High Court will dissolve charities lacking oversight

The High Court will be empowered to order dissolution where there is no effective trustee oversight in charities, the Mason Hayes and Curran LLP Managing Risk in Healthcare seminar (April 23) has heard.

MHC corporate partner Eimear Lyons, who hosted the seminar, also explained that when fully commenced, the Charities (Amendment) Act 2024, will codify the common-law duties of charity trustees for the first time. 

The act will also change the definition of ‘trustee’, clarifying that company secretaries are no longer charity trustees.

Lyons recommended that organisations should review Charities Regulator Authority (CRA) filings accordingly, save where the individual is also a director (including de facto or shadow director).

Lyons, who is also part of the MHC charity and not-for-profit team, addressed the duties and responsibilities of directors and charity trustees in healthcare organisations, emphasising that many such bodies operate as both companies and registered charities.

Fiduciary duties

Under the Companies Acts 2014, directors owe fiduciary duties solely to the company, whilst having regard to the interests of members, employees and creditors. 

Key duties include:

• Acting in good faith in best interests of company,
• Avoiding conflicts of interest,
• Exercising care, skill and diligence, and
• Maintaining proper books of account. 

Personal liability

Lyons noted that directors may face personal liability for company debts in certain circumstances, including reckless or fraudulent trading, and that criminal liability may arise where a director authorises or permits a default under the acts.

On charities law, Lyons explained that directors of charitable companies are also charity trustees.

She outlined duties under the  Charities Act 2009, including registration with the Charities Regulator (CRA), preparation of annual accounts and reports, and compliance with CRA directions. 

Lyons noted that the CRA "has been very active in monitoring compliance," and that non-compliance could escalate from correspondence to formal investigation.

For organisations holding service agreements with the HSE under the Health Act 2004, she highlighted additional governance obligations, including annual compliance statements.

On delegation, Lyons said that "directors may delegate authority but not responsibilities," and stressed that key decision-making on strategy, risk and finance must be retained at board level, with meaningful oversight exercised over those to whom authority had been delegated.

Lyons concluded that ignorance of duties was no defence.

MHC consulting partner Aoiffe Moran addressed key considerations in conducting effective healthcare investigations, emphasising that where incidents occur, it is “crucial to figure out why” and to identify appropriate remediation.

'Trust occupies a special place'

A member of the MHC public regulatory and investigations team, Moran said: “Trust occupies a special place in the provision of our healthcare service."

Therefore, thorough and impartial investigation is “one of the most powerful tools” available to providers in maintaining that trust and improving patient safety. 

She identified four “crucial” elements for an investigation;

• Investigator independence, and, where external investigators are engaged, lawful data sharing and confidentiality safeguards,  
• Clear terms of reference defining scope, methodology, evidential standards, reporting lines, and outputs, 
• Procedural fairness, 
• Timeline management. 

Moran explained that the nature of an incident — whether clinical or non-clinical — and its severity would determine the applicable procedure.

Two pieces of legislation are likely to be relevant to most providers. 

The Patient Safety (Notifiable Incidents and Open Disclosure) Act 2023 provides for mandatory open disclosure in respect of twelve categories of notifiable incident set out in schedule one of that act, including surgery performed on the wrong patient or the wrong surgical procedure being performed. 

Following a notifiable incident;

• A disclosure meeting must take place,
• A prescribed written statement must be provided to the patient within five days,
• Third-party notification must be made to the relevant regulator (HIQA, the Chief Inspector of Social Services, or the Mental Health Commission) within seven days, and
• Failure to comply without reasonable excuse constitutes an offence

The Civil Liability (Amendment) Act 2017, as substantially amended by the 2023 act, applies to patient safety incidents that are not notifiable incidents. 

Open disclosure under that act is voluntary, except for HSE and HSE-funded organisations which are required to follow the HSE's open disclosure policy. 

Disclosures do not invalidate insurance

Both acts provide important safeguards, including that disclosures do not invalidate insurance, do not constitute admissions of liability admissible in proceedings, and cannot in themselves constitute professional misconduct.

Moran also highlighted a range of other external reporting obligations, including to the HPRA regarding adverse events relating to medical devices or adverse reactions and to the State Claims Agency for potential personal injury actions or clinical adverse events.

Additional legislative obligations arise under the Health Act 2004, the Health Act 2007 and the Children First Act.  

External reporting obligations

Moran concluded that compliance with the 2023 act is mandatory for all providers where a notifiable incident occurs, and that providers must be familiar with their specific external reporting obligations.

In his presentation on the Coroners Court, medical law team of counsel David Hickey outlined the practical procedures involved and the reasons behind each class of verdict.

He also explained that coroners can issue riders and recommendations aimed at preventing future fatalities and addressing public health and safety concerns. 

Operational deficiencies 

These are general in nature, often highlight procedural or operational deficiencies, and are commonly used, particularly in jury inquests.

Coroners have no power to enforce compliance with such recommendations.

Hickey noted that inquests are public and findings, including recommendations, frequently reported, creating potential reputational implications both externally and internally. He explained that such risks can be mitigated by evidencing prior investigations, policy changes, and a proactive approach.

He further noted that, in appropriate cases, apologies could be offered and read at inquest, and family meetings could be arranged to address concerns. 

Inquests could also serve as a preliminary indication of potential civil claims, which, if pursued, would proceed in the usual manner.

Organisations were also advised to manage internal reputational considerations.