The Supreme Court, in different cases where one or more of the parties have had a conveyancer act in a transaction, has found that the conveyancer had, prior to the documentation being entered into, an obligation to assess their client’s capacity. In particular, the court in one case criticised the conveyancer’s attempt to assess the former client’s capacity as “…at best …superficial …”. Specific reference was made by the court to the conveyancer’s lack of diary notes of critical meetings.
1. Given that a conveyancer is permitted to carry out legal work “in connection with any transaction” that creates, transfers or extinguishes a legal or equitable interest in real or personal property; further, that such work includes “…the giving of advice that is consequential or ancillary to…” any such transaction, conveyancers will need to assess a client’s legal capacity.
2. In another Supreme Court case involving an elderly man who was being taken advantage of by his new wife, the judge found that the conveyancer’s client did not “comprehend the implications of what he was doing”; nor that he was being “taken advantage of” by his new wife. The judge criticised the conveyancer for acting on instructions “… without a critical review of those instructions or steps taken to ensure that [the client] had both the capacity and understanding necessary to divest himself of property”.
3. To quote another statement by a Supreme Court judge:
“… a licensed conveyancer acting in a transaction within the limits imposed by [the Act] should conform to standards of practice maintained by a solicitor acting in a similar transaction. The legislation expects no less.”
4. The courts have, and will, find that assessing capacity, and giving advice in relation to that issue, forms part of “conveyancing work” per section 4 of the Conveyancer’s Licensing Act 2003. People whose cognitive capacity is impaired may be vulnerable to exploitation by others and may not be able to protect their own legal interests. Ethical obligations are owed to the court, clients, and the administration of justice to ensure that a client’s interests are promoted and protected at all times.
Assessment of capacity
5. How, then, does a conveyancer assess the capacity of a prospective client they are meeting for the first time? While it is not your role to be an expert in mental capacity assessment of your clients, you are expected by the courts to be involved in carrying out a “legal” assessment of a client’s mental capacity which involves:
· making a preliminary assessment of mental capacity; looking for warning signs or “red flags”; using basic questioning and observation of the client;
· if doubts arise, seeking a clinical consultation or formal evaluation of the client’s mental capacity by a clinician with expertise in cognitive capacity assessment; and
· making a final legal judgment about mental capacity for the particular decision or transaction.
6. There is no one single definition of mental capacity in New South Wales. The legal definition depends in each case on the type of decision which is being made or the type of transaction involved. Some legal tests are contained in legislation such as the Guardianship Act while others have been developed in the common law – such as the test for testamentary (making a will) capacity.
7. A client may have the mental capacity to make some decisions, such as deciding whether to make small purchases like groceries, but may be found to lack mental capacity to make other decisions such as deciding whether to enter into more complicated financial arrangements, purchase or sell property etc. The fundamental issue is whether the client is able to understand the general nature of what they are doing. If a client has ongoing difficulty in demonstrating this level of understanding that may indicate a lack of mental capacity warranting further exploration.
8. Whenever a client’s mental capacity may be an issue it is important to remember and follow the principles which are set out in The Capacity Toolkit issued by the New South Wales Department of Justice.
9. A couple of key points to note are:
* it is okay to – at first instance and until something to the contrary is demonstrated – presume that a client has mental capacity;
* mental capacity is “fluid”. It can fluctuate over time or in different situations. Even where a client lacked the ability to make a specific decision in the past, they may be able to make that decision later on. Clients may regain, or increase, their mental capacity – such as by taking medication. Other factors such as stress, grief, depression or a medical condition may also affect a person’s decision‑making capacity;
* don’t make an assumption that a person lacks capacity because of their age, appearance, disability or behaviour;
* assess the person’s decision‑making ability, not the decision that they make. Just because you think a client’s decision is unwise doesn’t mean that they lack capacity. Individuals have their own values, beliefs, likes and dislikes;
* respect a person’s privacy.
