Lindsay v Wood

Capacity to manage property and affairs is assessed transactionally. The question is whether the person can recognise the relevant problem, obtain and understand appropriate information and advice, retain and weigh it, and communicate a rational decision. The complexity of the transaction determines the degree of capacity required.

Unwise, rash or irresponsible decisions do not of themselves establish incapacity. Vulnerability to exploitation may be considered as part of the overall evidence, but is not independently determinative. A person may have capacity in a structured setting yet lack capacity to manage complex affairs in ordinary life. The court must assess ability rather than the wisdom of the decisions actually made.

The claimant suffered serious brain injuries in a road traffic accident. Liability was admitted, and substantial damages were expected. Doubt arose whether he had capacity to conduct the litigation and manage the damages.

The preliminary issue was whether he was a patient within Part VII of the Mental Health Act 1983 and CPR Part 21. The medical evidence was divided. One expert considered that the claimant had sufficient capacity for decisions concerning the damages, while another considered that, without the protection of a discretionary trust, he could not manage his affairs. The central issue was whether the claimant could understand, retain and weigh the complex advice likely to arise in settlement of the litigation and give rational instructions.

1. The claimant was a patient within Part VII of the Mental Health Act 1983 and CPR Part 21. The burden lay on the person alleging incapacity, and capacity was presumed.

2. Capacity had to be assessed in relation to the particular transactions. The contemplated decisions included offers involving lump sums, periodical payments, risks of accepting or rejecting settlement, and possible shortfalls in future costs. They were materially more complex than the straightforward decision to establish a discretionary trust.

3. The relevant inquiry was whether the claimant could recognise the problem, obtain and receive relevant information and advice, understand and retain it, weigh it in reaching a decision, and communicate that decision. The court was concerned with ability, not merely with the outcome of past decisions. Rash decisions and vulnerability to exploitation did not by themselves prove incapacity, although vulnerability could be relevant to the assessment.

4. The judge accepted the evidence describing the claimant’s distractibility, poor concentration, impulsivity, need for prompting and inability to complete tasks without supervision. The difference between the medical assessments and his functioning in daily life was explained by the contrast between structured clinical testing and ordinary conditions. His ability to accept relatively simple financial advice in a structured setting did not establish capacity to weigh conflicting and complex settlement advice.

5. The claimant could not reliably absorb and weigh the advice he was likely to receive or give rational instructions based on it. The existing discretionary trust did not justify assuming that he would place any damages award in trust. The court therefore found that he was a patient for the purposes of the litigation.