In an article first published in the July 2025 edition of ThoughtLeaders4 Private Client Magazine, Trust and Probate Litigation partner Emma Holland and senior associate Jemma Goddard explore the “two stage” approach to assessing capacity. This involves firstly evaluating whether a person has the capacity to make a decision and secondly (if they are unable to complete the first step) determining the underlying cause of their lack of capacity.

On 18 December 2024, the Court of Appeal handed down its decision in Lioubov MacPherson v Sunderland City Council [2024] EWCA 1597, seemingly intent on putting to rest any ambiguity about the application of the “two stage” approach.

Background

The protected person, P, was diagnosed and, at the time of the appeal court’s decision, being treated for paranoid, treatment-resistant schizophrenia.

The appellant was P’s mother. She had been given a suspended 28-day sentence in January 2023 for breaching injunctive orders preventing her from posting material about P on the internet. After sentencing, the court found that the appellant had moved from England to France, deliberately putting herself beyond the reach of the law. Once in France, she resumed posting videos, articles and audio recordings of P on X and YouTube. The appellant’s posts related to the purported persecution of P by health and other professionals and the courts, which the appellant maintained were “part of a conspiracy to torture P”.

In January 2024, Mr Justice Poole, sitting in the Court of Protection, sentenced the appellant to an immediate custodial sentence of four months for contempt of court. The appellant appealed that decision. In that appeal, a preliminary issue arose as to whether the appellant had the requisite capacity to litigate her appeal.

Concerns had been raised following a conference with an experienced Court of Protection solicitor and two counsel, both of whom appeared at the hearing. The appellant refused to cooperate with a capacity assessment, so an expert was commissioned to conduct a paper-based assessment of the appellant’s capacity.

Assessing capacity under the Mental Capacity Act 2005

The framework for assessing whether a person has the mental capacity required in relation to a particular decision or transaction is set out in sections 2 and 3 of the Mental Capacity Act 2005 (“MCA 2005”).

Section 2 of the MCA 2005 provides that a person lacks such capacity if, at the material time, they are unable to make a decision in relation to the matter because of an impairment or a disturbance in the functioning of the mind or brain.

Under section 3 of the MCA 2005, a person is “unable to make a decision” pursuant to section 2 if they are unable to:

1. understand the information relevant to the decision, and/or
2. retain that information, and/or
3. use or weigh that information as part of the process of making the decision, and/or
4. communicate their decision (whether by talking, using sign language or any other means).

The expert’s report

In respect of the appellant, the expert concluded that “on the balance of probabilities, the information available suggests the possibility of a delusional disorder”.

Regarding the test in section 3 of the MCA 2005, the expert concluded that there was no evidence to suggest that the appellant could not understand or retain information but that her ability to use or weigh up relevant information was likely affected by her “firmly held beliefs which persist despite evidence against these”.

The decision and its impact on the legal test

The Court of Appeal (applying the Court of Protection Rules by relying on Rule 52.20 of the Civil Protection Rules 1998) was satisfied, based on the evidence before it (including the expert’s written report), that it could reach a conclusion on the matter. It concluded that it had reason to believe that the applicant lacked capacity in relation to her appeal. It made an interim declaration (pursuant to Section 48 of the MCA) to that effect and referred the case back to the Court of Protection to determine the issue of the applicant’s capacity either way before the appeal would proceed.

In reaching its conclusion, the court made clear that any report obtained in preparation for the final determination of the capacity issue must approach the question by reference to the judgment of the Supreme Court in A Local Authority v JB [2021] UKSC 52; [2002] AC 1322. This held that the “two stage” approach to the determination of capacity should be considered in the following order:

1. Whether P is unable to make a decision for himself in relation to the matter (section 3 MCA 2005 – the functional test).
2. Whether the inability to make a decision is “because of” an impairment of, or disturbance of the functioning of, the mind or brain (s.2(1) MCA 2005 – the diagnostic or mental impairment test).

The judgment in Re JB is in direct contradiction to paragraph 4.11 of the MCA 2005 Code of Practice, which states:

“Stage 1 requires proof that the person has an impairment of the mind or brain, or some sort of disturbance that affects the way their mind or brain works. If a person does not have such an impairment or disturbance of the mind or brain, they will not lack capacity under the Act.”

The Court of Appeal expressly acknowledged that contradiction but affirmed the approach of the Supreme Court in Re JB, referring to the new draft Code dated June 2022, which is yet to be implemented. (That approach in Re JB was also supported by the Court of Appeal in Hemachandran & Anor v Thirumalesh & Anor EWCA Civ 896, a case relating to a protected person’s ability to make decisions about their medical treatment.)

Commentary

The Court of Appeal, led by Lady Justice King (who also gave the lead judgment in Re Thirumalesh (dec’d)), has clarified further that in determining capacity, the functional test should be applied before the diagnostic test. This is helpful in practical terms when instructing experts on the question of capacity.

The lack of a settled procedure for determining whether a party lacks litigation capacity where the relevant party disputes the suggestion and refuses to cooperate with a process of assessment was highlighted in a report by the Civil Justice Council in November 2024 on the “Procedure for Determining Mental Capacity in Civil Proceedings”. Ultimately, the report recommends amendments to the Civil Procedural Rules or a new Practice Direction to provide a single, easily identifiable source of guidance.

As to the use of interim declarations, these can be a helpful tool where the court lacks sufficient evidence to make a final determination of incapacity, which would deprive the relevant party of the opportunity to litigate. Making such a declaration on an interim basis facilitates further steps being taken in the proceedings to determine the question either way, for example, enabling the appointment of the Official Solicitor as litigation friend to secure legal aid to continue to investigate the question of capacity (as was the case in CS v FB [2020] EWHC 1474 (Fam)).