A detailed analysis of the law and some of the many reported cases on the issue of capacity is beyond the scope of this short paper, the aim of which is to provide no more than an introduction to mental capacity and the framework within which mental capacity is determined in personal injury claims.
The law on mental capacity is set out in the Mental Capacity Act 2005 (“MCA 2005”) and should be read in conjunction with relevant case law and the Civil Procedure Rules.
Definition
A person lacks capacity if, at the time a decision needs to be made, s/he is unable to make that decision for themself because of an impairment or disturbance in the functioning of the mind or brain. This could be caused by conditions including dementia, mental health issues, learning disability, injury to the brain as well as temporary factors such as intoxication.
[section 2 of the MCA 2005].
Test
A diagnostic test will consider whether there is an impairment or disturbance of the mind or brain. A functional test will consider whether, because of that impairment, the person is unable to do one or more of the following:
- Understand the information relevant to the decision.
- Retain that information for long enough to make that decision.
- Use that information as part of the decision-making process; and
- Communicate the decision.
Key principles
- Everyone is assumed to have capacity unless proven otherwise.
- All practical steps must be taken to help the person decide before concluding that s/he lacks capacity.
- Capacity is not all or nothing. A person may lack capacity in one area or decision but may have capacity in other areas or decisions.
- Capacity can change over time; and
- Making a poor or risky choice does not automatically mean that someone lacks capacity.
Case law
There are many reported cases which consider capacity. Masterman-Lister v Brutton & Co 2003 1 WLR 1511 remains the foundation of the common law test for litigation capacity, even though the MCA 2005 came into effect after Masterman-Lister was decided. The MCA 2005 gives statutory structure, and the CPR Part 21 sets out the procedural safeguards ensuring that settlements involving protected parties are protected.
A person has capacity to conduct legal proceedings if s/he is capable of understanding, with proper explanations from lawyers, the issues on which his/her consent or decision is likely to be needed in the course of the proceedings. The person must be able to understand the nature of the proceedings, give proper instructions to his/her legal team, and appreciate and consider advice given in relation to the proceedings. The test is decision and situation specific, emphasising that a person can lack mental capacity in one area but retain it in another.
In Bailey v Warren [2006] EWCA Civ [2006] 1 WLR 51 the Court of Appeal reaffirmed the principles in Masterman-Lister that capacity to manage property and affairs is not the same as capacity to conduct litigation.
The courts in both Masterman-Lister and Bailey v Warren stressed that capacity must be judged in relation to the specific decision/s being made. In Masterman-Lister the question was whether the claimant could understand the litigation process and settlement with proper legal explanation. In Bailey v Warren the Court of Appeal reaffirmed the test – the claimant must be able to understand the issues, weigh the advice, and give instructions. Accordingly, in Bailey the court upheld the liability settlement entered into before the appointment of a litigation friend, despite it being suggested that Mr Bailey had agreed to a bad deal, thereby reaffirming that capacity to conduct litigation is separate from capacity to manage one’s own financial affairs. Both decisions recognise that capacity can be considered retrospectively.
Capacity is issue specific. It is not an all or nothing state. Furthermore, it is not a fixed state, meaning that capacity in a specific area can be lost and regained over time.
In Mr and Mrs Z v Kent County [2018] EWFC, the court stated:
§ 40 (f) “One significant intention [of the presumption of capacity] is to prevent inaccurately assuming lack of capacity in apparently vulnerable individuals without being properly established on evidence. It is emphatically not there to obviate an examination of such an issue. Nor can it have been Parliament’s intention to place a vulnerable person in danger of their lack of capacity being overlooked at the expense of their rights by a slack reliance on this presumption”.
[§ 2 and 3 of the MCA 2005].
Capacity to manage property and financial affairs: key practical questions, to be determined by way of experts’ evidence include - can the claimant understand the nature and size of the damages award, can s/he understand their ongoing needs (for example care, treatments, therapies etc) can s/he understand the concept of budgeting for example, that the money must last for life, can s/he appreciate the risk of mismanagement, exploitation by others, or poor financial decisions and can s/he instruct or supervise professional advisors, IFAs, accountants etc. If the claimant cannot, reliably - even with proper support - do these things, then it could potentially lead to a finding of lack of capacity to manage financial affairs.
Litigation capacity and witness capacity
Litigation capacity and witness competence are distinct concepts. Assessment of litigation capacity requires a functional, decision specific approach, recognising that a person may be incapable of managing legal proceedings yet still be able to provide evidence – the focus being on task specific ability at the relevant time. However, capacity to give evidence looks at whether the person can understand the meaning of the oath, questions, recall events, and communicate answers reliably as well as understand the distinction between truth and lie. Testifying competency is derived from the common law and CPR guidance in relation to whether the court can receive evidence from the witness in a meaningful way.
Under the Civil Procedure Rules (Part 1, PD 1A, Part 3, 32 and 39) the court has a range of options (special measures) available to it, to help vulnerable or intimidated parties and witnesses to give their best evidence. Unlike in criminal and family courts, where special measures are more formally codified, the civil courts have powers to adopt procedures which ensure fairness and support the overriding objective of dealing with cases justly. Within that context, the CPR provides the courts with a range of options - special measures where the quality of evidence or ability to give evidence might be diminished by reason of a party's vulnerability. Special measures can include, giving evidence via live link, screens, evidence in private, intermediaries and communication aids and in some cases video-recorded evidence. The court will consider each case on its own facts.
Evidence
In all cases, but especially in cases where the issue of capacity is not obvious, the importance of experts assessing capacity on an issue-by-issue basis cannot be overstated, nor can the need to ensure that experts have been properly instructed. Many experts will be familiar with the formulaic approach to assessing capacity, but some will not.
Experts should be provided with up-to-date records and information - general practitioner/hospital records, where available, CPN records, DWP records, support worker daily diary entry records, case management records, social worker records, as well as evidence from family members and independent services providers (CPN, support workers, social workers, case manager etc). In cases where capacity may be disputed, it is good practice to seek medical and other records for a period after the assessment has taken place and to make them available to the experts.
Summary
Capacity is not linear. It is not all nor nothing. A person can have capacity in one area but lack capacity in another. Possession of capacity can fluctuate over time. Determination of capacity is diagnostic and functional and should be evidence led. Care should be taken to ensure that experts are properly instructed and aware of the court’s approach to considering capacity to conduct litigation, manage financial affairs, and to give evidence as well as any other relevant areas for example capacity to consent to medical treatment.
