Hemmingrod Ltd v Commission for Social Care Inspection [2009] UKFTT 28 (HESC) (03 April 2009)

Decision of the First Tier Tribunal
Care Standards

HEMMINGROD Ltd

Appellants

-v-

COMMISSION FOR SOCIAL CARE INSPECTION

Respondents

Case reference: 2008 [1380.EA]

before

MS MELANIE LEWIS (Chairman)  
MRS CAROL CAPORN (Specialist Member)
MS MARIYLN ADOLPHE (Specialist Member), 

Sitting at Care Standards Tribunal, Pocock Street, London
between 9 March 2009 and 12 March 2009

The Appellants were represented by Mr G Brodie instructed by Burt, Brill & Cardens.

The Respondents were represented by Mr Hugh-Jones instructed by Radcliffes Le Brasseur

The Tribunal heard oral evidence from:-

For the Respondents 

Mr. David Bannier, Inspector CSCI,
Ms Annie Taggart, Inspector CSCI
Mr. Adrian Hughes Business Relationship Manager CSCI
Ms Loretta Rogers, West Sussex County Council seconded to the Primary  Mental Health Trust
Ms. Louise  Archer, Professional Head of Social Care West Sussex County Council, seconded to Sussex Partnership NHS Foundation Trust
Mr.  Liam Rudden Integrated Team Manager Sussex Partnership NHS Foundation Trust
Mr. Michael Jarvis Chartered Accountant
Mr Victor Strachan. Winchester Road Resident’s Association 

For the Appellants 

Ms. Vanessa Saunders, Manager Progress Project 
Mr. Ben Whittaker Occupational Therapist Progress Project
Mr. Belisario Schiavone Director Hemmingrod Limited

The Tribunal also considered 3 lever arch files of evidence running to some 800 pages. At the hearing we were also provided with a copy of the CSCI Inspection report carried out on 2 March 2009 and the Appellant submitted additional financial documents and a revision of the February 2008 Action Plan dated 10 March 2008.  

The Law

1.	Section 14 of the Care Standards Act 2000 provides that:

‘(i)	The Registration Authority may at any time cancel the registration of a person in respect of an establishment or agency – 
(a)	… ;
(b)	…;
(c)	on the ground that the establishment or agency is or has at any time been carried on otherwise than in accordance with the relevant requirements;
(d)	on any grounds specified by regulations.

(ii)	…
(iii)	In this section “relevant requirement” means –

(a)	any requirements or conditions imposed by or under this Part; and 
(b)	any requirements of any enactment which appear to the Registration Authority to be relevant.

2.	The decision was made pursuant to 14.1 (c) of the Care Standards Act 2000. The appeal is pursuant to Section 21 of the Act. In an appeal against the decision of the Registration Authority the Tribunal may confirm the decision, order that it shall cease to have effect and may direct any such condition as it thinks is fit shall effect in respect of the establishment. 

3.	The Commission has the burden of proof in seeking to maintain its own decisions; and, on appeal, the Tribunal may consider evidence arising after the date of the challenged decision in order to determine for present purposes, the fitness of the Appellant to run a care home. The test applied by the Tribunal in cancellation cases is in 3 parts: whether the cancellation was justified at the time of the Notice; if so, whether cancellation is still justified taking into account the current state of compliance and the likelihood of future breaches and whether cancellation is proportionate, taking into account the likely effect on the care and wellbeing of the service users. 

4.	As it was accepted that Hemmingrod Ltd was ‘at peril’ financially, the evidential burden shifts to the Appellant to establish that the care home will be  ‘financially viable for the purposes of achieving the aims and objectives set out in the Statement of Purpose’ pursuant to Regulation 25 Care Homes Regulations 2001.

5.	A breach of Regulation 25 did not form part of the reasons for the Notice of Proposal to cancel the Registration dated 12 June 2008. The breaches relied on were:-  Regulation 4 (Statement of Purpose), Regulation 10 (Registered Person: general requirements) , Regulation 12 (Health and Welfare of Service Users) , Regulation 13 (Further requirements as to health and welfare), Regulation 14 (assessment of Service Users), Regulation 15 (Service Users plan), Regulation 17 (Records), Regulation 18 (Staffing) and regulation 19 (Fitness of  Workers), Regulation (Quality of services) and Regulation 26 (Visits by the Registered Provider).      

Preliminary Matters

6.	On 2 March 2009 the President of the Tribunal considered an application by letter by the Respondent, seeking a direction regarding the submission of expert accountancy, evidence regarding the issue of the financial solvency of Hemmingrod Ltd. The President ordered that either party could rely on expert accountancy evidence and gave liberty for the applicant to apply for another Direction amending suspending or setting aside the Direction by telephone conference as a matter of urgency if necessary.

