Regina v. Central Valuation Officer and another (Respondent) ex parte Edison First Power Limited (Appellants)
OF THE LORDS OF APPEAL
FOR JUDGMENT IN THE CAUSE
Regina v. Central Valuation Officer and another (Respondent)
THURSDAY 10 APRIL 2003
The Appellate Committee comprised:
Lord Bingham of Cornhill
Lord Scott of Foscote
HOUSE OF LORDS
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
Regina v. Central Valuation Officer and another (Respondent)
ex parte Edison First Power Limited (Appellants)
 UKHL 20
LORD BINGHAM OF CORNHILL
1. I have the misfortune to differ from the majority of the House, and would for my part allow the appeal. Since my opinion cannot affect the outcome, I shall state the reasons for it briefly, adopting the helpful accounts of the facts and the relevant legislative provisions given by Carnwath J at first instance ( RA 1), by the Court of Appeal (Simon Brown, May and Dyson LJJ,  RA 229;  EWCA Civ 1096) and by my noble and learned friend Lord Millett.
2. I take as my starting point what is, I think, a trite proposition of law, that rates are a form of tax imposed on the occupier of a hereditament. In some circumstances rates may also be imposed on an owner, but the potential liability of a non-occupying owner plays no part in this case and can for present purposes be ignored. Unless there are joint occupiers, there can be only one occupier of a hereditament at any one time, and accordingly there can ordinarily be only one party liable to pay rates on that hereditament in relation to a given period. As a general rule of construction it will be presumed that a statute does not intend to tax or rate, or authorise the imposition of a tax or rate, on more than one occupier in relation to occupation of a hereditament during a given period. The juridical basis of this presumption may be open to argument. It may rest, in this context, on the legal nature of rates. But I do not think the existence of the presumption can be doubted. The cases cited by Simon Brown LJ in paragraphs 30-32 of his judgment are good authority for it: Smith & Son v Lambeth Assessment Committee (1882) 9 QBD 585 at 593; Westminster City Council v Southern Railway Co  AC 511 at 565; Brook v National Coal Board  RA 367 at 371. The general presumption against rating two parties in relation to the same hereditament was described by Simon Brown LJ (paragraph 30 of his judgment) as "well-established", and I did not understand the existence of the presumption to be challenged.
3. But it is of course no more than a presumption. It is not conclusive or irrefutable. Parliament is sovereign. Since, however, the presumption exists (like the presumption against double taxation) for the protection of the citizen and operates to curb the power of the state to exact payment from the citizen, the presumption will be displaced only if "sufficiently clear express words are used" or there are "circumstances surrounding the enactment of the particular legislation which lead to an inevitable inference that Parliament intended, in using the words that it did" that the presumption should be displaced. I did not understand either party to question the correctness of the approach indicated in these quotations from the opinion of Lord Oliver of Aylmerton in R v Inland Revenue Commissioners, Ex p Woolwich Equitable Building Society  1 WLR 1400 at 1412-1413.
4. In the judgments below, and in argument before the House, somewhat differing views were expressed on whether the facts of this case were such as to engage the presumption at all: whether (in other words) it is a case of double recovery. I would for my part adopt both the analysis and the conclusion of Dyson LJ in paragraphs 70-74 of his judgment. It is not in doubt that Edison paid non-domestic local list rates to the two relevant billing authorities in respect of occupation of the two transferred power stations for the period from 19 July 1999 until 31 March 2000. During the same period PowerGen continued to be liable to pay rates on a basis calculated so as to take account of their occupation of the two power stations. The transfer of the power stations did not reduce their liability in any way. Thus in effect the Secretary of State received payment twice, once from PowerGen and once from Edison. It was therefore a case of double recovery. The presumption was engaged.
5. Neither party suggested that the presumption was displaced by sufficiently clear express statutory words. Thus the question is whether the circumstances surrounding the enactment of the particular legislation were such as to raise an inevitable inference (not just a reasonable or a not unlikely inference, but an inevitable inference) that Parliament intended, in using the words that it did, to displace the presumption. But here again the task of interpretation is made easier by the common approach of the parties. The Secretary of State did not contend that the Local Government Finance Act 1988 raised an inevitable inference that Parliament intended there to be double recovery in a situation where a hereditament formerly part of a class of hereditaments included in the central list was transferred mid-year to a non-designated person and so was included in a local list from the date of transfer, obliging that person to pay local list rates. Rather he contended that the 1988 Act raised an inevitable inference that Parliament intended to authorise the Secretary of State to introduce a scheme for central rating which would have that effect. It is this contention which Edison challenges. The answer must be found in the statute, read of course as a whole and in context.
6. Sections 41-51 inclusive of the 1988 Act made provision for the local rating of non-domestic hereditaments not included in a central non-domestic rating list. The fine detail of the scheme is not important for present purposes. It is however clear from sections 43 and 44 that the amount chargeable in rates for each chargeable day was to be reached by multiplying the rateable value shown for the day (calculated in accordance with section 56(1) and Schedule 6) by the non-domestic rating multiplier for the financial year (calculated in accordance with section 56(2) and Schedule 7) and dividing the result by the number of days in the financial year. The product of that calculation, multiplied by the number of days during which the ratepayer has occupied the hereditament during the financial year, will represent the ratepayer's liability: the sum per day times the number of chargeable days.
7. The central rating list scheme established by sections 52-54 of the Act was clearly intended to provide a simple and efficient means of imposing rates on and collecting rates from ubiquitous utilities with hereditaments in numerous local authority areas. So specified hereditaments occupied by designated persons were to be centrally rated en bloc, and instead of specific rateable values applied to individual hereditaments the rateable value of these centrally rated hereditaments was to be shown in the list as a whole (section 53(1)(2) and (3)). By section 54 the chargeable amount for each chargeable day was to be reached by multiplying the rateable value shown for the day in the central list against the ratepayer's name (calculated in accordance with section 56(1) and Schedule 6) by the non-domestic rating multiplier for the financial year (calculated in accordance with section 56(2) and Schedule 7) and dividing the result by the number of days in the financial year. Allowance being made for the aggregation of hereditaments inherent in the scheme of central list valuation, the formula was very similar to the local list formula. It was clearly contemplated that there was some purpose to be served by finding the chargeable amount of rates for each chargeable day. So far, one finds no indication that a designated person was to remain liable to pay the full amount of rates even though a hereditament or hereditaments whose value was included in the aggregated central list value of hereditaments occupied by that person had ceased to be owned or occupied by that person but had become subject to local list rates as a result of its occupation by a person subject to such rates. It is not, as it seems to me, inherent in a scheme for centralised rating en bloc of hereditaments in a certain class that rates should continue to be paid in the same amount even though the hereditaments comprised in the class have significantly changed.
8. Counsel for the Secretary of State placed considerable reliance on section 67(9):
This provision, read on its own, might be thought to warrant the imposition of rates on a designated person in respect of a broadly-defined class of hereditaments whether or not the person ceased to occupy or own them at any stage in the financial year. But this reading is undermined by subsection (9A), which reads:
This would suggest to me that a designated person does not remain liable to pay rates calculated by reference to a valuation insofar as it is based on the valuation of hereditaments he no longer owns or occupies, the more so (given the presumption) where the hereditaments are owned or occupied by another party liable to pay local list rates.
9. The crux of the argument between the parties turned on the proper construction of Schedule 6 to the Act, entitled "Non-Domestic Rating: Valuation". Its effect, as stated in paragraph 1, was to determine the rateable value of non-domestic hereditaments for the purposes of Part III of the Act. Paragraph 2, equally applicable to central list and local list hereditaments, laid down a valuation formula based on annual letting value. Paragaph 2A applied to the valuation of buildings used for the breeding and rearing of horses when the buildings were occupied together with agricultural land. Paragraph 2B made special provision for valuing caravan sites. The Secretary of State's argument rests on paragraph 3(2), but I should quote the whole paragraph:
Paragraph 3(2) makes quite plain that the Secretary of State may make regulations to disapply paragraphs 2 to 2B, so as to depart from the annual letting basis of valuation, and either to specify a rateable value for central list hereditaments or to lay down rules governing the valuation of such hereditaments. What it does not do, as I read it, is authorise the Secretary of State to specify a value or prescribe rules which will permit double recovery of rates. But it is enough to say that no inevitable inference is to be drawn that Parliament intended to authorise the Secretary of State to introduce a scheme which would have that effect.
10. If that conclusion is correct, it is unnecessary to go further. The Secretary of State cannot draw support from the Electricity Supply Industry (Rateable Values) Order 1994 (SI 1994/3282), since it is the power of the Secretary of State to make that order which raises the issue before the House. Little assistance is gained from the Court of Appeal decision in Milford Haven Conservancy Board v Inland Revenue Commissioners  1 WLR 817, since in that case the court held that the Secretary of State had had express statutory authority to make the relevant orders. If that conclusion was correct, it necessarily followed that the presumption had been overridden.
11. Edison's standing to raise this challenge has not been challenged. It seems to me irrelevant that Edison would have been liable for local list rates only had it not agreed to indemnify PowerGen against PowerGen's liability for central list rates attributable to the two power stations from 19 July 1999 until the end of the financial year: but for that agreement, Edison itself would only have paid once, but there would still in effect have been double recovery. I do not think that consultation, particularly consultation at a time when divestment of hereditaments by designated persons at the behest of the Crown was not in the minds of those consulted, throws any light on the problem of statutory construction before the House.
12. In agreement with Dyson LJ and for very much the same reasons, I would accede to Edison's argument.
13. The Secretary of State received payment of rates twice in respect of the same hereditament. He received payment once from PowerGen and once from Edison. As Dyson LJ explained in his dissenting judgment in the Court of Appeal it was a case of double recovery. Undoubtedly there is a presumption against rating two parties in relation to the same hereditament. The presumption was applicable. So I am tolerably satisfied that the basic approach of Dyson LJ was correct.
14. On the other hand, at the end of oral argument, I felt somewhat reluctantly driven to the conclusion that under the "swings and roundabouts scheme" the presumption was displaced: Edison First Power Ltd v Secretary of State for the Environment, Transport and the Regions  EWCA Civ 1096, per Simon Brown LJ, para 45; May LJ, para 67.
