Definitions and tests of mental capacity

Overview

Legal relationships are part of life from beginning to end and involve the consideration and making of legally enforceable commitments that will impact the individual’s interests. Things like renting, buying or selling a home, buying or selling a car, and getting married are all types of legal relationships.

Not surprisingly given the legally binding nature of these arrangements, courts are called upon from time to time to consider whether a person had the capacity to properly enter into a particular arrangement. The following information is intended to assist in gaining a better understanding of these sometimes complicated considerations, and what you can do to be prepared.

Meaning of legal capacity

The personal ability to understand and make rational decisions about the things that will be legally binding on the decision maker and their property is the essence of the notion of legal capacity. A person must have legal capacity in order to make decisions that are legally binding on them.

There are 2 elements to the concept of legal capacity.

The first element is that a person must have reached the age of majority for the jurisdiction. Age of majority is a term that signifies the age at which, by law, a person becomes legally responsible for the management of his or her legal affairs. In B.C., the age of majority is 19 years
The second element is mental capacity. Generally speaking, mental capacity refers to a person’s ability to understand and appreciate the impact and consequences of their actions

In most cases: Legal capacity = Age of majority + Mental capacity

Age of majority

The Age of Majority Act states that a person reaches the age of majority upon becoming 19 years of age. The terms “minor” and “infant” are used in various statutes to refer to someone under the age of 19 years. For consistency, those terms will be used in this information as well.

There are some exceptions to the general requirement to reach age of majority in order to have legal capacity. Some examples are:

Section 36 of the Wills Estates and Succession Act provides that a person may make a will once they have reached 16 years of age
- A will is a legal document left by someone who has died. It lets the court know what to do with that person’s estate
Section 121(a) of the Workers Compensation Act states that, for the purposes of the compensation provisions of that act, a worker who is a minor has the capacity of a person who has reached 19 years of age
Section 88 of the Insurance Act deems that a beneficiary of life insurance proceeds who has reached the age of 18 years has the capacity of a person who has reached the age of 19 years for the purposes of receiving insurance money payable to the beneficiary and giving a discharge for it
- A beneficiary is person named in a will to receive all or part of an estate or people who have an interest in a trust that was created by a will
Section 17 of the Infants Act provides that an infant may consent to health care whether or not that health care would, in the absence of consent, result in unlawful contact to the infant's body. If an infant provides that consent, the consent is sufficient and it is not necessary to obtain a consent to the health care from the infant's parent or guardian. Importantly, section 17 also imposes a duty on the health care provider receiving the consent to be satisfied that the infant understands the nature and consequences and the reasonably foreseeable benefits and risks of the health care
Section 19 of the Infants Act states that a contract generally cannot be enforced against an infant. There are a few exceptions that are specifically set out in law, such as a contract for a student loan from the government. However, if an application is made to the court, the court may make an order that an infant has capacity to enter into a contract if the court finds it is beneficial to the infant to do so (section 21). This occurs for example when a person under age 19 is an actor, and is contracted to act in movies or television shows. Once the court order granting capacity is made, the contract can be enforced against the infant

Mental capacity

Section 3 of the Adult Guardianship Act states that until the contrary is demonstrated, every adult (person who has reached the age of majority) is presumed to be capable of making decisions about their own personal care, health care and financial affairs. A court order or certificate of incapability can establish that a person is not capable of making such decisions. An adult's way of communicating with others is not grounds for deciding that they are incapable of making those decisions.

Legal capacity, aging and estate planning

A person’s capacity to understand and make rational decisions about matters, can be reduced by injury, disease or aging. There are arrangements that a person can make to plan for such circumstances.

Preparing a will while capacity is still clearly present is a way of ensuring that your testamentary wishes will be carried out. There are also other documents (legal arrangements) that you can use to ensure that you will have assistance from people you choose, in managing your affairs, should that become necessary due to diminished capacity. These arrangements include preparing a representation agreement, power of attorney, and/or nomination of committee, and are discussed in more detail below.

Capacity is task specific

At their core, the various tests for capacity are concerned with a person’s ability to understand at the time the decision is made, what they are doing and the effects and consequences of their decisions and actions.

However, since individual legal arrangements vary widely in scope and complexity, multiple tests for capacity have arisen. There are individual considerations for the following (and other) areas of capacity:

Making a will
Giving a gift
Entering into a contract
Appointing an attorney or agent
Hiring and instructing a lawyer
Getting married or beginning a spousal relationship
Separating from a spouse
Making a representation agreement
Nominating a committee

The court can decide questions of capacity

In order to protect vulnerable individuals from exploitation, the court can be called on to review the circumstances surrounding any legal arrangements the person made, in order to determine whether a particular person may have lacked the legal capacity necessary to properly decide to enter into the arrangement. In doing so, the courts have developed various tests for capacity. Where it is established that an individual lacked the capacity to enter into a specific arrangement, the arrangement or relationship may be set aside.