Modern approach

Tuesday, 01 February 2011
A look at the Cayman Islands mental capacity case of IN Re D.

The Cayman Islands did not undergo the fundamental reform of their mental health legislation that occurred in England and Wales with the passing of the Mental Capacity Act 2005 (the MCA), nor do the Islands have an equivalent to the English Court of Protection. However, the Grand Court has a number of procedures available to it in the event it is called upon to make a decision in the management of the property and affairs of a person who no longer has the capacity to look after their own finances and in a recent case, In Re D [2009] CILR 432, it considered the test that should be applied when doing so.

The Cayman Islands Mental Health Law (1997 Revision)(the Mental Health Law) gives the Grand Court wide powers to assist in the event that a person loses capacity to deal with their own affairs. The Mental Health Law replicates much of the English Mental Health Acts of 1959 and1983.

Section 13 of the Mental Health Law provides for the Court to do or secure the doing of ‘all such things as appear desirable for the maintenance or benefit’ of three categories of persons:

  1. the patient
  2. his family, or
  3. those for whom he might be expected to provide if he were not mentally disordered, and where it would otherwise be desirable in the administration of the patient’s affairs.

Pursuant to s14 of the Mental Health Law, ‘all such things’ can include arranging for a person to manage, sell, acquire, charge or deal with property; entering into any settlement; providing for the management of a business; dissolving a partnership; completing a contract; conducting legal proceedings; acting as a trustee; or appointing a Receiver. It does not, on the face of it, extend to the making of a will for a patient.

Because the Cayman Islands’ mental health legislation did not undergo the root and branch reform that happened in England and Wales with the introduction of the MCA, one might reasonably assume that the test when considering what is ‘desirable’ for the purposes of s13 of the Mental Health Law, would follow the old pre-MCA ‘lucid intervals’ test, as set out in particular in the decision of Megarry VC in Re D(J) [1982] 1 Ch 237. In Re D however, the Grand Court moved away from the old ‘lucid intervals’ test to embrace the more modern ‘best interests’ approach, akin to that set out in the MCA.

The MCA set out a new approach to decisions taken on behalf of a patient; decisions must be made in the patient’s ‘best interests’ subject to certain conditions which are set out at s4 of the statute. The person making the decision must consider whether and if so when, the patient is likely to recover his capacity and must, as far as is practicable, encourage the patient to participate in the decision-making process. Consideration must be given to the patient’s past and present wishes and feelings, any letters written by them expressing their wishes while they had capacity, their beliefs and values and any other factors that they would consider were they able to do so. There must be consultation with anyone named by the patient as someone who ought to be consulted in decisions of that nature, as well as any attorney under a Lasting Power of Attorney (LPA) or a deputy appointed by the court, about what would be in the patient’s best interests.

In Re D: the facts

The facts of In Re D were this: Mrs D had lost capacity and as a consequence, a committee of guardians had been appointed by the Grand Court to look after her financial affairs, in this instance, her interest as primary beneficiary of a Cayman Islands family trust. Before she lost capacity, Mrs D entered into a settlement agreement with her family settling many years of litigation in the Cayman Islands and elsewhere, but a question had since come up about the requirement for an indemnity as a consequence of the settlement. Two of the committee of guardians (the other members of the committee were conflicted by reason of their own interest in the settlement agreement) applied to the Grand Court seeking directions to enter into the proposed indemnity agreement on behalf of Mrs D; the issue for the guardians being that the potential liability under the proposed indemnity was to be entirely assumed by Mrs D or her estate.

Chief Justice Smellie accepted that the Grand Court had jurisdiction to direct the guardians to enter into a settlement agreement on behalf of Mrs D (as per s14(a)(ii) of the Mental Health Law). He considered the test to be applied in deciding whether it was appropriate to do so.

In his reasoning, the Chief Justice distinguished the facts of the case before him, namely the maintenance or benefit of the patient and her immediate family, from older authorities dealing with maintenance or benefit of those for whom a patient might be expected to provide, described as ‘collateral’ members of the family, like nephews and nieces. He found that the lucid intervals test as set out in In Re L(WJG) [1966] Ch 135,‘was developed in the context of [the Judge] seeking to devise a settlement, which reflected the notional views and wishes of a settlor as to the bestowing of his bounty upon collateral relatives’. For that third category of persons, he held, the court would be required to identify a period during which ‘it must be assumed that the patient became of sound mind for a sufficient time to review the situation but knew that after a brief interval he would relapse into his former condition’, the so-called ‘lucid interval’ test.

Where an opportunity lies to develop the law and take a more modern approach, the Cayman Islands Grand Court will be open to doing so

The Chief Justice went on to elucidate the ‘counterfactual nature of the assumption explicit in the lucid interval test’ when considering benefit to a patient’s immediate family, the assumption being that a patient would at least on the face of it, wish to benefit them. For that reason, the Chief Justice was not persuaded that he ought to follow the decision of Megarry VC in Re D(J). The Chief Justice described Megarry VC’s decision as ‘problematical’, having extended the ‘lucid intervals’ test from the consideration of maintenance or benefit of the ‘collateral’ members of the family to consideration of what was desirable for the maintenance or benefit of the patient’s immediate family. That decision could be distinguished from the task facing him, as Megarry VC’s decision was reached in the context of making a statutory will for a patient.

The Chief Justice held that the starting point in the case before him must be the assumption that a patient would wish to benefit her immediate family and the test that follows should be whether what is proposed is ‘desirable’, being both ‘reasonable and in the best interests of the patient and her family’. In so doing, he expressed some sympathy with the judicial scepticism that has attended upon the lucid interval test and the ‘mental gymnastics’ that the test involves, commenting that ‘it does not commend itself, to my mind, as being the most logical or practical way of doing so’, given its ‘purely imaginary’ nature.

The Chief Justice found the ‘wide ambit’ of the Cayman Islands Mental Health Law to be ‘entirely accommodating’ of the test set out in the English MCA, concluding that ‘there is no reason to think that any of the many factors helpfully identified in the English Act of 2005 for consideration must be precluded.’ He agreed with Mrs Warnock-Smith QC, Leading Counsel for Mrs D’s daughters, that this more modern approach was to be preferred and concluded that in the absence of binding or persuasive Cayman authority, it was open to the Court to adopt it on the wording of s13 of the Mental Health Law.

What if?

This does beg the question of what would happen if the Grand Court were to be faced with taking a decision on behalf of a patient that would benefit those for whom the patient might be expected to provide. Although the Chief Justice, obiter, expressed sympathy with the judicial scepticism attendant upon the lucid intervals test, In Re D has not changed the test in the Cayman Islands for consideration of benefit to that third category of persons. Indeed the Chief Justice acknowledged that had he been faced with that question, he would have been obliged to participate in the ‘mental gymnastics’ required in effecting the ‘lucid intervals’ test. Nonetheless, while not every jurisdiction will have the need, the resources or the infrastructure to support reform of the depth or nature of the English MCA, as the case of In Re D amply demonstrates, where an opportunity lies to develop the law and take a more modern approach, the Cayman Islands Grand Court will be open to doing so.

Author block
Morven McMillan

Morven McMillan TEP is a Partner at Mourant Ozannes in the Cayman Islands.

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