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Chapter 5 Section A: Substitute Decision Making – Overview

In this overview, there is important information about some of the terms used in this chapter of the Manual. It is useful to read this section before you read other sections of this chapter. It may also be useful to refer back to it when you are reading about different types of substitute decision-making later in this chapter).

This overview includes pages on the following topics:

  • What is substitute decision-making?
  • Capacity
  • What is a guardian?
  • Financial management
  • Who deals with substitute decision-making in NSW?

5A.1: What is substitute decision-making?

The law requires that a person is capable of understanding the nature and consequences of their actions as a precondition(requirement) to them making certain decisions (such as a decision to consent to, or refuse, medical treatment), holding a particular status (such as public office), or entering into certain relationships with others (such as marriage). This requirement is referred to as ‘legal capacity.’ The law may view a person as not having legal capacitybecause of a cognitive impairment that is associated with a long-term disability, such as intellectual disability or acquired brain injury, or short-term injury or illness, such as a stroke or acute mental illness.

Under limited circumstances, the law may give another person or persons or certain organisations the legal power to make a decision on another person’s behalf. This is called “substitute decision-making.” A good example of this is when parents make decisions on behalf of their very young children.

In this chapter, we outline what happens when a person is viewed by the law as being unable to make decisions because of a cognitive impairment(sometimes referred to as a ‘decision-making disability’).

Most of the time, if you are an adult with mental illness or intellectual disability who has a cognitive impairment that renders you unable, under the law, to make certain decisions, and you have a family member, friend or carer that helps you out with decision-making, including by giving you advice and supporting you make difficult decisions in relation to day to day health and dental care, this person may be informally recognised as being able to make decisions for you. If these decisions are about your health and dental care they may also be recognised as the ‘person responsible’ under the law for making such decisions.

However, in some circumstances, the law says you will need someone to be legally appointed to make decisions on your behalf. For decisions other than decisions about your money or assets, this person or organisation is called a Guardian. For decisions about your money or property, this person or organisation is called a Financial Manager or an Attorney.

Guardian or Financial Manager may need to be appointed because of the particular type of decision that has to be made for you (such as a major health-care or lifestyle decision), or because there is no-one who can make decisions on your behalf, or because family members or carers cannot agree about what decision should be made or who should make a decision for you.

Your Guardian and your Financial Manager may be two different people (or organisations) or they may be the same person.

Most people in the community who have a level of cognitive impairment that, in interaction with the social environment, makes it difficult for them to make decisions, are supported to make these decisions by members of their family, their friends or carers. These people may help by guiding the person so that they can understand the nature of the decision, the consequences and options, and may support the person as they weigh up these options and decide for themselves. In these situations, there is no need for a legally appointed guardian, or ‘substitute decision-maker’. This process is called ‘supported decision-making’ rather than substitute decision-makingSupported decision-making is now an international human rights standard under the Convention on the Rights of Persons with Disabilities.

5A.2: Capacity

Capacity is a term that is used to describe your ability, under the law, to make your own decisions, undertake certain actions, fulfil particular roles, and enter into certain relationships with others. In some instances, the law will recognise your capacity to make some decisions, but not others. This may depend on issues such as the type of decision, its complexity, and its consequences for you and for others. In this way, legal capacity is usually determined on a decision-specific basis. You may be viewed as legally capable of making day-to-day decisions about what you will wear, what you will eat and how you will spend small amounts of money, but viewed as legally incapable of entering into a contract for the provision of a service (such as housing), consenting to surgery, or managing large sums of money or property.

A person may be viewed as legally incapable of making some decisions for a short time only because they are experiencing an active phase of mental illness which results in a serious cognitive impairment, from which they will recover when their symptoms are stabilised, or they could be viewed as ‘permanently’ legally incapable of making some decisions because of a continuing or progressive cognitive impairment, such as dementia.

The NSW Department of Justice and Attorney General has produced a book to help people understand and assess capacity. This book is called The Capacity Toolkit. You can get free copies of The Capacity Toolkit from the Department’s Diversity Services.

Follow this link to download the Capacity Toolkit.

5A.3: What is a guardian?

The law in NSW no longer characterises the legal relationship between a child and their parents, or other persons or organisations responsible for the care and support of children, as one of ‘guardianship.’ This concept has been replaced by the concept of ‘parental responsibility.’ Somewhat confusingly, there is a statutory officer called the Children’s Guardian in NSW. However, this officer does not have parental responsibility for children.

