pursuant to the
Civil Remedies Act
.

ANALYSIS

The Public Policy Rule

[13]

Decisions from the Supreme Court of Canada have provided various
    descriptions of the public policy rule. For example:

[14]

Oldfield v.
    Transamerica Life Insurance Co. of Canada
, 2002 SCC 22, [2002] 1
    S.C.R. 742, at para. 11:

The public policy rule at issue is that a
    criminal should not be permitted to profit from crime. Unless modified by
    statute, public policy operates independently of the rules of contract. For
    example, courts will not permit a husband
who
    kills his spouse to obtain her life insurance proceeds
, regardless
    of the manner in which the life insurance contract was worded. As Ferguson J.
    held in the court below, public policy "applies regardless of the policy
    wording -- it is imposed because of the courts' view of social values" (p.
    119). [Emphasis added.]

[15]

Brissette
    Estate v. Westbury Life Insurance Co
.; Brissette Estate v. Crown
    Life Insurance Co.,
[1992] 3 S.C.R. 87, at p. 94:

The rationale of the policy which denies
    recovery to the felonious beneficiary is that a person should not profit from
    his or her own criminal act. It is consistent with this policy
that a person should not be allowed to
    insure against his or her own criminal act
irrespective of the
    ultimate payee of the proceeds. [Emphasis added.]

[16]

Lundy v. Lundy

(1895), 24 S.C.R. 650, at pp. 652-53:

I cannot agree in the conclusion of the
    Court of Appeal, nor in the reasoning by which that conclusion was arrived at.
    The reasoning of the court would seem to me rather to apply to a case of
    justifiable or excusable homicide than to a case of manslaughter. The principle
    upon which the devisee is held incapable of taking under the will of the person
    he kills is, that no one can take advantage of his own wrong.
Then surely an act for which a man is
    convicted of manslaughter and sentenced to a long term of imprisonment was a
    wrongful, illegal and formerly (when felonies were recognized as forming a
    particular class of offences) a felonious act
. I can see no
    principle on which to rest the decision of the Court of Appeal, and I can find
    no authority in support of it. On the contrary, the case of
Cleaver v. Mutual Reserve Fund Life
    Association
, [1892] 1 Q.B. 147, proceeds upon reasons which admit
    of no such distinction as has been made by the judgment appealed against in the
    present case. That was itself a case of murder, but the Lord Justices lay no
    stress on the crime being a premeditated one, and indeed Lord Justice Fry uses
    language which indicates, as the ground of his decision, a principle which
    would include all wrongful acts, not merely felonies but misdemeanours, and
    this sound principle of universal jurisprudence the Lord Justice states in the
    following language:

No system of jurisprudence can
    with reason include among the rights which it enforces rights directly
    resulting to the person asserting them from the crime of that person. If no
    action can arise from fraud, it seems impossible to suppose that it can arise
    from felony or misdemeanour.

[Emphasis added.]

[17]

None of these cases deals with the issue here: whether the rule
    of public policy applies to a person found not criminally responsible on
    account of mental disorder. On the other hand, there is at least one decision
    from the Supreme Court of Canada that seems to hold that the rule does not
    apply where the person was insane at the time of the killing. In
Nordstrom v. Baumann
,
    [1962] S.C.R. 147, the deceased husband died in the course of a fire set by his
    wife. It does not appear that the wife was ever tried for the killing. At the
    time of the proceedings she was being held at the Provincial Hospital for the insane.
    The issue in
Nordstrom
was whether the wife was entitled to share in the estate of her deceased
    husband. The application judge had held that she could on the basis that she
    would have been found insane as defined in former s. 16 of the
Criminal Code
,
    R.S.C. 1985, c. C-46. The appeal by the wife concerned procedural issues. The
    cross-appeal by the administrator of the husbands estate, however, directly
    challenged the application judges finding that the wife was insane within the
    meaning of s. 16.

[18]

Speaking for the court on the cross-appeal, Ritchie J. at p. 154
    appeared to accept that the rule of public policy did not apply if the wife was
    properly found to be insane:

The real issue before the trial judge was
    whether or not, when she set this fire, the appellant was insane to such an
    extent as to relieve her of the taint of criminality which both counsel agreed
    would otherwise have precluded her from sharing in her husband's estate under
    the rule of public policy exemplified in such cases
as Lundy v. Lundy
[
(1895), 24 S.C.R. 650
],
The London Life Insurance Company v.
    Trustees of Lang Shirt Company Limited et al
. [
[1929] S.C.R. 117
,
1 D.L.R. 328
],
In the

Estate of Crippen
[
[1911] P. 108
, 80 L.J.P.
    47] and
Cleaver v. Mutual
    Reserve Fund Life Association
[
[1892] 1 Q.B. 147, 61 L.J.Q.B. 128].