7.	At the commencement of the hearing Mr Brodie submitted that the expert accountancy report by Mr Jarvis should not be admitted, as he had only received it on Friday 2 March so was not in a position to respond  with his own expert accountancy report, but could not seek an adjournment. Mr. Hugh –Jones submitted that the report was essentially a financial model of figures provided by Hemmingrod, who had agreed on 27 February 2008 to provide the information.  The report had been commissioned so Mr. Jarvis could give his opinion on the solvency of Hemmingrod Ltd.   This was not a new point and much of the more recent evidence went to this issue and the attempts by CSCI to get a clear picture of Hemmingrod’s financial position.  We took the view that this was clearly relevant to the question we had to consider, as to the sustainability and viability of the company of achieving the aims and objectives set out in the Statement of Purpose.  We indicated that we would of course take into account that this was late evidence but in the event Mr. Brodie produced late financial evidence on the availability of additional available capital to be injected into the business.  Mr Brodie also made an application to exclude the evidence of Victor Strachan, who lives next door to the care home but did not actively pursue this when it was indicated that his evidence would be limited to issues of neighbourly conduct not issues he had raised over the financial solvency of the company and wider planning issues relating to the number of care homes located in the same road.  

The Issues in the Case

8.	The Parties agreed that the issues that we had to decide were: -

(i)	Whether the grounds set out in the Notice of Proposal were sufficiently made out to justify the decision to cancel the registration.  
(ii)	Whether there had been a history of non-compliance with statutory requirements since 26 August 2005, when the service was first registered. 
(iii)	If so, what the history of non-compliance demonstrated about the Applicant’s attitude to its obligations, its knowledge of its obligations under the relevant legislation, its competence and skill to carry on a care home for vulnerable people, its ability to protect service users and meet their needs and to meet their needs and its ability to manage the home properly by appropriate recruitment methods and training, supervision and monitoring of staff.
(iv)	Whether the requirements of the Regulations are currently being met and will continue to be complied with. 
(v)	The Appellant raised the issue as to what the findings of the rennet inspections demonstrated about the Appellant’s fitness to carry on the care home. 

9.	Additionally, whether the Applicant is and could reasonably be expected in the next six months to be, in a position to carry on the care home in such a manner as is likely to ensure that it will be financially viable for the purpose of achieving the aims and objectives set out in the statement of purpose. 

The Background

10.	Hemmingrod Ltd was incorporated as a private limited company on 18 July 2005. The Progress Project, Winchester Road, Worthing was registered on 26 August 2005, initially for 7 service users with mental disorders and drug and alcohol problems, excluding learning disability or dementia. The Commission approved an increase to 17 service users on 3 January 2007, since reduced on the application of Hemmingrod to 16.  The directors were Belisario Schiavone and James Fawcus who, since 1999 have been the directors of Sunkist Homes Ltd and Sunkist Housing Ltd which ran two other homes, Sunkist and Ravenswood in the same road.  In 2008 the Commission cancelled the registration of Ravenswood and that decision is not being appealed; Ravenswood home is no longer operating. Sunkist continues to operate with a registration for 23 service users. Mr. Schiavone told us that 22 places are currently filled. Save for those bare facts, we were not directed to any other evidence in relation to those homes as being relevant to the issues that we had to decide. However, when first registered Hemmingrod Ltd was described as part of the Sunkist Care Group of companies and it is clear that they have always been intertwined financially, with staff moving between the three care homes. 

10.	Mr James Fawcus has at all material times been a director of Hemmingrod Ltd. However he has never been a responsible individual in respect of the Progress Trust. He did not attend the hearing or provide any written statement. We read that he has been on extended sick leave. We were not told that he is to be replaced as a director or given any indication as to when he is likely to resume any active role in the management of the company. 

11.	Whilst we consider it essential to set out the history of allegations and the subsequent findings, we have taken the view that naming the individuals involved would add nothing and could breach confidentiality. We have therefore redacted their names

12.	The first unannounced key unannounced inspection by the Commission took place on 31 January 2006 when all outcome areas were scored as ‘Standard,’ ‘Met’ or Almost Met. It was not suggested that the 7 minor shortfalls identified were in any way unusual for a new Care Home. No major shortfalls were identified.  The minor shortfalls identified related to   supporting the needs of service users in their care and wellbeing and medication issues as agreed prior to admission, through the individual service users care programme approach. There were also   staffing issues   and some minor improvements were identified to ensure all staff were trained in accordance with National minimum standards. At that time the registered manager of the Progress Project was Mr KB, but it was noted that he had recently started a 3-month secondment to manage another home in the Sunkist group.

