British Columbia Law Institute Publishes Consultation Paper on Common-Law Tests of Capacity

On February 22, 2013, the British Columbia Law Institute published a Consultation Paper on Common-Law Tests of Capacity.

As set out in the BCLI press release:

The consultation paper examines legislative reforms to judge-made rules governing when a person is determined to have the mental capacity to carry out a transaction or enter into a relationship. It was prepared with the assistance of a ten-person, all-volunteer project committee, made up of some of the leading lights in this area of the law. 

 “We hope to hear from legal advisors and the general public on this important topic,” said committee chair Andrew MacKay, “which touches on issues that affect the daily lives of British Columbians.” 

 The consultation paper contains 31 proposals for reform on how tests of mental capacity operate when someone wants to make a will, to designate a beneficiary under an insurance policy or retirement plan, to make a gift, to nominate a committee, to enter into a contract, to retain legal counsel, to marry or enter into a spousal relationship, or to separate from a spouse.

The proposals include proposals for legislation that would allow a will to be made for a person who does not have the capacity to make a will, and for legislation setting out tests for making gifts between living persons (inter vivos gifts).

Currently, if a person does not have the mental capacity to make a will in British Columbia he or she cannot make or revoke a will. The project committee looked at other jurisdictions in which there are statutory powers to make a will on behalf of someone who is incapable, including the jurisdictions in the United Kingdom, Australia and New Zealand. In Canada, only New Brunswick has similar legislation.

The Committee’s tentative recommendations would allow a person who falls within certain categories to apply to the Supreme Court of British Columbia to make a will for the person who does not have the mental capacity to make a will. The categories are the incapacitated person’s attorney under an enduring power of attorney, representative under a representation agreement, committee, a beneficiary under a known will, a person who would receive a share of the estate on an intestacy or a person whom the incapacitated person might be expected to benefit if he or she had capacity, and the public guardian and trustee.

The person making the application to court would have to give notice to other interested persons who would have a right to participate in the court proceedings. The court would consider the wishes of the incapacitated person and what provisions he or she might have made if capacitated.

If the court approves a statutory will, the court would authorize the application to sign the will for the person on whose behalf the will is made.

In contrast to the tests for capacity to make a will, which are well established in the cases, British Columbia does not have clearly articulated tests for inter vivos gifts, with some court decisions focusing on the common law tests for capacity to make a will, and others on tests for capacity to contract.

The Common-Law Tests of Capacity Project Committee has tentatively recommended legislation setting out the criteria for capacity to make inter vivos gifts that is consistent with the tests for capacity to make a will as follows:

British Columbia should enact legislation that provides that, in order for an individual to make a valid inter vivos gift, (1) the individual must have the capacity to understand (a) the nature of making the gift, (b) the effect of making the gift on the individual’s interests, (c) the extent of the individual’s property that is affected by making the gift, and (d) the claims of potential beneficiaries under the individual’s will or intestacy, or by other means, to which the individual ought to give effect; and (2) the gift must not be the product of any insane delusion affecting the individual.

I have mentioned recommendations in respect of just a couple of areas of law canvassed in the paper, but it is well worth reading and considering all of the recommendations.

The British Columbia Law Institute is seeking responses to the consultation paper for consideration before making a final report. You are invited to respond by June 15, 2013, which you may submit,

by mail:

British Columbia Law Institute

1822 East Mall

University of British Columbia

Vancouver, BC

V6T 1Z1

Attention: Kevin Zakreski;

by fax:

(604) 822-0144; or

by email: capacity@bcli.org.

For convenience you may complete and submit a booklet, which is available here, with responses to the specific recommendations.