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Proceeds of Crime Act 2002

Interim administration orders (Scotland)
Section 256: Application for interim administration order

327.Sections 256 to 265 make provision for ‘interim administration orders’ in Scotland; interim administration procedure may – but need not always – form the preliminary stage of civil recovery procedure.

328.An ‘interim administration order’ is, as subsection (2) explains, a court order for:

  • the detention, custody or preservation of property which is claimed to be recoverable property or associated property, and

  • the appointment of an interim administrator in respect of that property.

Its characteristics are spelled out more fully at sections 257 to 265, though undersubsection (8) these sections do not limit the extent of the power to make the order.

329.Under subsection (1), the first step in the procedure is for the Scottish Ministers to make an application to the Court of Session for an interim administration order. The Scottish Ministers may do this even though they have not yet served the application which marks the start of court proceedings. And they may do so without putting any interested party on notice that they are doing so if giving notice would prejudice the Scottish Ministers’ right to recover the property (subsection (3)). It may be necessary to act swiftly and without alerting potential parties, for example, to prevent property from being concealed or disposed of.

330.Subsections (5) and (6) set out the conditions which must be satisfied before the court can make an interim administration order. The Scottish Ministers must satisfy the court that:

  • there is a ‘probable cause of action’, that the property in question is either recoverable or associated property, and

  • if the property in relation to which the order is sought includes associated property, the Scottish Ministers have taken all reasonable steps to establish the identities of everyone who holds the property (if the order is made or the proceedings otherwise go ahead, the Scottish Ministers will have to put these persons immediately on notice of the action under section 244(2)).

331.The Scottish Ministers must also, under subsection (7), nominate someone suitable to act as interim administrator, but the nominee may not be a member of staff of the Scottish administration. The interim administrator on appointment becomes an officer of the court and his functions (set out in section 257) require him to act to secure the detention, custody or preservation of the property pending resolution of its fate.

Section 257: Functions of interim administrator

332.The detailed functions of an interim administrator will be conferred by the court’s order itself. The court’s discretion to confer whatever powers it considers appropriate to the circumstances of an individual case are at large, provided always they are for the purpose set out at subsections (1) and (2).

333.Up until the interim administration order, or the raising of proceedings (whichever comes first), the Scottish Ministers have access to the civil investigation powers set out in Part 8. Thereafter, they cease to have access to these powers and the duty of taking whatever further steps are needed to establish the facts about the property is placed upon the interim administrator acting under the court’s direction.

334.Schedule 6, which is introduced by subsection (1)(a), makes explicit mention of some of the more significant powers that the court may choose to confer on an interim administrator. These are explained above.

335.Although the court has a wide discretion over the powers and functions which may be conferred on an interim administrator, there are some duties under which he must always be placed. Subsection (2) sets these out. He will always be required to take the necessary steps to establish:

  • whether in his view the property is to any extent recoverable or associated property, and

  • whether there is any other property which is recoverable in relation to the same unlawful conduct.

336.Subsection (3) provides legal protection for the interim administrator if he mistakenly, but honestly and reasonably, deals with property which is not the property specified in the order. He will have immunity from any legal claims in respect of loss or damage caused by such dealing, unless it can be shown that it was caused by his negligence.

Section 258: Inhibition of property affected by order

337.Section 258 provides that the Scottish Ministers may apply to the Court of Session for a warrant of inhibition against any person named in an interim administration order. If granted, the warrant would inhibit that person from dealing with the specified property until such time as the court determined the outcome of the civil recovery case. The warrant would be registered in the register of inhibitions and adjudications thus alerting the public to the inhibition.

Section 259: Duties of respondent etc

338.Section 259 provides for certain duties to be placed on a person whose property is subject to an interim administration order. The order may require the person to bring the property, or any documents relating to the property, to a place specified by the interim administrator or to the custody of the administrator. This would apply for example where the property or documents are located outside Scotland.