10. Assessing a person’s mental capacity means dealing with personal information about them including medical information. A client must consent to any personal information being provided to others such as medical practitioners.
Warning signs/red flags
11. A former Chief Justice of the High Court said “… a determination that a person lacked (or has not been shown to have possessed) a sound disposing mind, memory and understanding is a grave matter”. Another court has said that arriving at a conclusion about lack of mental capacity should not be “produced by inexact proofs, indefinite testimony, or indirect references”. On the other hand, there are certain indicators of a lack of mental capacity which should sound warning bells or raise red flags.
12. Sometimes a lack of mental capacity will be straightforward; the client may be severely disoriented and confused about where they are and clearly unable to comprehend what is being said to them or to communicate in a rational way. In other cases it may not be obvious. Many people with age‑related cognitive disabilities may present extremely well to people who do not know them. They can appear quite capable. A person with dementia may have excellent long term memory but impaired short term memory. They may be able to hold intelligent, lucid and entertaining conversations but not remember any details of that conversation a short time later.
13. What are the warning signs?
· difficulty with recall or memory loss;
· difficulty communicating;
· lack of mental flexibility;
· problems with simple calculations;
· something about the client has changed – deterioration in personal presentation, mood or social withdrawal;
· the client is in hospital or a residential aged care facility when instructions are taken;
· they have changed conveyancers/solicitors several times over a short period (particularly if the person who they had previously gone to has acted for them for many years);
· the client is accompanied by others – friends, family or carers; but is not given the chance to speak for themselves;
· limited ability to interact; and
· limited ability to repeat advice given or failure to ask key questions about relevant issues.
14. It is important to approach a consultation with a client in a way that helps you gain as much useful information as you can about whether the client has the mental capacity to instruct you or make a legal decision. A number of techniques can be utilised including giving clients more time to read documents and providing aids where the client has hearing or vision impairments.
15. The way the questions are put to a client, and the responses, can often be indicative of capacity. For instance:
(a) Ask open ended questions rather than questions which can be answered “yes” and/or “no”.
(b) Don’t ask leading questions ie questions that suggest the answer.
(c) Framing questions to quickly identify any areas of concern for which a person may need support or help.
(d) Ensure that the person whose capacity is a concern is the one who answers the questions, not a family member or friend who attends with them.
16. It is important that you keep notes of the consultations you have with all clients but in particular where mental capacity may be an issue.
17. If there are lingering doubts about a client’s mental capacity after the initial assessment is undertaken by you, you might need to suggest a formal mental capacity assessment from a medical professional with experience in assessment of cognitive capacity. Usually that will be a psychiatrist, psychologist or a geriatrician.
18. You also need to 1) obtain the clients instructions to seek a medical assessment and, 2) be careful as to what you put in any referring letter. Avoid general requests to provide a report about a client’s “mental capacity”. Set out the client’s background, the reason for the contact with you by the client, the purpose of the referral to the doctor, the relevant legal standard of mental capacity, and known medical information about the client.
All of the above but still incapable
19. If after all of the above is undertaken and a client is in your opinion incapable of providing instructions either because that is the assessment that you arrive at or because a medical report suggests so, it may be appropriate for a substitute decision maker to be appointed who can stand in the client’s place and ensure their best interests are protected.
20. The NSW Civil & Administrative Tribunal Guardianship Division can appoint a guardian and/or financial manager to make substitute decisions for people with a decision making disability.
21. It is also considered best practice for a person other than yourself (ie family solicitor) to make any necessary NCAT application.
22. If you have been through the process in 19 but remain concerned about a client’s capacity it may be worthwhile, prior to suggesting a guardianship application through NCAT, to refer the client to a solicitor for not only the making of the application but also by way of second opinion.
Note: The Capacity Toolkit, prepared by the Department of Communities & Justice, is a guide to assessing a person’s capacity to make legal, medical, financial and personal decisions. As at publication the toolkit can be found at: Capacity Toolkit