Team member Donna Nguyen.

Donna Nguyen - Family Lawyer

Donna is a family law solicitor admitted in the Supreme Court of New South Wales with a double degree in Business and Law. Donna is drawn to family law as…
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What is capacity?

You may be familiar with the meaning of the word “capacity” in everyday use. A person’s capacity can refer to their authority to do something. For instance, the capacity of a qualified doctor to prescribe certain medications. 

In legal matters, capacity has a more specific meaning. 

In criminal law, capacity focuses on the culpability of someone for their criminal acts. A very young child, for instance, does not have the capacity to form the necessary intention to be responsible for a criminal act. 

In civil law, capacity most commonly relates to the capability of a person to make decisions for themselves. This form of mental capacity is the focus of this article. 

Image of a lawyer interviewing client and title reading what is legal capcity

How is legal capacity determined?

It is important to remember that a person is presumed to have legal capacity unless it is proven that he or she lacks capacity. Just because a loved one struggles with complicated processes, or even finds routine transactions difficult, does not mean that they lacks legal capacity. 

Rather, a person’s legal capacity to make a decision depends upon their ability to do three things: 

  1. Understand the facts of a situation and the main options available; 
  2. Weigh up the consequences of each option and understand how those consequences might affect them; and 
  3. Communicate their choice. 

Although this is the general test for legal capacity, there are specific tests that apply to particular actions. For instance, a person making a will (called a “testator”) must satisfy a legal test to show that they have testamentary capacity. This requires that the testator understands things such as what assets they own and who may have a potential claim against their estate.  

If a person does not have the capacity to make a certain decision, someone called a “substitute decision-maker” might need to make the decision for them. 

Someone born with a significant intellectual disability, for instance, may never have the capacity to make every-day decisions. As such, a person with a mental disability may require a formal guardianship. Under this guardianship, another person is given the authority to make important decisions about medical treatment, legal advice, financial decisions, and even personal decisions such as where they live. 

In New South Wales, the Public Guardian is often appointed by the Supreme Court of NSW or the Guardianship Division of the NSW Civil & Administrative Tribunal  (NCAT) to act as guardian to someone who lacks capacity.

Someone who currently has capacity to make decisions may worry about what will happen in the future. For instance, they may be concerned that as they age, they could suffer mental impairment or mental incapacity. In that case, it is possible to appoint someone else as their enduring power of attorney. This trusted person will step in to make decisions for them only when and if they no longer have the capacity to make decisions for themselves. This person can be a family member, friend, or a professional such as the Public Trustee. 

As the name suggests, an enduring power of attorney remains in place indefinitely, unless the power is revoked.  

Capacity to make decisions

It is important to know that capacity is not always clear-cut. A person’s capacity to make certain decisions can fluctuate, depending on the time of the day, their environment, or whether they are effected by medications or alcohol. If you care for a person whose decision-making is in question you may need to assess their capacity anew with each circumstance.

Many professionals, including doctors, accounts, lawyers and financial advisors, need to know a person’s capacity to make a decision. It is also important for family members to be aware of their loved one’s capacity to manage their own affairs. This is a difficult and complex area of law, and you may need to assemble a support team including a solicitor, doctor, and therapist to help you make these assessments. 

Warning signs of lack of capacity

A serious warning sign that a person may lack capacity is when they start to make decisions that risk harm to themselves.

Other signs to watch for include:

  • confusion over concepts that were previously understood or which are commonly understood;
  • emotional outbursts, mood swings, or significant personality changes; and
  • neglecting personal hygiene or appearance, or not attending to financial or personal matters.

What can affect a person’s capacity?

A person’s capacity to make decisions may be affected by mental illness, physical illness, and intellectual disability, as well as many other factors. 

However, it is important to know that the impact of conditions vary from person to person. One person with serious depression, for instance, may be fully capable of making decisions, despite their illness. Another person with depression may, at times, have impaired capacity because when their illness is severe they make decisions that put them at significant risk. Only the person with impaired capacity requires a substitute decision maker. 

Consider supported decision-making

A person may lack the capacity to make some decisions by themselves, but may be able to make that same type of decision if they have support during the decision-making process. Before deciding that a person does not have the capacity to make a decision, you should ensure that you have first tried everything possible to support them to make their decision themselves. 

If you are supporting a person to make a decision, you must not influence their decision, or help them to make what you think is the “correct” decision. Supported decision-making is simply the process of helping the person to go through the process of decision making. You might help them identify the options, weigh the consequences, and make and communicate their choice: for instance, you may explain the meaning of some financial terms to support them in managing their own financial affairs. 

Regaining capacity

A person can regain capacity or increase their capacity. For example, they can regain consciousness after being in a coma, or learn new skills that will enable them to make certain decisions for themselves. Someone with a mental illness may be able to make decisions when they are medicated, for instance, or during periods when they are in a good place with their mental health. 

Just as a doctor can verify that an individual lacks capacity, so too a doctor can administer tests and determine that someone has regained capacity. If you believe that you have regained capacity but a medical authority does not agree, you can apply to an administrative tribunal for review. 

Children and legal capacity

Young people under the age of eighteen are considered minors under Australian law. Parents are usually also legal guardians, and as such they can make decisions in the child’s best interests, and sign documents on behalf of their children.

In some situations a child may have legal capacity to make decisions on their own behalf. A competent minor may be able to make a binding contract for a “necessities of life”, such as securing accommodation. A child over 14 will usually not require the consent of the parent or guardian to decide to access most medical treatment.

What is a case guardian?

A case or litigation guardian is someone who can act on behalf of a person who lacks legal capacity during a legal proceeding. Several parties can ask the Court to appoint a case guardian, including the principal party themselves. The applicant submits an application with an affidavit outlining the relevant details and any evidence to the Court, and the Court determines if the appointment of a case guardian is appropriate.  

The role of the case guardian

Under the Federal Circuit and Family Court of Australia (Family Law Rules) 2021 (Cth), a person who lacks capacity must use a case guardian to start, continue, respond to, or seek to intervene in a case. The first responsibility of the case guardian is to listen to the wishes of the person who lacks capacity, if this is at all possible.

The case guardian needs to consider the available options and any consequences to the principal, and make a decision in relation to the case that he or she considers to be in the best interests of the principal. 

Legal Capacity and Family Law

Someone involved in a family law action who lacks capacity for legal transactions will usually only be able to respond to the action via a case guardian. The case guardian will instruct the solicitor and provide information to the Court. 

As decision-making in the best interests of the child is the core of parental responsibility, a parent without capacity may not be able to exercise parental responsibility. The Federal Circuit and Family Court of Australia may consider that a parent who lacks capacity may not be ready and able to protect their child from harm. As a result, the Court may limit their parental responsibility, at least until the child is old enough to make daily decisions for themselves. 

Here For You

The team at Unified Lawyers is here to help if you have questions about legal capacity.

We understand that this is a difficult and sensitive issue and we can provide advice on enduring power of attorney, case guardians, and testamentary capacity.

Please contact or call us on 1300 667 461 today.

Team member Donna Nguyen.

Donna Nguyen - Family Lawyer

Donna is a family law solicitor admitted in the Supreme Court of New South Wales with a double degree in Business and Law. Donna is drawn to family law as she is interested in helping clients during a difficult and transitional period following separation. She strives to achieve the best outcome for her clients and has their best interest at the forefront of her advice.

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