R (Edison First Power Ltd) v Central Valuation Officer

The House considered whether powers in Schedule 6 paragraph 3(2) to the Local Government Finance Act 1988 authorised the Secretary of State to prescribe a formula or an en bloc valuation method (as implemented by the Electricity Supply Industry (Rateable Values) Order 1994) which had the consequence that, for part of a rating year, two different ratepayers could be liable for rates in respect of the same hereditament (an effect described as "double recovery"). The court applied the presumption against double taxation/double recovery but held that the presumption can be displaced by sufficiently clear statutory words or by the surrounding circumstances leading to an inevitable inference that Parliament intended the result. The majority concluded that, read in context and against the history of formula or cumulo rating for utilities, paragraph 3(2) was wide enough to authorise the Secretary of State's scheme and that the element of double recovery was not so unfair or unreasonable as to require a different construction.

This is an appeal by Edison First Power Limited challenging the lawfulness of valuation rules applied to electricity generating hereditaments. Edison acquired two power stations from PowerGen and paid local non-domestic rates for the period of its occupation from 19 July 1999 to 31 March 2000. Under a separate statutory scheme (the ESI Order), PowerGen's aggregate central list rateable value was calculated by reference to declared net capacity and was adjusted only annually; PowerGen therefore remained liable, in substance, for an element of rateable value attributable to those stations for the same period. Edison contended that this produced "double recovery" and that the ESI Order was ultra vires Schedule 6 paragraph 3(2) to the Local Government Finance Act 1988.

Nature of the claim: judicial review challenge seeking quashing (insofar as necessary) of the ESI Order as ultra vires and relief for repayment of sums paid under an apportionment clause.

Issues framed:

• whether the presumption against double taxation/double recovery was engaged;
• whether paragraph 3(2) of Schedule 6 read with the 1988 Act authorised an en bloc/formula valuation permitting the apparent double recovery; and
• whether the statutory scheme was irrational, unfair or otherwise unlawful (including Convention arguments which were not pressed to succeed).

Court’s reasoning: The court accepted that there was an element of double recovery in substance but emphasised the interpretative presumption against double taxation which can be displaced by clear statutory words or by surrounding circumstances producing an inevitable inference. The majority examined the text of the 1988 Act, the structure of local and central lists (sections 41-54, section 56 and related provisions such as section 67(9)/(9A)), and the long background of formula/cumulo rating for public utilities dating back to earlier statutes and administrative practice. On that background the majority concluded that paragraph 3(2) gave broad powers to the Secretary of State to disapply conventional valuation and to prescribe alternative valuation rules (including en bloc figures and annual recalculation) and that retaining annual adjustment and en bloc valuation was a rational and long-established approach for utilities; accordingly the ESI Order was within powers and not unlawfully oppressive.

Appeal dismissed. The majority held that Schedule 6 paragraph 3(2) to the Local Government Finance Act 1988 authorised the Secretary of State to prescribe an en bloc/formula valuation scheme of the kind implemented by the Electricity Supply Industry (Rateable Values) Order 1994; while the scheme produced an element of double recovery in substance for part of a rating year, that result was not so unfair or unreasonable as to render the enabling power in paragraph 3(2) inapplicable or to render the Order ultra vires. Two Law Lords would have allowed the appeal, applying a stricter application of the presumption against double recovery.

On appeal from the Court of Appeal ([2001] EWCA Civ 96; reported judgments of the Court of Appeal including Edison First Power Ltd v Secretary of State for the Environment, Transport and the Regions [2001] EWCA Civ 1096). Earlier first instance decision at Queen's Bench Division was reported and considered by the parties (Carnwath J).