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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Edison First Power Ltd v Secretary Of State For Environment, Transport & Regions [2001] EWCA Civ 1096 (12 July 2001)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1096.html
Cite as: [2001] EWCA Civ 1096, [2001] 30 EGCS 112, [2001] RA 229

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Neutral Citation Number: [2001] EWCA Civ 1096
Case No: C/2000/3678

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ADMINISTRATIVE COURT
AND DIVISIONAL COURT
(MR JUSTICE CARNWATH)

Royal Courts of Justice
Strand, London, WC2A 2LL
Thursday 12th July 2001

B e f o r e :

LORD JUSTICE SIMON BROWN
LORD JUSTICE MAY
and
LORD JUSTICE DYSON

____________________

EDISON FIRST POWER LIMITED
Appellant
- and -

THE SECRETARY OF STATE FOR THE ENVIRONMENT, TRANSPORT AND THE REGIONS
Respondent

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Mr Michael Beloff, QC, Mr Nigel Pleming, QC & Mr Christopher Lewsley
(instructed by Jones Day Reavis & Pougue of London EC4N 8NA) for the Appellant
Mr Richard Drabble, QC & Mr Timothy Mould
(instructed by The Treasury Solicitor of London SW1) for the Respondent
Mr Robin Dicker, QC (instructed by Freshfields Bruckhaus Deringer of London EC4 1RS) for Powergen UK plc (interested party)

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    LORD JUSTICE SIMON BROWN:

  1. On 19 July 1999 Edison First Power Limited (the appellant) completed the purchase from Powergen UK Plc (Powergen, a person directly affected by these proceedings) of 199 year leases of two electricity power stations and thereupon, as occupiers, became liable to local non-domestic rates for the balance of the rating year 1999/2000 in the sum of about £13.5 million, a liability calculated by reference to the power stations' declared net capacity (DNC). So much is not in dispute.
  2. What is in dispute, by the appellant but not by Powergen, is whether, following the sale, Powergen continued to be liable for central non-domestic rates in a similar sum calculated in essentially the same way. The appellant contends not, on the basis that such liability would offend the fundamental principle against double taxation – adapted in the rating context to the principle against double assessment – and thus constitute an abuse of power by the respondent Secretary of State, the ultimate recipient of both rate payments. The appellant's interest in the matter stems from its liability under the contract for the purchase of these power stations (subject to arbitration proceedings to be heard in late July) to reimburse Powergen in this sum.
  3. Carnwath J held that the liability under the rating scheme for both payments clearly gives rise to double assessment but that this is permitted by the legislation and involves neither irrationality nor a breach of the European Convention on Human Rights. He accordingly dismissed the challenge. The appellant now appeals to this Court by leave of the Judge below.
  4. With that briefest of introductions let me now turn to set out the factual background, the rating background and the present legislative scheme almost entirely as explained in the helpful judgment below.
  5. Factual Background

  6. As stated, this appeal concerns liability for non-domestic rates in respect of two electricity power stations, Fiddler's Ferry in Cheshire and Ferrybridge "C" in Yorkshire. Prior to July 1999 the two power stations were owned and occupied by Powergen, a company created when the Central Electricity Generating Board was privatised in 1990. Its business now includes a wide range of activities, one of which is electricity generation. Its electricity generation and transmission businesses are regulated under the Electricity Act 1989.
  7. Powergen is a designated person for the purposes of central rating. Property occupied by Powergen for the purposes of electricity generation is subject to central non-domestic rating and is included in the central rating list. Central non-domestic rates are demanded by, and payable to, central Government (the Secretary of State for the Environment) for inclusion in the rates pool which is subsequently distributed to local authorities. Up to and including the year 1999/2000, the two power stations were subject to central rating, as part of an assessment as a whole of all the hereditaments in England occupied by Powergen for the purposes of electricity generation. The rates paid by Powergen for the year 1999/2000 were calculated on that basis.
  8. In 1998, Powergen gave an undertaking to the Secretary of State for Trade and Industry, under the Fair Trading Act 1973, to dispose of a proportion of its coal-fired generating capacity by a date to be specified by him. The date specified was 30th July 1999. In compliance with that undertaking, it offered the two power stations for sale. In April 1999, the appellant entered into an agreement with Powergen to acquire long (199 year) leases of the two power stations and to occupy them for the purposes of the generation of electricity. The purchase was completed on 19th July 1999. Powergen then ceased to occupy the power stations, and the appellant became the occupier. The appellant is not a designated person. Properties occupied by it are subject to local rating and are included in the local rating list.
  9. Part of the agreement (clause 9) was that, upon completion, an apportionment was to be made of various charges and payments in respect of the power stations, including non-domestic rates payable by Powergen in relation to the power stations for the rating year 1999/2000. About £13.5m was claimed by Powergen, as representing the amount paid by it in relation to the two power stations for the part of the rating year when the appellant was in occupation. The appellant has paid that sum, but is contesting the liability in separate arbitration proceedings under the contract.
  10. Subsequently, local non-domestic rates (of a similar amount) were demanded from the appellant by the local authorities in whose areas the power stations are situated, for the period from the change of occupation in July 1999 to 31st March 2000. Warrington District Council issued a demand on the 19th November 1999 in respect of Fiddler's Ferry. Wakefield Metropolitan District Council issued a demand on the 14th March 2000 in respect of Ferrybridge "C". Payments have been made by the appellant under protest. The local authorities had already paid equivalent sums to Central Government (the Secretary of State) for inclusion in the rates pool.
  11. There has been no amendment to the central rating list to reflect the change of occupation in July 1999. This can only be done with effect from the beginning of the next rate year after a change of occupation, that is, with effect from the 1st April 2000. The Secretary of State has refused to refund the amount paid in respect of the two power stations under the central list for the period after the change of occupation in July 1999 up to the 31st March 2000 although he has agreed that he would do so on an ex gratia basis were this Court to hold that to retain it would constitute an abuse of power.
  12. Valuation – background

  13. It is useful to begin by setting the relevant parts of the Local Government Finance Act 1988 in their historical context. The traditional basis for assessment of value for rating purposes was by reference to "net annual value" of a "hypothetical tenancy". In relation to property which was rarely or never let, valuers had to devise methods which would provide them with evidence of the annual letting value.
  14. Two main methods emerged: the contractor's basis and the profits' basis. The contractor's basis is, in short, interest on the cost of construction; the theory is that a prospective tenant would not agree to pay more by way of rent for the hereditament being valued than it would cost him to borrow money (or use his own) to construct similar premises elsewhere. The profits basis assesses the receipts and expenditure involved in carrying on an undertaking in order to arrive at a figure (the "divisible balance") from which the tenant's share is then deducted, leaving a figure which is available to pay rent to a landlord.
  15. Where the undertaking occupied property in several rating areas, a further step involved making an apportionment of the total figure to enable a rateable value to be attributed to each hereditament. The profits basis came to be established as the appropriate basis for assessing canals, railways, docks, water, gas, electricity and similar undertakings. It was eventually held by the House of Lords that it had to be applied as a matter of law to public utility undertakings (Kingston Union v Metropolitan Water Board [1926] AC 331).
  16. Following the war, most of the public utilities were nationalised. Since they were no longer operated for profit, the profits basis was no longer considered to be the appropriate basis for assessment. Statutory provision was, therefore, made in respect of each industry. So far as the electricity industry was concerned, the bodies set up on nationalisation were not liable to be rated, although they were required to make payments to local authorities in lieu of rates. The structure of the electricity industry was changed by the Electricity Act 1957 (creating the Central Electricity Generating Board, and 12 area boards). At the same time the method of rating the boards was provided for in the Local Government Act 1958, later consolidated into the General Rate Act 1967.
  17. Under the General Rate Act 1967, the measure of liability continued to be the rateable value of the hereditament, derived from its net annual value (s 19(1)). For the assessment of the nationalised industries the statutory formulae were retained. The statutory scheme for the rating of the CEGB and each Area Board (under the General Rate Act 1967, s 34) provided that each Board was to be treated as occupying in each rating area a hereditament having a rateable value calculated in accordance with schedule 7. The rateable value was assessed as the value of the distribution and generating activities of each Board. The schedule specified the "basic electricity rateable value" of all Boards (which was amended from time to time by statutory instrument), and then apportioned amongst the Boards to arrive at an aggregate value of each Board's activities. That aggregate value was then apportioned amongst rating areas. In the case of generating activities, the basis of apportionment was the proportion of the Board's total generating capacity situated in the rating area. The rateable value was re-calculated each year by Commissioners in the December preceding the next rate year. There was no mechanism for altering the rateable value during the course of the rate year.
  18. The 1988 statutory framework – general

