A clearer test of capacity

Capacity and capability. These words are often used interchangeably. Does someone have capacity to make a will? Are they capable of making a decision? How do we determine answers to these questions? Who determines the answers?

Many might argue that the rules are generally straightforward. The law defines the test. Medical professionals and assessors may carry out examinations to provide diagnoses or assess ‘capacity’. But, when an assessment concludes that an adult is incapable, what is that adult incapable of? Which test was used? How was the decision arrived at? Who participated in the process? Many jurisdictions are addressing the numerous issues that these questions raise. The Canadian province of British Columbia (BC) is no exception.

Test for incapability for making an EPA

Practitioners in common-law jurisdictions will be familiar with common-law tests of capacity for making a will, entering contracts, making inter vivos gifts, retaining counsel, and marrying.1  Some may also be familiar with legislation that has introduced more detailed tests for incapacity or incapability. In BC, all of the legislation in this field is framed in terms of incapability and there is a focus on the nature of the decisions to be made. The first of the two new tests discussed in this article was introduced in 2000 with s10 Representation Agreement Act, RSBC 1996, c405 (RAA), which applies to representation agreements (RAs) for health care and personal care. The second was introduced in 2011 with s12 Power of Attorney Act, RSBC 1996, c370 (POAA). These tests are offered to guide practitioners as to when the presumption of capability (confirmed in s11 POAA and s3 RAA) will not apply.

Section 10 RAA states that ‘an adult may authorize a representative to do any or all of the things referred to in s9 unless the adult is incapable of understanding the nature and consequences of the proposed agreement’. Similar provisions are found in other jurisdictions, and in s12(1) POAA. However, s12 goes on to set out what the adult must understand, including the property that the adult has and its approximate value, obligations owed to dependants, the nature of the authority that the attorney will have, the risks of that authority, and the fact that the adult may revoke the enduring power of attorney (EPA). While many advisors might already consider these matters with clients, setting the test out in legislation provides explicit guidance on the issues that should be reviewed with clients before the document is made.

Test for making a s7 RA

The test for incapability in relation to what the BC legislation calls a ‘standard representation agreement’, authorised under s7 RAA, will be less familiar to practitioners. Section 7 RAA has attracted international attention, and has been cited in the commentary to article 12 of the UN Convention on the Rights of Persons with Disabilities.2

Section 7 RAs are unique in two ways. First, they explicitly provide for adults in BC to authorise a representative (a) to help the adult make decisions, or (b) make decisions on behalf of the adult, about any or all of the adult’s personal care, routine management of financial affairs (defined by regulation), major and minor health care (defined by legislation), and obtaining legal services and instructing counsel.

Second, they explicitly acknowledge that the adult may be incapable of making certain decisions, and provide guidance on how to determine incapability. As with other legislation, s4 confirms that an adult can make an RA unless incapable of doing so. Section 8 goes on to state:

‘(1) An adult may make a representation agreement consisting of one or more of the standard provisions authorized by s7 even though the adult is incapable of:

• a) making a contract,
• b) managing his or her health care, personal care or legal matters, or
• c) the routine management of his or her financial affairs.

(2) In deciding whether an adult is incapable of making a representation agreement consisting of one or more of the standard provisions authorized by s7, or of changing or revoking any of those provisions, all relevant factors must be considered, for example:

• (a) whether the adult communicates a desire to have a representative make, help make, or stop making decisions;
• (b) whether the adult demonstrates choices and preferences and can express feelings of approval or disapproval of others;
• (c) whether the adult is aware that making the representation agreement or changing or revoking any of the provisions means that the representative may make, or stop making, decisions or choices that affect the adult;
• (d) whether the adult has a relationship with the representative that is characterized by trust.’

It is beyond the scope of this article to discuss how s7 RAs challenge traditional paradigms and our understanding of capacity and capability. They were conceived as a mechanism to avoid the need for the court to appoint a decision-maker (s2 RAA). As the public, third parties and practitioners become more familiar with them, they are opening up new opportunities for adults who may be incapable of making an enduring power of attorney or a representation agreement under s9 RAA.3

As noted, s7 RAs are also a mechanism for avoiding statutory and court-ordered guardianship under the province’s Patients Property Act, RSBC 1996, c349. In December 2014, new legislation governing the issuance of certificates of incapability (statutory guardianship) is expected to come into force.4  It states that, upon receiving a report of an adult’s incapability (conducted according to regulation not yet released), the health authority designate authorised to issue the certificate may issue the certificate if satisfied that ‘…(a) the adult needs to make decisions about the adult’s financial affairs, (b) the adult is incapable of making those decisions, (c) the adult needs, and will benefit from, the assistance and protection of a statutory property guardian, (d) the needs of the adult would not be sufficiently met by alternative means of assistance…’ Section 7 RAs and EPAs are viable options when appropriate friends and families are available to support and assist a vulnerable adult. They can be expected to attract more attention when informal options are not practical or appropriate.

While much uncertainty remains, one fact is certain: our understanding of the tests of capacity and, perhaps more importantly, incapability, and how they should be determined, is far from complete.  

Mental Capacity SIG

The Mental Capacity Special Interest Group was established in recognition of the increasing importance and relevance of issues concerning capacity to the work of STEP practitioners. Go to Mental Capacity for further information on the SIG and how to join.

• 1In September 2013, the BC Law Institute issued its ‘Report on Common-Law Tests of Capacity’ (www.bcli.org/project/rationalizing-and-harmonization-bc-common-law-tests-capacity). This 200-page report offers a comprehensive review of a number of common-law tests of capacity and thoughtful discussion on whether or not legislative reform could address deficiencies or offer greater certainty as to the law. It also acknowledges that the functional approach to determining capacity is currently the dominant legal approach to capacity (pages 7–18)
• 2UN Enable, ‘Legal Capacity and Supported Decision-making’
• 3For research and stories on how RAs have been used in BC since their introduction in 2000, see ‘Stories’ and ‘Research’ on the website of the Nidus Personal Planning Resource Centre and Registry at www.nidus.ca/?page_id=234
• 4Section 32(3) at s4 of the Adult Guardianship Act, RSBC 1996, as set out in Bill 29 – 2007: Adult Guardianship and Planning Statutes Amendment Act, 2007, as amended