In Adamson v Enever & Anor [2021] QSC 221 , Mrs Adamson was run down by a vehicle that failed to give way on 13 October 2015, when she was 63 years old. On 31 August 2021 when the Supreme Court decided she did not lack capacity, she was 69 years old. In the motor accident she suffered a head injury with post-concussion syndrome, various orthopaedic injuries and a psychological injury with anxiety and depression.
Court Sanction Application
On 29 January 2021 she settled her motor accident personal injury compensation claim for $350,000 plus recoverable legal costs. The settlement was conditional on Mrs Adamson applying to the Supreme Court for a decision about whether she had capacity and this meant the Court would decide whether she had the capacity to:
- settle her claim for $350,000 plus recoverable legal costs (and if the Court would decide whether to approve the settlement as being in her best interests)
- approve the legal costs sought by her lawyers and take steps in her own interests to ensure the amount in her hand at the end would be as high as possible (otherwise the Court would review and approve or reject the legal costs)
- manage the compensation payout, as opposed to have an administrator appointed to manage, invest, consider and then approve or deny expenditures
What is a lack of capacity?
Schedule 4 of the Guardianship and Administration Act 2000 (Qld) (‘GAA‘) defines ‘capacity’ and ‘impaired capacity’:
Capacity, for a person for a matter, means the person is capable of –
(a) understanding the nature and effect of decisions about the matter; and
(b) freely and voluntarily making decisions about the matter; and
(c) communicating the decisions in some way.
‘impaired capacity‘ means ‘the person does not have capacity for the matter’
Schedule 4 of the Guardianship and Administration Act 2000 (Qld)
What is a ‘matter’?
A ‘matter’ can be:
- the conduct of a legal claim or litigation
- the settlement of a legal claim or litigation
- the receipt and management of the compensation payout from a legal claim or litigation
- the review and approval or dispute of a person’s legal costs for a legal claim or litigation
Consequences of ‘impaired capacity’
Impaired capacity for settlement of a legal claim or litigation will mean the settlement is subject to a sanction by the Court under s 59 of the Public Trustee Act 1978 (Qld). QCAT has jurisdiction to appoint an administrator to manage the payout. The Public Trustee may also sanction a settlement but it may not be willing to in many cases and generally it is preferable to seek an independent sanction from the Court.
Adequate and appropriate support
If a person has ‘adequate and appropriate support’ for a matter they may have capacity for the matter, but if they do not have that support they may have impaired capacity. This means two people with the same level of function for prudent decision making might have different results when assessed for impaired capacity, if one has adequate and appropriate support and the other does not.
Advise about Wills and powers of attorney
In a case where a client has declining capacity but may not yet have impaired capacity for making a Will or enduring power of attorney for financial or healthcare matters, a solicitor acting in a personal injury compensation matter should warn their client to consider attending to those matter while they may still be able to.
Focus on the decision making ability, not the decision
Simply because a person may struggle with a matter, for example deciding whether to settle for a certain amount or manage a large compensation payout, does not mean they have impaired capacity for the matter if they have or will be able to avail themselves of ‘adequate and appropriate support’. Many people who have no impaired capacity may make decisions that others do not agree with and just because someone makes a bad decision does not necessarily mean they have impaired capacity.
Example of no impaired capacity
The Court said: ‘Mrs Adamson does not require a complex financial plan. She is not a young person who has received millions of dollars to compensate her for catastrophic injuries. She does not have so much money that is needs to be shifted around through different managed investment funds and direct investments. She needs simple advice about where to invest her money so that it might earn some interest and not attract significant fees which erode its value.’
Her plan was to buy some furniture so as to be more comfortable, especially in light of her injuries, seek some relatively inexpensive financial advice about where to invest her payout and then rely on support from close family. She was already in stable accommodation. Medical evidence that she would ‘struggle to manage more complex funds, such as those associated with the proceeds of the settlement sum’ was considered relevant, but was not accepted as meaning there was impaired capacity, because she had ‘adequate and appropriate support’ for the matter. She even sought legal advice about her rights to challenge the validity of her solicitor’s costs agreement and amount of the costs they proposed to charge her. The Court adjourned the sanction hearing to give her the opportunity to seek financial and legal advice and make a Will and enduring power of attorney. The Court noted that Mrs Adamson was likely to follow the financial advice she planned to obtain and thought she had capacity to make a Will and enduring power of attorney.
Capacity Guidelines
Section 250 of the GAA states: ‘The Minister is to prepare guidelines to assist persons required to make assessments about the capacity of adults to make decisions about matters to make the assessments.’ Those guidelines contain five principles to apply when assessing an adult’s capacity:
- Always presume an adult has capacity (as a starting point)
- Capacity is decision specific and time-specific
- Provide the adult with the support and information they need to make and communicate decisions
- Assess the adult’s decision-making ability rather than the decision they make
- Respect the adult’s dignity and privacy in the process for the assessment of their capacity
To have capacity to understand the nature and effect of decisions, an adult must have the ability to broadly identify the advantages and disadvantages of the available options and to understand the consequences of those options, then weigh those consequences and reach a decision. The adult must also be able to make decisions without coercion so that the decision is theirs, and not someone else’s. Finally, the adult needs to be able to communicate their decisions in some way.
Considerations for lawyers
The issue of capacity can involve some relatively simple matters, for example advising a client with declining capacity to consider making a Will and enduring power of attorney for financial and healthcare matters while they may still be able to. In cases where the adult wants an administrator appointed for a matter that will often result in a simple QCAT application and the appointment or an administrator.
In assessing or making submissions about the assessment of a client’s capacity, consider their decision making process, not just the decision they want to make, and also consider their current access but also potential future improved access to adequate and appropriate support for the capacity matter.
There will though be very complex cases where a client likely has impaired capacity (or clearly has extremely impaired capacity), is very opposed to having an administrator for the matter and might even refuse to attend a QCAT hearing (which would probably itself be a factor suggesting impaired capacity). Their own view about their level of capacity might be inconsistent with favourable medical evidence (favourable for their compensation claim) about the extent of their cognitive or psychiatric injury. The simple reality is that you often cannot help someone who does not want to be helped and in that case you may need to withdraw from the matter. A good example is a bullying claim where the client clearly lacks capacity but wants to essentially run their own case, with the only logical result that they will wreck their case or else prove they are not so injured and should be a lawyer. Where there is a question about capacity, earlier investigation and gathering of medical evidence, evidence about the available ‘adequate and appropriate support’ and filing of a QCAT application allows the question to be decided by the appropriate decision maker. Solicitors should not make calls on capacity that are close to the line where there is the facility available to inexpensively have the decision made by QCAT.
Adamson v Enever & Anor [2021] QSC 221