A tale of two tests

Since the Mental Capacity Act 2005 (the MCA 2005) came into force on 1 October 2007, the issue of what is the correct legal test for testamentary capacity has been the subject of contention in the courts.

As was recognised in Baker & Anor v Hewston,1 a ‘polarised debate’ has developed between England and Wales Court of Protection and Chancery lawyers about the correct legal test. Is it the 150‑year‑old common‑law test expounded in Banks v Goodfellow2 or is it now the statutory test under the MCA 2005?

The Banks test provides that a testator must be able to:

• understand the nature of the act of making a will and its effects;
• understand the extent of the property of which they are disposing;
• be able to comprehend and appreciate the claims to which they ought to give effect; and
• not be suffering from any disorder of the mind which poisons their affections, perverts their sense of right or prevents the exercise of their natural faculties so that no insane delusion shall influence their will in disposing of their property and bring about a disposal of it which, if their mind had been sound, would not have been made.

Section 2 of the MCA 2005 provides that a person lacks capacity ‘if at the material time he is unable to make a decision for himself in relation to the matter because of an impairment of, or disturbance in the functioning of, the mind or brain’. Section 3 of the MCA 2005 confirms that a person is unable to make a decision for themselves if they are unable:

• to understand the information relevant to the decision;
• to retain that information;
• to use or weigh that information as part of the process of making the decision; or
• to communicate the decision.

The ‘comprise solution’ in Baker

In the latest of a line of testamentary capacity cases, His Honour Judge Tindal in Baker proffered an alternative ‘compromise solution’, which at its core synthesises and accommodates the two tests within one another. He found that ss.2–3 of the MCA 2005 do not strictly apply to testamentary capacity in probate cases. However, he noted that these sections are aligned and broadly consistent with the common‑law test for testamentary capacity and are consciously so. He suggests that the MCA 2005 can be interpreted in a way that aligns with the common‑law test in Banks.

The position adopted by Tindal J is grounded in principle. The MCA 2005 Code of Practice (albeit not legally binding) expressly provides at 4.33 that ‘[t]he Act’s new definition of capacity is in line with the existing common law tests, and the Act does not replace them’. Tindal J also notes how the MCA 2005 derived from three reports from the Law Commission of England and Wales. In particular, a 1995 report on mental incapacity was clear that the then‑draft Bill did not attempt to replace definitions of capacity at common law and, indeed, that the ‘new definition expands upon, rather than contradicting, the terms of the existing common law tests’. The report suggested that the two tests should be capable of being applied harmoniously.

However, while these may have been the original drafting intentions, how has having two tests manifested in practice? Has it been harmonious? Does it work that, formally, there are two tests to apply? After all, there are clear differences.

The (non-exhaustive) differences between the tests

One of the most striking differences is the presumption of capacity under the MCA 2005. Section 1 of the MCA 2005 enshrines this presumption: one is presumed to have capacity. If a challenger seeks to dispute capacity, the burden falls on them to prove the individual lacks capacity. There is an
argument that this is cleaner, fairer and better aligned with modern thinking around mental health issues. Under the common law, as set out in Key v Key,3 the burden of proof is on the propounder of a will to establish capacity. While the court will presume capacity where a will is duly executed and rational on its face, a challenger to a will only needs to raise a ‘real doubt’ about capacity to displace this presumption, forcing the propounder to positively establish that the testator had capacity. In practice, this will likely involve proving a negative, i.e., the absence of a mental health issue, which arguably places the propounder under a disproportionately difficult burden.

Accordingly, the MCA 2005, which was intended to wash away outdated notions and prejudices around incapacity, appears to be better aligned with freedom of testation as, under the MCA 2005, a testator would be presumed to have capacity unless a challenger can prove otherwise. However, Tindal J in Baker described the differences as ‘over‑stated’. He emphasised that the presumption of capacity would ordinarily operate if a will was properly executed and could only be displaced if there is a ‘real doubt’ over the testator’s capacity.

In Walker v Badmin,4 Nicholas Strauss QC (as he then was) thought that the burden of proof would be unlikely to make a difference in most cases. However, he noted, ‘there may be cases in which there is a dearth of evidence and burden of proof may be decisive’ and he recognised ‘in such cases the common law position would be reversed if the [MCA 2005] applies’.

Another important difference is s.3(4) of the MCA 2005, which provides that the information relevant to a decision includes information about the ‘reasonably foreseeable consequences’ of deciding one way or another, or failing to make the decision. However, this is not necessary under the common law.