15. On further consideration of the matter, particularly in the light of the arguments presented by counsel for the appellant, the judgment of Dyson LJ and the speech of my noble and learned friend Lord Bingham of Cornhill, I now consider that this was not a satisfactory and principled basis for concluding that the statutory scheme demonstrates clearly that Parliament wished to displace the presumption. The question whether overall the scheme devised by the Secretary of State works fairly is logically distinct from the question whether the Secretary of State was empowered by the enabling legislation to devise a scheme involving double recovery in the first place. On balance it seems to me that the statutory language is susceptible of different interpretations and does not sufficiently clearly authorise a scheme involving double recovery.
16. In the end the problem before the House is one of vires. The text of the statute must be the starting point. The question is how far, on a contextual reading of the statute, the language is capable of stretching. While I accept that all relevant contextual material must be taken into account, not all the material deployed by the Secretary of State can affect the point of statutory construction. Thus while I accept that the consultation process in this case is admissible, it ultimately does not warrant an interpretation which attributes to the language used by Parliament a meaning which displaces the presumption. The objective setting of the statute does not in logic and common sense reveal a Parliamentary intent to override the presumption.
17. I must go back to what I regard as a strong presumption against double recovery. In my view the executive has not shown a displacement of this principle by a clear Parliamentary intent.
18. For the reasons given by Lord Bingham of Cornhill, as well as my brief reasons, I would allow the appeal.
19. PowerGen (UK) Plc ("PowerGen") carries on the business of generating electricity. By an agreement dated 30 April 1999 ("the sale agreement") it agreed to sell two power stations, Fiddlers Ferry and Ferrybridge C, to Edison First Power Limited ("Edison"). The purchase was completed on 19 July 1999, when Edison went into occupation.
20. PowerGen was rated under a special statutory regime by which the aggregate rateable value of the hereditaments which it occupied and used for generating electrical power was prescribed by the Electricity Supply Industry (Rateable Values) Order 1994 (SI 1994/3282) ("the ESI Order") made pursuant to para. 3(2) of Schedule 6 to the Local Government Finance Act 1988. This prescribed a fixed sum (£178,882,300) for the first year (1995-1996) of the quinquennial valuation list subject to annual recalculation according to a formula based on changes in PowerGen's declared net capacity ("DNC") in respect of electricity generation. Changes in the actual hereditaments which it occupied, such as the sale of a power station, had no effect upon the aggregate valuation until the end of the rating year and then only if they resulted in a change in DNC. The result was that PowerGen's liability for rates in the year 1999-2000 was unaffected by the sale.
21. Edison, on the other hand, was rated in the ordinary way by reference to its occupation of the power stations. It was charged rates assessed on the annual value of the power stations for the period from 19 July 1999 until the end of the 1999-2000 rating year on 31 March 2000.
22. By clause 9.3 of the sale agreement, Edison agreed that "accrued charges payable" in respect of the power stations should be apportioned at the completion date. The clause said that "for the avoidance of doubt" the apportionment should include an apportionment of rates payable by PowerGen in relation to the power stations "which shall be in addition to any rates levied on the Buyer as a result of its occupation from the Completion Date."
23. Pursuant to this clause Edison paid PowerGen £13,517,937. But when it came to its own assessment for rates, Edison protested. It said that it was being made to pay rates twice over in respect of the same hereditaments. But Edison's own liability was hard to challenge. The hereditaments had properly been entered in the local rating lists from 19 July 1999 and it had been the occupier. Liability was clearly imposed by the 1988 Act. So it decided to attack the legality of the PowerGen rating regime. It said that the ESI Order was ultra vires and void so far as it imposed a liability upon PowerGen in respect of the power stations as from 19 July 1999.
24. Para. 3(2)(b) of Schedule 6 to the 1988 Act gave the Secretary of State power to provide by order that the rateable value of PowerGen's hereditaments should be "such as is specified in the order or determined in accordance with prescribed rules". These are very wide words. But Edison say that they do not allow him to prescribe a method of valuation which permits the same hereditaments to be taken into account for the purpose of rating both PowerGen and Edison. In the absence of express words or necessary implication, a statute should not be construed as imposing or allowing double taxation. Edison brought proceedings for judicial review to have the ESI Order and associated statutory instruments quashed so far as necessary as ultra vires. If that application is successful, PowerGen will owe no rates in respect of the power stations as from 19 July 1999 and there will be nothing to apportion to Edison. It will be entitled to ask PowerGen for its money back. But Carnwath J. dismissed the application and his decision was upheld by the Court of Appeal (Simon Brown and May LJJ, Dyson LJ dissenting.)
25. My Lords, the presumption against double taxation is one facet of a wider common sense principle of the construction of statutes by which courts will often imply qualifications into the literal meaning of wide and general words in order to prevent them from having some unreasonable consequence which it is considered that Parliament could not have intended: see Stradling v Morgan (1560) 1 Pl 199 and, for a more recent example, R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax  2 WLR 1299. The strength of the presumption depends upon the degree to which the consequences are unreasonable, the general scheme of the legislation and the background against which it was enacted.
26. The specific presumption against double taxation was considered by the House of Lords in Regina v Inland Revenue Commissioners, ex parte Woolwich Equitable Building Society  1 WLR 1400. That case also concerned a power in general terms to make regulations; in that case, for the taxation of building society interest. The Society complained that the effect of the regulations was to make it subject to tax in respect of payments of interest which had already been taxed in a previous year and that the statute should not be construed as permitting such double taxation. But the House of Lords held that the background to the enactment of the statute made it clear that this was exactly what Parliament had in mind. Lord Oliver of Aylmerton said (at p 1412-13):
27. In the present case, there was a division of opinion in the Court of Appeal about whether it really was an example of double taxation. The majority said that upon the true construction of the ESI Order and the 1988 Act, PowerGen was not rated in respect of the power stations as from 19 July 1999. It was rated only in respect of the hereditaments that it actually occupied. But the total rateable value of those hereditaments was treated as being the same as it had been when they included the power stations. Dyson LJ said (at p 255) that this was merely a matter of form. In reality, PowerGen continued to pay rates which had been calculated by reference to the DNC of the two power stations.
28. I do not think that it advances the argument to debate whether this is really a case of double taxation or not. The question is whether the Act authorised what actually happened, whatever you choose to call it. The inevitable consequence of the valuation regime created by the ESI Order was to make the sale of the power stations irrelevant to PowerGen's rate liability in the 1999-2000 rating year but to allow the rating authority to claim rates from Edison for the period of its occupation. As the latter is conceded to be lawful, the question is whether a valuation regime which takes no account of the disposal of hereditaments to a rateable occupier in a rating year is so unreasonable, viewed against the scheme of the 1988 Act and the background to its enactment, that Parliament cannot be supposed to have intended paragraph 3(2) of Schedule 6 to authorise it.
29. My Lords, the background is very important and I must therefore spend some time on the methods which had been used to value the hereditaments of public utilities like electricity generating companies before the 1988 Act.
30. Rates are traditionally a local tax assessed upon occupiers of hereditaments in accordance with their annual value. Each local authority makes a rate according to its needs. There are however certain kinds of ratepayers whom it is not very practical to rate by reference to the individual hereditaments which they occupy in each local authority area. They may carry on activities for the purpose of which they occupy hereditaments which are situated in many local authority areas and which are extremely difficult to value separately. The problem emerged in consequence of the creation of canal, harbour, railway, gas, electricity, water and telegraph companies in the nineteenth century. The law insisted that such companies should pay the poor rate and other rates assessed upon them by reference to the annual value of the hereditaments which they occupied within each parish. But how were such values to be determined? The principle, as set out in section 1 of the Parochial Assessments Act 1836, was to estimate "the rent at which the [hereditaments] might reasonably be expected to let from year to year". But, as Viscount Cave LC said in Kingston Union v Metropolitan Water Board  AC 331, 338:
31. The first difficulty, as explained by Viscount Cave, was that piecemeal valuations of the hereditaments in each parish would not necessarily add up to the value of the undertaking as a whole:
32. I shall call this problem, which in the nineteenth century was solved by using the "profits method" (later called the "receipts and expenditure method") of valuation, the "global valuation problem". But then, having arrived at a global valuation, the next problem was to allocate that value fairly between the parishes in which the ratepaying company occupied hereditaments. I shall call this "the distribution problem". In the nineteenth century it was solved by an elaborate formula devised by experts and approved by the courts, which divided hereditaments into "indirectly productive assets" like reservoirs and "directly productive assets" like pipes carrying the water to properties in the parish, and giving each parish a proportion of the total valuation by reference to the cost of construction of the first class of assets and the revenue arising from the second class.
33. These methods of rating public utility companies continued until after the Second World War but for various reasons were not found altogether satisfactory. For one thing, a number of public utilities ran at a loss in the inter-war years. Assessment of rates by reference to the excess of receipts over expenditure was not very realistic. The rules were also very complicated because, once one had calculated the total value of the undertaking, it was necessary not only to apportion the total value among the rating areas in which the utility occupied hereditaments but also to make adjustments for cases in which it was not the occupier for the whole rating year.
34. After the nationalisation of most public utilities after the war, resort was had to even more violent departures from traditional rating. So violent, indeed, that for ten years the sums payable by the nationalised electricity corporations were described not as rates but as payments in lieu of rates. One difficulty about continuing with the old method of global valuation was that the concept of profit seemed inapplicable to nationalised industries. I shall briefly outline how the payments in lieu were calculated, because they are relevant to the methods of rating adopted later when the industry was brought back into the rating system.
35. Payments in lieu of rates were introduced by section 85(1) of the Local Government Act 1948. It provided that hereditaments occupied by, among others, the statutory corporations in which the assets of the industry had been vested by the Electricity Act 1947 should not be liable to be rated or to be included in any valuation list. Instead, the nationalised corporations were to pay, for the year 1948-49 and all subsequent years, "payments for the benefit of local authorities" in lieu of the rates which would otherwise have been payable. The amount payable for 1948-49 was to be "the standard amount": section 96(2)(a). This was defined in section 96(3) as meaning, in relation to the payment for the benefit local authorities in England and Wales, £11,250,000. In succeeding years the amount was to be adjusted for changes in the average rates levied in England and Wales and changes in the amount of electricity supplied.