    (a) Central non-domestic rating

  19. This system is governed by sections 52 to 54 of the 1988 Act, and regulations made under it. It applies to property which is operated as a whole but physically distributed throughout England, such as railways, canals, gas, electricity, and telecommunications. The valuation of hereditaments in England subject to central non-domestic rating is the responsibility of the central valuation officer. Regulations designate the persons subject to central rating and prescribe in relation to each designated person one or more descriptions of hereditaments. The central rating list shows the identity of each designated person and describes the hereditaments prescribed in relation to him. It also specifies the rateable value (in aggregate) of the groups of hereditaments shown for each designated person, but it does not show a separate value for each hereditament. The rateable values are computed by reference to formulae contained in the statutory instruments. They are re-computed each year. The central valuation officer is under a duty to "maintain" the list, and to prepare a new list in every fifth year. Provision for alteration of the list is made in regulations.
  20. Collection of rates on hereditaments shown in the central rating list is the responsibility of the Secretary of State. Rates are payable by the persons named in the central rating list. Liability accrues daily whilst a person is so named. Central rates may be recovered up to one year in advance subject to adjustment if the amount demanded is found to be in excess of, or less than, the amount payable. The amounts received are paid into the central pool. Local authorities have no role in relation to hereditaments shown in the central rating list.
  21. (b) Local Non Domestic Rating

  22. The other system is referred to as local non-domestic rating, and is governed by sections 41 to 51 of the 1988 Act. The valuation of hereditaments in England for this purpose is the responsibility of the valuation officer. The amounts of the values of each of the hereditaments are set out (separately for each hereditament) for each day in the local rating list for each district local authority area. The valuation officer is under a duty to "maintain" the local list, and to prepare a new list in every fifth year, and provision for alteration is made in regulations.
  23. Collection of rates on hereditaments shown in the local rating list is the responsibility of district local authorities, referred to in this context as "billing authorities". The identity of the occupier of each local non-domestic hereditament on any day is not shown in the rating list, but is held in the records of the billing authority as part of its administration of its collection fund. Liability accrues daily. Local rates may be recovered up to one year in advance subject to adjustment if the amount demanded is found to be in excess of, or less than, the amount payable.
  24. Contents of the Central List

  25. The contents of a central non-domestic rating list are provided for by s.53. With a view to securing "the central rating en bloc of certain hereditaments", the Secretary of State may make regulations designating a person and prescribing in relation to him one or more descriptions of relevant non-domestic hereditaments (s 53(1)). Where the regulations so require (as they do in this case), the central list must show the name of the designated person and against that name –
  26. "… each hereditament … which on the day concerned –
    is occupied … by him, and
    falls within any description prescribed in relation to him." (s 53(2))
  27. For "each such day" the list must also show against his name "the rateable value (as a whole) of the hereditaments so shown" (s 53(3)).
  28. These requirements have to be read with section 67(9). That provides that a hereditament shall be treated as shown in a central non-domestic rating list for a day, if on that day "it falls within a class of hereditament shown for the day in the list." For that purpose "class" means:
  29. "… a class expressed by reference to whether hereditaments –
    are occupied or owned by a person designated under section 53(1) above, and
    fall within any description prescribed in relation to him under section 53(1)." (s 67(9A))
  30. For the purposes of the central list for the period beginning on 1 April 1995, the Secretary of State exercised his powers of designation and prescription by means of The Central Rating Lists Regulations 1994 (SI 1994 No. 3121) (the 1994 Regulations). In respect of electricity supply hereditaments, he designated Powergen and prescribed, in relation to Powergen -
  31. "hereditaments (other than excepted hereditaments) wholly or mainly used for the purposes of the generation of electrical power or for ancillary purposes" (reg. 5(1), Schedule Part 2).

    Valuation under the 1988 Act

  32. The traditional "hypothetical tenancy" basis is preserved as the ordinary basis in the 1988 Act: that is, the "rent which it is estimated that the hereditament might reasonably be expected to be let from year to year…" (on certain specified assumptions) (sch 6, para 2(1)). However, in relation to particular classes of hereditaments, the Secretary of State is empowered to disapply the ordinary basis, and make special provision by order. The relevant provisions are paragraphs 3(1) and (2) of Schedule 6, which provide -
  33. "(1) The Secretary of State may by order provide that in the case of non-domestic hereditaments of such class as may be prescribed –
    (a) paragraphs 2 to 2C above shall not apply, and
    (b) its rateable value shall be such as is determined in accordance with prescribed rules.
    (2) The Secretary of State may by order provide that in the case of non-domestic hereditaments to be shown in the central non-domestic list –
    (a) paragraphs 2 to 2C above shall not apply, and
    (b) their rateable value shall be such as is specified in the order or determined in accordance with prescribed rules."

    The procedure for such orders requires an affirmative resolution of each House of Parliament (s 143(8)).

  34. The order under consideration in the present case is the Electricity Supply Industry (Rateable Values) Order 1994 (the 1994 Order), which came into force in December 1994, and provided the basis for the valuation of hereditaments in the electricity industry for the ensuing five years. It dealt with both local and central lists. The calculations were based on "declared net capacity" ("DNC"), that is the "highest generation of electricity … which can be maintained indefinitely without causing damage to the plant …" (less capacity consumed by the plant) (art 2). For power stations in local lists rateable value for any year from 1st April 1995 was fixed at £11,620 per megawatt of DNC.
  35. In relation to the central list a global approach was adopted. The two bodies principally concerned were Powergen plc and National Power plc. There were separate classes for England and Wales. The classes were defined by reference to the classes of hereditaments defined in the 1994 Regulations. A rateable value for each such class for the year beginning 1st April 1995 was "specified"; in the case of Powergen the figure for England was £178,8823m (arts 7(1), 8A(2)(a), sched pt 1). There was provision for an adjustment for changes between December 1994, when the figure was calculated, and April 1995, when it came into effect: (art 8A(2)). For each subsequent year, the specified amount was to be adjusted by reference to a "recalculation factor", designed to reflect any change in the total DNC of generating plant in the class, taken at 31st March in the immediately preceding year, as compared with 31st March 1995 (art 8A(2)(b), 9).
  36. The basis on which the initial figure for Powergen was calculated does not appear from the Order itself. It is, however, common ground (and is evident from the contemporary documents) that the starting point was the net book value of the rateable assets as shown in Powergen's current cost accounts. Allowances were made for particular disabilities of the hereditaments, to leave the effective capital value, which was converted into an annual rateable value by the application of a 6% decapitalisation rate. (This corresponded to the so-called "contractor's basis" of rating valuation.)
  37. This figure embraced all property in England within the specified description. It included operational and non operational property, but focused primarily on property used for electricity generation. Items such as offices and other property not on operational land were "excepted" from the specified description. It is common ground that the rateable value of the class of hereditaments occupied by Powergen for the rate year beginning 1st April 1999 was assessed on the basis that the class included Fiddler's Ferry and Ferrybridge power stations.
  38. The principle against double taxation

    This brief survey of the relevant authorities I also take substantially from the judgment below.

