The impact of impaired decision making ability on legal capacity

South African law of agency is based upon the principle that an agent cannot do that which his principal has no capacity to do himself. Put differently: you cannot authorise another to perform acts that you do not have the capacity to perform yourself.

This poses the question: what happens when a person’s mental capacity starts to diminish? Can a power of attorney cater for this scenario?

The short answer is “no”. South African common law determines that a power of attorney terminates once the principal becomes mentally incapacitated. In other words, when a principal is no longer able to perform the act in question himself, the agent can no longer do it for him. A validly concluded power of attorney therefore automatically lapses as soon as the principal loses the legal capacity to act, leaving the agent with no authority to act.

The only legal solution to resolve this situation is to either approach the High Court for the appointment of a curator or applying to the Master of the High Court for the appointment of an administrator, depending on the circumstances.

Appointment of a curator

An application may be made to the High Court for the appointment of a curator to look after a person who, by reason of mental illness or otherwise, is incapable of managing his or her own affairs.

Rule 57(1) of the Uniform Court Rules deals with the appointment of curators and sets out the procedure to follow. The application is brought ex parte and is usually made by a relative or member of the patient’s family. The application must be supported by an affidavit of at least one person to whom the patient is well known (containing such facts and information concerning the patient’s mental condition), as well as affidavits by at least two medical practitioners who have conducted recent examinations of the patient to ascertain and report on the mental condition of the patient. After considering the application, the court will appoint the person to act as curator to the patient on such terms as it deems fit.

There are three “types” of curators in South African law:

1. A curator ad litem who is appointed to assist with litigation;
2. A curator bonis who is appointed to look after the patrimonial interest (the property) of a person; and
3. A curator personae who is appointed to look after the personal welfare of a person.

Appointment of an administrator

The Mental Health Care Act 17 of 2002 (“the Act”) regulates the appointment of an administrator in respect of a person who is mentally ill or with severe or profound intellectual disability.

Section 59 empowers the Master of a High Court to appoint an administrator:

1. on consideration of an application as submitted in terms of section 60, or
2. upon an order made by a High Court (after an appeal or an enquiry referred to in section 60 or 61) stating that such person is incapable of managing his or her property and requesting that an administrator be appointed.

a) Application in terms of section 60

This type of application is typically brought by the spouse or next of kin – section 60(2)(a) actually states if the application is brought by someone else they will need to set out the reasons why the application was not brought by the spouse or next of kin. The Master will consider the facts as set out in the application, whereafter he may either appoint an administrator, decline to appoint an administrator or refer the matter for consideration by a High Court judge in chambers.

b) Application in terms of section 61

Section 61 deals with instances where an application for an administrator is brought on the recommendation of the High Court. This would typically be the instance where, during the course of legal proceeding before the court, the judge has reason to believe that the person in respect of whom the legal proceeding is held or conducted, is incapable of managing his/her own affairs.

 Section 61 empowers the court in such instance to launch an investigation into the mental health status of that person. If, on completion of the investigation, the court finds such person incapable of managing his or her property, the court may recommend that an administrator be appointed to take care of and administer the property of such person.

 A power of attorney is of little or no value to someone who fears that their mental capacity is/may be weakened in the future and who wants someone to act on their behalf when that situation arises.

 The curatorship route involves costs (both the initial and running costs), takes time and makes the person’s state of health and financial affairs public. Although the appointment of an administrator is somewhat less complicated (and possibly less expensive) since the application is made directly to the Master, it still relies on access to the court system – a luxury many South Africans don’t have.

 Other foreign countries have attempted to circumvent this problem by introducing enduring powers of attorney (that remain in force despite the mental incapacity of the principal). The possibility of introducing such a system in South Africa has been investigated by the South African Law Reform Commission (Discussion Paper 105 dated January 2004) which included a draft bill). Years later, however, the matter has yet to be taken further.

 What remains certain is that South Africa desperately needs to cater for adults with impaired decision making capacity. This can be either by way of introducing new legislation that makes provision for assisted decision making in a simpler, more accessible form than our current curatorship system, or by making provision for a type of enduring power attorney that is developed based on our common law principles of agency.

Note about two-pot fund rules

In terms of the current draft of the two-pot legislation, fund rules will need to be amended for the two-pot system (and registered) before 1 March 2024. This is likely to be a large amendment to the rules.

The FSCA is planning to issue a Guidance Notice containing principles for two-pot rule amendments. Hopefully this is issued sooner rather than later, but it is likely that the FSCA also needs to see the final two-pot legislation before finalising and issuing it.