As Lord Justice Lewison observed in Simon v Byford, ‘the classic formulations of testamentary capacity … limit themselves to requiring the testator to understand no more than the extent of his property. They do not require him to understand the significance of his assets to other people’.5 Tindal J reconciled this difference in Baker by emphasising the ‘issue-specific’ nature of capacity. He relied on the case of ALA v JB.6 He further noted that it made ‘complete sense’ in ALA, which involved the capacity to engage in ‘bilateral’ sexual relations, that s.3(4) of the MCA 2005 should encompass understanding the consequences for one’s sexual partner. However, he said the capacity to make a ‘unilateral’ will was a totally different decision and does not mean that ‘s.3(4) MCA also requires understanding of the consequences for others’.

The rule in Parker v Felgate,7 that it is enough for a testator to understand they are executing a will for which they previously provided instructions, even if by the time of execution the testator has lost capacity, is also inconsistent with the MCA 2005, which requires that a person have capacity ‘at the material time’. Tindal J again proposes that Banks and Parker can be used to ‘put flesh on the bones’ of the MCA 2005. However, the rule in Parker is fundamentally at odds with the MCA 2005. Parker permits a valid will to be executed even if the testator has lost capacity and it may no longer carry out their true wishes. This would not be possible under the MCA 2005.

Finally, and significantly, a will could be valid under one test but invalid under the other. Justice Falk (as she then was) in Clitheroe v Bond conceded:8

‘[T]o the extent that there are differences between the two tests, there is a potential tension. As pointed out by the Chancery Bar Association to the Law Commission, at an extreme it might mean that no valid will could be executed if it were the case that a testator lacked capacity under the Banks test but was not demonstrated to lack capacity for MCA purposes.’

Obstacles to a resolution

Since the MCA 2005 came into force, the tests have been debated extensively and grappled with by a number of distinguished judges. Tindal J noted in Baker that the England and Wales Court of Appeal has considered Banks no fewer than seven times in the past 20 years. However, the Court of Appeal has not been able to consider the issue of Banks v MCA because either the cases, or the wills, pre‑dated the MCA 2005 and so the matter remains unresolved.9

Clitheroe had the potential to finally resolve matters. However, Falk J refused to permit the point on appeal, pursuant to Singh v Dass,10 principally on the ground that the Banks/MCA 2005 issue was not raised before the first instance court. There are two key observations. First, Falk J found in certain terms (albeit obiter dictum) that it was the common‑law test that applied to testamentary capacity: it had not been overridden by the MCA 2005. She also raised ‘significant doubt as to whether it would be possible for this court to do so even if it were so minded’. This begs the question of how the applicant might have been expected to raise it at first instance given the judge herself found the court was bound to apply Banks.

Second, Falk J concluded that it would not be just to permit this issue because in her view:

‘aspects of the trial would have been conducted differently with regard to evidence as well as submissions. It is clear that the experts’ reports were prepared, and they were cross-examined, on the basis that the Banks test applied, both as to the content of the test and the burden of proof’.

This appears to go to the heart of the issue; that is, there are important differences between the two tests that dictate different evidential burdens, findings and strategies. It is difficult to see how this problem can be solved by accommodating the tests within one another.

Conclusion

The only rational course is for the law to adopt one single test. This issue must be addressed by the Court of Appeal or legislature to provide certainty in this important space of testamentary capacity.

This article was first published by the STEP Journal in February 2024. Nicola Bushby and Katherine Reed ‘A tale of two tests’, STEP Journal (Vol32 Iss1), pp.56-57. The full issue can be downloaded here.

Footnotes:

1 [2023] EWHC 1145 (Ch)
2 (1870) LR 5 QB 549
3 [2010] EWHC 408 (Ch)
4 [2015] WTLR 493
5 [2014] WTLR 1097
6 [2021] 3 WLR 1381
7 (1883) L.R.8P.D.171
8 [2021] WTLR 449
9 Sharp v Adam [2006] WTLR 1059 (CA); Hoff v Atherton [2005] WTLR 99 (CA) pre-dated the MCA 2005 and in Perrins v Holland [2011] Ch 270, Burgess v Hawes [2013] WTLR 453, Simon v Byford [2014] WTLR 1097 and Burns v Burns [2016] WTLR 755, the wills pre-dated April 2007 (when the MCA 2005 came into force) and Hughes v Pritchard [2022] Ch 33 in which the will post-dated April 2007, but there was no argument on the MCA 2005.
10 [2019] EWCA Civ 360