  39. A convenient starting point for considering this long-established principle is Lord Oliver's speech in R v IRC ex parte Woolwich Equitable Building Society [1990] 1 WLR 1400, 1412-1413. Having referred to the relevant statute, Lord Oliver said this:
  40. "On the face of it, that clearly authorises, for instance, a requirement to pay in the year of assessment 1986-87, a sum in respect of interest in fact paid before the commencement of that year. One then asks, what, as a matter of construction, prevents the revenue from requiring such payment in addition to payment of sums in respect of interest paid during that year of assessment? The suggested inhibition against such cumulative taxation lies not in the words which Parliament has chosen to use but in certain well-established presumptions or principles – a presumption against double taxation, a presumption that income tax, being an annual tax is payable only on the income of a particular year and so on. But these are only presumptions. They are clearly rebuttable if sufficiently clear express words are used. But they can also be rebutted, as it seems to me, by circumstances surrounding the enactment of the particular legislation which led to an inevitable inference that Parliament intended, in using the words that it did, that these presumptions or principles should not apply. … I have, in the end, found myself irresistibly driven to the conclusion that this ['the very unusual course of seeking to tax more than one year's income in a single year of assessment'] was what Parliament intended should occur."
  41. That general presumption is well-established also in the context of rating. In Smith v Lambeth Assessment Committee (1882) 9 QBD 585, Field J said at p.593:
  42. "Except in the case of joint occupation, there cannot be two persons liable to be rated for the same thing."
  43. In Westminster City Council v Southern Rly Co. [1936] AC 511, Lord Wright MR said at p.565:
  44. "… they [i.e. the rating authority] got their rates from the railway, if they did not get them from W.H. Smith & Son, and they could not get them twice over."
  45. In Brook v National Coal Board (1975) RA 367, which concerned the assessment of a spoil heap at a mine, Lord Denning MR said at p.371:
  46. "In the circumstances it seems to me that the spoil heap can and should be treated as a separate hereditament. But by doing so there is no danger of double assessment. The Tribunal found that the assessment of the mine did not contain any element of value which could be directly attributed to the appeal heap."
  47. The authority perhaps closest in point on the present appeal is Milford Haven Conservancy Board v IRC [1976] 1 WLR 817. By virtue of Orders made in 1971 and 1973 under special provisions of the General Rate Act 1967, the valuation of the Board's hereditaments was changed from the ordinary "hypothetical tenant" basis to a formula based on "relevant receipts". The relevant receipts included harbour dues on vessels entering and leaving the haven, and other categories of income such as payments for services of pilots, and also the rent of a cottage which was separately rated in the name of the tenant. The overall effect of the change was to increase the rateable value from £4,602 under the previous system to £55,000. The empowering section provided in relation to various types of undertaking including the Board's harbour undertaking:
  48. "The Minister may by order make provision for determining the rateable value of hereditaments to which this section applies, or any class or description of hereditaments specified in the order, by such method as may be so specified … ."
  49. The Board contended that the Order was ultra vires because Parliament could not have intended to give power to the Secretary of State "to make such a fundamental amendment of the law by his orders". The contention was rejected. Giving the leading judgment in the Court of Appeal, Cairns LJ summarised certain basic principles of rating law, including the principle that receipts not dependent on occupation of a hereditament cannot be taken into account, and the presumption against double assessment. He cited Smith v Lambeth Assessment Committee for the proposition that "double assessment is not permitted. So where a tenant is assessed to rates, the landlord is not to be assessed too". He contrasted those principles with the effect of the Order to show "how great a departure from the classical rules about rating is involved in the Order complained of" but nevertheless concluded:
  50. "In my view, the language … is sufficiently clear to entitle the Secretary of State to prescribe any method of valuation, however far it departs from previously established principles. I cannot find in the words of the section any such ambiguity as the court could be asked to resolve in favour of the ratepayer. Nor does it appear to me that the Orders deal in any respect with liability to rates as distinct from valuation for rates. It cannot be said that the Orders seek to impose rates on the haven or on the dues, investment income or rents received. When the profits basis of valuation is adopted it is not the profits which are being rated, but the hereditaments …" (p.824)
  51. The other two members of the court agreed. In relation to the cottage rents, Scarman LJ said this:
  52. "I confess that I am less than happy on the question of 'double-rating', though the amounts in question are not large. It appears wrong that rates should be paid twice – once by the tenant and secondly by the landlord. But this wrong – if it be a wrong – does not avail the Board if, upon their true construction, the Orders of the Secretary of State are, as I think they are, concerned only with method of valuation. It is a wrong which the Secretary of State can, if he thinks fit, remedy by further order; it goes to the fairness of the method, not the power of the minister."

    The question to be addressed

  53. As I have already indicated, the Judge below addressed the central question as to whether the liability here for both payments offends the principle against double taxation in two parts, asking himself first whether this case involves a double assessment (which he answered "clearly, yes" in favour of the appellant), and secondly, "whether Parliament has expressly or impliedly empowered the making of an order having such an effect [i.e. the 1994 Order]" (which he also answered yes, but this time against the appellant).
  54. For my part, I think it preferable to address the question as a single whole: did Parliament authorise the making of an order in the terms of the 1994 Order resulting in the liability to make two payments in the circumstances of the present case? I prefer this approach because it seems to me relevant, when it comes to asking whether the legislative language sufficiently clearly authorises the Order, to have in mind the precise nature of the two payments of which complaint is made and what liability they represent. The appellant's argument treats "double assessment" as a term of art and as something necessarily so objectionable as to be permissible only if required by Parliament's express words or "by irresistible inference from the statute read as a whole" – see Lord Reid's speech in Westminster Bank v Beverley BC [1971] AC 508, 529. But Westminster Bank was a case concerned with the taking away of private rights of property without compensation and Woolwich itself, of course, was a plain case of double taxation and "very unusual". In other cases, as it seems to me, the double payment may be more readily justifiable and accordingly require less in the way of explicit statutory authorisation. That, indeed, is my understanding of the Milford Haven case: the court's conclusion there that the impugned Orders concerned the method of valuation rather than liability to rates recognised that the double assessment, if such it was, was less intrinsically objectionable than in a liability case and thus more readily to be found authorised by Parliament.
  55. The nature of these payments