36. The new system therefore dealt with the global valuation problem in the same way as before; by making the industry's liability referable to the whole of its undertaking. But the method of calculation was greatly simplified; instead of valuing the undertaking, attributing proportions of that value to the various rating areas in which it occupied hereditaments and then applying the various local rates to those values, it used a single annual figure prescribed by Parliament, subject to adjustment in following years in accordance with a formula. It did not matter whether a corporation ceased to occupy hereditaments or occupied new ones. If a corporation sold a hereditament to a rateable occupier, it would pass out of the immunity to rates conferred by section 85(1) but the sum for which the corporation was liable to make payments in lieu would be unaffected.
37. The distribution problem was dealt with equally simply: the payment was distributed to rating authorities in proportion to the rateable values of their respective areas in the year in question: section 100(2)(a). This method paid no regard to where any hereditament happened to be.
38. This egalitarianism was no doubt in accordance with the spirit of the age but resulted in complaints from local authorities which had to sustain greater burdens on account of the industry's activities than others; in particular, those in which generating stations were situated. Equity between rating authorities was thought to require recognition of these differences. So the system was recast by the Local Government Act 1958. This abolished "payments for the benefit of local authorities in lieu of rates": section 12(1). Instead, it brought the nationalised corporations (then consisting of the Central Electricity Generating Board and twelve Area Boards) back into the rating system.
39. Section 12(1) of the 1958 Act provided that after 31 March 1959 the thirteen electricity boards were to be treated, for the purposes of any rate period, as occupying in each rating area "a hereditament of a rateable value" calculated in accordance with provisions contained in the Second Schedule.
40. The method of calculation, an example of what was known as "formula rating", was briefly as follows. The Minister of Housing and Local Government certified "the basic electricity rateable value" (paragraph 4(3), which was his estimate (subject to certain adjustments) of the annual payment in lieu of rates falling due for 1958-59, the last year of the old system. Half of this amount was to be attributed to the Generating Board and the other half to Area Boards in specified percentages. These sums were to be adjusted in subsequent years by reference to changes in the outputs of the Boards. In calculating the rateable value of the hereditament which a Board was deemed to occupy in each rating area during any given year, a distinction was made between the values of distribution activities and generating activities. There was a formula for deciding what proportion of the total value allocated to a Board should be treated as attributable to each kind of activity: in the case of the Generating Board it was half and half; in the case of the Area Boards it was more complicated. Value attributable to distribution activities was apportioned among rating authorities within the areas of each Board in proportion to the aggregate net annual value of their rating areas. Value attributable to generating activities was apportioned only to the rating authorities in whose areas the Board had generating stations in commission. Apportionment was made according to the proportion of the generating capacity in the rating area to the Board's total generating capacity.
41. The important point to notice about this system is that the hereditament which a Board was treated as occupying in the year in question was entirely notional. It did not matter whether the Board actually occupied hereditaments in that rating area for all or any of the year in question. The immunity from rating conferred by section 85(1) of the 1948 Act in respect of hereditaments actually occupied by the Boards was preserved and there was substituted its liability in respect of the notional hereditaments created by the 1958 Act. So once again, the actual hereditaments occupied by the Boards during the rating year were irrelevant to its overall liability. Occupation of hereditaments on which it had a generating station in commission would affect the distribution of the rates which it paid but only by way of revision from year to year. The disposal of a hereditament to a rateable occupier in the course of a year would leave the Board's liability to rates unaffected.
42. Similar codes of formula rating were applied to other public utilities and they were all consolidated in the General Rate Act 1967, where the provisions relating to Electricity Boards will be found in section 34 and Schedule 7.
43. This system of formula rating lasted until the 1988 Act came into force on 1 April 1990. The revolutionary change made by the 1988 Act was to convert non-domestic rates from a local into a central tax. The rate is now set by the Secretary of State, paid over to him and then redistributed to local authorities according to the population living in their areas. This change solved at a stroke the distribution problem which had given so much trouble over the previous 150 years. It is no longer necessary for each local authority to be able to collect the rates on the hereditaments or notional hereditaments which the ratepayer occupies or is deemed to occupy in its rating area. They all go into the same pot for redistribution.
44. Nevertheless, in the case of the great majority of hereditaments subject to the non-domestic rate, local valuation, assessment and collection were continued. It was obviously more convenient that valuation of individual hereditaments should be in the hands of local valuation officers. Local authorities maintain lists called "local non-domestic rating lists" of non-domestic hereditaments within the authority's area, showing for each day in the year the rateable value of each hereditament as determined by the local valuation officer. The occupier of the hereditament is liable to the rate for each day on which it is shown in the list and he is in occupation. The local authority collects the rate and passes it on to the Secretary of State.
45. For some cases, however, the 1988 Act provided for central assessment. Section 52 established a central non-domestic rating list. Section 53(1) provides that "with a view to securing the central rating en bloc of certain hereditaments" the Secretary of State may by regulations designate a person to be included in the central list and prescribe the hereditaments in respect of which he is to be centrally rated. Regulation 6(1) of the Central Rating Lists Regulations 1994 SI 1994/3121 ("the Central Rating Regulations"), echoing section 53(2) of the 1988 Act, provides that the central list must show, for each day for which the list is in force, the name of the designated person and, against each name, each hereditament in England which on the day concerned is occupied or (if unoccupied) owned by that person and falls within the description of hereditaments for which the Secretary of State has prescribed that he is to be centrally rated. This might suggest that each hereditament must be separately identified on the list, but section 67(9) and (9A) provide that the requirement may be satisfied by specifying a class of hereditaments by reference to occupation by the designated person and the prescribed description. Thus PowerGen is designated by the Central Rating Regulations in respect of all its hereditaments "wholly or mainly used for the purposes of the generation of electrical power" without specifying them individually. This means that if the designated person ceases to occupy a hereditament, it ceases to be a member of the class and it is no longer rated in respect of that hereditament.
46. Section 54 deals with the liability of centrally rated persons. Such a person is liable in respect of a chargeable financial year "if for any day in the year" his name appears on the list. The amount for which he is liable is the aggregate of the chargeable amounts for each chargeable day. A chargeable day means a day for which the ratepayer's name is shown on the list and the chargeable amount for each such day is determined by multiplying the rateable value shown on the list for that day by the "non-domestic rating multiplier" - the equivalent of the old poundage fixed by the local authority - and dividing it by the number of days in the financial year.
47. Thus the statutory framework for central rating contemplates that although the designated ratepayers' centrally rated hereditaments will be valued en bloc, the method of valuation will, in the absence of contrary provision, be the traditional method of estimating the rent at which those hereditaments could reasonably be expected to let from year to year.
48. An example of designation for central rating without the use of a formula is British Telecom, which was designated only respect of its "posts, wires, underground cables and ducts, telephone kiosks, towers, masts, switching equipment, or other equipment, or easements or wayleaves", which were to be treated as one hereditament: see regulation 5 of and Part 5.II of the Schedule to the Central Rating Regulations and Regulation 4(1) of the Non-Domestic Rating (Railways, Telecommunications and Canals) Regulations 1994 (SI 1994 No 3123). Thus all other hereditaments occupied by British Telecom are rated on local lists in the ordinary way and even in respect of those centrally rated en bloc, valuation is according to the conventional method specified in paragraphs 2 to 2B of Schedule 6 to the 1988 Act: an estimate of the rent at which the hereditament might reasonably be expected to let from year to year.
49. The 1988 Act therefore contains what may be regarded as a prima facie assumption that valuation, even of centrally rated hereditaments rated en bloc, will be according to the conventional method. For present purposes, the important feature of the conventional method is that each hereditament (or class of hereditaments deemed to be a single hereditament) is separately valued, so that disposal of an hereditament results in a cessation of liability in respect of the value of that hereditament.
50. But paragraph 3 of Schedule 6 gives the Secretary of State power to disapply the conventional method, in respect of both hereditaments on local lists (sub-paragraph (1)) and hereditaments on the central list (sub-paragraph (2)):
51. It is the purpose and scope of this provision which is in issue in this appeal. The 1988 Act was a long time in gestation and the purpose of paragraph 3 can be clearly understood only by reference to the rating law as it was before the Act and the admissible evidence of what were perceived to be the matters needing to be reformed. The proposal to introduce a central non-domestic rate was made in the 1986 Green Paper Paying for Local Government (Cmnd 9714) which set out the results of more than a year of studies undertaken by ministers and officials in the Department of the Environment and "special advisers" (of whom I was briefly one). Chapter 2 argued the case for central non-domestic rating; paragraph 2.40 noted that the last revaluation had been in 1973 and that values had become "badly out of line with up-to-date rental values." It proposed the preparation of a new list in time for introduction on 1 April 1990 and said (in paragraph 2.42) that the government would issue a separate consultation paper on revaluation. This was issued in July 1987, entitled Paying for Local Government: Non-domestic Rates. Paragraph 7 dealt with formula rating:
52. As foreshadowed, the government made the Electricity Supply Industry (Rateable Values) Order 1989 (SI 1989 No. 2475) which continued formula rating for the industry for the 1990-1995 quinquennium. By the time the Act had been passed, it appeared that the government had a further reason for not including the formulae in the Act itself. It regarded the whole idea of formula rating as a relic of outdated political theory. Public utilities should function in a market economy and there was no reason why their assets should not be valued in the same way as those of any other enterprise. And a point forcibly made by the public utility industries during consultation was that conventional valuation by the Valuation Officer allowed them a right of appeal, whereas a statutory formula, even if devised after a process of consultation, was immovable.
53. In a further consultation paper published after the Act had been passed, the government therefore made it clear that it would like to return the industry to conventional rating as soon as possible:
54. In the event it appears that it was not found practical to return the industry to conventional assessment in time for the start of the next quinquennium, so the government, after further consultation, made the ESI Order in 1994. But the industry's power station hereditaments were eventually transferred to local lists in 2000.