13.	There had also been a complaint on 21 June 2006 from a senior social worker from Midhurst Social Services regarding the care provided for a service user, but this was not taken up by CSCI.  A second key unannounced inspection of the home took place on 6 September 2006.  The Commission now rely on the fact that The Progress Project had failed to meet the 3 key requirements in the inspection of 31 January 2006. However, overall the service was assessed as ‘Good.’ It was not suggested that there were serious concerns at that time, although these same three concerns around delivering Care Plans, medication and staffing were to emerge again. Mr Bannier noted that the service appeared to be undergoing change and that a number of staff and residents had left since his last visit.   There were no inspections or visits by CSCI in 2007. 

14.	It is accepted by the Appellant that what then happened was a drastic drop in standards, which first came to the attention of CSCI when it received a letter dated 31 October 2007 from DH, as the responsible individual disclosing a number of allegations concerning 3 members of staff who had been suspended pending further investigation.  They were identified as KB the registered mental health nurse and RN and MP who were Project Workers. KB was married to the then registered manager of the Progress Project.  She was questioned by Liam Rudden – Integrated Team Manager as there was a concern about   a conflict of interest but denied any knowledge of any abuse or unorthodox ways of working.  She had raised a concern previously about alleged abuse by KB, her husband, which Hemmingrod had investigated but not upheld the allegation. They had informed CSCI of this in a letter dated January 2007 and no further action was taken by CSCI.

15.	On 1 November 2007 Sunkist Care Group raised an Adult Protection Alert and on 2 November 2007 Liam Rudden, as Investigating Manager met with DH, the responsible individual. Mr Rudden investigated the allegation and produced a report dated 2 January 2008, which was considered at a Safeguarding Adult Case Conference held on 3 January 2008. This was a level 4 conference, which equates to a high level of risk.   The conference revealed major concerns. It is the Appellants’ case that this was completely unacceptable, but is now history. The staff against whom any allegations were made  have  all now left,  including DH, so that Mr. Schiavone became the responsible adult.  It is the Respondents’ case that the history and why this state of affairs developed is relevant to the current issues that we must investigate and decide. 

16.	In June 2007 a system known as ‘pull up ‘, was introduced by KB, who had returned to work for Sunkist with a revised remit of Clinical Leader. It is a behavioural programme originating from drug rehabilitation programmes. This practice was introduced with the full knowledge of the management but without any apparent understanding of the implications for service users. Further, this intervention was not an agreed part of any service users care package.  The investigation found a lack of consistency in the implementation of the programme. There were no formal arrangements to monitor agreed outcomes and conference members raised concerns about KB and his wife who was the manager working together. The primary victim was MH. Two incidents of physical abuse and being threatened by RH, Support Worker, were found proved. It was found proved that MH had been verbally abused, had water thrown into his face and another that he had been woken by having a pot and a rolling pin banged together by MP, Support Worker. It was also found proved was that KB had banned another service user JF from the communal area as a form of punishment.  It was found proved that staff intimidated the service users by using foul and offensive language as a norm.  There were 10 residents in the home at that time. There were only 4 members of staff who were qualified. 

17.	Other concerns emerged. Three new members of staff recruited since January 2006 did not have criminal record bureau checks prior to commencing employment, with no report being available for 4 months. In the case of RH, whilst he had declared that he had previous convictions, it transpired that he had 36 previous convictions and that his referees were personal friends. The Commission were concerned that the Manager did not appear to have actively considered whether to continue his employment.

18.	There was also a concern that the Progress Project had changed its statement of purpose on several occasions since its opening and there was a lack of clarity about the purpose of the project.  The West Sussex Primary Care Trust who commissioned the services of the care home had highlighted those concerns.  Even after this came to light, two more staff members MP and KP were employed without CRB checks and appropriate vetting.  KF was a friend of the Directors and MP had had a personal relationship with James Fawcus. Concerns were noted that RH had been re-employed at a Sunkist Home after a Disciplinary Hearing.

