Assessing Capacity: Weighing the Evidence in Guardianship and Administration Proceedings

A key issue in guardianship and administration proceedings is assessing whether the person has capacity to make reasonable judgments about personal, medical and financial matters. The State Administrative Tribunal must be satisfied the person lacks capacity in the relevant domain before making guardianship or administration orders (Guardianship and Administration Act 1990 (WA), ss 43, 64).

The Tribunal's primary consideration is the best interests of the person (s 4(2)). Every person is presumed capable until proven otherwise (s 4(3)). Orders should not be made if less restrictive alternatives are available (s 4(4)). The person's views and wishes must be ascertained and considered (s 4(7)).

In the decision of NB [2023] WASAT 88, the State Administrative Tribunal considered an application to appoint an administrator for NB due to concerns about her vulnerability to financial scams.

NB and her husband LB had inherited around $700,000. However, over a short period NB spent or committed to spend all but $75,000 - $80,000 of her share through involvement in an online romance scam. Despite strong evidence she was being defrauded, NB persisted in sending money for a car she believed was gifted by a famous musician she was in contact with online.

NB relied on financial help from family for living expenses while providing money to scammers. Medical evidence indicated NB had mild cognitive impairment affecting financial judgement.

The Tribunal weighed all evidence in concluding NB lacked capacity for financial matters and required an administrator to protect her estate.

A finding of incapacity must be based on evidence, not assumptions. As stated in XYZ (Guardianship) [2007] VCAT 1196 at [69], cognitive tests like the Mini Mental State Examination can place too much weight on language, education and cultural factors. Direct observation of functioning may be more insightful (XYZ at [66]).

The definition of 'mental disability' is inclusive, not exhaustive, and does not require a medical diagnosis (FY [2019] WASAT 118 at [32]). The cause may be unclear but the disability evident. The key issue is whether the person can make reasonable judgments in the relevant domain.

Medical evidence will often be important. In NB [2023] WASAT 88, greater weight was placed on evidence of a consultant physician over a GP. MRI and PET scans showed mild cerebral abnormalities but no neurodegenerative dementia. However, the doctor considered the represented person still had some vulnerability to financial scams and uncertainty judging complex finances (NB at [25]-[27]).

Non-medical evidence provided further proof of incapacity. The represented person's persistent vulnerability to scams, inability to critically evaluate fraud warnings, dismissiveness of family advice, anger at their interventions, and continuing belief she was in contact with a famous musician she admired showed lack of insight and judgement (NB at [29]-[40]).

Assessing capacity requires analysing and weighing all evidence. Medical evidence alone may not indicate incapacity, especially if the person functions highly in other respects. But corroborating non-medical evidence of impaired functioning in daily life can prove incapacity.

Tribunals must evaluate the person's ability to make reasonable judgements in the relevant domain - personal/lifestyle, medical, financial and legal affairs. Financial capacity requires balancing income against necessary living expenses and financial goals, devising a budget, assessing contracts and expenditure, meeting debts, and resolving problems (FY at [53]).

In NB, despite intelligence and past financial responsibility, the represented person lacked reasonable financial judgement. She relied on family for living expenses while sending money to scammers, wanted to spend most of a sizeable inheritance on a luxury car, and would likely deplete remaining funds rapidly without prudent management (NB at [42]-[46]). This demonstrated inability to budget, prioritise essentials, understand contracts and expenditure implications, and meet debts.