[19]

The court allowed the wifes appeal and dismissed the
    cross-appeal with the result that the wife was entitled to a share of her
    husbands estate in view of the application judges finding of fact that she
    was insane.

[20]

The exception from the public policy rule in cases of insanity
    was also recognized by Estey C.J.H.C. in
Re
    Dreger
(1976), 12 O.R. (2d) 371, at p. 377:

The next issue which arises at this stage
    of these proceedings is whether or not the husband, having killed his wife, can
    succeed to any benefits under her will. It has, of course, for many years been
    contrary to public policy that any person should be allowed to benefit from his
    own crime. Applied to the circumstances of the transmission of property, a
    beneficiary under this rule of public policy cannot receive property under the will:
Lundy et al. v. Lundy

(1895), 24 S.C.R. 650
.
    This principle of law was recently discussed in this Court in
Re Gore
,
[1972] 1 O.R. 550
,
23 D.L.R. (3d) 534
.
The only exception to this rule is
    that a person of unsound mind is not so disqualified from receiving a benefit
    under the will of a person he has killed while in law insane
:
Re Estate of Maude Mason

(1916), 31 D.L.R. 305
,
[1917] 1 W.W.R. 329
, 23
    B.C.R. 329 (B.C.S.C.);
Re
    Pitts; Cox v. Kilsby
, [1931] 1 Ch. 546;
Re Houghton; Houghton v. Houghton
, [1915] 2
    Ch. 173. [Emphasis added.]

[21]

Re Dreger
was a case of murder/suicide, and Estey C.J.H.C. held that those attempting to
    claim through the husband had not established that he was insane at the time he
    killed his wife. Accordingly, the public policy rule applied and their claim
    was dismissed.

[22]

In my view, the public policy rule is as set out in
Nordstrom
and
Re Dreger
and the person
    who is not guilty by reason of insanity, now termed not criminally responsible
    on account of mental disorder, is not prevented from taking under an insurance
    policy. The only question, then, is whether the rule of public policy can be
    said to have been varied because of the intervention by the legislature through
    the
Civil Remedies Act
.
    I will deal with that particular issue later. At this point, I simply state my
    view that I can see no reason not to apply
Nordstrom
and
Re Dreger
. To the
    contrary, developments since 1976 have only strengthened the policy basis for
    making an exception for persons found not criminally responsible.

[23]

In
Winko v.
    British Columbia (Forensic Psychiatric Institute)
,
[1999] 2 S.C.R. 625, the court was required to consider the constitutionality
    of the new Part XX.1 of the
Criminal
    Code
that was enacted in the wake of the
    Supreme Court of Canadas holding in
R.
    v. Swain
, [1991] 1 S.C.R. 933, that the
    former
Criminal Code
provisions dealing with mentally ill offenders were
    unconstitutional. As part of its revision of the
Criminal Code
, Parliament also amended s. 16 to eliminate the insanity
    defence, replacing it with the concept of not criminally responsible on account
    of mental disorder. Where the person meets this definition, he or she is found
    not criminally responsible on account of mental disorder (NCR), pursuant to
    s. 672.34 of the
Criminal
    Code
.
In
Winko

at para. 20, McLachlin
    J. described the purpose of the new provisions:

Part XX.1 reflected an entirely new
    approach to the problem of the mentally ill offender, based on a growing
    appreciation that treating mentally ill offenders like other offenders failed
    to address properly the interests of either the offenders or the public.
The mentally ill offender who is
    imprisoned and denied treatment is ill-served by being punished for an offence
    for which he or she should not in fairness be held morally responsible.
At the same time, the public facing the unconditional release of the untreated
    mentally ill offender was equally ill-served. To achieve the twin goals of fair
    treatment and public safety, a new approach was required. [Emphasis added.]

