Capacity – a search for the light
One of the hardest tasks a solicitor may face in professional practice is deciding whether or not a client has legal capacity. Very often this task arises in the context of the solicitor being instructed to prepare a new Will or Codicil or Power of Attorney for an elderly or sick person – sometimes at the behest of a family member or friend. Making the wrong decision in such circumstances may lead the solicitor into disciplinary or professional negligence proceedings. How can these serious risks be minimised by a solicitor?
Only a person with legal capacity is capable of making a Will, Codicil, or Power of Attorney.
In this context one should remember what was said in an English court decision over 150 years ago:
“There is no difficulty in the case of a raving madman or of a drivelling idiot, in saying that he is not a person capable of disposing of property. But between such an extreme case and that of a man of perfectly sound and vigorous understanding, there is every shade of intellect, every degree of mental capacity. There is no possibility of mistaking midnight for noon; but at what precise moment twilight becomes darkness is hard to determine.” (1)
Every adult person is presumed by the common law to possess legal capacity:
“The common law treats human individuals as having legal personality and thus the capacity for legal rights and obligations. The individual is taken to have legal personality because ‘rights and duties involve choice’ and individuals ‘naturally … enjoy the ability to choose’. For people, legal personality is thus a birthright.” (excluding references) (2)
Thus, the professional conduct rules provide that a solicitor must follow a client’s lawful, proper and competent instructions. (3)
At all times it must be remembered by solicitors that legal capacity is a legal not a medical issue although great assistance may be obtained by solicitors from appropriately qualified and experienced health care professionals such as doctors and nurses.
What then is the standard of legal capacity required to satisfy the law?
“The standard of capacity which is required for a person to participate in legal proceedings is the same standard of capacity which is required for a person to enter into legal transactions. That required standard of capacity was stipulated by Dixon CJ, Kitto and Taylor JJ in Gibbons v Wright in these terms:
‘The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation.’
As you can see, the standard is based on the subjective understanding of the person. The understanding which is required is contextual and relates to the nature of what the person is doing. The question is not whether the person can do the legal act intentionally, as by putting their signature to a deed; it is whether they can understand the nature of the legal consequences which will be brought about.” (excluding references) (4)
Solicitors’ Capacity Guidelines
The Law Institute of Victoria and the Law Society of New South Wales have each published detailed guidelines to assist solicitors when faced with issues of client capacity. (5) It is recommended that solicitors obtain and read these very helpful publications.
Recent Judicial Guidance on Testamentary Capacity
In July 2017 Justice Kunc of the NSW Supreme Court decision handed down a decision in a difficult testamentary case which he characterised as follows:
“This is not a straightforward case. There is a great deal of reliable, contemporaneous evidence (including Frank’s treatment notes at the nursing home in which he lived) and uncontradicted retrospective medical evidence that suggest Frank lacked testamentary capacity in January 2013. On the other hand, Ms Dalton’s contemporaneous notes and her recollection of her attendances on Frank to take his instructions point in the opposite direction.”
Importantly, the judge felt it would be helpful to the legal profession to give some practical advice by means of a postscript:
“Postscript – the need for continuing legal education on questions of capacity
- The demographic reality of an aging population means that the likelihood of challenges to wills on the ground of testamentary capacity is increasing. Two recent government reports on elder abuse have made recommendations in relation to the role of lawyers and legal education. Those matters, when also considered in the light of recent decisions of this Court on the question of testamentary capacity, suggest that it is appropriate to conclude this judgment with some observations divorced from the personalities and facts of this particular case.
- Questions of testamentary capacity are necessarily fact sensitive. No rule or procedure will cover every case to avoid the possibility of litigation. Nevertheless, the effort involved in paying attention to questions of capacity at the time instructions for a will are taken and the will is executed (including, where necessary, obtaining an assessment of the client where it is thought one is called for) pales into insignificance with the expense, delay and anxiety caused by litigation after the testator’s death. Bearing that in mind, and without wishing in any way to derogate from, for example, the desirability of all solicitors being familiar with the guidelines, the recent experience of the Court suggests that proposing some basic rules of thumb (which, as such, are necessarily arbitrary) may be of assistance.
- It seems to me that the following is at least a starting point for dealing with this increasingly prevalent issue:
(1) The client should always be interviewed alone. If an interpreter is required, ideally the interpreter should not be a family member or proposed beneficiary.
(2) A solicitor should always consider capacity and the possibility of undue influence, if only to dismiss it in most cases.
(3) In all cases instructions should be sought by non-leading questions such as: Who are your family members? What are your assets? To whom do you want to leave your assets? Why have you chosen to do it that way? The questions and answers should be carefully recorded in a file note.
(4) In case of anyone:
(a) over 70;
(b) being cared for by someone;
(c) who resides in a nursing home or similar facility; or
(d) about whom for any other reason the solicitor might have concern about capacity,
the solicitor should ask the client and their carer or a care manager in the home or facility whether there is any reason to be concerned about capacity including as a result of any diagnosis, behaviour, medication or the like. Again, full file notes should be kept recording the information which the solicitor obtained, and from whom, in answer to such inquiries.
(5) Where there is any doubt about a client’s capacity, then the process set out in sub-paragraph (3) above should be repeated when presenting the draft will to the client for execution. The practice of simply reading the provisions to a client and seeking his or her assent should be avoided.
- I emphasise that the foregoing is offered only as suggested basic precautions which may identify problems which need to be addressed. In many cases which do come before the Court the evidence of the solicitor will be critical. For that reason, it is essential that solicitors make full, contemporaneous file notes of their attendances on the client and any other persons and retain those file notes indefinitely.”
This is a very helpful summary of the required steps which need to be taken by a solicitor when taking instructions for a Will or Codicil where testamentary capacity may come into issue at a later date.
- Boyse v. Rossborough (1857), 6 H.L.C. 2 at 45, 10 E.R. 1192
- Goddard Elliott (a firm) v Fritsch  VSC 87 (14 March 2012) at 545
- Legal Profession Uniform Law Australian Solicitors Conduct Rules 2015 [Rule8]
- Goddard Elliott (a firm) v Fritsch  VSC 87 (14 March 2012) at 555
- Capacity Guidelines and Toolkit – taking instructions when a client’s capacity is in doubt, Law Institute of Victoria, October 2016 and When a client’s capacity is in doubt – a practical guide for solicitors, Law Society of NSW, 2016
- Ryan v Dalton; Estate of Ryan  NSWSC 1007 (31 July 2017) http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2017/1007.html