Have you ever considered what will happen if your client loses capacity?

Who will give you instructions? Who will pay your bill?

Your client must have capacity to give you valid instructions or to enter into a contract for your services. A contract entered into with a client without capacity may be void or voidable. For example, in Bergmann v Dengiz[1] a real estate agent lost her entitlement to $125,000 commission because it was later found her client did not have capacity to enter into the standard form agreement to appoint her as agent.

It is expected that by 2060 the Australian population aged 75 or more years will rise to 14.4 per cent of the population. It is estimated that 900,000 people will be diagnosed with some form of dementia in 2050. These profound demographic shifts will present challenges to professional service providers as our clients are likely to live longer but their capacity to give us valid instructions may diminish.

Many of our clients are likely to have an Enduring Power of Attorney (EPA) appointing a substitute decision maker from whom we can accept instructions. However, what do we do when faced with a client who does not have an EPA and whose ability to give instructions becomes or is already impaired?

In these circumstances, the only solution is to apply to the Queensland Civil and Administrative Tribunal (QCAT) for an administration or guardianship appointment.

QCAT has exclusive jurisdiction for the appointment of guardians and administrators for adults who lack capacity. Any ‘interested person’ can apply to QCAT for an administration and/or guardianship order which will appoint a substitute decision maker who can provide valid instructions on behalf of your client.

What functions does QCAT have?

QCAT’s functions include:

  • Making declarations about the capacity of an adult;
  • Appointing guardians and/or administrators;
  • Reviewing the appointment of guardians and/or administrators, including suspending the appointment where necessary;
  • Considering applications for a declaration, order, direction, recommendation or advice in relation to the Guardianship and Administration Act 2000 (Act) or the Powers of Attorney Act 1998;
  • Ratifying an exercise of power or approving a proposed exercise of a power.

How do I know if a Client has lost capacity?

Capacity is a fluid concept. It can vary for different tasks. As far as QCAT is concerned, to have capacity for a decision, a person must be capable of:

  • Understanding the nature and effect of decisions about the matter; and
  • Freely and voluntarily making decisions about the matter; and

All adults are presumed to have capacity and to rebut the presumption there must be sufficient evidence placed before QCAT. Medical evidence is usually sufficient to rebut the presumption.

Who can apply?

QCAT can make an appointment on an application by the adult or an ‘interested person’.[3] An ‘interested person’ is someone who has a sufficient and continuing interest in the other person.[4]

Where there are no close family or friends, a service provider with a continuing interest in the adult would satisfy the ‘interested person’ test.