19.	Mr Brodie accepted that the grounds for cancellation were made out at the time it was issued but not today and would not be in the foreseeable future. The Appellants’ case is predicated upon a sea change when Vanessa Saunders became the manager on 2 January 2008. Since that time there had been unannounced inspections: 26 February 2008, 15 September and random visits on 2 March 2009 and 19 May 2008. Whilst it is accepted that the unannounced inspection of 26 February 2008 disclosed a large number of inadequacies, the management of the care home who sought to address them, agreed them all. A Statutory Requirement Notice was issued on 23 April 2008 and was not challenged and it was agreed.  West Sussex Primary Care Trust were informed of the enforcement activity and this lead to them removing six residents and making alternative arrangements for suitable placements. 

20.	A further management review was held by CSCI on 28 April 2008. It was at that point that a decision was made to issue a notice of proposal to cancel the registration of Hemmingrod Ltd. Mr Bannier carried out a random inspection on 19 May 2008. There was some evidence of compliance with the Statutory Requirement Notice. The notice of proposal to cancel registration was issued on 12 June 2008. 

21.	Mr. Brodie helpfully compiled a schedule of ‘Observations of the Appellant on CSCI judgements and recommendations’ focussed primarily on the two Unannounced Inspections of 26th Feb 2008 and 15th Sept 2008.  It was accepted that two key areas for improvement concerning changes to the statement of purpose and assessment of prospective residents had not met the previous timescale set for improvement by 6 October 2006. However that requirement was met by 19th May 2008. The requirements of the statutory notice were met quickly, by the 16th May 2008.  Mr. Bannier made an unannounced visit on 19 May 2008.  The improvements had continued. He required the statement of purpose to accurately reflect the service provided at the care home. He set a date for compliance of 30 May 2008 and it is agreed   that was not met until 15 September 2008. The two areas that he made adverse judgement on were the need to include behaviour management plans in care plans was only partly agreed, but the requirement that care plans and risk assessments needed to be further developed was agreed and met by 5 March 2009.  The other area was ‘Staffing’, where there was a further need for mandatory specialised training in managing challenging behaviour. The original requirement had been challenged as it was felt all staff were appropriately trained but by 5 March 2009, all staff had been on such a course, so that requirement is now met.  

22.	Immediate concerns about the running of the care home had therefore reduced but a new area of concern developed regarding the financial viability of Hemmingrod, which did not form part of the original reasons in the Notice of Cancellation. A confusing and contradictory chain of events then followed, which it is necessary to set out in some detail. In October 2008 CSCI discovered, but not from Mr. Schivone as Regulation 39 requires, that the Commissioners of HM Revenue & Customs (HMRC) had petitioned the High Court for a winding up order in respect of Hemmingrod on 16 October 2008 and this was to be heard on 29 October 2008. Mr. Hughes instructed CSCI’s solicitors to write a letter dated 7 November 2008 asking a number of very specific questions and whether they expected in the next 6 months to be in a position to carry on the care home so as to comply with Regulation 25. They were also asked to give more particulars of any commercial or other relationship between them and Sunkist Homes. Mr Schiavone, who signed himself ‘Director of Finance’, replied on 17 November 2008. He said quite clearly in that letter that ‘Hemmingrod Ltd has ceased trading. The Progress Project has been taken over by Sunkist Homes Ltd’.  A further request for financial information was made by CSCI on 4 February 2009. They were not satisfied with the response on 12 February so issued a Statutory Notice on 16 February 2009. 

23.	On 3 December 2008 CSCI received a complaint from a staffing agency that they were owed money and that Mr. Schiavone had told them him that the Progress Project had ceased trading, which was contradicted in a second call when Mr. Fawcus denied that was the position. On 8 December 2008 West Sussex Primary Care Trust had a letter from Mr. Schiavone advising that Hemmingrod Limited had ceased trading and asking for further contract payments to be made to Sunkist Homes Ltd.  A winding up order in respect of Sunkist Homes was made in the High Court on 3 December 2008, the solicitors instructed having made a mistake, believing it was listed on 10 December 2008. The court rescinded the Order on 10 December 2008 at an expedited hearing, by agreement and on terms as to the repayment of the debt to the Inland Revenue.  

The Hearing and alleged breaches:-  

24.	Ms. Annie Taggart following her unannounced inspection on 15 September 2008 made 5 requirements:-

(a)	Care plans needed to be updated;
(b)	And should include plans for managing challenging behaviour;
(c)	 Mandatory training was out of date for some staff members and not all of the staff’s team had training in managing challenging behaviours even though they were dealing with this on a regular basis;
(d)	Improvements were needed to the cleanliness of the 2 service                      users’ private bedrooms; and
(e)	Regulation 37 reports regarding events that pose a risk to the safety of the service users or others were not being sent to the Commission as required. 