[24]

It seems to me that if a person found not criminally responsible
    on account of mental disorder is not morally responsible for his or her act,
    there is no rationale for applying the rule of public policy. That rule is
    founded in the theory that people should not profit from their crimes or, more
    broadly, by their own wrongs. Section 16 and Part XX.1 of the
Criminal Code
deny that
    the NCR accused has committed a crime or can be held legally responsible for
    any wrongdoing. It was an error for the application judge to describe the
    appellant as having committed second degree murder. Further in
Winko
, at para. 42,
    McLachlin J. makes the point that the NCR accused is not to be punished; rather,
    Parliament has signalled that the NCR accused is to be treated with the utmost
    dignity and afforded the utmost liberty compatible with his or her situation.

[25]

The approach in other common law countries is generally to exempt
    persons with a mental disorder that would give rise to an insanity defence from
    the effect of the public policy rule. For example, in the United States, those states
    that have adopted § 2-803 of the
Uniform
    Probate Code
would exempt persons who are not criminally
    accountable for the felonious and intentional killing of the decedent. Most
    so-called slayer statutes similarly exempt the insane beneficiary from
    operation of the public policy rule: see Laurel Sevier, Kooky Collects: How
    the Conflict Between Law and Psychiatry Grants Inheritance Rights to Californias
    Mentally Ill Slayers (2007) 47 Santa Clara L. Rev. 379; and Gary Schuman,
    Life Insurance and the Homicidal Beneficiary: The Insurers Responsibilities
    Under State Slayer Laws and Statutes (2001) 51 Fedn Def. & Corp. Counsel
    Q. 197.

[26]

This same approach is generally followed in other common law
    jurisdictions such as Australia and New Zealand. In the United Kingdom, the
    common law would seem to exempt from forfeiture someone who was not guilty of
    deliberate, intentional and unlawful violence, or threats of violence: see
R. v. National Insurance Commissioner,
    ex parte Connor
, [1981] 1 All E.R. 769 (Div. Ct.), at p. 774.
    Thus, a person found not guilty by reason of insanity would not be subject to
    the forfeiture rule: see Chris Triggs, Against Policy: Homicide and Succession
    to Property (2005) 68 Sask. L. Rev. 117, at p. 126. In any event, even if the
    forfeiture rule did apply to an insane accused, the common law has been varied
    to give the court discretion not to apply the forfeiture rule where the
    justice of the case requires the effect of the rule to be so modified; the
    court is to consider the conduct of the offender and of the deceased and ...
    such other circumstances as appear to the court to be material: see the
Forfeiture Act 1982
(U.K.), 1982, c. 34, s. 2(2).

[27]

To conclude, it is my view that the public policy rule does not
    prevent the appellant from receiving the proceeds of the insurance policy.

The
    Civil Remedies Act

[28]

The
Civil
    Remedies Act
was proclaimed into force on April 12, 2002. The
    purposes of the Act are set out in s. 1:

1
.
The purpose of this Act is to provide
    civil remedies that will assist in,

(a) compensating persons who suffer
    pecuniary or non-pecuniary losses as a result of unlawful activities;

(b) preventing persons who engage in
    unlawful activities and others from keeping property that was acquired as a
    result of unlawful activities;

(c) preventing property, including
    vehicles as defined in Part III.1, from being used to engage in certain
    unlawful activities; and

(d) preventing injury to the public
    that may result from conspiracies to engage in unlawful activities.

[29]

In the result, s. 3 of the Act provides for the making of an
    order forfeiting property that is proceeds of unlawful activity on application
    by the Attorney General to the Superior Court of Justice. Unlawful activity
    is defined in s. 2 of the Act to mean an act or omission that (a) is an
    offence under an Act of Canada, Ontario or another province or territory of
    Canada. The term proceeds of unlawful activity is defined in the same
    section, in part, as property acquired, directly or indirectly, in whole or in
    part, as a result of unlawful activity. Finally, s. 17(1) provides that
    proof that a person was convicted, found guilty or found not criminally
    responsible on account of mental disorder in respect of an offence is proof
    that the person committed the offence.

[30]

Importantly, however, the forfeiture order is not automatic. Under
    s. 3(1), the court is not to make the order forfeiting the property to the
    Crown where it would clearly not be in the interests of justice. Also, the
    forfeiture provisions of the
Civil
    Remedies Act
are only triggered on application by the Attorney
    General.