55. The question, as I have said, is whether the system of formula rating prescribed by the Secretary of State by the ESI Order, which carried the inevitable consequence that the en bloc rateable value of hereditaments occupied by PowerGen would not be affected by changes during the rating year, was so unreasonable that Parliament could not have intended to authorise it by the general words of paragraph 3(2) of Schedule 6 to the 1988 Act. My Lords, I find it impossible to say this of a system which, in its essential principles, Parliament had thought appropriate for the electricity generating industry for the previous 30 years. In my opinion the purpose of paragraph 3(2) was to allow that system to be retained, with whatever formulae the Government thought appropriate and as long as it thought it expedient to do so.
56. PowerGen acknowledges all this in the written submissions which they made to your Lordships by way of intervention in the appeal. Edison's claim of double taxation would not have any plausibility if it were not for the fact that it agreed to pay an apportioned part of the rates payable by PowerGen which were treated as attributable to the DNC of the two power stations. But this payment, however calculated, is in my opinion nothing more than part of the price which Edison were willing to pay PowerGen for the power stations. It is not, from Edison's point of view, a payment of rates.
57. For these reasons I consider that the ESI Order was not ultra vires, either as a matter of construction of paragraph 3(2) or because, as Edison have submitted, the Secretary of State acted irrationally or contrary to Edison's rights of property under Article 1 of the First Protocol to the European Convention on Human Rights.
58. There are two matters to be mentioned in conclusion. The first is the decision of the Court of Appeal in Milford Haven Conservancy Board v Inland Revenue Commissioners  1 WLR 817, on which both sides placed some reliance. The 1967 Act, as I have said, consolidated the provisions for the formula rating of a number of public utilities including Electricity Boards, for which the formula was contained in Schedule 7. In the case of mines and quarries, statutory dock and harbour undertakings and broadcasting, however, the particular circumstances were thought likely to be so varied that no formula was included in the primary legislation. Instead, the Minister was given power in section 35(1) to make provision by order for determining rateable values "by such method as may be so specified". The formula prescribed by the Minister for dock undertakings was based on 4% of their receipts, including receipts from some parts of their property which had been let and on which the occupiers were therefore paying rates in the ordinary way. The Milford Haven Conservancy Board complained that the order was ultra vires because it involved double taxation. But the Court of Appeal rejected this submission. Cairns LJ said (at pp. 824-825):
59. This reasoning seems to me to apply equally to the formula adopted by the Secretary of State in the ESI Order. The other matter on which I should comment is the closely reasoned and, on its own terms, persuasive dissenting judgment of Dyson LJ in the Court of Appeal. He first characterised the ESI Order as giving rise to a possibility of double rating and then analysed the provisions of the 1988 Act to see whether it disclosed a clear intention to allow such a consequence. His conclusion was that it did not.
60. If one looks no further than the scheme of the 1988 Act, I would be inclined to agree. The Act is, as I have said, is based on the assumption that conventional valuation will be the norm, and the formula rating applied by the ESI Order is so violent a departure from that norm as to make one doubt whether it could have been authorised by Parliament. But once one looks, as Lord Oliver of Aylmerton in Regina v Inland Revenue Commissioners, ex parte Woolwich Equitable Building Society  1 WLR 1400, 1412 said one should do, at the "circumstances surrounding the enactment of the legislation", the meaning of the statute becomes plain. The background of formula rating over the previous thirty to forty years provides the key to understanding both the purpose of the powers conferred upon the Secretary of State by paragraph 3 and the way in which he used them. For these reasons and those given by my noble and learned friends Lord Millett and Lord Scott of Foscote, I would dismiss the appeal.LORD MILLETT
61. This is a very curious case. The appellant Edison First Power Limited ("Edison") claims that an assessment to central rates in respect of two electricity power stations amounted to double taxation and was unlawful. The Secretary of State denies that the assessment was unlawful but has agreed to reimburse Edison if its claim is upheld. Yet Edison has never been assessed to central rates in respect of the power stations and has never paid them. They were assessed on and paid by PowerGen (UK) plc. ("PowerGen"). If there was a victim of double taxation it was PowerGen. But PowerGen makes no complaint about the assessment and although it is not directly affected by the outcome of the present appeal it has intervened to support the Secretary of State's contention that the assessment was validly made.
62. While this may make one sceptical about Edison's claim that anything as oppressive as double taxation is involved, it is not determinative. The case does not turn on Edison's locus standi to challenge the assessment on PowerGen. If it was unlawful, Edison has sufficient interest to entitle it to a declaration to that effect.
63. PowerGen was created when the Central Electricity Generating Board ("the CEGB") was privatised in 1990. Its business was subsequently diversified and now extends to a wide range of activities but continues to include the generation of electricity. Along with other public utilities it was a designated person for the purposes of central non-domestic rating and the hereditaments which it occupied for the purposes of generating electricity were entered on a central rating list. They were rated under a special statutory scheme established by Part III of the Electricity Supply Industry (Rateable Values) Order 1994 (SI 1994/3282) ("the ESI Order") made by the Secretary of State pursuant to powers conferred by para. 3(2) of the Sixth Schedule to the Local Government Finance Act 1988 ("the 1988 Act").
64. In 1998 PowerGen was required to dispose of a proportion of its coal-fired generating capacity. In compliance with this requirement PowerGen put two electricity power stations, Fiddlers Ferry and Ferrybridge C, up for sale. Edison agreed to acquire them on long leases from PowerGen.
65. On 19 July 1999 Edison completed its acquisition of the two power stations and went into rateable occupation. PowerGen remained liable to central rates in respect of the hereditaments which it occupied for the purpose of generating electricity. These no longer included the two power stations which it had sold to Edison, but owing to the way the rateable value of its properties was calculated by reference to its total declared net capacity for generating electricity ("DNC") at the beginning of each rating year a change in the hereditaments which it occupied during the year did not affect its liability to rates until the following year and did not do so even then if it did not affect its total DNC. Accordingly for the remainder of the 1999-2000 rating year PowerGen continued to be liable to central rates in an amount which reflected the DNC of the two power stations even though it had disposed of them and Edison was in rateable occupation and liable to local rates in respect of them.
66. The agreement for sale provided for PowerGen's liability to central rates in respect of the two power stations to be apportioned. PowerGen estimated that they would contribute some £13.5 million to its total liability for central rates for the rest of the current rating year. Edison duly paid this sum to PowerGen, though it subsequently contested its liability to do so in arbitration proceedings.
67. Following its acquisition Edison was assessed to local rates in respect of the two power stations. The assessments were made by the rating authorities for the areas in which the power stations were situated. They were in an identical sum and were made in accordance with a special scheme for the industry established by Part II of the ESI Order made by the Secretary of State pursuant to powers conferred by para. 3(1) of the Sixth Schedule to the 1988 Act. Edison paid under protest but accepts that it had no ground for withholding payment. Being unable to recover its payment of local rates, Edison has turned its attention to the recovery of the central rates paid by PowerGen for the period when Edison was in occupation. If PowerGen was unlawfully assessed to them, they could not properly be apportioned to Edison.
68. The central valuation officer has refused to make any amendment to the central rating list with effect from the change of occupation in July 1999. He says that he can do so only with effect from the beginning of the following rating year on 1 April 2000. Edison accepts this as correct, and identifies this limitation on his powers as the aspect of the scheme of central rating which is unlawful.
The Rival Contentions.
69. Edison's case is as follows:
70. The Secretary of State acknowledges that the general principles of rating law are as Edison describes them. But he says that the 1988 Act authorised him to establish a scheme for central rating which departed from those principles and that the scheme which he adopted was neither irrational nor unfair. He accepts that the 1988 Act did not require him to make a scheme which provided for annual recalculation only but says that it authorised him to do so and that annual recalculation was a long accepted practice in the industry and represented a pragmatic solution to a practical problem. He denies that strictly speaking the scheme which he established involved any element of double taxation, and to the extent that it involved an element of double recovery he says that, taken as a whole, it was not oppressive or objectionable and did not need to be authorised by express words or necessary implication in the enabling Act.
The Rating of Public Utilities.
71. My noble and learned friend Lord Hoffmann has described the various methods which have been adopted from time to time to determine the rateable value of hereditaments occupied by public utilities and situated in numerous rating districts. As he has shown, it has been found necessary for practical reasons for Parliament to authorise departures, and often radical departures, from conventional rating principles. The Local Government Act 1948 introduced a system known as "formula rating" based on the method formerly employed for the railways under the Railways Act 1921. This system, however, was not extended to the electricity industry until the Local Government Act 1958. In the meantime the industry was exempted from rates and required instead to pay to central government a fixed sum in lieu of rates which was then distributed by central government to local authorities.
72. By the time of the 1988 Act the large majority of statutory undertakers, as well as some private enterprises, were rated by statutory formula. It is not necessary to describe the system in any detail, but two of its features may be briefly remarked upon. First, the liability of an undertaking for rates had only a tenuous connection with the hereditaments which it actually occupied. Notional hereditaments were created in each rating district and the liability of the undertaking was based on the initial aggregate (or "cumulo") rateable value of the hereditaments which it was deemed to occupy when the valuation list came into force. This was adjusted annually to reflect changes during the life of the list. The formula differed from industry to industry. In the case of the CEGB the initial cumulo figure represented a pre-determined proportion of the payment which it had made to central government in lieu of rates in the last year of the old system, and this figure was adjusted periodically to reflect changes in its output of electricity. Accordingly while changes in the hereditaments which the CEGB occupied from time to time affected the distribution of its payments among local rating authorities they did not affect the amount of its overall liability unless they affected its total output. Secondly, in common with other undertakings subject to this form of rating, the CEGB's output was revised at the beginning of each year, so that changes during the year did not affect the amount of its liability until the following year.
73. These two features were retained in the scheme of central non-domestic rating which the Secretary of State established for the industry under Part III of the ESI Order.
The 1988 Act.
74. The long title to the 1988 Act describes it as an Act (inter alia) "to create new rating systems". Part III of the 1988 Act introduced a new system of rating for non-domestic property. This differs from the familiar system of domestic rating in two ways. First, the rate or poundage is not set by individual local rating authorities. Instead a single national rate is set for the whole of England by the Secretary of State. Secondly, the proceeds are not retained by the rating authorities in the areas where the relevant hereditaments are situated. Instead they are paid into a central pool which is administered by the Secretary of State and distributed among local authorities on a basis which is independent of the location of the hereditaments in question.