25.	Ms. Taggart carried out an unannounced visit as recently as 2 March 2009.  By then there were only 3 service users in residence, who have very complex needs and are being accommodated appropriately in line with their Care Programme approach.   Ms Taggart clarified that her  ‘inspection record’ is in fact a working document to be used to guide her next inspection.  She had two concerns. One remained that two staff were still not trained in managing challenging behaviour. Ms. Saunders response was that one had training in ‘lone working ‘ and the other was a registered mental health nurse who had previously undergone training in another county but whose certificate had been mislaid. Ms. Saunders said that Ms. Taggart had been made aware that they were booked to go on a course on 4 March 2009, although that was not specifically explored with her in cross examination.  There was an issue as to why this training had not happened before if there was an ‘infinite’ training budget as had been claimed by Mr. James Fawcus at the time of the Safeguarding Adult Conference. Ms. Saunders emphasised that she has prioritised staff supervision and her observation and assessments had lead her to conclude that both members of staff were fully competent in managing challenging behaviour. Training also had to be scheduled for when a suitable course was available.

26.	Ms. Taggart reported that there were two incidents, which she thought should have been notified to CSCi under regulation 37.  One incident was when a service user S had choked over a meal following a joke. He had passed out unconscious. An incident report in which it was logged ,said that he had been unconscious for 5 to 10 seconds. The staff had recorded that they had started to stand S up so that they could administer the Heimleich manoeuvre but this had been unnecessary. Ms. Saunders commented on 19 January 2009 (the accident happened on 15 January 2009) that the incident had been well managed by staff members on duty and health checks had been carried out and logged on S’s risk assessment. She felt that was a sufficient response.  The other incident was when 2 police officers had arrived as a resident SM had been overheard by a member of the public to say to a resident of the Sunkist home, that he had had sex with an 8 year old girl. It is not suggested there was any truth in that suggestion. Ms. Saunders said that this service user was well known to make wild allegations on a variety of topics. However, Ms. Saunders did accept, having heard Ms. Taggart’s concerns over the vulnerability of the individual as well as the care home due to the involvement of the police that this should have been the subject of a regulation 37 report. However, SM’s risk assessment was updated   and actioned. The resident left two days later as part of his planned discharge, not   related   to   this incident. 

27.	 In her first report Ms. Taggart confirmed that therapeutic groups had been set up and Mr. Whittaker was in post as the Occupational Therapist with professional support from an external clinical supervisor, but this activity needed to be included in the statement of purpose.   Despite the earlier concerns there was now a robust recruitment process and service users felt supported by a committed staff.

28.	 In oral evidence Ms. Loretta Rogers clarified that she had actually visited the Project on a number of occasions in 2007. It is part of the responsibility of the commissioning team to ensure the agreed packages of care are being effectively delivered, but the team became concerned this was not happening. She was concerned about repeated changes in the statement of purpose, the eligibility criteria and the funding structure, which regularly caused problems at the Resource Allocation Panel. She found it hard to know who to contact at the Care home due to changes of staff.  

29.	 Ms. Rodgers disputed West Sussex County Council has a large number of people waiting to be referred to the Progress Project and that it was only a matter of removing the cancellation for Hemmingrod to move to being a viable business. The reason for this is a move towards supported living accommodation in the community for service users.   That is a different model of care and the service users would pay rent and have the option of being able to manage their care budgets themselves. In meetings with Mr Schiavone to discuss possible options for service redesign, she had accepted this model could be run on the same site as the Progress Project but this would require a reconfiguration of the property so that the supported housing premises would be separately registered.  Progress Project would be required to provide the current accommodation into self contained accommodation as a ‘step up’ for service users.   This model of care would run as a different entity. 

30.	Whilst both Ms. Saunders and Mr. Schiavone in their oral evidence confirmed that they had discussed this issue it was clear that there is no clear plan to provide  ‘move on’ supported living accommodation on this site and no plans have been drawn up or consideration of what this would cost.  

31.	Mr Strachan confined his evidence to neighbourly issues. He said there had been countless occasions since he had moved next door to the Progress Project in 2006, when he would telephone and report excessive noise nuisance. He had also raised concerns about residents loitering outside and causing a nuisance. He had been met with unresponsive and unhelpful response and echoed Ms. Rogers in reporting that it was difficult to know who was in charge. However, he did fairly accept that since Ms. Saunders had been the Manager he had had a more positive reaction. 