[31]

I accept that the
Civil
    Remedies Act
is an indication that public policy in Ontario favours
    preventing persons from profiting from their crimes and that, given the
    provisions of s. 17, the policy extends to persons found not criminally
    responsible by reason of mental disorder. In my view, however, the Act does not
    supplant the common law rule of public policy that does not prevent an NCR accused
    from taking under an insurance policy or a will. At its highest, the Act
    indicates that the rule ought not to be applied automatically. The common law
    rule and the Act serve different functions. The common law rule simply prevents
    the wrongdoer, however defined, from receiving the proceeds of the insurance
    policy or the will. In many cases, that would mean that the funds would be
    available either to a secondary beneficiary in the case of an insurance policy,
    if one is named, or to other beneficiaries, in the case of a will.

[32]

A forfeiture order made under the Act, however, deprives
    everyone, including other beneficiaries, of the proceeds because the proceeds
    are forfeited to the Crown. A more compelling expression of public policy would
    be for the legislature to reverse the effect of the public policy that permits
    the NCR accused to take under a will or insurance policy by deeming the accused
    to have predeceased the victim.
[2]
Such a provision would result in the proceeds usually ending up in the estate
    of the victim for the benefit of beneficiaries other than the accused.

[33]

Thus, there are competing public policies. On the one hand, the
    common law, reinforced by the policy as explained in
Winko
, is that an
    NCR accused is neither morally nor legally responsible for the death and
    therefore should be entitled to take under an insurance policy in which he or
    she is a beneficiary. On the other hand, there is the reflection of the public
    policy in the Act favouring the view that proceeds of crime in the hands of an
    NCR accused may be forfeited to the Crown.

[34]

In my view, the way to reconcile these competing policies is to
    allow the common law and the Act to each operate in their own spheres. That the
    legislature has so recently turned its mind to the question of criminals
    profiting from their crimes and not sought to wholly abrogate the common law
    rule suggests to me that the legislature intended to leave the common law rule intact.
    The legislature has expressed public policy in the province but limited
    forfeiture to applications made by the Attorney General.
[3]


[35]

The common law rule does not prevent the appellant from receiving
    the proceeds of the insurance policy. However, it is open to the Attorney
    General to bring an application under s. 3 of the Act. I note that s. 4 gives
    the Attorney General the right to apply for any number of interlocutory orders
    to safeguard any property pending an application under s. 3. If such an
    application were brought, the court would determine whether it would clearly
    not be in the interests of justice to forfeit the proceeds to the Crown.

DISPOSITION

[36]

Accordingly, I would allow the appeal, set aside the order of the
    application judge, grant the application and order that the money deposited
    with the Accountant of the Superior Court of Justice, along with all interest
    accrued, is rightfully payable to the appellant. The funds are to be paid out
    to the law firm of Oster Wolfman LLP in trust for the benefit of the appellant.

[37]

The Attorney General was given notice of the original application
    but apparently took no position on the application. I would stay this order for
    30 days to give the Attorney General time to consider whether he wishes to
    apply for an interlocutory order under s. 4 of the
Civil Remedies Act
. I should not be taken as
    having determined that an application could be made until the property is
    actually in the hands of the appellant or someone holding the funds on his
    behalf.

[38]

In my view, this is not a case for costs. While I have found that
    the Supreme Court of Canada decision in
Nordstrom
is controlling, the issue of the impact of the
Civil Remedies Act
is a novel issue. I would
    set aside the costs order of the


application judge and order that there be no costs of
    the application or the appeal.

Signed:        M. Rosenberg J.A.

I agree E. A. Cronk J.A.

I agree David Watt J.A.

Released: MR APRIL 24, 2012





[1]
In these reasons, I will refer to the rule preventing a person from profiting
    from his or her own crime as the public policy role or the forfeiture rule.



[2]
See § 524.2-803 of the Minnesota Uniform Probate Code, which provides that the
    spouse, heir or devisee who feloniously and intentionally kills the deceased
    is not entitled to any benefits under the will and the estate of the decedent
    passes as if the killer had predeceased the decedent.



[3]
See, for example, the approach by the Supreme Court of Canada to deduction of
    fines and penalties under the
Income
    Tax Act
, R.S.C. 1985, c.1
: see
65302
British Columbia Ltd. v. Canada
,
    [1999] 3 S.C.R. 804, especially
per
Iacobucci J., at paras. 59-65.