75. The 1988 Act established two forms of non-domestic rating, one by means of local lists (sections 41-51) and one by means of central lists (sections 52-54). Some classes of property are exempt from rates altogether, but all rateable non-domestic property must be rated by inclusion in one list or the other. The two lists are mutually exclusive; it is not possible for the same property to appear in both lists at the same time.
76. A unit of rateable property is known as a hereditament: section 64(1). For the purposes of non-domestic rating the financial year runs from 1 April: section 145(3). Both local and central lists were to be compiled on 1 April 1990 and on 1 April in every fifth year thereafter: section 41(1)(2) (local lists) and section 52(1)(2) (central lists). Lists remain in force for a period of five years: section 41(3) (local lists) and section 52(3) (central lists). The present case is concerned with the local and central rating lists compiled for the period of five years beginning on 1 April 1995.
Local list rating.
77. Local non-domestic rating lists are maintained by local rating authorities. They continue to be responsible for the valuation of hereditaments in their areas and for the assessment and collection of the rates. Hereditaments are individually assessed by local Valuation Officers, and the rateable value of a hereditament is ordinarily determined on a conventional basis. This is not, however, so in all cases. In the case of the electricity generating industry and some (but by no means all) other utilities the conventional basis of valuation has been disapplied and special schemes of valuation by statutory formula have been substituted.
78. Sections 42-44 are the key provisions. Section 42 governs the contents of local lists. A local rating list must show every relevant non-domestic hereditament which is situated in the authority's area and which is not a hereditament which must be shown for the day in a central non-domestic rating list. It is this last requirement which prevents a hereditament from being shown for the same day in both a local and a central list. The local list must also show the rateable value of the hereditament for each day on which it is shown in the list.
79. Sections 43-44 are concerned with liability to local list rates. This is based on rateable occupation for a chargeable day. A ratepayer is subject to local non-domestic rates in respect of a chargeable financial year if on any day in the year (a) he is in occupation of all or part of the hereditament and (b) the hereditament is shown for the day in a local list: section 43(1). The chargeable amount for a chargeable day is ascertained by multiplying the rateable value shown for the day by the non-domestic multiplier for the financial year and dividing the product by the number of days in the financial year: section 43(2)-(4) and section 44.
Central list rating.
80. Central list rating was designed to accommodate those public utilities which were to continue to be dealt with on a global basis and rated undertaking by undertaking rather than locally and hereditament by hereditament, though not necessarily by use of a formula. As one might expect, therefore, the statutory provisions relating to central lists are closely modelled on those for local lists with only such variations as are necessary to reflect the aggregate and undifferentiated nature of the hereditaments shown in the list.
81. Central non-domestic rating lists are maintained by the central valuation officer. Sections 53-55 are the key provisions. Section 53(1) is the enabling section. It explains the statutory purpose and gives the Secretary of State power to designate the undertakings and hereditaments to be shown in a central list. It provides:
82. Section 53 governs the contents of central lists. It provides that, where the regulations so require (as they do), a central non-domestic rating list must show, for each day in each chargeable year for which it is in force, the name of the designated person and, against it, each hereditament (wherever situated) which on the day concerned (a) is occupied or (if unoccupied) owned by him and (b) falls within any description prescribed in relation to him. It must also show for each such day against the name of the designated person the rateable value (as a whole) of the hereditaments so shown, ie the hereditaments occupied or if not occupied owned by the designated person on that day.
83. This is amplified by Section 67(9) which provides that a hereditament is to be treated as shown in a central list for a day if on that day it falls within a class of hereditament shown for that day in the list; and by section 67(9A) a class may be expressed by reference to whether hereditaments are occupied or owned by a designated person and fall within any description prescribed in relation to him.
84. These provisions make it unnecessary for every hereditament occupied or owned by a designated person to be identified individually and entered separately in the central list. In PowerGen's case the central list contained against its name the description
The description referred to is
85. This is a generic description of a fluctuating body of hereditaments. To come within the description on any particular day a hereditament must on that day (i) be occupied or (if unoccupied) owned by the designated person and (ii) be wholly or mainly used for the generation of electrical power or for ancillary purposes. On the disposal of the two power stations to Edison they failed to meet the first condition and automatically ceased to come within the description. It followed that they ceased to be treated as shown in the central list and qualified for inclusion in local lists instead.
86. Section 54 deals with liability to central list rates. A ratepayer is subject to central non-domestic rates in respect of a chargeable financial year if for any day in the year his name is shown in a central non-domestic rating list in force for the year. There is naturally no requirement that he should be in occupation of the hereditaments shown in the list, because the hereditaments are already defined by reference to his occupation or ownership. The chargeable amount for a chargeable day is ascertained in a similar manner to that required by sections 44-45 in relation to hereditaments in the local lists: section 54(4).
Formula rating: the Consultation Paper.
87. As I have already mentioned, most statutory undertakers were subject to formula rating in 1988. The 1987 Consultation Paper which preceded the 1988 Act stated that the existing formulae would require extensive recasting, and that the Government would be reviewing them, in consultation with the industries concerned, with the intention of bringing them up to date at the same time as the general non-domestic revaluation in 1990. The review could not be completed in time to be included in the main legislation, and accordingly the Government had it in mind to replace the existing statutory provisions relating to formula rating with a simple enabling power. The Consultation Paper stated that there was no intention of substantially extending the scope of formula rating, and that indeed in some cases it might be possible to revert to conventional methods of valuation. In the meantime it was proposed that the rateable value of hereditaments subject to formula rating should be determined as a specified sum or be calculated in a specified manner and for the value to be adjusted for changes in occupation.
88. Eventually, it seems, it was hoped that formula rating could be phased out altogether; though in the event this was not achieved for the electricity generating industry until the next quinquennial revaluation in 2000. This objective could be the more easily achieved the more closely assessments produced by formula rating approximated to those which would be produced by conventional methods of valuation. Accordingly the Consultation Paper stated that the object would be
(The reference to "hereditament" was a reference to local rating and the reference to "industry" to central rating). It was envisaged that different provision would be made for determining rateable values for different industries, and that the Secretary of State would consult representatives of each industry before varying the existing formula or applying formula rating for the first time or ceasing to apply it.
Valuation under the 1988 Act.
89. As foreshadowed by the Consultation Paper, the 1988 Act takes the form of an enabling Act with power for the Secretary of State to make provision by statutory instrument for particular classes of hereditaments to be rated by formula. Whether because it was recognised that formula rating was a departure from the norm and was not appropriate for all public utilities, or because it was intended to phase it out eventually, the 1988 Act makes general provision for hereditaments, whether in local or central lists, to be valued by conventional methods, while giving the Secretary of State power to disapply those methods in particular cases and substitute formula rating in such form as he may prescribe.
90. Section 56(1) of the 1988 Act gives effect to the Sixth Schedule, which contains detailed rules for determining the rateable value of non-domestic hereditaments, whether shown in local or in central lists. Para. 2(1) sets out the conventional method of valuation. So far as material it provides
91. Paragraph 3 of the Sixth Schedule, however, gives the Secretary of State power to disapply this paragraph and substitute valuation by such method as he may prescribe. Subparagraph (1) of paragraph 3 applies to local lists and subparagraph (2) to central lists. The paragraph provides
In each case the order required an affirmative resolution of each House of Parliament: Section 143(8).
92. By the ESI Order the Secretary of State exercised these powers in relation to hereditaments used or available for use for the purpose of generating electricity. The order was made on 20 December 1994 following extensive consultations with the industry and came into force on the following day. Part II of the ESI Order applies to hereditaments shown on local lists and Part III to hereditaments treated as shown on central lists. In relation to a hereditament shown on a local list Article 6(1) disapplies paragraphs 2 to 2B of the Sixth Schedule and stipulates that its rateable value in any year beginning on or after 1 April 1995 shall be £11,620 per megawatt of its DNC (or, where the primary source of energy is wind or tidal power, half that figure). This formed the basis on which the rateable value of each of the two power stations acquired by Edison was determined when it was entered in the relevant local list with effect from 19 July 1999.
93. In relation to each class of hereditaments shown on a central list Article 8(1) similarly disapplies paragraphs 2 to 2B of the Sixth Schedule. For each designated person the rateable value of its centrally listed hereditaments as a whole is specified as a single figure. In the case of PowerGen the figure for its hereditaments in England as at 1 April 1995 is stated to be £178.8823 million.
94. The basis of this figure is not explained in the ESI Order but is agreed by the parties to have been as follows. It represented the net book value of PowerGen's rateable assets as shown in its current cost accounts. Allowance was made for particular disabilities of the hereditaments to leave the effective capital value of the assets, and this was then converted into an annual rateable value by the application of a 6% decapitalisation rate. This corresponds to the conventional "contractor's basis" of valuation. The resulting figure embraced all non-excepted property in England within the specified description. Items such as offices and other property not on operational land were excepted from the specified description. But the figure included both productive and non-productive property, the latter being property which did not contribute directly to PowerGen's total DNC. An example of non-productive property canvassed in argument would be a car park for the use of staff employed at a power station; but many other examples could be given.
95. The figure was calculated in December 1994 and was adjusted to take account of changes between then and 1 April 1995 when it took effect, but nothing turns on this in the present appeal.
96. For subsequent years the figure was adjusted annually by means of a specified "recalculation factor" to reflect changes in the total DNC of generating plant within PowerGen's prescribed class of hereditaments, taken at 31 March in the immediately preceding year, compared with 31 March 1995. In PowerGen's case Article 9(1) of the ESI Order specifies the figure of £11,620 as the recalculation factor.
97. The basis of this figure is also not explained in the ESI Order, but the evidence shows that it was calculated by adding together the rateable values of the hereditaments occupied by PowerGen and National Power (the other former publicly owned non-nuclear electricity generator in the central list) and dividing the total by their combined DNC in megawatts at the same date. The resulting figure was taken to represent the average value to a designated person of the occupation of its power stations in terms of pounds per megawatt of generating capacity. It was applied to the DNC of each of the independent generators to arrive at the rateable value of their hereditaments.