32.	The Tribunal were assisted by the clear presentation of the financial position by Michael Jarvis, by reference principally to the accounts of 31.1.09. It was not possible to distinguish the accounts of Hemmingrod Ltd and Sunkist Ltd. The two companies were intertwined. The assumptions, on which his forecast had been made, were from figures provided by the Appellant and, not claiming any specialised knowledge of care homes, he proceeded on the basis that they had been reasonably stated. He cautioned that those assumptions would need to be given detailed consideration. The balance sheet showed a heavily insolvent financial position, on the simple test that liabilities heavily exceed assets. The alternative test of whether Hemmingrod Ltd. would be able to meet its financial obligations as they fall due would also be failed. Hemmingrod Ltd. had been supported by Sunkist Homes to a sum which on 31.1.09 stood at £520,092. However, that view might change if Hemmingrod  Ltd. could rely on external sources to provide additional funding for the foreseeable future and for existing funders  (including the bank) to maintain supportive positions. The financial analysis includes the assumption that service users numbers were forecast to increase from 3 in February 2009 to 12 in January 2010. The break-even point was between 8-10 service users, projected for November 2009. This meant that the business would need £91,000 injection of funds to make it viable until then. 

The Respondent’s case:

33.	The Respondent’s case was that the history of non-compliance outweighed any proven improvements in approximately the last 14 months. Any improvements had to be seen in the context of how the need for improvement had come about as a result of an abysmal state of affairs in the management of the home and the abuse of June 2007. The Adult Safeguarding Meeting on 3 January 2008 should be seen as crisis intervention and an urgent imperative. Staff continued to be employed without CRB checks, issues over training and lack of completion of the statement of purpose remained. Financial issues fell under 2 distinct heads

(i)	The credibility of Mr Schiavone
(ii)	The substantive issue of financial viability

The Appellants’ Case

34.	Whilst the unannounced inspection of 26 February 2008 disclosed a large number of inadequacies, they were all recognised by the management of the care home and swiftly addressed. The requirements imposed by the statutory notice dated 23 April 2008 had all been met when the random visit took place on 19 May 2008. By the time the unannounced inspection on 15 September 2008 was undertaken, Ms. Saunders had managed an efficient  and effective  turnaround in the manner in which the care home was operating. Of 5 statutory requirements imposed, 3 had been met when the unannounced inspection took place on 2 March 2009. Regulation 37 was agreed as a requirement to be reported to CSCI although appropriate steps were taken by the staff to elevate any risk through the risk assessment process. And the issues of training had been actioned.   A robust recruitment process was now in place so that we could be confident that even if Ms. Saunders left, an appropriate replacement would be in place. It was appreciated that the winding up petition against both Hemmingrod and Sunkist Homes gave rise to legitimate concerns about financial viability. However, the injection of funds meant that there could no longer be any realistic fears regarding the financial viability of the company.  

The Tribunal’s Decision with Reasons

32.	With regard to the issues that we have to determine, it is clear that there has been a history of non-compliance with the statutory requirements since 26 August 2005 when the service was first registered. However, the first inspection in January 2006 established only minor shortfalls. Mr Bannier agreed and our experience as an expert Tribunal, would suggest that these requirements were not untypical for a care home that was just starting up. 

33. 	It is accepted that at the date of the Notice of Cancellation on 10 June 2008 the breaches were established and the grounds had been made out. 

34.	Since Ms. Saunders became manager of the care home on 2 January 2008, there has been an improvement in the running of the home, although some requirements remained outstanding. Overall, our view is that the random unannounced inspection on 15 September 2008 establishes that Ms. Saunders, achieved a major sea change.  A Consultant supported Ms. Saunders for five months and we take that as a positive sign that the registered providers were taking the need to change seriously and recognised the enormity of the task that Ms. Saunders had taken on in order to safeguard the care and wellbeing of the service users in Progress Project. 

35.	Two of the judgements made by Ms. Taggart in September 2008 remained outstanding when she made a random visit on 2 March 2009. Ms. Taggart was by then satisfied that the statement of purpose reflected what the service users were in fact getting and the care plans had been appropriately updated and actioned, although not reflecting the input of the Occupational Therapist. Overall, we take the view that the 2 issues identified, in the context of the large amount of work done do not cause us to have any real concerns that breaches are continuing or change is not being sustained.  We accept that regulation 37 referrals allow for a range of appropriate and proportionate responses. On reflection, having heard Ms Taggart’s evidence, Ms. Saunders accepted that she should have referred the case of the service user who made untrue allegations about having had sex with a child. However there is no suggestion that that incident was not appropriately recorded, actioned and reviewed by Ms Saunders and her team. Similarly, the incident of the service user who had suffered a choking incident, which again was appropriately dealt with, monitored and reviewed. 

