Section 6 of the Ontario Substitute Decisions Act (SDA) sets out: “A person is incapable of managing property if the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.”

In F.L. v. Oliver, 2024 ONSC 478 the Ontario Superior Court heard an appeal of a finding of incapacity to manage property.  In summarizing the law surrounding the determination of incapacity, Perell J. first noted that the test for capacity was established by the Supreme Court of Canada in Starson v. Swayze, 2003 SCC 32 (“Starson”).[1]  Perell J. went on:

Capacity involves two criteria. First, a person must be able to understand the information that is relevant to making a decision. This requires the cognitive ability to process, retain and understand the relevant information. Second, a person must be able to appreciate the reasonably foreseeable consequences of the decision or lack of one. This second standard requires the person to be able to apply the relevant information to his or her circumstances, and to be able to weigh the foreseeable risks and benefits of a decision or lack thereof. The ability to appreciate the reasonably foreseeable consequences of a decision or lack of decision includes an ability to recognize whether one’s condition renders the person unable to apply the relevant information and appreciate the consequences of his or her decision.

The ability to appreciate consequences involves more than a mere understanding of the relevant information and requires that the person have some ability to evaluate the information to appreciate the consequences of making or not making a decision. Indicators of a person’s ability to appreciate consequences are: (a) acknowledgement that the decision will have consequences to him or her; (b) appreciation of how the decision will have consequences; and (c) the absence of delusional beliefs.

A general principle of capacity evaluation is that incapacity is not determined by diagnosis. The Supreme Court in Starson held that the Consent and Capacity Board must avoid the error of equating the presence of a mental disorder with incapacity. Nonetheless, the Ontario Superior Court has cautioned that incapacity cannot exist without some form of mental illness. As stated in Loyer et al v. Loyer et al, 2024 ONSC 3342 at paragraph 11:

“Incapable” means “mentally incapable”, and “incapacity” means “mental incapacity”: s. 1(1). In other words, the incapacity to manage property or personal care must arise from a mental incapacity. In the context of litigation guardians, mental incapacity has been elaborated as stemming from “mental illness, dementia, developmental delay or physical injury and not from some other (non-legal capacity related) reason such as a lack of sophistication, education or cultural differences.

Referrals to the Capacity Clinic commonly reflect concerns of possible incapacity in seniors who do not have a diagnosis of dementia, but perhaps have mild cognitive impairment (MCI). Clinically, this can be detected by a positive score on a Montreal Cognitive Assessment (MoCA), a paper-and-pencil assessment requiring approximately 10 minutes to administer and scored out of 30 points. The cognitive domains assessed include visuospatial skills, executive functions, memory, attention, concentration, calculation, language, abstraction, memory, and orientation. A score below 26 on the MoCA is considered a positive screen for MCI, validated in seniors up to age 85.

MCI is not listed as a diagnostic entity in the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5) but rather is replaced with mild neurocognitive disorder (mild NCD); defined as a noticeable decrement in cognitive functioning that goes beyond normal changes seen in aging. It is a disorder that may progress to major NCD (previously known as and still commonly referred to as dementia) but importantly, it may not.

Difficulty with complex financial decisions is potentially anticipated in seniors with MCI according to the evidence based research in MCI and executive function – a term used to describe a cluster of cognitive capacities required for adaptive behaviour (e.g. planning, goal setting, inhibition, cognitive switching, and novel problem solving). Executive functions include the abilities to mentally manipulate information, plan sequences of actions, and to provide relevant responses to particular information.

In determining incapacity, the Supreme Court in Starson cautioned that capable individuals have the right to take risks and are presumed free to make decisions that are considered unreasonable. The test is not whether the choice by the patient appears reasonable or wise, but whether the patient is capable, within the meaning of the statute, of making the decision. The physician is not to inject his/her own personal values, judgments, and priorities into the process. As Justice Harris stated in Bartoszek v Ontario (Consent and Capacity Board), [2002] O.J. No. 3800 (S.C.J.), at para 20: “It is mental capacity, not wisdom, that is at issue here. The appellant carries with her, like all citizens, the right to be wrong”.

Yet it is typically someone in the family of a senior without dementia but possibly having MCI injecting his/her own personal values, judgments, and priorities into the senior’s decision-making process, that results in the request for a capacity assessment.

The theme described in the caselaw regarding evaluating ability to appreciate is to apply the relevant information to one’s circumstances. As stated in M.N. v. Klukach, 2004 CanLII 6325 (ON SC), the court explained the second branch of the test for capacity (i.e. the ability to appreciate consequences) in light of Starson, as follows: “The second branch of the test of capacity assesses the ability to evaluate, not just understand, information. A person must have an ability to appreciate the relevant information as it relates to him or her.”

But what is the relevant information and/or circumstances to be applied for the test of ability to appreciate for management of property, and how can it be extrapolated from capacity to consent? Recognition of the manifestations of a condition certainly applies to the test of ability to appreciate for capacity to consent, but why would that be generalizable to capacity to manage property? The presence of delusional beliefs would not necessarily determine incapacity either, only so if the delusions are impacting the decision-making process (see Banks v. Goodfellow (1870)).

The Capacity Clinic has iteratively developed a standardized list of situation specific factors that may impact decision-making capacity. We developed DecisionTracker as a screening tool that can also be used during an assessment to help the evaluator assess if the Decision Maker is able to understand information about their accommodations, assistance needed or specific information about their health, mental health, social or financial decision-making process. If a Decision Maker does not understand this information, it puts them at risk of decision-making incapacity.

In evaluating the test of ability to appreciate for capacity to manage property I suggest the Decision Maker must understand the information about their circumstances, including their limitations and any assistance they require, and apply that information by demonstrating an appreciation of how that information impacts their decision, and/or is being impacted by the decision made.

As the population ages, I anticipate the courts will be confronted with more cases of capacity determination in seniors with MCI, and it will be interesting to see to what extent MCI becomes a diagnosis accepted of causing mental incapacity or not.

[1] I note that Starson v Swayze was a case of capacity to consent under the Ontario Health Care Consent Act (“HCCA”) which has the same tests of ability to understand and ability to appreciate for capacity to consent as the SDA has for capacity to manage property.