98. The basic scheme of Part III of the ESI Order is common to all centrally listed hereditaments in relation to which the Secretary of State exercised his powers under paragraph 3(2) of the Sixth Schedule to the 1988 Act. These included gas and water undertakings and the railways. In each case the ordinary basis of determining rateable values is expressly disapplied and instead a single global or cumulo figure is prescribed as the rateable value of the relevant class of hereditaments for the year beginning on 1 April 1995. For each subsequent year the figure is subject to annual adjustment by means of a specified recalculation factor to reflect changes in the proxy selected for the utility in question. As envisaged in the Consultation Paper, some utilities were centrally rated but were conventionally valued under paragraphs 2 to 2B of the Sixth Schedule. These included telecommunications, canals and long-distance pipelines.
The Consequences of the Sale to Edison.
99. On the acquisition of the two power stations by Edison they ceased to come within the generic description of the hereditaments treated as shown against PowerGen's name in the central list and qualified instead for inclusion in the relevant local lists. PowerGen ceased to be subject to central rates in respect of them and Edison became liable to local rates in its place. But since PowerGen's liability was determined by its total DNC at the beginning of each rating year, the reduction in its DNC was not reflected in the amount of its liability to central rates until the beginning of the following year.
100. Although the power stations transferred from central to local listing, they did not cease to be subject to formula rating. Their rateable value was now determined under Part II of the ESI Order instead of Part III, but in all essential respects it was determined by the same formula as before. It continued to be based on DNC, so that the acquisition or disposal by Edison of non-productive property would not affect its rateable value while the current lists remained in force. Moreover the conversion (or "recalculation") factor of £11,620 per megawatt was unaffected. Given the way this figure was calculated the rateable value of the two power stations continued to reflect an element of value derived from the rateable value of non-productive property formerly occupied by PowerGen (or National Power for that matter) and not included in the sale to Edison. Each of these features represents a marked departure from conventional rating principles, but neither is challenged by Edison.
101. The transfer of the power stations from central to local listing had two consequences. First, each of them was now rated individually as a separate hereditament and not as an unidentified and undifferentiated part of a larger whole. Secondly, changes in its DNC would now be taken into account with immediate effect and not merely with effect from the beginning of the following rating year. The two features are interrelated; for annual adjustment of the total is (and has always been) a feature of global or cumulo rating. It is not a necessary concomitant of formula rating, as is evidenced by the treatment of the power stations after they transferred to local lists.
Is the ESI Order authorised by the 1988 Act?
102. It is convenient to deal with this question in two stages, first by disregarding any element of double taxation and considering the question as a pure matter of construction of the language of the 1988 Act. The question is whether, on its true construction, para. 3(2) of the Sixth Schedule to the 1988 Act authorises so radical a departure from the conventional principles of rating as that which Part III of the ESI Order established.
103. I would unhesitatingly answer this question in the affirmative. Indeed, but for the opinion of my noble and learned friend Lord Bingham of Cornhill, which I have had the advantage of reading in draft, I would have regarded the contrary as unarguable. Paragraph 3(2) of the Sixth Schedule to the 1988 Act gives the Secretary of State express power to disapply the conventional method of valuation and substitute a different, and it follows an unconventional, one. It expressly authorises him to specify the rateable value of PowerGen's centrally rated hereditaments as a single global sum, and that is what he did for the 1995-6 rating year. There are no restrictions on the methods which he may employ in arriving at the specified figure, save no doubt that they must not be unreasonable or irrational; and Edison does not challenge them. The 1988 Act also authorises the Secretary of State to prescribe rules for determining the rateable value of such hereditaments, and that is what he did for each of the following years. There are no restrictions on the nature of the rules which he may prescribe, and save in one respect Edison does not challenge them either. It confines its challenge to the frequency with which the global figure is to be adjusted to reflect changes in PowerGen's total DNC.
104. This makes it necessary to examine the reason why the Secretary of State chose to prescribe rules which require the global figure shown in the central lists to be adjusted annually while leaving changes to the rateable value of hereditaments shown on local lists to be made on a daily basis if necessary. In approaching this question it should be borne in mind that annual adjustment was a feature of the cumulo system under which public utilities had been rated ever since 1948 and continued to be rated under provisions contained in the General Rating Act 1967. There had never been a mechanism for altering the global or cumulo rateable value of their hereditaments during the course of a rating year. This is some indication, to say the least, that it had a rational basis and was adopted with the approval of Parliament.
105. In my opinion its rationale is obvious. When an operational unit such as a power station is rated as an individual hereditament and by reference to a proxy such as its generating capacity, effect must be given to changes in its capacity as soon as they occur if its rateable value is not to become seriously distorted. But when a large number of such hereditaments are taken together and rated as a single whole, changes in the capacity of individual units (in both directions) are likely to be both far more frequent and much less significant. There is not the same need to take individual account of every such change as soon as it occurs; and changes in total capacity can reasonably be given effect less frequently.
106. In the case of some utilities more frequent adjustments would be quite impractical. British Gas plc, for example, owned or occupied many thousands of miles of gas supply pipeline which were embraced in the specified global valuation figure at the date of the relevant statutory instrument. There will have been a great many variations in the extent of its operational holdings during the course of a rating year. The specification of a global figure avoids the need for every such variation to be individually assessed for its significance as and when it occurs, a process which would be required under conventional rating methods. But it is inherent in a system of en bloc or cumulo rating that the amount of a ratepayer's liability will not necessarily have to change from day to day in order to reflect every change in the individual hereditaments which it occupies.
107. While abandonment of the system of annual adjustment which had previously obtained would not have been completely impractical in the case of PowerGen, it would have meant a large number of adjustments (in each direction) being made each year and would have been productive of much administrative inconvenience without any significant countervailing advantage in accuracy. The ESI Order followed extensive consultations with the industry in which the principle of annual recalculation of rateable values was specifically drawn to its attention and accepted by an industry working party. Moreover it was manifest on the face of the ESI Order when it was laid before Parliament and affirmed by resolution of each House.
108. These considerations would not, of course, prevail if the terms of the 1988 Act did not permit annual adjustment. Edison places much reliance on the fact that Section 54(4) of the 1988 Act requires the chargeable amount of hereditaments treated as shown in a central list to be ascertained for each chargeable day. This is necessary in the case of local list rating, which is based on rateable occupation for the day. But it serves no useful purpose under the form of central rating which the Secretary of State prescribed by Part III of the ESI Order. This, Edison says, shows that insofar as it does not make provision for daily revision the ESI Order is ultra vires.
109. But this consequence simply does not follow. The presence of Section 54(4) is sufficiently explained by the fact that, as foreshadowed in the Consultation Paper, the Secretary of State is authorised to make different schemes for different industries and is not required to disapply conventional rating for every industry subject to central list rating. Provision needed to be made for the rateable value of property entered on a central list to be determined in a conventional way and by reference to rateable occupation for the day. On any view Section 54(4) cannot be said to be otiose. Edison might have had a point if the ESI Order made it impossible to do the calculation; but it merely made it unnecessary. The calculation can still be done; it merely produces the same result despite changes in the composition of the hereditaments which are treated as shown in the list.
110. Edison also relies on Section 67(9A), which it says indicates that a designated person is not to remain liable for rates assessed by reference to the value of hereditaments which he does not own or occupy. But Section 67 (9) and (9A) are concerned with the contents of central lists. They indicate that the designated person is not to remain liable for rates in respect of hereditaments which he does not own or occupy. They say nothing about the method by which the global rateable value of the hereditaments which he does occupy is to be determined.
111. In my opinion the language of the enabling provision of the 1988 Act is sufficiently wide to entitle the Secretary of State to prescribe any method of valuation however far it departs from conventional principles, provided only that it is not unreasonable or irrational. There is certainly nothing in the 1988 Act to indicate that he must depart from long established practice and require the global or cumulo figure in a central list to be adjusted more frequently than once a year.
112. I must now turn to the second stage of the enquiry and consider whether I should modify my opinion because of the element of double taxation to which Part III of the ESI Order is said to give rise.
Is there an element of double taxation?
113. Carnwath J held that there clearly was an element of double assessment. From 19 July 1999 and for the remainder of the rating year the Secretary of State received payments of rates based on the DNC of the two power stations from both PowerGen and Edison. Simon Brown LJ observed that the situation was not that PowerGen was continuing to pay central rates on power stations no longer in its occupation. Once they were disposed of they ceased to be treated as shown in the central list. It was rather that PowerGen was not entitled to a revaluation of its remaining hereditaments until the beginning of the following year. May LJ, who agreed with him, took the view that this did not amount to "straightforward double taxation". Dyson LJ considered that it amounted to double assessment in substance if not in form. In an impressive dissenting judgment he said:
114. My Lords, I have no doubt, and the Secretary concedes, that Dyson LJ's analysis of the effect of the legislation is correct, and that the question has to be addressed as a matter of substance and not as a matter of form. I also have no doubt that it is generally regarded as oppressive for the same person to be taxed twice over in respect of the same matter: IRC v Clifforia Investments Ltd  1 WLR 396; IRC v FS Securities Ltd  1 WLR 742 at p 751. The present, however, is not such a case.
115. There is not, in my opinion, necessarily the same objection to double recovery where two different persons are taxed in respect of the same matter. In Furniss v Dawson  AC 474 at p 525 Lord Brightman observed that there was an element of double taxation whenever a shareholder sells at a profit his shares in a company that has itself realised a capital asset at a profit, but that he did not see any undesirable element of double taxation in such cases.
116. This shows that the presumption against double taxation is not a strong presumption which gives effect to a high constitutional norm, like the presumptions against the abrogation of the privilege against self-incrimination or legal professional privilege. It is rather a species of a wider genus, viz. the presumption that Parliament intends to act reasonably: see IRC v Hinchy  AC 748 at p 767 per Lord Reid. The Courts will presume that Parliament did not intend a statute to have consequences which are objectionable or undesirable; or absurd; or unworkable or impracticable; or merely inconvenient; or anomalous or illogical; or futile or pointless.