36.	The need for all staff to be trained in managing challenging behaviour was picked up historically and remained outstanding in September 2008 and on 2 March 2009.  We accept that Ms. Saunders had used her own observation and assessment of the 2 staff who had not undergone this training and satisfied herself that they could manage such behaviour and had had previous training that was relevant and transferrable to their current duties.  This does not mean that the requirement didn’t need to be met. We were satisfied that it was by 4 March 2009 and therefore do not regard that as a serious breach. We are satisfied that it does not establish anything negative about Ms. Saunders’ attitude as the manager, on the need to comply with the requirements set. This must be set in the context of the large amount of work done, not just to meet the regulations but also to install good practices in the workings of the project.   

37.	An issue was raised about Ms. Saunders recruitment without open competition. Whilst valid concerns had been raised in the past about the lack of robust recruitment policy, we find, that given the urgency of the situation it was not unreasonable for Mr Schivone to employ Ms. Saunders and this is not part of a continuing pattern of casual practice.  Whilst he may know her personally, there has never been any issue about her suitability, qualifications and experience for the role. She was known to CSCI as she had worked at another local care home, which had been inspected.  There must be a concern should she leave or not be available to work, but we are satisfied that a deputy is in place and that more robust recruitment processes are now in place.  The issue about the re employment of RH after a disciplinary hearing fell away, as it was accepted on behalf of the Respondent that the evidence was incomplete.  Mr. Schiavone was clear that he had been advised by the solicitor he brought in to chair the disciplinary hearing that he could not dismiss him, so he offered him re employment which in the end he did not take up.  

38.	 However, it is the applicant who seeks registration not Ms. Saunders. The only reason she was not registered was because enforcement proceedings have been commenced. CSCI confirmed that this was usual in context of the enforcement process and that the registration was suspended pending the outcome of this hearing. 

39.	The Safeguarding Vulnerable Adults conference in February 2008, clearly established the ‘pull up’ regime was not hidden. There was a ‘pull up’ book available.  If the registered providers did not know about it, they should have done, and if they knew about it and did nothing it shows a very worrying lack of knowledge and understanding of what is an appropriate regime for those with profound and complex mental health difficulties. 

40.	That regime was, as the original reasons for the Notice of Cancellation shows only part of a very poor practice. We conclude that in light of the history of non-compliance the applicant had a very lax attitude to their obligations, failed to show appropriate understanding and knowledge of  their  obligations under the current legislation, and despite many opportunities to do so did not protect service users and meet their care needs. It is clear that they left the running of care home to the manager but even that was not consistent, as the managers changed or spent time working in other care homes in the group. 

41.	 In the light of that poor history we have carefully considered the evidence that the relevant legislation will be met in the future. We are satisfied that the current improvements have been steadily maintained for 14 months. Mr. Schiavone did not dissent from the position that that what had previously occurred was ‘appalling’. The simple fact is that if he wishes to attract future business he will have to build the confidence of those who commission the services and this will only happen by showing that standards are being maintained and sustained. 

42.	We next turn to the issue of whether Hemmingrod Ltd  is financially viable.  On this issue we had more difficulty with the evidence, not least with the oral evidence of Mr. Schiavone.   We have set out the history in some detail as it shows In particular why Mr. Hughes was having real difficulty in establishing an accurate picture as to the financial viability of Hemmignrod Ltd.   We reject any notion that Mr Schivone signed the letter of 17 November 2008, stating that the company was to cease trading   ‘under protest’. We are confirmed in that conclusion as Hemmingrod’s bank accounts had clearly been shut at the time and an application was made to transfer the registration to Sunkist on 21 November 2008. The winding up petition regarding Hemmingrod had been presented for debts owed to the Inland Revenue.  Mr Schiavone was not being honest with himself or with us in seeking to suggest any mistake, or that it was his accountants who had closed down his bank account. It was clear that his solicitors and his accountants advised him that Hemmingrod Ltd had to cease trading. It is self-evident that he would have to consider that option and if he did not want to accept that advice, then he should have acknowledged that in a straightforward manner. 

43.	That has caused us to consider very carefully whether Mr Schivone is not in some sense avoiding realities. We have given regulation 25 its ordinary meaning. We accept Mr Hugh Jones’ submission that liability is best tested by the first test for insolvency, which is more pragmatic, namely ‘will the company be able to meet its debts as they fall due’. The second test whether the company’s liabilities exceed their assets is a much more complex question, particularly in the light of the intertwined financial and all other arrangements that exist between Hemmingrod Ltd and Sunkist Homes. There is no transparency on the accounts. 

