Regina v. Central Valuation Officer and another (Respondent) ex parte Edison First Power Limited (Appellants).

The presumption against double taxation or double recovery is an application of the broader principle that Parliament intends to act reasonably. Its strength depends on the unfairness or irrationality of the suggested result, the legislative scheme and the circumstances surrounding enactment.

A broadly expressed power to replace conventional rating valuation may authorise global formula rating with annual adjustments, even though a disposal during the rating year produces an element of double recovery. Such a scheme is lawful where its consequences are neither unfair, unreasonable nor arbitrary and its structure reflects the established background against which Parliament legislated.

PowerGen sold two power stations to Edison during the 1999–2000 rating year. PowerGen's centrally assessed liability remained unchanged until the next annual recalculation, although Edison became liable for local rates upon taking occupation. Edison had also agreed contractually to pay PowerGen an apportioned part of PowerGen's rating liability.

Edison sought judicial review, contending that Part III of the Electricity Supply Industry (Rateable Values) Order 1994 was ultra vires the Local Government Finance Act 1988 insofar as it permitted recovery referable to the same generating capacity from both ratepayers. Carnwath J dismissed the application. The Court of Appeal, by a majority, upheld that decision: [2001] RA 229; [2001] EWCA Civ 1096.

The central issue was whether paragraph 3(2) of Schedule 6 authorised the annual global valuation scheme despite its potential to produce an element of double recovery following a mid-year transfer.

1. Appeal dismissed by a majority of three to two. Lord Hoffmann, Lord Millett and Lord Scott of Foscote concluded that the Electricity Supply Industry (Rateable Values) Order 1994 was within the power conferred by paragraph 3(2) of Schedule 6 to the Local Government Finance Act 1988.

2. Per Lord Hoffmann, Lord Millett and Lord Scott, the presumption against double taxation or double recovery is not a constitutional presumption protecting a fundamental right. It is an application of the broader interpretative assumption that Parliament intends reasonable results. The relevant inquiry therefore concerns the actual consequence of the statutory scheme and the degree to which that consequence is unfair, unreasonable, arbitrary or otherwise objectionable.

3. Paragraph 3(2) expressly empowered the Secretary of State to disapply conventional annual-rental valuation and prescribe a rateable value or alternative valuation rules for centrally listed hereditaments. Its language was sufficiently broad to authorise global or cumulo valuation and annual recalculation. Sections 54(4) and 67(9)–(9A) did not require the global value to be altered whenever the composition of the designated class changed during a rating year.

4. The history of formula rating formed an important part of the statutory context. Annual adjustment and the resulting disconnection between current occupation and aggregate liability had long been features of the rating of public utilities. Parliament enacted paragraph 3 against that background and intended to permit continuation of the system where the Secretary of State considered it appropriate.

5. The resulting element of double recovery was not unfair, unreasonable or arbitrary. PowerGen's liability arose under the annual global scheme, while Edison's local liability arose from its occupation. Edison itself had been assessed only once. Its additional financial burden resulted from a freely negotiated contractual apportionment. The annual system also operated in both directions because newly commissioned capacity was similarly disregarded until the next rating year.

6. Lord Hoffmann also rejected the contention that the scheme was irrational or contrary to article 1 of the First Protocol to the European Convention on Human Rights. Lord Millett recorded that the Convention challenge added nothing material and had substantially been abandoned.

7. Dissenting: Lord Bingham of Cornhill and Lord Steyn would have allowed the appeal. They considered the case to involve double recovery and regarded the presumption against it as strong. In their view, neither the statutory language nor its objective setting demonstrated the clear parliamentary intention necessary to authorise that result.

1. House of Lords: The appeal in Regina v Central Valuation Officer, ex parte Edison First Power Limited was dismissed by a majority of three to two. The majority upheld the validity of the central formula-rating scheme.
2. Court of Appeal: Simon Brown and May LJJ upheld Carnwath J's dismissal of the judicial review application. Dyson LJ dissented: [2001] EWCA Civ 1096; [2001] RA 229.
3. High Court: Carnwath J dismissed Edison's application for judicial review: [2000] RA 1.