In light of the ageing population, the number of patients with dementia has been on the rise. Coupled with the increase in “young strokes” (strokes occurring in individuals aged 18 to 55 years), the issue of mental incapacity is becoming more relevant to many of us.
When a person loses mental capacity, either because of a stroke, dementia or brain injury, family members may have difficulties accessing that person’s financial assets if they did not execute a valid Enduring Power of Attorney.
Under Hong Kong law, relatives or guardians of an alleged Mentally Incapacitated Person (MIP) may apply to the court under Part II of the Mental Health Ordinance (Cap. 136) for an inquiry, to determine whether the individual is a MIP incapable of managing and administrating his/her property and affairs, and, if so, how these should be managed and administered. Such applications also apply to cases where the MIP is involved in litigation or awarded with damages which will require proper administration for his maintenance and benefit.
Practice Direction 30.1 outlines the guidelines for these applications. A revised Practice Direction 30.1, which supersedes the previous version dated 10 October 2005, came into effect on 28 October 2024.
Notably, the revisions include the following:
- Role of the Official Solicitor: The Official Solicitor will have a more significant role during the initial stage of the application. Application papers will only be placed before a judge for consideration after the Official Solicitor has reviewed the whole set of documents and confirmed that they have no further comments (Section 2.06, 2.23-2.24).
- Revised procedural guidelines: The revised Practice Direction provides for the filing of a Supplemental Certificate of Family and Property, to succinctly set out all enquiries raised by the Official Solicitor and the answers/further information given in the format of the new Annex B(1). (Section 2.32-2.33) It further provides that a skeleton argument and list of authorities relied upon by the Applicant must be lodged with the court at least 72 hours before the hearing (Section 3.01-3.02).
- Views of Family Members: In cases where family members and relatives have different views on how the alleged MIP is to be treated, the revised Practice Direction provides that the court may direct disputing family members to mediation, if appropriate. The court emphasizes that in exercising its mental health jurisdiction, it will not resolve disputes between family members and affidavits filed should therefore focus on matters which are relevant to the appointment of a committee, maintenance of the MIP and administration of his/her properties and affairs. Costs incurred due to the inclusion of unnecessary materials in affidavits may be disallowed (Section 2.10).
- Urgent cases: The revised Practice Direction outlines provisions for cases of urgency, including the appointment of interim receivers (Section 2.29) or a committee with essential authorization to address the immediate need to attend to the maintenance and interest of the alleged MIP first (Section 2.20).
- Further Directions after Appointment of Committee: The revised Practice Direction highlights the necessity of obtaining specific court authorization if the committee wishes to exercise powers beyond those typically allowed or to make significant changes to the MIP’s estate (Sections 3.06-3.07, 4.01, 4.05). Such specific authorisations may include sale of the MIP’s assets, making further investments on behalf of the MIP and initiating legal proceedings on behalf of the MIP.
- Management of MIP’s Financial Affairs: The revised Practice Direction further provides for clear guidance on management of the MIP’s estate, including investment of the MIP’s capital (Section 3.10), operation of the MIP’s business (Section 3.11), repayment of loans or reimbursement for expenses incurred on the MIP’s behalf (Section 3.13), and borrowing money to be repaid from the MIP’s estate (Section 4.06).
- Directions for Legal Proceedings: There are new directions for parties bringing or defending legal proceedings on behalf of a MIP (Part V) and for approval of settlements in litigation conducted on the MIP’s behalf (Part VIII) which are relevant to all legal proceedings involving MIPs.
- Solicitors’ duties: The revised Practice Direction further reminds solicitors acting for the committee to familiarise themselves with the procedure under Part II of the Mental Health Ordinance and appreciate that they have a duty to give proper advice to the committee upon the grant of a Part II order. Solicitors should also explain to the client (1) the terms of the order; (2) the duty of a committee; (3) how a committee should conduct himself/herself in handling the affairs and properties of the MIP; and (4) the need to apply to court for further directions (Section 7.01-7.02).
To access the full copy of the revised Practice Direction, please see here.
Deacons’ Family, Mental Capacity and Vulnerable Client Practice team, headed by Sherlynn Chan, is experienced in handling family and mental capacity related matters. Please reach out to Sherlynn Chan or Hazel Wong if you would like to know more.
For Further information, please contact:
Sherlynn Chan, Partner, Deacons
sherlynn.chan@deacons.com
