(1)Subsection (2) applies if a person’s recoverable property is mixed with other property (whether his property or another’s).
(2)The portion of the mixed property which is attributable to the recoverable property represents the property obtained through unlawful conduct.
(3)Recoverable property is mixed with other property if (for example) it is used—
(a)to increase funds held in a bank account,
(b)in part payment for the acquisition of an asset,
(c)for the restoration or improvement of land,
(ca)for the discharge (in whole or in part) of a mortgage, charge or other security,
(d)by a person holding a leasehold interest in the property to acquire the freehold.
Cases considering section 306 21
[2010] EWCA Civ 143 · 26 February 2010
The mixed-property provisions did not apply to spread betting. The supposedly innocent contribution was the bettor’s effort or skill, which was not property for this purpose. (see paras [24]; [64])
[2008] EWCA Crim 2649 · 15 October 2008Interprets
The court treated section 306 as showing a legislative intention that, for mixed property, only the portion attributable to recoverable property represents unlawful benefit. That supported the same approach under criminal confiscation provisions (see paras [22]-[27]).
[2008] EWCA Civ 104 · 22 February 2008
The court held that the mixing provisions protect the value attributable to untainted contributions. They would have been relevant if capital mortgage repayments had been made from lawful funds, but the evidence did not establish that fact. (see paras [38]-[39]; [45]; [52]; [61])
Where recoverable and other property are mixed, recovery is limited to the portion attributable to the recoverable property. The court applied that principle to explain why an untainted contribution could not be forfeited. (see paras [38]-[39]; [52])
1 more judgment, and what each says about section 306, are in the
case-law panel in the full Act.
427.Property which was not itself obtained through unlawful conduct at any stage can come to ‘represent’ such property, and therefore be potentially recoverable, not only by being traceable by the enforcement authority under section 305 but also by having become mixed with recoverable property. Because the ability to follow property under section 304is dependent on the property retaining its identity, it may become impossible to follow property when it is mixed into other property.
428.Subsection (3) gives some illustration of this problem. If cash which is the proceeds of drug dealing is paid into a bank account which is in credit through deposits of honest earnings, it becomes impossible to identify any individual withdrawals which may be made from that account as being the ‘dirty’ money rather than the clean. Subsection (2)therefore provides that in such circumstances so much of the ‘mixed’ property as is attributable to the recoverable property will be representative of the original property, and is therefore itself recoverable.