  56. Against that background of fact and law let me now turn to consider the precise nature of the two payments made here in relation to the transferred power stations to which end it is necessary to examine and contrast the respective schemes for local and central rating under the 1988 Act. The position was, I think, fairly summarised by Mr Drabble QC for the Secretary of State as follows:
  57. In a local rating list, each hereditament is required to be identified separately and shown individually in the list (s.42(1)). In a central list, there is no such requirement: the hereditaments occupied or owned by the designated person will be identified as a class (ss.53(2) and 67(9)(9A)).
    In a local rating list each hereditament is required to be valued individually and its rateable value shown separately in the list (ss.42(5) and 56 and paragraphs 2(1) and 3(1) of Schedule 6). There is no such requirement in relation to centrally listed hereditaments: the class of hereditaments shown in the central list against the name of a designated person are intended to be rated en bloc and valued as a whole (s.53(1)(3)). Paragraph 3(2) of Schedule 6 empowers the Secretary of State to specify their rateable value as a single sum for the lifetime of the list (i.e. the 5 year period).
    Whereas the central list contemplates a single figure which may last even for the whole lifetime of the list, the local list is required to reflect changes of value on a daily basis (s.42(2)(3)(4)).
    The ingredients of the specified formula for calculating the amount of the ratepayer's liability are similar for both the local and central lists (ss.43(2-4) and 44 for locally listed hereditaments, s.54(2-7) for a centrally listed class of hereditaments). For both lists, liability accrues on a daily basis for each chargeable day (ss.43 for local list, and ss.53 and 54 for the central list). However, local list liability depends upon the ratepayers' occupation or ownership of the individual hereditament on the day (ss.43(1) and 45(1)) whereas the central ratepayers' liability depends upon the appearance of his name in the central list for any day in the chargeable financial year (s.54(1)).
    The result is that the daily amount of the charge to central rates does not take account of changes in occupation of the centrally rated hereditaments whereas such changes are inevitably taken into account in relation to a local list.
  58. The Judge below, having similarly examined the respective provisions governing the central and local lists, concluded that Powergen's liability in respect of the period when they no longer occupied the two power stations was "inherent in the statutory scheme". The legislative features he particularly emphasised were that Powergen's hereditaments could be identified as a class and were intended to be rated "en bloc" and valued "as a whole", that liability falls on a person for any day that its name is shown in the central rating list and is not (unlike local rating) dependent on occupation on that day, and that the calculation of the daily amount of the central rating charge is based on a formula which takes no account of changes in occupation but simply divides the annual rateable value by the number of days in the year. In the result, he concluded:
  59. "It is implicit in this structure that the daily charge will continue to fall on the designated person, so long as his name remains in the list, and will be calculated by reference to the same annual value, determined in aggregate for the class, regardless of changes during the year and the hereditaments making up the class. Given that the local list, by contrast, operates on a basis which does take into account changes in occupation during the year, it inevitably follows that, where there is a transfer from one to the other, there is the possibility of double assessment or no assessment at all."
  60. That possibility of "no assessment at all", of course, arises from the fact that the annual charge for the central list ignores also the commissioning of new plant within the year: the annual value would no more be increased to reflect the increased DNC of new plant than reduced when the DNC is reduced. As the Judge explained when he came to deal with the alleged irrationality of the scheme, it gave rise to "swings and roundabouts" in practice. Powergen in the event were largely able to arrange things so that the balance of advantage worked in their favour. There were three examples of power stations being decommissioned at the end of March, thus minimising the period for which rates were paid without occupation, the sale of the two power stations being the single example of the system working to opposite effect. Powergen for their part expressly recognise that the scheme represented a pragmatic solution to an administrative problem and regarded it as broadly acceptable. It was, indeed, Mr Dicker QC's sole submission to us on Powergen's behalf that on no view should the court quash the order and thereby unravel the scheme under which Powergen and others conducted their affairs over many years.
  61. The appellant's case on appeal

  62. Mr Beloff QC for the appellant advances two main arguments on appeal. His first and principal submission is that the Judge, having found the relevant two payments to constitute double assessment, and having then asked himself in accordance with the Woolwich approach whether the statute expressly or by inevitable inference permitted that result, when he came to reach his conclusion lowered the threshold of permissibility by concluding that Powergen's continuing liability under the central list was merely "inherent" or "implicit" in the statutory scheme, a conclusion which he reached notwithstanding the Secretary of State's concession "that it would have been possible within the powers of the Act to create a system which allowed for adjustment of the central values on a transfer". His second submission is that, even if the Secretary of State had power to make the 1994 Order, that power was improperly and irrationally exercised given that it resulted in double assessment.
  63. The first argument

  64. I was, I confess, greatly attracted to Mr Beloff's first argument for much of the hearing. It seems to me impossible for the Secretary of State to contend that the 1988 Act either expressly or by necessary implication required a central rating scheme which allowed only for annual rather than daily revisions of liability (least of all with regard to transfers of operational property to the local list), or even required that electricity generators like Powergen be centrally rated at all – as, indeed, was demonstrated by them eventually ceasing to be so rated on 1 April 2000.
  65. The 1994 Order was made under the apparently wide powers contained in paragraph 3(2) of schedule 6 but the Secretary of State was not obliged to make it. Not only could he, as stated, have chosen not to use the central list system at all for this industry but, even if it was to be used, he did not need to adopt a paragraph 3(2) method of valuation (rather than a conventional assessment under paragraph 2 of the schedule) nor, even if paragraph 3(2) was to be used, did it preclude daily rather than annual adjustments.
  66. True, as Mr Drabble QC for the Secretary of State pointed out, the statute plainly contemplates use of both the central scheme and of paragraph 3(2) for valuation on a non-conventional basis, and it is no less plain that the utility of the whole system would be seriously undermined by providing for daily rather than annual adjustments. But it cannot be said that the scheme as implemented was actually required rather than merely envisaged by the primary legislation.
  67. If, therefore, I were to regard the double payment made here as no less intrinsically objectionable than the double taxation involved in Woolwich, or the double assessment strictly so described in some of the rating cases, I would have acceded to Mr Beloff's argument and declared this valuation scheme unlawful at least with regard to the sale of these two power stations. In the event, however, I have concluded that Powergen's continued liability for central rates at an unchanged figure despite its disposal of the power stations is not intrinsically objectionable or at any rate not sufficiently so as to have required any more specific statutory authorisation than the 1988 Act provides. The situation here on analysis is not that Powergen was continuing to pay central rates on power stations no longer in its occupation or ownership: once these hereditaments were transferred they ceased to be treated as shown in the central rating list (s.67(9)(9A)) – which, indeed, is why they were thenceforth required to be shown in the relevant rating list (see s.42(1)(d)). Rather the position is that under this swings and roundabouts scheme Powergen was not entitled to a rating revaluation of its remaining hereditaments, and thus a recalculation of its rating liability, until the end of the rating year.
  68. That to my mind suggests a close analogy between this case and the Milford Haven case despite Mr Beloff's contentions to the contrary. He submits that we are dealing here with liability whereas the court there was concerned with valuation. He submits too that although in one sense Milford Haven could be classified as an example of double assessment, on true analysis the two rate payers were being assessed in respect of different benefits: the tenant for his occupation of the cottage, the Board for their occupation of other hereditaments and merely by reference to receipts. But that too seems to me the situation in the present case. Of course Powergen after the sale no longer enjoyed the benefits of the power stations or their DNC. But it was not continuing to be rated for these; rather it was rated on its remaining hereditaments according to a valuation which merely still reflected them.
  69. In Milford Haven the amount payable in respect of rates (whether one calls this the "liability to rates" or the "valuation for rates" seems to me in the present context a matter of semantics) was calculated (in part) by reference to the income from the cottage (which, as it happened, continued to be paid throughout the whole rating year) notwithstanding that the cottage was not occupied by the Board but rather was occupied by a tenant who paid rates separately in respect of his occupation. Here the amount payable in respect of rates was calculated (in part) by reference to the DNC of the two power stations notwithstanding that for part of the year they were occupied not by Powergen but rather by the appellant which paid rates separately in respect of its occupation. The suggested difference in principle between the two cases seems to me elusive. Insofar as it is said that the respondent's position would be stronger had Powergen charged the appellant rent during the remainder of the year I find it difficult to understand why. After all, these power stations were disposed of on long leases anyway.
  70. Even if, which I respectfully doubt but which the Judge below thought, the decision in Milford Haven does not completely cover the instant case, it seems to me that Powergen's continuing liability throughout the year for the valuation ascribed in the past to these power stations is no more objectionable than to have included in the Milford Haven assessment the cottage rent within the Board's income, and that the primary legislation here no less clearly than in Milford Haven contemplated and permitted the actual scheme adopted.
  71. In the result I would reject the appellant's first argument.
  72. The second argument