Section 260: Supervision of interim administrator and variation of order

339.An interim administrator, a respondent, any party to the proceedings and anyone else affected by the administrator’s actions (including the Scottish Ministers) will be able to ask the court to clarify the administrator’s powers. All parties, and any persons who may be interested, will be able to put their views to the court before it acts. There is also power for the court to vary or set aside the interim administration order. Before it does so, it must give an opportunity to be heard to the parties and any persons who may be affected by the court’s decision.

Section 261: Restrictions on dealing etc. with property

340.Subsection (1) provides that the interim administration order must prevent any dealing with the property to which it applies, subject to any exclusions which may be made under the rest of the section. This is to prevent the property being dissipated, pending a resolution of the civil recovery case. 'Dealing' is explained in section 316(1) as including disposing of the property, taking possession of it or removing it from the United Kingdom. A person who disobeys these provisions will be in contempt of court.

341.Subsection (2) states that exclusions may be made either when the order is made or by variation. Subsection (3) states that an exclusion may in particular provide for property to be used for meeting any person’s reasonable living expenses or to carry on a trade, business, profession or occupation. Living expenses would be likely to include the living expenses of dependants. But the court’s discretion to release this property is limited by subsections (4) and (6); the legal expenses of a person involved in proceedings may be met through the legal aid scheme, so there will be no need for them to draw from the property subject to the order.

Section 262: Restriction on proceedings and remedies

342.This section enables the existence of an interim administration order to have an effect on contemporaneous legal proceedings affecting the property in question. Subsection (1) allows the court that has made the order to sist any other legal process, including court proceedings, in respect of the property to which the order applies.

343.Subsection (2) allows any court in which proceedings are pending in respect of the property to sist them, or impose terms on their continuation. Before exercising any of these powers, the court must give an opportunity to be heard to the interim administrator (if appointed), the parties to the proceedings or any person who may be affected by the court’s decision (subsection (3)).

Section 263: Exclusion of property which is not recoverable etc.

344.The court has the power to vary an interim administration order at any time (section 260(3)). This section makes specific provision for variations of interim administration orders to have the effect of excluding property from the proceedings altogether. The court may decide before the final hearing of the action, for example on an application by a person who may be affected by the court’s order or a report by an interim administrator (see section 264), that some of the property to which the order applies is neither recoverable nor associated property. The court must exclude this property from the terms of the interim administration order. The court may also release associated property, if satisfied that it may be excluded without materially affecting the claims of the Scottish Ministers in respect of the remainder. If so, it may vary the order accordingly and the excluded property will be released, with or without conditions.

Section 264: Reporting

345.An interim administration order must, under this section, require an interim administrator to take a number of steps to keep the Scottish Ministers and the court informed. He must report as soon as practicable if he forms the opinion that:

  • any property to which the order applies which is claimed to be recoverable property is not in fact recoverable, or

  • any property to which the order applies which is claimed to be associated property is not in fact associated property, or

  • any property not subject to the order is in fact recoverable by virtue of the same unlawful conduct or is associated property, or

  • any property to which the order applies is held by someone different to the person identified on the claim form.

346.All these possibilities are matters to which the interim administrator is required to be alert under the provisions of section 257(2). He must also report any other material change of circumstances. And he must make a report of his findings to the court, and serve copies of it on all those who may be affected by it. This report may comprise a comprehensive account of the nature and origins of, and interests in, the property in question. It will be capable of being used as a basis to establish agreed facts and to identify disputed matters that will fall to be resolved at the final hearing.

Section 265: Arrestment of property affected by interim administration order

347.Section 265 enables the Scottish Ministers or the interim administrator to apply to the Court of Session for an order to arrest (or attach) moveable property which is subject to an interim administration order but is in the hands of third parties. An example of this would be a person’s bank account. The warrant of arrestment would enable the bank account and other assets to be frozen thus preventing their being moved or dispersed before a final recovery order was made vesting the property in the hands of the trustee for civil recovery.

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