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How do you know if someone has capacity to take legal steps - is there not just one test? The answer to this (frequently asked) question is "no" as the applicable tests are decision specific. This note summarises, by reference to recent cases, the tests for five important personal legal steps – marrying, making a will, creating an LPA, managing one's affairs and conducting litigation.
1. The case of A, B, C v X, Z  WTLR 187
A, B and C were the adult children of X, an elderly man of significant means deriving from a family business. The family was, in Mr Justice Hedley's view, close and trusting. After 56 years of marriage, X's wife died in April 2008. Within a month of this profound shock X was diagnosed with dementia. He subsequently executed powers of attorney in favour of his children. Z became X's full-time carer in July 2010. In October 2010, X expressed his wish to marry Z.
Family relations rapidly deteriorated from that point. X, who was a “skilled and highly intelligent man”, was reluctant to accept the limitations imposed on him by his illness and became frustrated and resentful when others attempt to assist him. A, who was described as an “able, business-like” daughter, clashed with Z, a “persistent, efficient and somewhat strident woman”, with both (not unusually) “entertaining serious doubts about the good faith of the other towards X”.
A, B and C brought Court of Protection proceedings to determine whether X had mental capacity to marry, to make a will, to make or revoke a power of attorney, to manage his property and affairs and to litigate. Hedley J’s judgement provides a useful summary of the applicable principles and an illustration of their application by the court.
2. The Mental Capacity Act 2005 (“the MCA”)
Hedley J began by reminding himself of the framework within which the Court of Protection is required to operate when dealing with questions of capacity. Under the MCA a person is assumed to have capacity in relation to a matter unless it is established that “he is unable to make a decision for himself in relation to the matter because of an impairment of or a disturbance in the functioning of the mind or brain”.
In determining whether a person can make a decision for himself, the court must ask whether he can understand the information relevant to the decision (including the reasonably foreseeable consequences of deciding one way or another), retain that information and use or weigh it as part of the decision-making process. Before it can be established a person is unable to make a decision all practicable steps must have been taken to help him do so.
3. Capacity to marry
The test for capacity to marry was set out in Sheffield City Council v E & another. The parties to a marriage must be capable of understanding the nature of the marriage contract – the duties and responsibilities that normally attach to marriage. However, the marriage contract is in essence a simple one which can be understood by anyone of normal intelligence. The test for capacity to marry cannot be set too high lest it operate as a bar against the mentally disabled.
Hedley J decided that, as X "retained many aspects of his intelligence at a fundamental level" he had the capacity to understand and accept the marriage contract. He noted that “the requirements of capacity to marry are comparatively modest” and X’s “56 years of beneficent experience of marriage has firmly etched upon his understanding the duties and responsibilities that go with it”. He therefore refused to make a declaration that X lacked capacity to marry.
4. Testamentary capacity
The test for testamentary capacity was stated in Banks v Goodfellow. When he executes his will, a testator must be able to understand its provisions will function after his death, know the extent of his property and what it consists of and recall those who have claims on him and the nature of those claims. No disorder of the mind must “poison his affections” and no insane delusion should bring about a disposition which otherwise would not have been made.
The medical evidence pointed to a dramatic and continuing decline in X’s mental functions but his statement showed an understanding of his obligations and set out sensible testamentary proposals. Hedley J felt unable to decide whether X lacked testamentary capacity in general but warned there would be many times when he did and any will he executed would, if unaccompanied by medical evidence asserting capacity, be “seriously open to challenge”.
5. Capacity to create a lasting power of attorney (“LPA”)
To be valid an LPA must be made when the donor has capacity to grant it or ratified when capacity has been regained. The donor must be able to understand, among other things, what the attorney will be empowered to do under the terms of the LPA, when the attorney will be able to act for the donor and when the LPA can, and cannot, be revoked, together with certain prescribed information.
Hedley J did not examine the authorities in relation to this point. He simply concluded, similar to the question of X’s testamentary capacity, that he could not declare X lacked capacity in general to create an LPA but noted that any such power created would, without medical evidence of his capacity, give rise to a serious risk of challenge.
6. Capacity to manage affairs
Hedley J turned to X’s capacity to manage his own affairs. Much of the detail of his business affairs was delegated to professional advisers, but inevitably decisions – for instance, decisions relating to the discharge or avoidance of tax – had to be made by X. Hedley acknowledged there would be times when “a snapshot of [X’s] condition would reveal an ability” to manage his affairs. However, those affairs were complex, and involved occasionally unpredictable and urgent demands, so Hedley J held that on balance X lacked capacity to manage his affairs.
7. Capacity to litigate
Finally, Hedley J examined an issue closely related to X's capacity to manage his affairs – his ability to conduct litigation which was already underway. Hedley J quoted the test formulated by Chadwick LJ in Masterman-Lister v Brutton & Co – "The test to be applied, as it seems to me, is whether the party to the legal proceedings is capable of understanding, with the assistance of proper explanation from legal advisers and experts in other disciplines as the case may require, the issues on which his consent or decision is likely to be necessary in the course of those proceedings" – and found X "lacks capacity to conduct this litigation, even with the skilled advice available to him".
Hedley J concluded that X had capacity to marry, a “qualified capacity” to make a will and execute an LPA, but lacked capacity to manage his own affairs or conduct litigation. It is worth noting that X had not married, made a will, created an LPA or settled the litigation at the time of the judgment. Where a person has carried out an act which the court later finds he was not capable of doing, the consequences will depend on the nature of the act:
A will made by a testator who lacked capacity is invalid and the estate will be administered in accordance with any previous valid will or otherwise the intestacy rules. The Law Commission has announced its intention to review the law in this area and to release its findings in 2018. An LPA made by a donor without capacity may either be challenged or there may be a refusal by the Office of the Public Guardian to register the power.
Where a person is married when suffering from mental disorder so as to be “unfitted for marriage" the marriage is voidable. An application to annul the marriage must be made by a party to that marriage during the lifetime of both parties. Marriage, even if later annulled, revokes any prior wills, so a person lacking testamentary capacity can still revoke their will by marrying. Given the increase in marriages in later life this will become a greater issue.
In Dunhill v Burgin the court clarified that a litigant must have "capacity to conduct the claim or cause of action which the claimant in fact has, rather than to conduct the claim as formulated by her lawyers". A settlement was entered into by Ms Dunhill who lacked litigation capacity but had no litigation friend and without the court's consent. The settlement was set aside. With an increase in unrepresented litigants, practitioners will need to be alive to the question not only of their own client's capacity but the capacity of their opponent.
If you require further information on anything covered in this briefing please contact Adam Carvalho (firstname.lastname@example.org; 020 3375 7170) or your usual contact at the firm on 020 3375 7000. Further information can also be found on the Contentious Trusts page on our website. This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, September 2014
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