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The Chief Inspector of Social Services has asked the Law Society to draw the attention of members to the following in relation to the Health Act 2007, specifically relating to ‘Section 68: Notice of appointment under law to take charge of designated centre’.

The letter from the Office of the Chief Inspector’s deputy director of regulation, Niall Byrne, dated 24 May 2013, states, as follows:

“Under the provisions of the Health Act 2007, as amended, the Chief Inspector of Social Services, an official of HIQA, is responsible for the registration and general regulation of all residential services falling within the definition of ‘designated centre’. The main provisions relevant to this function are set out in section 2 of the act and in parts 7 and 8.

In certain circumstances, persons may be appointed under other legal provisions to take charge of designated centres in place of the person or body who was previously the registered provider of that centre. In this circumstance, section 68 of the act requires the person appointed by or under the law to give notice of their appointment to the chief inspector.

The purpose of this letter is to detail to you and to your members their legal obligations should this circumstance arise and to provide information and guidance in relation to the procedures to be followed.

The Chief Inspector would appreciate if you could arrange to bring this letter and the attached appendix to the notice of your members.”

The appendix to the letter follows below:

Appendix to Letter from Chief Inspector of Social Services

Legislation

Section 68 of the Health Act 2007, as amended, states:

1. A person who is appointed by or under the law to take charge of a designated centre in place of its registered provider shall give notice of the appointment to the chief inspector, as soon as practicable, but not later than 48 hours after the appointment.
2. The chief inspector may accept a later notification where the chief inspector is of the opinion that it would be right and proper to do so.
3. Where the chief inspector receives information in accordance with subsection 91 and has reasons to believe that it is in the interests of the health and welfare of the residents:

• He or she may notify the executive, and
• The executive may make alternative arrangements for the residents of the centre.

Procedure

When a receiver/manager is appointed to a company in Ireland, it is common for that receiver/manager to act as agent for the company itself. The main issue for the chief inspector in the case of a provider in receivership is that it may become unclear as to who precisely is the registered provider in circumstances where the person who has control over the designated centre and who is therefore carrying on the business (the receiver/manager) is not the named registered provider.

A receiver/manager over a company that is a registered provider under section 68 of the Health Act 2007 is required to give notice to the Chief Inspector of the said change as soon as practicable, but not later than 48 hours after the appointment, as per section 68(1) of the Health Act 2007.

In order for the chief inspector to then determine who is currently the registered provider, the Registration Office will issue two letters – one to the company and one to the receiver – to ascertain the following:

1. Who has been appointed as receiver and manager over the company?
2. Has this person been appointed as receiver over all the assets of the company, that is, while the company still technically owns the assets, this person controls them and has the right to sell them?
3. Has the person been appointed as manager of all of the business of the company, that is, the company still technically owns its business, but the person has total control over the business and the board of directors no longer control the business?
4. What precisely are the legal responsibilities of the receiver?
5. Who will be the nominee of the registered provider who liaises with the authority regarding the operation of the designated centre?

If the answers to questions 2 or 3 above are ‘yes’, then it follows that the legal entity that is currently carrying on the business of the designated centre is in receivership.

On receipt of responses from both parties, and if matters remain unclear, it may be necessary to seek further information at this point based on the provider and receiver responses.

If the receiver appoints someone different to whom is currently agreed as the nominated person to liaise with the authority on behalf of the registered provider, then the Registration Office will send the receiver an NF38 notification of ‘Change of person on behalf of the registered provider form’ (available on the HIQA website) for the new person to complete. Only when this is complete can the authority deal with the newly appointed person on behalf of the registered provider.

If the receiver wants to sell on or close the business, he/she must send the Chief Inspector an NF35 notification of intention to cease to carry on the business of the designated centre and close the centre form (available on the HIQA website). This is required under regulations to be submitted at least six months in advance of the centre closing. Any new provider wishing to take over the business must apply to the Chief Inspector to become the new registered provider.

Persons required to notify

The following are the types of receivers under section 68 of the Health Act 2007 who are under obligation to notify the Chief Inspector of their appointment:

• A receiver appointed by the High Court pursuant to section 28 of the Judicature Act (depending on the terms of the High Court order),
• An asset receiver, whether appointed pursuant to statutory provisions or pursuant to the terms of a mortgage/charge, appointed by a mortgagee/chargeholder on foot of a fixed mortgage/charge over the interest of the mortgagor/charger,
• A receiver and manager appointed pursuant to a security package, which includes a floating charge.

Other than receivers under section 68, the following would be under obligation to notify the chief inspector of their appointment:

• Committees of a ward of court,
• Certain attorneys under particular powers of attorney,
• Examiners where they successfully make application to the High Court under section 9 of the Companies (Amendment) Act 1990 for an order that all or any functions or powers of the directors be exercisable by them, or under section 20 of that act for an order approving of the repudiation or affirmation of any relevant contract (depending on the terms of the order),
• Liquidators in a:
  • (i) Creditors’ voluntary winding-up, or
  • (ii)Compulsory winding up.

Under the scheme of the Health Act 2007 and the regulations made thereunder, the Chief Inspector should also be made aware by notice when there is a change to those who have overall charge of the designated centre, or who carry on the business of, or manage, or participate in the management of, the centre. In addition:

• Section 46 of the act states that “a person shall not carry on the business of a designated centre unless the centre is registered under the act and the person is its registered provider”. This means that the Chief Inspector will require to have notice when the registered provider of a centre is proposed to change owing to an intended sale of the business and assets of a designated centre. The proposed new registered provider will be required to apply for registration before carrying on the business, as otherwise a breach of section 46 may occur.
• Section 66 of the act prohibits the cessation of carrying on of business and the closure of centres without providing the prescribed amount of notice to the Chief Inspector. The prescribed amount of notice is currently a minimum of six months.

Persons participating in management

In the case of the appointment of a receiver/manager over a company that is a registered provider, it is likely that the company will remain as the registered provider, albeit that the company is managed by the receiver/manager. A decision will be taken in each case as to whether the receiver/manager is deemed to be “a person who will participate in the management” of the designated centre and, accordingly, a person whose fitness requires to be assessed under the provisions of the act.

Further information

Should you require further information regarding this matter, contact Mr Fergal Collins, Registration Manager, at tel: 021 240 9300, by email: fcollins@hiqa.ie, or by letter to: Health Information and Quality Authority, Unit 1301, City Gate, Mahon, Cork.