44.	The following capital resources have either been introduced into the company or were said to be available for this purpose. Roger Fawcus, brother of James had lent him £105,000 but the evidence established that had already been drawn down to Sunkist Ltd. The email Mr Roger Fawcus  sent directly to Mr Brodie, offered to lend his brother a further £60,000 to finance the company but it is not clear whether that is as a gift or a loan so we disregard it.  It is concerning that Mr. Schiavone had not discussed this with James Fawcus.  In December Mr Schivone obtained a £92,000 loan from Mrs Smith on Fintry Place, an investment property he jointly owns with his wife.  The £92,000 (net) loan by Mrs Smith was quickly taken up by Sunkist and not passed onto Hemmingrod. Ltd.  The proposal to sell Fintry Place even at a forced sale price of £500,000 must be regarded as not being an immediate source of funds in the current market but that might release a further £127,000 after redemption of the mortgage. Similarly the sale of grazing land, which is not subject to any charge and has been valued in the region of £160,000.  More immediately Mr Schiavone   proposes to release a further £140,000 of equity in Fintry Place by remortgaging with the Abbey National, £477,500 in redeeming the secured loans of £247,000 from HSBC and £100,000 from Mrs Smith. It is therefore right to describe the future viability of the company as being on shaky ground, however, on balance there would appear to be enough funds that might be immediately available to take the business through until the nadir of November 2009. 

45.         Whether by November 2009 the business is viable is unknown as it will also depend on   Hemmingrod Ltd meeting the local Commissioners  (West Sussex Primary Care Trust – Mental Health)  and CSCI’s  requirements to  attract  sufficient service users. The only ready money would come from Mr. Schiavone and would be needed to meet day-to-day running costs. At present there are 3 service users in the care home and 8 day and 2 night staff working shifts. Any extension beyond that will require additional staff to be recruited, inducted, trained and paid. It is Mr. Schiavone’s stated intention to continue to market the Progress Project as a residential care home. He will have to demonstrate to the Regulators and Commissioners that the funds he has identified are realised and used for the benefit of Progress Place.   

46.	Whilst the charges would be cheaper for a London Authority, the need for local services to be actually available to deliver a comprehensive   enhanced care plan for individual service users may be the reason that historically the majority of commissioners are from West Sussex Primary Care Trust.  They have clearly stated that they are moving to a new model of care. It is not possible to reach a conclusion as to what impact that will have on any future business.  We have noted that Sunkist home, which has the same registration currently has 22 out of 23 places filled which suggests there is a need. There has been no investigation of adaption costs, registration requirements or investigation of how domiciliary care income might differ from residential care income.

47. 	This is a business but a very regulated one of necessity, as the people who use it’s services have very complex needs and are extremely vulnerable. The chance to get a business up and running again must not be at the service user’s expense. We have carefully considered the safeguards that exist to protect them. The Regulating Body has the power to make unannounced visits and make inspection. The Commissioners and care coordinators who make placements will no doubt carefully look at what is to be provided and have a duty to make ensure what is in the contract and care plan is being delivered, regularly reviewed and monitored.

48.	 Following a request from the tribunal but not advocating them, the Respondent suggested a number of conditions that might be attached. Some were objected to on the grounds that they would effectively be in restraint of 
trade, limiting the numbers of placements.  The conditions that we attach limit the category of service user to that for which the care home is currently registered. In our view it is necessary for the operation of the home to be supervised by a qualified mental health professional. Mr. Schiavone has acknowledged that as the named responsible individual he does not have this expertise. It is imperative that he has appropriate advice and assistance to support him in carrying out this role effectively.   This service could be provided on a consultancy basis and should not be taken on by a member of staff. The purpose is to ensure that regulation 26 visits, are not simply a ‘tick box’ exercise but focus on the relevant issues and external relevant expertise provides an additional safeguard to protect service users from a reoccurrence of past poor and abusive practice. 

Decision

Accordingly our unanimous decision is the appeal is allowed. 

We direct that a decision to cancel registration of the Care Home dated 10 June 2008 shall not have effect.

The following consequential orders:-

1.	By agreement we impose the following conditions on the registration of the Progress Project. 

(i)	That the category of service users be exclusively Mental Disorder including drug and alcohol problems, but excluding learning disability and dementia. 

(ii)	The operation of the home is to be supervised by a qualified mental health professional. 

MS MELANIE LEWIS (Chairman)  
MRS CAROL CAPORN (Specialist Member)
MS MARILYN ADOLPHE (Specialist Member)	

3 April 2009