  73. I can deal altogether more briefly, as did the Judge below, with Mr Beloff's alternative submission that, even assuming power existed in the Secretary of State to make the scheme embodied in the 1994 Order, it was improperly exercised so as to result in this double payment.
  74. I accept, of course, Mr Beloff's submission that the mere fact that the exercise of a power falls within the four corners of the enabling legislation does not mean that it is immune from challenge if indeed it contravenes the principle of legality. I accept too his argument that the exercise of the Secretary of State's power to make the 1994 Order is reviewable on conventional grounds despite the Order having been subject to the affirmative resolution procedure and made in the field of "public financial administration". R v Secretary of State ex parte Nottinghamshire County Council [1986] AC 240 concerned a very much more complex area of public financial administration than this rating scheme, and the recent Court of Appeal decision in Javed v Home Secretary [2001] EWCA 789 demonstrates that an Order may be quashed even though both Houses of Parliament have approved it.
  75. The difficulties in the appellant's path are not these but rather to my mind that it cannot make good its basic contentions that this swings and roundabouts scheme was intrinsically confiscatory or discriminatory or unfair or irrational. Essentially, as it seems to me, the choice for the Secretary of State was between daily and annual recalculation of Powergen's rating liability. Daily recalculation would obviously be resource intensive; annual recalculation would inevitably involve Powergen escaping any liability for the commissioning of generator capacity during the year but not being relieved of any liability for decommissioning or disposal of generator capacity during the year. It was to my mind no more irrational or unfair that Powergen should continue to be liable despite decommissioning plant than that it should continue to be so liable despite selling plant (notwithstanding that such plant became immediately rateable under the local list), nor indeed than that it should not be liable despite commissioning new plant.
  76. I recognise, of course, that if, as occurred here, power stations were sold to someone other than National Power (the only other person designated for central rating) an additional rate burden – an immediate local list liability on the new owners – would be created. I am unimpressed, however, by the appellant's plea that this is unfair to it, that whereas for Powergen the scheme involves snakes and ladders, for it there were only snakes. The only reason why the appellant is liable to make two payments in relation to these power stations is because it chose to enter into a contract with Powergen under which (subject to dispute in the pending arbitration) it agreed to make one such payment to Powergen. In short, the adverse consequences of the scheme from the appellant's point of view are self-imposed.
  77. These same considerations to my mind provide a complete answer to the appellant's remaining contention that its liability to make these two payments in relation to the same power stations contravenes article 1 of the First Protocol of the European Convention on Human Rights.
  78. It follows from all this that I would reject the appellant's second argument also and in the result would dismiss this appeal.
  79. LORD JUSTICE MAY:

  80. I agree that this appeal should be dismissed for the reasons given by Simon Brown LJ, whose account of the facts I gratefully adopt. I have read Dyson LJ's judgment in which he concludes, in disagreement with Simon Brown LJ, that Parliament has not authorised the Secretary of State to introduce a scheme for determining central list non-domestic rateable values in a manner which could lead to double assessment. As I read his judgment, Dyson LJ agrees with Simon Brown LJ, as I do, that Mr Beloff's second main submission should be rejected. I shall accordingly confine this judgment to explaining in my own words why I agree with Simon Brown LJ on the double assessment issue.
  81. Section 53(1) of the Local Government Finance Act 1988 empowers the Secretary of State to designate by regulations a person and prescribe in relation to him one or more descriptions of relevant non-domestic hereditaments. This is "with a view to securing the central rating en bloc of certain hereditaments". By section 53(2), a central non-domestic rating list has to show, for each day in each chargeable financial year for which it is in force, each hereditament which on the day concerned is occupied, or (if unoccupied) owned, by the designated person. By section 53(3), for each such day the list has to show the rateable value "as a whole" of the hereditaments so shown. By section 67(9), a hereditament is to be treated as shown in a central non-domestic rating list for a day, if on that day it falls within a class of hereditaments shown for the day in the list.
  82. Section 54(1) of the 1988 Act provides that the ratepayer is to be subject to a central non-domestic rate for 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." By section 54(2) the ratepayer is liable to pay an amount whose calculation includes the chargeable amount for each chargeable day. By section 54(4) and (5), the critical element of the chargeable amount is the rateable value shown for the day in the list against the ratepayer's name. By section 54(3), a chargeable day is one which falls within the financial year and for which the ratepayer's name is shown in the list. Section 56 gives effect to Schedule 6, which provides for the determination of the rateable value of non-domestic hereditaments. Paragraph 2 of Schedule 6 enables the rateable value to be calculated on the basis of a hypothetical tenancy. Paragraph 3(2) of Schedule 6 enables the Secretary of State, in the case of non-domestic hereditaments to be shown in a central non-domestic rating list, by order to disapply paragraph 2, and to provide that their rateable value shall be such as is specified in the order or determined in accordance with prescribed rules. Such an order requires an affirmative resolution of each House of Parliament – see section 143(8).
  83. In his judgment in the present case, Carnwath J correctly summarised the effect of the relevant order as follows:
  84. "21. The order under consideration in the present case is the Electricity Supply Industry (Rateable Values) Order 1994, which came into force in December 1994, and provided the basis for the valuation of hereditaments in the electricity industry for the ensuing five years. It dealt with both local and central lists. The calculations were based on "declared net capacity" ("DNC"), that is the "highest generation of electricity … which can be maintained indefinitely without causing damage to the plant …" (less capacity consumed by the plant) (art 2). For power stations in local lists rateable value for any year from 1st April 1995 was fixed at £11,620 per megawatt of DNC."
    22. In relation to the central list a global approach was adopted. The two bodies principally concerned were Powergen plc and National Power plc. There were separate classes for England and Wales. The classes were defined by reference to the classes of hereditaments defined in the 1994 regulations. A rateable value for each such class for the year beginning 1st April 1995 was "specified" (defined as "T"); in the case of Powergen the figure for England was £178.8823m (arts 7(1), 8A(2)(a), schedule pt 1). (There was provision for an adjustment ("V") for changes between December 1994, when the figure was calculated, and April 1995, when it came into effect: (art 8A(2)). For each subsequent year, the specified amount was to be adjusted by reference to a "recalculation factor" (defined as "U"), designed to reflect any change in the total DNC of generating plant in the class, taken at 31st March in the immediately preceding year, as compared with 31st March 1995 (art 8A(2)(b),9).
    23. The basis on which the initial figure for Powergen was calculated does not appear from the Order itself. It is, however, common ground (and is evident from the contemporary documents) that the starting point was the net book value of the rateable assets as shown in Powergen's current cost accounts. Allowances were made for particular disabilities of the hereditaments, to leave the effective capital value, which was converted into an annual rateable value by the application of a 6% decapitalisation rate. (This corresponded to the so-called "contractor's basis" of rating valuation.)
    24. This figure embraced all property in England within the specified description. It included operational and non operational property, but focused primarily on property used for electricity generation. Items such as offices and other property not on operational land were "excepted" from the specified description. It is common ground that the rateable value of the class of hereditaments occupied by Powergen for the rate year beginning 1st April 1999 was assessed on the basis that the class included Fiddler's Ferry and Ferrybridge power stations."
  85. In Milford Haven Conservancy Board v. IRC [1976] 1 WLR 817, orders made under sections 35(1) and (2)(c) of the General Rate Act 1967 provided that the rateable value of the hereditaments of a dock or harbour undertaking extending to two or more hereditaments should be calculated as a percentage of "relevant receipts". These included the rents of parts of the dock or harbour undertaking which were let. The Milford Haven Board's relevant receipts included rent of a cottage which was separately rated. It was contended, therefore, that the orders in Milford produced double rating. Disregarding the terms of section 35, it was not in dispute but that it is a well established proposition of rating law that double assessment is not permitted. So where a tenant is assessed to rates, the landlord is not to be assessed as well. Cairns LJ said at page 824C, that it was clear that the cottage which was separately let was doubly assessed if the Board was rated in respect of it. But it was clear that Parliament can by statute override any existing rule of rating law, whether statutory or established by the courts. In his view, the language of section 35 of the 1967 Act was sufficiently clear to entitle the Secretary of State to prescribe any method of valuation, however far it departed from previously established principles. Nor did it appear that the orders dealt with liability to rates as distinct from valuation for rates, it could not be said that the orders sought to impose rates on the haven or on the dues, investment income or rents received. When the profits basis of valuation is adopted, it is not the profits which are being rated, but the hereditaments. Scarman LJ, at page 827E, was less happy on the question of double rating. It appeared wrong that rates should be paid twice. But this wrong did not avail the Board if, as Scarman LJ agreed, on their true construction the orders were concerned only with method of valuation. Cairns LJ continued at page 824H:
  86. "But is the method prescribed by the Orders a method of valuation at all? If what was required by section 35 to be assessed were the net annual value I should be inclined to say that the Orders could not fairly be considered to be directed to ascertaining that value. But rateable value, whenever it departs from net annual value, either by being related to net annual value in some specific way or by being assessed without reference to net annual value, is an artificial concept. The profits basis of valuation was a means of estimating the rent that the hypothetical tenant would pay: see the Kingston case [1926] A.C. 331, 339. But none of the methods of assessment under sections 31 to 35 have that character. Water, gas and electricity undertakings are dealt with on the basis of supply. Mines and quarries (other than National Coal Board properties) are given a rateable value ascertained by applying a fraction, at first three-quarters and later a half, to the rateable value previously assessed. No complaint is made by the Board of the method of applying a percentage to receipts, so long as the definition of relevant receipts is not too wide."
  87. In the present case, Carnwath J considered that there clearly was double assessment. For the period after July 1999, the Secretary of State received payments relating to the power stations from both Powergen and Edison. He then addressed the question whether the double assessment was permitted by the statute. It was emphasised on behalf of the Secretary of State that the Milford Haven case showed the width of the discretion given to the Secretary of State. The language of paragraph 3 of Schedule 6 of the 1988 Act conferred a similar wide discretion to that in section 35 of the 1967 Act. As Cairns LJ pointed out, in the Milford Haven case there was no issue as to the occupation by the Board of the relevant hereditaments during the period under consideration. In the present case, Edison's case both before Carnwath J and on appeal was that Powergen were not in rateable occupation for the relevant period so that the issue was one of liability, not valuation. The judge accepted that central and local lists are mutually exclusive as to the inclusion in them of hereditaments – see section 42. And he accepted that in principle liability is imposed on a daily basis – see sections 43 and 54. Mr Beloff also laid stress on the feature of occupation in section 53(2) as the critical criterion for inclusion of a hereditament in a central non-domestic rating list. The judge nevertheless concluded that it was the central list scheme which resulted in Powergen being liable in respect of a period when they did not occupy the two power stations. That seemed to him to be inherent in the statutory scheme. He emphasised four features, expressly authorised by the statute itself, as follows:
  88. "(1) the Powergen hereditaments are not required to be shown individually in the list but may be identified as a class, expressed by reference to Powergen's occupation (s 67(9));"
    (2) they are intended to be rated "en bloc", and valued "as a whole" (s.53(1)(2));
    (3) liability falls on a person for any day in which his name appears in the valuation list (s 54(1)), and does not depend on occupation on that day (as under the local list – see s 43(1)(a));
    (4) the calculation of the daily amount of the charge is based on a formula which takes no account of changes in occupation, but simply takes an annual rateable value, divided by the number of days in the year (s 54(4)-(7))."
  89. The judge considered that it was implicit in this structure that the daily charge would continue to fall on the designated person, so long as his name remained in the list, and would be calculated by reference to the same annual value, determined in aggregate for the class, regardless of changes during the year in the hereditaments making up the class.
  90. Mr Beloff accepted that the judge's four reasons were correctly expressed so far as they went, but he submitted that they failed to take account of other features of the legislation. It is correct that the hereditaments are not required to be shown individually but may be identified as a class, but the class description is not a theoretical generic concept but a group of physical hereditaments occupied by Powergen on a day. If occupation ceases, it ceases to be treated as shown on the central list for that day. It is accepted that the aim of the legislation is to secure central rating en bloc to be valued as a whole, but Mr Beloff suggests that section 53(2) provides that the hereditaments which are to be rated and valued are those which are occupied by Powergen "on the day concerned". The valuation has to relate not to the theoretical generic class, but to the physical hereditaments in that class on the day concerned. Although there is liability on a day if a person is named in the list on that day, the amount of that liability depends on his occupation on that day of particular hereditaments and, if there is no occupation, to that extent there is no liability. Although the judge was correct that the daily amount of the charge is based on a formula, that formula does enable account to be taken of changes in occupation, because rateable value in the formula is defined as the rateable value shown for the day which is based on the value as a whole of the hereditaments occupied by Powergen on that day.
  91. In my judgment, although this legislation does not positively prescribe provisions for the calculation of rateable value as a whole such as were made in the Order under consideration, neither does it compel a conclusion that a calculation of global rateable value subject to recalculation annually is impermissible. In my view, section 53, with section 67(9), provides, not for liability, but for the contents of central lists. These include the designation of the person on a central list and the hereditaments as a class to which the entry on the list relates. It also has to show the rateable value of the hereditaments as a whole. But liability for central rating is provided in section 54, and this arises if the person's name is shown on the central non-domestic rating list in force for the year. The chargeable amount which the person is liable to pay depends on the rateable value shown for the day in the list against his name. Provisions for valuation are in Schedule 6, and these empower the Secretary of State to make regulations for the determination of the rateable value in the case of non-domestic hereditaments to be shown on a central non-domestic rating list. Questions relating to double assessment apart, paragraph 3(2)(b) of Schedule 6 is amply wide enough to empower the making of regulations such as were made. Accordingly, I consider that the critical issue in this appeal is that relating to double assessment generally.
  92. It would, I think, be odd if the legislation to which I have referred did not empower the method of valuation for central list non-domestic rating provided for in the 1994 Order, including an annual recalculation of rateable value as at 31st March each year. The facts of this case exemplify the oddity. Edison are properly liable for local non-domestic rates for the two electricity power stations from 19th July 1999 to 31st March 2000. That is Edison's only liability under the rating legislation for these power stations. They entered into a contract with Powergen which, subject to arbitration, obliged them to pay Powergen an amount calculated by reference to Powergen's liability for rates. This liability of Edison accordingly arises contractually, and not under the rating legislation. Powergen do not themselves object to the consequences for them of the central list rating legislation for which the Secretary of State contends. On the contrary, they support the Secretary of State in these proceedings. Thus, for the period in question, Edison are only liable for one lot of rates; and Powergen do not object to the rating system which is said to give rise for their liability for another lot of rates for the same power stations. This is not, I think, a blatant merits point only. This court is unanimous with Carnwath J, rejecting Mr Beloff's second submission, in concluding that, if the Secretary of State had power to make the 1994 Order, that power was neither improperly nor irrationally exercised. But these facts, in my view, also indicate that the nature of any double assessment to which the 1994 Order may give rise must be carefully considered.
  93. Carnwath J concluded that the facts of this case amounted to double assessment. Dyson LJ has explained analytically why he agrees that there was double assessment. In a sense, of course, there was, because Edison paid local list non-domestic rates for each of the two power stations for the period from 19th July 1999 to 31st March 2000; and Powergen paid central list non-domestic rates for the year which included that period upon a global valuation part of which derived from their occupation and potentially profitable use of the two power stations. But, on one view at least, Edison were, for the period in question, paying rates on the two power stations; Powergen were paying rates under the 1994 Order for the whole year en bloc for their hereditaments wholly or mainly used for the purposes of the generation of electrical power or for ancillary purposes. Edison's liability arose because they were occupiers; Powergen's because they were designated on a central list. I do not consider that this is straight forward double assessment. I agree with Simon Brown LJ that it is preferable to address the double assessment issue in this appeal as a single question, whether Parliament authorised the making of an order in the terms of the 1994 Order under which Powergen's liability for rates was not reduced when they disposed of the power stations. I agree with Mr Drabble that the central question is whether it was impermissible to have a central list rating valuation system in which revaluation takes place annually and not, if necessary, more frequently, if constituent hereditaments of the en bloc rating valuation are disposed of or acquired. I agree with Dyson LJ and Mr Beloff that the answer would have to be that it was impermissible, if it is necessary to find in the legislation positive, explicit provision to that effect. Paragraph 3(2) of Schedule 6 of the 1988 act is not positive and explicit in this way and, as Mr Drabble accepted there was no necessary requirement for annual revaluation for central non-domestic rating.
  94. My view that this is not straightforward double taxation means that I am not persuaded that this appeal raises without qualification the presumption against double taxation referred to by Lord Oliver in R v. IRC ex parte Woolwich Equitable Building Society [1990] 1 WLR 1400 at 1412. Mr Beloff's submission to the contrary is, I think, over-analytical and does not take sufficient notice of the scheme and purpose of central list non-domestic rating. Simon Brown LJ has explained what this scheme and purpose is. A short account of the earlier history which led to the provisions presently under consideration is to be found in the judgment of Cairns LJ in the Milford Haven case at page 820. There are obvious problems if property distributed throughout the country and occupied by those who operate railways or canals, or supply gas or electricity, or provide telecommunication services, were to be valued for rating purposes as the net annual value of hypothetical tenancies. There are obvious advantages, both for those who calculate and collect the rates and for the undertakings who pay them, to have a less complicated en bloc system of valuation. Within such a system, revaluation no more frequently than once a year may well be sensible. An en bloc system may result in a degree of approximation and in temporary anomalies. In these circumstances, it seems to me that any presumption against the kind of double assessment with which this appeal is concerned is at best weak. If, contrary to my inclination, authority requires this court to confront a presumption, it can, as Lord Oliver said, be rebutted "by circumstances surrounding the enactment of the particular legislation which lead to an inevitable inference that Parliament intended … that these presumptions or principles should not apply".
  95. I do not accept Mr Beloff's submission that Carnwath J, having correctly asked whether double assessment was permitted by the statute, wrongly reduced the question to whether it was inherent or implicit. It is commonplace that cases are won or lost, and the conclusion of judgments are fashioned by the formulation of what is regarded as the right question to ask and answer. For the reasons which I have given, I think that the heart of the matter in this appeal is whether a method of central list non-domestic rating with annual revaluation likely to result in a degree of approximation is permitted by the statute. I agree with Carnwath J's conclusion that it is, essentially for the reasons which he gave. If authority requires me to say that is an "inevitable inference", I think that it is. The fact that there admittedly were and are other means of constructing a method of valuation for central list non-domestic rating does not seem to me to exclude the conclusion that the system in fact adopted for Powergen was permitted by the statute. The facts of this case and the relevant statutory provisions are not in substance exactly the same as those considered in the Milford Haven case. But in this case, as in the Milford Haven case, the court is concerned with a method of valuation to determine rateable value, not with liability. In the Milford Haven case, the methods of assessment for the undertakings which Cairns LJ considered did not estimate the rent that the hypothetical tenant would pay. As it happens, the method adopted for Powergen had an initial rateable value derived from a property calculation, but the annual recalculation by reference to output. However that may be, I consider that the statutory structure in the 1988 Act for central list non-domestic rating envisages rateable value as just as much an artificial concept as the structure considered in the Milford Haven case. It was, no doubt, in part because valuation on the basis of hypothetical tenancies would or might be inappropriate that the Secretary of State was empowered to disapply paragraph 2 of Schedule 6; and for the same reason that liability is global and does not depend on occupation, but presence on the central list. In the result, an artificially constructed rateable value is, I think, clearly anticipated. The submission that the rateable value has to change whenever the hereditaments change ignores the reasons why artificiality is permitted and in my judgment fails.
  96. LORD JUSTICE DYSON:

  97. The central question that arises on this appeal is whether the Electricity Supply Industry (Rateable Values) Order 1994 ("the ESI Order") was ultra vires paragraph 3(2) of Schedule 6 to the Local Government Finance Act 1988 ("the 1988 Act") in so far as it provided for recalculation of the rateable value at no more than yearly intervals.
  98. Double assessment?

  99. At the heart of Mr Beloff's case is the submission that, as illustrated by the facts of this case, in the event of the transfer of a hereditament from the central list to a local list, article 8 is capable of giving rise to a "double assessment" to rates, and that it is therefore ultra vires the 1988 Act. For reasons that I shall explain, I agree with the judge that there was double assessment on the facts of this case. Between 19 July 1999 and 31 March 2000, both Edison and Powergen were liable to pay rates in respect of the two power stations that were the subject of the transfer. I shall explain shortly in what sense I mean "in respect of" in this context. Mr Drabble counsels caution over the use of the label "double assessment". He submits that after 19 July 1999, Powergen was not liable to pay rates in respect of the two power stations that had been transferred to Edison. Rather, they were paying rates in respect of the remaining hereditaments which were too high because their rateable value could not be adjusted to reflect the transfer of the two power stations until the end of the rating year. This argument has found favour with Simon Brown LJ.
  100. It is clear that Powergen was liable to pay rates calculated by reference to the Declared Net Capacity ("DNC") inter alia of the two power stations from 1 April 1999 until the transfer to Edison on 19 July 1999, and that from the date of transfer until the end of the chargeable financial year it continued to be liable to pay rates calculated by reference to the DNC inter alia of the same two power stations. As a matter of form, it may be said that after the date of transfer Powergen was no longer liable to pay rates in respect of the power stations, because they had ceased to be treated as shown on the central list. This is because section 53(3) provides that the central list must show the rateable value of the hereditaments that are shown on the list. But in reality, the position was otherwise. After the transfer, the rateable value of the remaining hereditaments remained unchanged: it continued to reflect the previous value ascribed to the two power stations, and Powergen continued to be liable (on a daily basis) for rates as before the transfer. The method of calculation and the amount payable were unaffected by the transfer. In reality, therefore, Powergen continued to be liable to pay rates in respect of the two power stations notwithstanding the transfer in respect of a period during which Edison was also liable to pay rates calculated in more or less the same way in respect of the same two power stations.
  101. The position may be summarised in this way. After the transfer, as a matter of form, Powergen was no longer liable to pay rates in respect of the two power stations because they were no longer shown on the central list. But in reality it continued to be liable to pay rates in respect of the power stations because it was not entitled to a rating revaluation of its remaining hereditaments until the end of the rating year. It seems to me that these two propositions are not mutually exclusive. Both are true. It is only if one concentrates on the first and ignores the second that it is possible to say that there was no double assessment on the facts of this case. In fact, it is precisely because Powergen was not entitled to a revaluation of its remaining hereditaments to reflect the transfer of the two power stations that both it and Edison were liable to pay rates in respect of the same hereditaments during the same period.
  102. Simon Brown LJ is of the opinion that this is not a case of "double assessment" strictly so described in some of the rating cases, and it is not intrinsically objectionable or sufficiently objectionable to have required more specific authorisation than the 1988 Act provides. Rates are a form of taxation. The principle against double assessment is well-established. There is a presumption that no more than one person is to be liable to pay rates in respect of the same hereditament for the same rating period. That presumption may be rebutted if sufficiently clear express words are used, or where there is an inevitable inference that parliament intended that the presumption should be displaced.
  103. In my judgment, whether the case is properly to be viewed as one of double assessment depends on an examination of the circumstances as a matter of substance, rather than form. It is only if one concentrates on form that it can properly be said that after 19 July 1999, Powergen was not liable to pay rates in respect of the two power stations, because they ceased to be treated as shown on the central list. But as a matter of substance, nothing changed on 19 July so far as the liability of Powergen to pay rates in respect of the power stations was concerned. It continued for the rest of the rating year to pay the same amount calculated in the same way as before, ie by reference to the same DNC.
  104. I need at this stage to refer to Milford Haven Conservancy Board v IRC [1976] 1 WLR 817 to see whether it compels or at least suggests a different conclusion. Simon Brown LJ has already sufficiently set out the facts and cited the relevant parts of the judgments of Cairns and Scarman LJJ. I agree that the ratio of that decision is that the Orders in question did not deal with liability to rates as distinct from the method of valuation: Cairns LJ (page 824G) and Scarman LJ (page 827F). The boundary between valuation and liability will usually be obvious. But occasionally, it may be difficult to define. Where the boundary is, and whether it has been crossed, will depend on the circumstances of the particular case. The divide between valuation and liability does, however, exist, and was recognised in Milford Haven.
  105. In Milford Haven, the cottage was rated twice, or formed the basis of an assessment twice: first by reason of the tenant's occupation, and secondly, by reason of the landlord's ownership from which it derived a benefit (the "relevant receipt"). In the present case, there was no connection whatsoever between Powergen and the two power stations after 19 July 1999. It seems to me that in substance the present case is not about the method of valuation of the remaining hereditaments after 19 July. Rather, it is about whether Powergen should have been held liable to pay rates at all in respect of the two power stations after it had ceased to have any connection with them, and at a time when Edison was in occupation. I do not consider that the Milford Haven case compels or suggests a different conclusion on the double assessment issue from the one that I have already reached.
  106. I would, therefore, hold (in agreement with the judge) that this is a double assessment case in the sense that between 19 July 1999 and 31 March 2000, both Edison and Powergen were liable to pay rates in respect of the same hereditaments.
  107. In my judgment, the real question that arises on this appeal is whether the provisions of the 1988 Act (read as a whole) are sufficient to authorise the exercise of the powers conferred by paragraph 3(2) of Schedule 6 in such as way as to achieve this result. That was considered to be the central question by the judge, and I agree with him. I turn now to consider that question.
  108. Was double assessment authorised?

