How to make use of the Mental Health Ordinance when a relative becomes incapable of managing their affairs

This article explains how to deal with a family member whose mental capacity declines and you need to gain control of their financial and legal affairs without an Enduring Power of Attorney.

When a family member becomes mentally ill it is important to ensure that their property and other affairs are appropriately taken care of. Often this can be achieved in advance using an Enduring Power of Attorney, on which we have written, here. If their condition declines rapidly or is unforeseen it may be advisable to make use of the statutory scheme of protection contained in Part II of the Mental Health Ordinance, Cap 136.

This regime is relevant where a person is deemed ‘incapable, by reason of mental incapacity, of managing their property and affairs’. One of its purposes is to protect the interests of those suffering diseases such as Alzheimer’s and Huntington’s often in their later years. But the term ‘mental incapacity’ is defined in the Ordinance sensibly and broadly enough to encompass a wide range of other circumstances that affect one’s cognitive ability, and the scheme can be used creatively (though appropriately) to the benefit of person hospitalised following strokes, severe trauma or even drug use that has induced a coma.

Two-stage process

The central function of the court under Part II is to conduct an inquiry to ascertain whether the person is in fact incapable of managing their property and affairs. The procedure is therefore divided into two stages.

At the first stage, the court will consider the papers and make directions as to how the inquiry will proceed. It will be important to ensure, for example, that family members are given notice of the forthcoming inquiry. The court will wish to be notified of the person’s assets, their needs and interests, as well as their medical condition and prognosis. The Official Solicitor will provide assistance as a friend of the court, and as the government office statutorily responsible for those who cannot conduct litigation on their own behalf.

At the second stage the court conducts the inquiry, hearing from those interested in or affected by the person’s incapacity, and makes a finding. Where the inquiry finds that the person is indeed incapable of managing their property and affairs, a broad range of statutory powers vest in the court to be exercised on their behalf and in their best interests. These include:

• Acquiring, selling, charging or disposing of the person’s property;
• Setting trusts;
• Executing a will;
• Carrying on the person’s profession, trade or business;
• Entering into and performing contracts; and
• Conducting legal proceedings.

One common resolve, particularly where the incapacity is likely to be ongoing, is to appoint a Committee of the Estate under section 11. The Committee may comprise family members as well as the Official Solicitor. It will be charged with dealing with the property and affairs of the person in their best interests, and empowered to execute instruments on the person’s behalf. Importantly, the court retains jurisdiction to oversee the Committee’s handling of the matter, including by specific order that Committee act in a particular manner. Where the estate is less considerable the court is specifically empowered to make a simpler form of order for the ‘direct and inexpensive’ maintenance of the person and / or their relatives, without appointing a Committee, under section 24.

Emergency relief

One of the most powerful aspects of the regime is the power to grant emergency relief. This can be obtained urgently, as unfortunately may often be necessary, and before an inquiry has been convened (and before a final finding as to the person’s capacity has been made). This has the potential to save valuable time where an unforeseen medical crisis occurs, and a person on whom perhaps a number of others depend is suddenly rendered incapable of providing for them.

This jurisdiction is wide and entitles the court to make use of ‘any of the powers conferred’ by Part II, including those above, to meet the exigencies of the situation. Consideration will be given to the fact that some of the person’s relatives will not yet, on an urgent application, have been heard. The court will be reluctant to grant a carte blanche over assets where it is unable to discern the longer-term implications, though it will not ignore situations of real need, particularly where the relief is designed to continue established uses and applications of assets, for example as regards family maintenance, educational fees or expenses in the ordinary course of a family business.

The application

Applications for both inquiries and for emergency relief are generally made by ‘relatives’ (they may also be made by the Director of Social Welfare, the Official Solicitor and court-appointed guardians).

A ‘relative’ is particularly defined in the Ordinance to include a person’s spouse, cohabitant, children (including step-children), grandparents and grandchildren (including in-laws), uncles, aunts, nephews, nieces and cousins (and their spouses).

Applications must be accompanied with two medical certificates attesting to the person’s incapacity. One of the practitioners must be approved by the Hospital Authority as having specialist experience in mental incapacity or mental handicaps. Arrangement should be made for hospital visits as early as is practicable where emergency orders are sought, as hospital medical reports are often only available after a period of weeks.

What to do in the event that a family member loses capacity

First, be sure to discuss the situation with family members close to or dependent on the person. Seek agreement on an arrangement of the person’s assets that parties agree is in their best interests. To a degree this will mean in accordance with their wishes, and you should ascertain if possible whether the person has made a Last Will and Testament. Often people remain incapacitated in the legal sense, though alive, for some time. In such a case your first consideration will likely be the person’s long-term care, which may require funding. The court is acutely aware of these issues and will be comforted where some thought has gone into such medium and long term arrangements. If in doubt, seek legal advice.

Second, consider what matters as concern others will have to be attended to in the event that the person does not regain capacity in the foreseeable future, and whether any of those are likely to become urgent. It may be the case that a simple trust settlement, or a business trade sale, will provide for a steady source of support that does not necessitate the court’s ongoing supervision. On the other hand where there exists a complex estate or where the person has retained much of the operational power to use and apply their assets, it will be beneficial to begin the planning process as early as possible.

If you would like to discuss an application under Part II with a lawyer, please contact:

Mark Side

Partner | Email

If you would like to discuss an Enduring Power of Attorney ahead of incapacity please contact:

Eddie Look

Partner | Email

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.