(1)If—
(a)a person disposes of recoverable property, and
(b)the person who obtains it on the disposal does so in good faith, for value and without notice that it was recoverable property,
the property may not be followed into that person’s hands and, accordingly, it ceases to be recoverable.
(2)If recoverable property is vested, forfeited or otherwise disposed of in pursuance of powers conferred by virtue of this Part, it ceases to be recoverable.
(3)If—
(a)in pursuance of a judgment in civil proceedings (whether in the United Kingdom or elsewhere), the defendant makes a payment to the claimant or the claimant otherwise obtains property from the defendant,
(b)the claimant’s claim is based on the defendant’s unlawful conduct, and
(c)apart from this subsection, the sum received, or the property obtained, by the claimant would be recoverable property,
the property ceases to be recoverable.
In relation to Scotland, “claimant” and “defendant” are to be read as “pursuer” and “defender”.
(4)If—
(a)a payment is made to a person in pursuance of a compensation order under Article 14 of the Criminal Justice (Northern Ireland) Order 1994 (S.I. 1994/2795 (N.I. 15)), section 249 of the Criminal Procedure (Scotland) Act 1995 (c. 46) or [F1042Chapter 2 of Part 7 of the Sentencing CodeF1042][F1043 or in pursuance of a service compensation order under the Armed Forces Act 2006F1043] , and
(b)apart from this subsection, the sum received would be recoverable property,
the property ceases to be recoverable.
[F1044 (4A)If—
(a)a payment is made to a person in pursuance of a slavery and trafficking reparation order under section 8 of the Modern Slavery Act 2015, and
(b)apart from this subsection, the sum received would be recoverable property,
the property ceases to be recoverable.F1044]
[F1045 (4A)If—
(a)a payment is made to a person in pursuance of a slavery and trafficking reparation order under Schedule 2 to the Human Trafficking and Exploitation (Criminal Justice and Support for Victims) Act (Northern Ireland) 2015, and
(b)apart from this subsection, the sum received would be recoverable property,
the property ceases to be recoverable.F1045]
(5)If—
(a)a payment is made to a person in pursuance of a restitution order under section 27 of the Theft Act (Northern Ireland) 1969 (c. 16 (N.I.)) or [F1046Chapter 3 of Part 7 of the Sentencing CodeF1046] or a person otherwise obtains any property in pursuance of such an order, and
(b)apart from this subsection, the sum received, or the property obtained, would be recoverable property,
the property ceases to be recoverable.
(6)If—
(a)in pursuance of an order made by the court under section 382(3) or 383(5) of the Financial Services and Markets Act 2000 (c. 8) (restitution orders), an amount is paid to or distributed among any persons in accordance with the court’s directions, and
(b)apart from this subsection, the sum received by them would be recoverable property,
the property ceases to be recoverable.
(7)If—
(a)F1048in pursuance of a requirement of the [F1047Financial Conduct Authority, the Prudential Regulation Authority or the Bank of England under or by virtue ofF1047] section 384(5) of the Financial Services and Markets Act 2000 (power ... to require restitution), an amount is paid to or distributed among any persons, and
(b)apart from this subsection, the sum received by them would be recoverable property,
the property ceases to be recoverable.
[F1049 (7A)If—
(a)a payment is made to a person in pursuance of an unlawful profit order under section 4 of the Prevention of Social Housing Fraud Act 2013, and
(b)apart from this subsection, the sum received would be recoverable property,
the property ceases to be recoverable.F1049]
(8)Property is not recoverable while a restraint order applies to it, that is—
(a)an order under section 41, 120 or 190, or
(b)an order under any corresponding provision of an enactment mentioned in section 8(7)(a) to (g).
[F1050 (8A)Property is not recoverable while it is detained under or by virtue of section 44A, 47J, 47K, 47M, 47P, 122A, 127J, 127K, 127M, 127P, 193A, 195J, 195K, 195M or 195P.F1050]
(9)Property is not recoverable if it has been taken into account in deciding the amount of a person’s benefit from criminal conduct for the purpose of making a confiscation order, that is—
(a)an order under section 6, 92 or 156, or
(b)an order under a corresponding provision of an enactment mentioned in section 8(7)(a) to (g),
and, in relation to an order mentioned in paragraph (b), the reference to the amount of a person’s benefit from criminal conduct is to be read as a reference to the corresponding amount under the enactment in question.
(10)Where—
(a)a person enters into a transaction to which section 305(2) applies, and
(b)the disposal is one to which subsection (1) or (2) applies,
this section does not affect the recoverability (by virtue of section 305(2)) of any property obtained on the transaction in place of the property disposed of.
430.Section 308 constitutes a limitation on the enforcement authority’s ability to follow and trace property; the exceptions set out here also apply to the forfeiture provisions in Chapter 3. Section 304 provides that where, for example, someone is given a yacht in return for a contract killing, and then sells the yacht, the authority may follow the yacht into the hands of the purchaser and recover it from him. Under subsection (1) of this section, if the purchaser paid full value for the yacht, and was unaware of its unlawful provenance, the authority is not entitled to recover it from him or from anyone else who may subsequently acquire it. The fact that the yacht has ceased to be recoverable property, however, does not prevent the proceeds of the sale of the yacht representing property obtained through unlawful conduct, and themselves being recoverable (subsection (10)).
431.Subsection (2) ensures that property ceases to be recoverable following successful civil recovery or cash forfeiture proceedings or following disposal in accordance with Part 5 powers. For example, if property is sold by an interim receiver or interim administrator in the exercise of his powers, although it may still be ‘property obtained through unlawful conduct’, or representative of such property, it will not be recoverable in the hands of the recipient and may be recycled in the market in the ordinary way.
432.Subsections (3) to (7) set out other circumstances in which property will cease to be recoverable: for example, where a payment is made following a compensation or restitution order under the Powers of Criminal Courts (Sentencing) Act 2000, and the sum or property received would otherwise be recoverable; where a claimant obtains property from a defendant in civil proceedings which are based on the defendant’s unlawful conduct, and the property would otherwise be recoverable; where an amount is paid in accordance with a restitution order made by a court under the Financial Services and Markets Act 2000 and that amount would otherwise be recoverable; and where restitution is required to be made by the Financial Services Authority under that Act paying an amount which would otherwise be recoverable.
433.Subsections (8) and (9) serve to exclude property from civil recovery if such property is already the subject of a restraint order, or has been taken into account in making a criminal confiscation order.