117. But the strength of these presumptions depends on the degree to which a particular construction produces an unreasonable result. The more unreasonable a result, the less likely it is that Parliament intended it: see (in a contractual context) Wickman Machine Tool Sales Ltd v L Schuler AG  AC 235 at p 251 per Lord Reid. I do not, therefore, find it profitable to discuss whether the effect of the ESI Order amounts to "double taxation" or "double assessment" (whether straightforward or not) or the rather less objectionable "double recovery". I would prefer to go straight to the real question: whether the scheme established by the ESI Order is so oppressive, objectionable or unfair that it could only be authorised by Parliament by express words or necessary implication.
118. My Lords, as I said at the outset, Edison is not the victim of double taxation. It has been chargeable to one set of rates and one set only, namely local rates; and these were levied on Edison in an appropriate amount and for an appropriate period. It has never been subject to central rates, and was not charged to the central rates which are in issue in the present case. It undertook a contractual obligation to pay an apportioned part of PowerGen's liability to central rates for the 1999-2000 rating year, but this was a voluntary assumption of liability on its part as part of a larger commercial transaction. There is no reason to suppose that it paid more in total than it was willing to pay, or than PowerGen was content to receive, as the price of the power stations.
119. If anyone was treated unfairly it was PowerGen. It was liable to central rates in respect of an element of value, namely the DNC of the two power stations, which it no longer possessed. Yet it does not complain. It has explained its consent to the ESI Order by saying that it accepted the Secretary of State's view that in the case of the central list the administrative burden in making changes to rateable values during the course of the rating year outweighed any potential disadvantage to the ratepayer in not doing so. For the ratepayer there were advantages as well as disadvantages in annual adjustment. Although plant taken out of commission or disposed of during the year was not reflected in a change in rateable value until the beginning of the following year, neither was the commissioning of new plant. "Swings and roundabouts" were inherent in the scheme; and it seems that there were more "swings" than "roundabouts", since PowerGen was able to work the system to its own advantage, bringing forward the commissioning of new plant to the beginning of the rating year and delaying the decommissioning of existing plant until nearer the end.
120. Dyson LJ found any analogy between disposal and decommissioning of plant to be unconvincing. On a disposal, he observed, a power station ceases to be occupied by one ratepayer and is transferred into the occupation of another. In the case of decommissioning, the position is different. Ownership remains vested in the first ratepayer, and there is no double assessment to rates.
121. This is true, of course; but I think that it makes the case for the Secretary of State, not against him. It shows that any potential unfairness to the ratepayer has nothing to do with double assessment. It arises on decommissioning, when the ratepayer ceases to enjoy the element of value by reference to which his liability is calculated. It does not arise on subsequent disposal when for the first time another ratepayer becomes liable to rates in respect of the same element of value. In itself this has no effect on the first ratepayer's liability.
122. Both parties have placed reliance on the decision of the Court of Appeal in Milford Haven Conservancy Board v IRC  1 WLR 817. The case bears a strong resemblance to the present. It concerned the validity of a statutory instrument which prescribed a system of formula rating of the hereditaments of a statutory dock or harbour board. The terms of the enabling Act, which were very wide, included power to repeal or amend enactments relating to valuation. The relevant statutory instrument based the valuation on the board's receipts; but these were not limited to receipts of the hereditaments in question and this, the board said, was not a method of valuing the hereditaments at all. Moreover, the receipts in question included the rents from a cottage let to a tenant who was himself in rateable occupation. This was a straightforward case of double recovery.
123. The board claimed that the statutory instrument was ultra vires. It said that it was contrary to fundamental principles of rating and, under the guise of prescribing a method of valuation, imposed a form of tax which Parliament cannot have intended.
124. Bridge J dismissed the board's claim, and his judgment was unanimously upheld by the Court of Appeal. The Court held that the language of the enabling Act was sufficiently wide to entitle the Secretary of State to prescribe any method of valuation, however far it departed from established principles, and notwithstanding that it appeared to countenance double taxation. Scarman LJ was troubled by the question of double taxation. He said that it appeared wrong that rates should be paid twice, once by the tenant and once by the landlord. But this did not avail the board because the statutory instrument was concerned only with the method of valuation and not with the identity of the hereditament.
125. My Lords, that is equally true in the present case. But whether that decision was right or wrong, I am with respect not impressed by the reasoning of the Court of Appeal. If the question of double taxation is to be approached as a matter of substance and not form, as I consider that it is, then the distinction is without a difference. What matters is the result, not the means by which it is achieved. I agree with Dyson LJ in the present case that there was an element of double recovery in that the Secretary of State received payments by reference to the same element of value during the same period from both PowerGen and Edison. But for the reasons I have given, I do not consider that this was unfair or unreasonable. It is not just a question of swings and roundabouts, though this goes a long way to alleviate any unfairness. It is rather that the element of double recovery arose as a result of the provision for annual adjustment, which was an appropriate and long established feature common to the various global or cumulo systems under which public utilities, including the electricity generating industry, were rated for many years before 1988. It cannot possibly be said that it was beyond the contemplation of Parliament that it would be retained for central non-domestic rating where the Secretary of State, after consultation with the relevant industry, might think it appropriate.
The European Convention on Human Rights.
126. Both Carnwath J and the Court of Appeal considered that the principles of the European Convention on Human Rights do not add anything of value to the basis of Edison's challenge to the validity of the ESI Order. Subject to one point in its printed case which it has subsequently abandoned, Edison accepts that they were correct on this point.
127. Accordingly, in agreement with my noble and learned friends Lord Hoffmann and Lord Scott of Foscote, I would dismiss the appeal.
LORD SCOTT OF FOSCOTE
128. I have had the advantage of reading in advance the opinions prepared by my noble and learned friends Lord Hoffmann and Lord Millett and gratefully adopt their exposition of the circumstances and statutory context in which the issue in this case has arisen.
129. Statutory provisions made pursuant to the Local Government Finance Act 1988 (the 1988 Act) established a regime for the assessment, collection and payment of rates on most, but not all, non-domestic hereditaments that is relatively easy to comprehend. Liability was based on occupation of the hereditament in question. The occupier was liable to pay the rate for each day that he was in occupation. Each local authority was required to maintain a list of the non-domestic hereditaments in its area showing the rateable value of each hereditament. The valuations were to be carried out by local valuation officers. The lists were called "local non-domestic rating" lists.
130. But the 1988 Act also contained provisions under which a different rating regime could be applied to some non-domestic hereditaments. Section 52 of the Act created a "central" non-domestic rating list. The Secretary of State was given power to designate the persons to be placed on the central list and the non-domestic hereditaments in respect of which they were to be centrally rated (see section 53(1) of the Act and the Central Ratings Lists Regulations 1994 SI 1994/3121). The purpose of this was "to [secure] the central rating en bloc of certain hereditaments" (emphasis added). The designation of the hereditaments to which central rating would apply did not have to specify them individually but could specify them as a class (see section 67(9) of the Act).
131. The Secretary of State placed PowerGen on the central list and designated all its hereditaments "wholly or mainly used for the purpose of the generation of electrical power, or for ancillary purposes" as the non-domestic hereditaments in respect of which PowerGen would be centrally rated. Hereditaments of PowerGen falling within this class could not be and were not, therefore, included in any local non-domestic rating list.
132. Paragraph 3 of the 6th Schedule to the 1988 Act gave express power to the Secretary of State by order to disapply the normal method of establishing the rateable value of a non-domestic hereditament (see para 2(1) of the 6th Schedule) and instead to provide that, in the case of non-domestic hereditaments on local lists,
and, in the case of non-domestic hereditaments on a central list,
133. By the Electricity Supply Industry (Rateable Values) Order 1994 (SI 1194/3282) the Secretary of State made "prescribed rules" in relation to hereditaments used for the purpose of generating electricity. Part II of the Order applied to hereditaments on local lists. The rateable value of each of these hereditaments was to be assessed by reference to its declared net capacity (DNC) in respect of electricity generation. Part III of the Order applied to hereditaments on the central list. Here, a rateable value was not attributed to each hereditament. Instead the designated hereditaments of each designated person, eg PowerGen, were to be given an en bloc rateable value based upon their en bloc DNC. My noble and learned friend Lord Millett has described in paragraph 34 of his opinion how the en bloc rateable value was calculated. It suffices for present purposes to say that the original en bloc valuation was varied on 1 April of each rating year by a complex formula that reflected any changes in PowerGen's DNC during the past year. PowerGen's rating liability for the next rating year was then calculated accordingly. If, for example, a new power station were acquired by PowerGen and began generating electricity, its capacity would be built into PowerGen's DNC at the beginning of the next rating year and would affect the amount of PowerGen's rating liability for that year. But for the remainder of the rating year in which the new power station had been acquired, PowerGen's rating liability would not be affected. Conversely, if PowerGen were to sell or decommission a power station the consequence of this would have no impact on PowerGen's rating liability for the remainder of the rating year in question. But the loss of capacity would be taken into the DNC calculation at the end of the rating year and thus affect the rating liability for the next year. In relation to ancillary premises, such as car parks, garages, facilities for employees etc, which fell within the designated class but did not themselves generate electricity, PowerGen's ownership, occupation, sale or purchase of them during a particular rating year would have no effect whatever on its rating liability for that year or thereafter.
134. The rating scheme as applied to PowerGen and its central list designated hereditaments was fundamentally different from the ordinary scheme applied to ordinary non-domestic hereditaments, including those of electricity generating companies not on the central list. Under the latter scheme, rating liability was, and is, based on occupation. When occupation ceases, liability ceases. When occupation commences, liability commences. And the amount of the liability was dependent on the rateable value of each individual property of which the ratepayer was in occupation and in respect of which he was liable to pay rates. Under the former scheme, rating liability was not based on occupation of any particular property and the amount of the liability was based on the total rateable value of all the ratepayer's designated hereditaments calculated as at the beginning of the rating year. The payment of rates by PowerGen, calculated accordingly, would discharge its rates liability in respect of all its hereditaments falling within the designated class during the rating year in question, regardless of its occupation of them during that year.
