I loaned money to someone that has now lost mental capacity…Can I still get it back?

Where there is an agreement between people that a loan, or money spent on behalf of someone, will be repaid, the agreement can usually be enforced if the money is not paid back.

Normally, if a person decides to seek judgment through the Court for repayment of money, they can file in the Disputes Tribunal, District Court or High Court to hear the dispute and seek repayment.

However, recovering money becomes more complicated when issues of loss of mental capacity arise involving the person that owes the money. A person may be found to lack mental capacity by a medical professional where they are unable to do one of:

• Communicate decisions that they have made;
• Cannot understand the nature or consequence of a decision; or
• Cannot remember information for a period long enough allowing them to make a decision.

Where there is money to recover from a person who has lost mental capacity, a claim cannot be directly filed in the District or High Court. A potential claimant must get permission from the Family Court to bring a claim against a person.

In order to give permission to continue with a claim, the Family Court must be satisfied that the incapacitated person still had capacity at the time the agreement was made, and the money or services were provided.

If the person did not have capacity to enter the agreement, or understand the consequences of the agreement, the Family Court has the discretion not to allow any claim to be made.

If the person did have capacity at the time of the agreement, the Family Court will likely allow the claim to proceed, at which point it will return to the District Court or High Court and continue.

Where a person has lost capacity, it is important to understand that there are additional processes involved if a debt is to be recovered from them. Failure to follow the correct process may result in unnecessary costs and delays in recovering any owed money.

If you are owed money by a person that has since lost capacity and are seeking to recover it, or if you are an attorney or property manager for an incapacitated person, it is best to speak with a professional experienced in that area of law.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-priced Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.