A beneficiary appealed the dismissal of his application for payment of the proceeds of the life insurance policy of his deceased ex-wife. The appeal was allowed; the court held that the public policy rule preventing a person from profiting from his or her own crime does not apply to a beneficiary who is found not criminally responsible on account of mental disorder.

[2012] O.J. No. 1757

2012 ONCA 261

Ontario Court of Appeal

M. Rosenberg, E.A. Cronk and D. Watt JJ.A.

April 24, 2012

In 1998, the appellant had a group life insurance policy in the amount of $51,000. Under the policy, his wife was also an insured and the appellant the beneficiary. The appellant and his wife subsequently separated.

The appellant had been suffering from a serious mental disorder for many years. In 2006, the appellant killed his ex-wife, Kamlesh, and was subsequently charged with second degree murder. At trial, the appellant was found not criminally responsible on account of mental disorder. After the criminal trial, Kamlesh’s son, acting as administrator of the estate, requested that the proceeds of the insurance policy be paid into the estate as opposed to the appellant. The appellant brought an application to have the proceeds paid to him.

The application judge dismissed the appellant’s application finding the public policy rule that prohibits a person from profiting from his or her own criminal act applied in the circumstances. The application judge found as follows:

Although the Applicant attempts to distinguish the Canadian jurisprudence relied on by [respondent], 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.

The appellant appealed and argued the public policy rule does not apply to a beneficiary who is found not criminally responsible on account of mental disorder.

The court found that the relevant authorities establish that a person who is not criminally responsible on account of mental disorder is not prevented from taking under an insurance policy. In Nordstrom v. Baumann, [1962] S.C.R. 147, the deceased husband died in the course of a fire set by his wife. The Supreme Court of Canada found that the wife 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”.

The court found that there is no rationale for applying the public policy rule when a person found not criminally responsible on account of mental disorder is not “morally responsible” for his or her acts. As a result, it was an error for the application judge to describe the appellant as having “committed second degree murder”.

However, the court noted the Civil Remedies Act, 2001, S.O. 2001, c. 28, prevents persons from profiting from their crimes and extends to persons found not criminally responsible by reason of mental disorder. The Civil Remedies Act provides for the making of an order forfeiting property that is the proceeds of unlawful activity to the Crown on application by the Attorney General.

The court allowed the appeal and set aside the order of the application judge. The order was stayed for 30 days in order to allow the Attorney General time to consider whether to apply for an order under the Civil Remedies Act.