135. It is the contrast between the two schemes that has produced the complaint by the appellant, Edison, in the present case. Edison completed its purchase from PowerGen of the two power stations on 19 July 1999. It was entered in the local non-domestic rating list as liable for rates in respect of those hereditaments as from 19 July 1999. Edison does not challenge this liability. As from the same date, 19 July 1999, the power stations ceased to fall within the class of designated properties in respect of which PowerGen was liable to be centrally rated. But PowerGen's rating liability for the year 1999/2000 had been fixed as at 1 April 1999. PowerGen's ownership of the two power stations and their contribution to PowerGen's total DNC had, of course, contributed to the amount of that liability. The rating consequences of the contribution continued for the rest of the rating year notwithstanding that during the year PowerGen had divested itself of the two power stations.
136. The continuing and unreduced rating liability of PowerGen after its sale of the power stations to Edison might be thought an insecure basis for a complaint by Edison. Edison's complaint is, however, attributable to PowerGen's success in obtaining, as a term of the contract of sale between itself and Edison, a provision under which Edison agreed to pay an apportionment of the rates payable by PowerGen in relation to the power stations in the rating year 1999/2000. The amount of PowerGen's rating liability for the year 1999/2000 attributable to the two power stations was a sum in excess of £13.5 million. Edison has accepted its contractual liability to pay PowerGen this sum and has duly paid it. Edison protests, however, that in relation to the two power stations the central rating scheme produced by the Secretary of State in purported reliance on his statutory power under the 1988 Act has led to double recovery, from PowerGen on the one hand and from Edison on the other, in respect of the same properties (the power stations) and in respect of the same period (19 July 1999 to 31 March 2000). Edison contends that the statutory power under which the Secretary of State purported to act ought not to be construed as permitting such a result. There is, it is contended, a presumption that Parliament does not intend double taxation or, in the context of rates, double recovery in respect of the same property or properties. General words in a statute, such as those in paragraph 3 of the 6th Schedule to the 1988 Act, are not, it is submitted, sufficient to displace this presumption. And if the central rating scheme is ultra vires, as contended, then PowerGen were not liable to pay the £13.5 million; Edison were not liable to pay that sum to PowerGen and are entitled to repayment. So the argument goes.
137. My Lords, as an aid to construction of statutes, presumptions are from time to time invoked. This is particularly so where rights of citizens regarded as of fundamental importance appear to be encroached upon by a particular application of a statute. In such a case it is presumed that Parliament, if it intended the statute to encroach upon the important fundamental right, would have expressly said so. If Parliament has not expressly said so, and if the statute is capable of being given sensible effect without encroaching upon the fundamental right, a construction of the statutory language may be adopted that would leave unimpeded the right in question. As Lord Hoffmann put it in R v Home Secretary ex parte Simms  2 AC 115:
138. A very good recent example of this is the decision of the House in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax  2 WLR 1299. The case concerned legal professional privilege. It raised the question whether the statutory power of the Revenue to require production of documents extended to documents covered by legal professional privilege. The statutory provision relied on by the Revenue was in general terms and apt to cover all and any relevant documents. But the right of citizens, or companies, to seek and receive legal advice in the knowledge that the communications between them and their lawyers cannot be the subject of compulsory disclosure is of such fundamental importance in a society governed by the rule of law as to require express statutory language or an unavoidance implication if it is to be overruled by statute. General words in a statute will not suffice. So the House held.
139. There are no doubt other rights whose fundamental importance may justify similar reverence but I need not try and identify them for it is surely clear that the so-called presumption against double taxation or double recovery does not derive from a fundamental right of that character. There is no fundamental right not to be taxed, or not to be taxed in a particular way or at a particular time. The so-called presumption against double taxation is in reality no more, and no less, than the formulation in a taxation context of the broader interpretative presumption that Parliament does not intend that legislation should bring about results that are unreasonable or unfair or arbitrary.
140. As Lord Reid said in IRC v Hinchy  AC 748:
In IRC v Clifforia  1 WLR 396, where the Inland Revenue were proposing an interpretation of a taxing Act that would result in double taxation, Ungoed-Thomas J referred to the double taxation result as "patently unjust" (p 402).
141. In IRC v Vestey  AC 1148 Lord Wilberforce declined to accept a construction of a taxing Act that led to a result that was "arbitrary, unjust, and in [his] opinion unconstitutional" and explained that:
It was the unfairness of a tax regime that subjected a number of discretionary beneficiaries to the burden of paying tax on income that they might never receive that prompted those remarks. The statutory provision in question had been enacted in order to combat a particular type of tax avoidance scheme, but it was not the beneficiaries who were the tax avoiders. They had not participated in setting up the scheme. They were simply named as beneficiaries. The House did not accept that Parliament could have intended to impose on each of the discretionary beneficiaries a liability to pay tax on the income generated by the funds in the scheme. Such a result would have been, in Ungoed-Thomas J's words, "patently unjust" and the House construed the taxing provision in question so as to avoid that result.
142. By way of contrast, in R v Dimsey  1 AC 509 it was the tax avoider himself who was liable to tax on income that he might never receive. The actual recipient of the income was the corporate tax avoidance vehicle that the tax avoider had used. For reasons that it is unnecessary to explain the tax avoider contended that his own liability to tax ought to lead to a construction of the relevant taxing statute that relieved the tax avoidance vehicle from liability to tax on the same income. The presumption that Parliament did not intend the same income to be taxed twice was invoked. The House declined to accept these submissions. For the tax avoider to be liable to tax did not seem in the least unjust and there was no practical likelihood of the Revenue, even if they had wanted to do so, being able to recover tax from the tax avoidance vehicle, an overseas company incorporated in a tax haven.
143. These cases, my Lords, are some distance removed from the rating issue that is before the House on this appeal. But they are relevant to the approach that the House should adopt. It is said that the House should presume that Parliament did not intend the 1988 Act to bring about a result under which more than one ratepayer was liable to pay rates in respect of the same hereditament and for the same period. My Lords, I do not doubt that in general such a presumption would arise. If it were contended, for example, in relation to a house in joint ownership that each owner/occupier of the house was liable to pay the full amount of rates on the house whether or not some other joint owner had already paid, the courts would rightly look for express statutory words mandating such an unjust result before acceding to the contention. It would be the unfairness and the unreasonableness of the result contended for that would justify the assumption that Parliament did not intend that result and would justify the insistence on express words or unavoidable implication. It would not be the compressing of the facts of the case into a box labelled "no double taxation" or "no double recovery" that would do so.
144. The present case is not a case of double taxation at all. It might, arguably, be described as a case of double recovery. It might, therefore, be said to justify an initial assumption that the general statutory words in paragraph 3 of the 6th Schedule to the 1988 Act were not intended by Parliament to allow the Secretary of State to produce that result. But, as Lord Oliver observed in R v IRC, Ex p Woolwich  1 WLR 1400, such a presumption is no more than a presumption. He said:
145. The circumstances surrounding the enactment of the 1988 Act include the history of the rating of non-domestic hereditaments, and the history of 'formula rating' in particular, set out in the opinion of Lord Hoffmann and Lord Millett. This history rebuts, in my opinion, any inference that Parliament could not have intended the Secretary of State to be able to prescribe an en bloc rating system with yearly changes based on changes in electricity generating capacity for designated electricity generators such as PowerGen. And I can see no room for any compelling inference that would debar the Secretary of State from prescribing a system under which for a period within a particular rating year he might, on the one hand, receive rates under the en bloc system in respect of a hereditament which for the same period was attracting for its occupier a rating liability under the local occupation-based system or, on the other hand, receive no rates under the en bloc system in respect of a hereditament which had become rateable under the central list and which, therefore, for the same period did not attract rates under the local system.
146. The result produced by the system prescribed by the Secretary of State cannot, in my opinion, be described as unfair, unreasonable or arbitrary. Edison was liable under the Act for rates in respect of the two power stations for the period 19 July 1999 to 31 March 2000. Its liability was based on its occupation of the power stations for that period. PowerGen's rating liability for the year 1999/2000 derived in part from its ownership of the two power stations on 1 April 1999 and on their contribution to its DNC on that date.
147. My Lords, this is not double taxation or double recovery in the sense in which those expressions are normally used. It is true that it was because the two power stations were owned and occupied by PowerGen at the commencement of the 1999/2000 rating year that PowerGen's rating liability for that year was in part attributable to the two stations. And it is true that the Secretary of State may, in consequence of their sale during that year and consequent entry on the local non-domestic rating list, be regarded as having made in a sense double recovery for the period 19 July 1999 to 31 March 2000. But this analysis does not take into account the distinctly different bases on which the respective liabilities of PowerGen and Edison arose.
148. In any event, however, I do not regard the wielding of a double taxation or double recovery banner as apt to provide a sound answer to the appellant's contentions on this appeal. The critical issue is whether the statutory power given to the Secretary of State by paragraph 3 of Schedule 6 to the 1988 Act, correctly construed, authorised him to prescribe the rating system for PowerGen and other electricity generating companies that has produced the result now challenged by Edison. The language of the paragraph is in my opinion, plainly wide enough to frank the system and unless the result can be shown to be unfair, unreasonable or arbitrary the challenge, based on the presumed intention of Parliament, must fail.
149. Neither PowerGen nor, so far as your Lordships have been told, any other electricity generating company has complained of the unfairness of the central rating scheme. PowerGen, indeed, has intervened in these proceedings and expressly disavowed any such complaint. The burden on Edison has been caused not by the imposition on Edison of an unfair statutory rating liability but by Edison's agreement in a freely negotiated contract of sale to pay PowerGen an additional sum calculated by reference to PowerGen's rating liability derived from the two power stations. The liability of PowerGen that Edison agreed to pay did not arise from PowerGen's occupation of the power stations for the period, 19 July 1999 to 31 March 2000, during which Edison were in rateable occupation. It derived from a quite different base. I can find nothing unreasonable or unfair or arbitrary in the central list formula rating system prescribed by the Secretary of State.
150. For these reasons and for those expressed by Lord Hoffmann and Lord Millett with which I am in full agreement, I would dismiss this appeal.