Guardianship’ is therefore a legal concept that now only applies to certain persons over the age of 16 years. In NSW, a “Guardian” is someone who is appointed by the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) under the Guardianship Act 1987 (NSW), to make decisions on behalf of a person who is viewed as legally incapable of making certain healthcare and lifestyle decisions for themselves. A Guardian may be a family member or friend of a person with a decision-making disability, called a Private Guardian, or it may be a statutory office-holder, called the Public Guardian.

You can also appoint an “Enduring Guardian” under the Guardianship Act 1987 (NSW) while you still have legal capacity. This might be a relative or friend. An Enduring Guardian can make decisions for you when you become legally incapable of making decisions for yourself (for example an older person may appoint a son or daughter as Enduring Guardian to make decisions for them if they later develop dementia). In some circumstances, the Guardianship Division of NCAT can also appoint an Enduring Guardian to replace an Enduring Guardian who is no longer capable of acting for you.

For more about the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT), follow this link.

For more about guardianship, follow this link.

In NSW, a “Guardian” is not a person or organisation responsible for making financial and property related decisions on behalf of an adult who is viewed under the law as being incapable of making these decisions personally. This person is called a Financial Manager or an Attorney.

5A.4: Financial management

Decisions about your financial matters, which includes decisions about spending or saving your money, your property and its maintenance, and dealing with any other assets you own, are dealt with separately from guardianship. This can be somewhat confusing as one of the main organisations involved in financial management for adults who are viewed under the law as being incapable of managing their financial affairs is the NSW Trustee and Guardian. The NSW Trustee and Guardian is not a ‘guardian,’ despite its name.

An adult can appoint a person to manage their financial affairs while they are legally capable. This person is called an Attorney and the powers they exercise on your behalf are called Powers of Attorney. While you still have legal capacity you can also appoint an Attorney to act for you when you become legally incapable of making these decisions for yourself. This is called an Enduring Power of Attorney.

If a person has not appointed an Attorney under an Enduring Power of Attorney, or if they have a cognitive impairment which means that at law they are not capable of doing so, and they require someone to make decisions about finances and property for them, a Financial Manager can be appointed under a Financial Management Order.

A Financial Management Order can be made by the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) or the Supreme Court under the Guardianship Act 1989 (NSW) or by the Mental Health Review Tribunal or Supreme Court under the NSW Trustee and Guardian Act 2009. Under the Guardianship Act a Financial Manager can be either another person, such as a family member, referred to as a Private Financial Manager, or the NSW Trustee and Guardian. A Private Financial Manager is subject to the supervision of the NSW Trustee and Guardian. Under the Public Trustee and Guardian Act, only the NSW Trustee and Guardian can be appointed the Financial Manager.

For more about financial management, click here.

5A.5: Who deals with substitute decision-making?

There are several organisations that deal with substitute decision-making in NSW, including:

  • The Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT).
  • There is also a Public Guardian and the NSW Trustee and Guardian. The graphic below shows the relationship between these organisations.

The Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) makes guardianship and financial management orders and also sometimes decides whether or not someone can have an operation or a medical or dental procedure. For more about the Guardianship Division of NCAT, follow this link.

The Guardianship Division of NCAT can appoint the Public Guardian as your guardian if you have a decision-making disability (such as mental illness). For more about the Public Guardian, follow this link. (Friends, relatives and carers can also be appointed as private guardians; for more about this, follow this link.

The Guardianship Division of NCAT can appoint the NSW Trustee and Guardian as your financial manager if you have a disability (such as mental illness). The NSW Trustee and Guardian also has other functions, which include managing wills and Powers of Attorney for members of the general community who are not subject to Financial Management Orders. For more about the NSW Trustee and Guardian, follow this link.

The Mental Health Review Tribunal (MHRT) can also make financial management orders if you are an involuntary patient under the Mental Health Act 2007 (NSW). For more about this, follow this link.

‘Persons responsible’ can also, in certain circumstances, consent to medical and dental procedures on your behalf if you lack capacity to consent. For more about this, follow this link.

If you appoint an Enduring Guardian at a time when you have capacity (anticipating that you may lose capacity at some time in the future), that Enduring Guardian has very similar powers to guardians appointed by the Guardianship Division of NCAT. For more about enduring guardianship, follow this link.

If you grant someone your Enduring Power of Attorney when you have capacity to do this, that person can make substitute financial decisions on your behalf. For more about enduring powers of attorney, follow this link.

Updated January 30, 2015