90. The meaning of legal capacity and a broader conceptual discussion of equal recognition before the law, capacity, and substitute and supported decision-making is included above in paragraphs 61 to 72 of this Issues Paper.
91. To determine whether an individual has capacity to make a particular decision at a particular point in time, it is necessary to consider the:
92. Relevant to an assessment of whether a person is able to meet the relevant capacity standard is consideration of what decision-making arrangements might need to be put in place to assist them to exercise legal capacity.
93. At a practical level, it may also be necessary to identify the circumstances, or the triggers that might lead to questions about whether an individual can meet the relevant capacity standard, and to ensure appropriate safeguards and review of decisions about capacity.
94. The CRPD does not contain a particular capacity standard. Rather, it requires States Parties to ensure that people with disability ‘enjoy legal capacity on an equal basis with others is all aspects of life’.[98] However, a number of overseas jurisdictions have incorporated detailed incapacity standards and a presumption of capacity–for example, under the Mental Capacity Act 2005 (UK).
95. In Australia, there is no uniform standard for capacity. Each area of the law has developed a standard of capacity generally relevant to the transaction in question. For example, in some contexts the relevant standard is that the person be of ‘sound mind, memory and understanding’,[99] in others there is a need to understand the nature and significance of the particular transaction or activity.[100]
96. The question of capacity and the need for a capacity standard arises in a range of contexts, particularly in the context of guardianship laws. However, there is significant variation across jurisdictions. For example, in Victoria there are a number of standards, including that the person must be unable to make reasonable judgments or understand the nature and effect of a document.[101] In NSW, the standard is where a person is totally or partially incapable of managing his or her person.[102]
97. The assessment of capacity may lead to particular outcomes, including decision-making arrangements being put in place.
98. Once it is determined that a person’s capacity needs to be assessed, the key issue is then how such an assessment should occur and what impact that assessment has on determining an individual’s legal capacity.
99. There are a number of approaches to assessing capacity for the purposes of assisted decision-making arrangements. The two traditional approaches are the ‘status’ approach and the ‘cognitive’ approach.[103] Broadly, the status approach automatically equates certain characteristics or impairments with the loss of legal capacity. The UNCRPD has expressed the view that status-based approaches and systems violate article 12 of the CRPD ‘because they are facially discriminatory, as they permit the imposition of a substituted decision-maker solely on the basis of an individual having a particular diagnosis’.[104]
100. The cognitive approach focuses on the decision-making capacity of an individual in relation to specific decisions and encompasses the concept of mental capacity.[105] This approach tends to be favoured under guardianship legislation. As Bernadette McSherry explains, the cognitive approach can be divided into two assessment approaches:
101. However, the CRPD suggests that functional and outcome-based tests of capacity that lead to the denial of legal capacity may contravene article 12 if they ‘are either discriminatory or disproportionately affect the right of persons with disabilities to equality before the law’.[107]
102. At a practical level, the means of assessing capacity occurs in various ways. One of the key approaches involves capacity assessment principles. For example, the assessment of capacity in NSW is guided by the use of capacity assessment principles under the NSW Capacity Toolkit. The assessment principles included in the Toolkit are:
103. In its 2012 report, the Victorian Law Reform Commission recommended that Victorian guardianship legislation should contain similar capacity assessment principles.[109]
104. As outlined above at paragraphs 16 to 18, in this Inquiry the ALRC is directed to have regard to, or to consider: the interaction of Commonwealth, state and territory laws, modelling in Commonwealth laws and legal frameworks, and uniformity between as well as complementary Commonwealth, state and territory laws.[110]
105. Against this backdrop, as definitions of capacity and approaches to assessing capacity vary across jurisdictions, the ALRC considers it may be useful to develop a national, or nationally consistent, approach to capacity. The ALRC is interested in stakeholder comments on the need for, and viability of, developing such an approach and what the most appropriate mechanism might be. For example, there appear to be a number of potential regulatory options for achieving this, including through:
106. Some of the key issues to consider in developing any national or nationally consistent approach will include: the Constitutional basis of the scheme; the interaction between Commonwealth, state and territory legislation; administrative law issues; scope and processes for amendment; and the jurisdiction of the courts.
107. The ALRC welcomes stakeholder submissions on whether there should be a Commonwealth or nationally consistent approach to defining capacity and assessing a person’s ability to exercise their legal capacity. The ALRC is particularly interested in what any such mechanism should look like, the key elements, and its interaction with existing state and territory legislative regimes.
Question 4. Should there be a Commonwealth or nationally consistent approach to defining capacity and assessing a person’s ability to exercise their legal capacity? If so, what is the most appropriate mechanism and what are the key elements?