    The decommissioning analogy

  109. Mr Drabble submits that what happened when the power stations were transferred out of the central list into the local list was not different in principle from what would have occurred if instead Powergen had decommissioned the power stations during the financial year. In that event, it is clear that there could be no recalculation of the rateable value until the next financial year, but it is not suggested that, in so far as articles 8 and 9 of the ESI Order have that effect, they are ultra vires the 1988 Act. In my view, the analogy between a transfer out of the central list into the local list with what occurs on a decommissioning is not convincing. On a transfer, the power station ceases to be occupied and owned by the ratepayer, and is transferred into the ownership and occupation of another ratepayer. In the event of a decommissioning, the position is quite different. Ownership remains vested in the first ratepayer, and there is no question of double assessment to rates. What occurs is that the method of valuation that is chosen for the financial year disregards the fact that the hereditament is no longer in use and occupation. Section 53(2) of the Act is relevant here. It provides that where the regulations made under section 53(1) so require (and they do: see regulation 6 of the Central Rating Lists Regulations 1994), a central list must show for each day the name of the designated person, and against it each hereditament 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". The same concept of occupation or ownership of a hereditament appears in section 67(9A) for the purposes of defining the class of hereditaments to which a hereditament must belong if it is to be treated as shown on the central list. Thus the 1988 Act expressly provides that the central list must show each hereditament which on the day concerned is occupied or (if not occupied) is owned by the person named on the list. Accordingly, a decommissioned power station which was no longer occupied, but was still owned by Powergen would continue to be shown on the list. It is common ground that once Powergen ceased either to occupy or own a power station, then the hereditament was to be treated as no longer shown on the list.
  110. Is the presumption against double assessment rebutted?

  111. It is common ground that, if (as I consider to be the position) this is to be regarded as a double assessment case, then the decisive question is whether the Act and/or the circumstances surrounding its enactment sufficiently clearly show that parliament intended to authorise the Secretary of State to make an order under paragraph 3(2) of Schedule 6 which could give rise to double assessment: see the speech of Lord Oliver in R v Inland Revenue Commissioners ex p Woolwich Building Society [1990] 1 WLR 1400, and in particular, the passage already cited by Simon Brown LJ at page 1412-1413.
  112. Having stated (at paragraph 27 of his judgment) that there was no dispute that there was a presumption against double taxation, rebuttable only by express words or by inevitable inference, the judge asked himself (at paragraph 35) the question whether Parliament had expressly or impliedly empowered the making of an order which permitted double assessment. He then went on (at paragraph 41) to say that it was "implicit" in the structure of the Act that the daily charge to rates would continue to fall on the designated person so long as his name remained in the list, and that it would be calculated by reference to the same annual value, determined in aggregate for the class, regardless of changes during the year in the hereditaments making up the class.
  113. I take it that by his use of language such as "inherent in the statutory scheme" and "implicit in this structure" he was deciding that the presumption against double assessment was rebutted by the language of the 1988 Act.
  114. The language of paragraph 3(2) itself yields no clue as to how the discretion conferred on the Secretary of State may be exercised. It simply permits the Secretary of State in respect of non-domestic hereditaments to be shown on a central list (a) to disapply the rules for determining rateable values of individual hereditaments that appear in paragraph 2 of Schedule 6, and (b) to order that "their rateable value shall be such as is specified in the order or determined in accordance with prescribed rules". It does not confer an unfettered discretion on the Secretary of State. The discretion has to be exercised in accordance with the spirit as well as the letter of the Act. More particularly, it cannot be exercised so as to produce a scheme in which double assessment is possible unless it is plain that this is what Parliament intended. Such an intention cannot be inferred from the open-ended language of paragraph 3(2) alone.
  115. Mr Drabble submits that it is crystal clear that in enacting paragraph 3(2) of Schedule 6 Parliament intended to authorise the making of an order which fixed a single figure for the rateable value of a large number of hereditaments that would not necessarily be adjusted each time there was a transfer of a hereditament out of the central list into a local list. He submits that this intention is to be derived from the statutory context as a whole, and in particular the four features relied on by the judge at paragraph 40 of his judgment to uphold the judge's conclusion.
  116. The four features relied on by the judge

  117. It is, therefore, necessary to examine the four features relied on by the judge to see whether they do sufficiently clearly show that parliament intended to authorise the Secretary of State to exercise the paragraph 3(2) power so as to allow for double assessment. Since they are so important, I shall set them out:
  118. ""(1) the Powergen hereditaments are not required to be shown individually in the list, but may be identified as a class, expressed by reference to Powergen's occupation (s 67(9));
    (2) they are intended to be rated "en bloc", and valued "as a whole" (s 53(1)(3));
    (3) liability falls on a person for any day in which his name appears in the valuation list (s 54(1)), and does not depend on occupation on that day (as under the local list—see s 43(1)(a));
    (4) the calculation of the daily amount of the charge is based on a formula which takes no account of changes in occupation, but simply takes an annual rateable value, divided by the number of days in the year (s 54(4)-(7))."
  119. It is these four features that led the judge to say that it was "implicit in this structure" that the daily charge would continue to fall on the designated person so long as his name remained on the list, and would be calculated by reference to the same annual value determined in aggregate for the class regardless of changes during the year in the hereditaments making up the class.
  120. It certainly cannot be said that the structure of the 1988 Act required the Secretary of State to make an order under which the rateable value was recalculated at no more than annual intervals, or to make an order under which the rateable value was not to be recalculated whenever there was a transfer of a hereditament from the central list to the local list. Indeed, Mr Drabble concedes that an order which required the aggregate rateable value of all the hereditaments shown on the central list to be recalculated whenever there was such a transfer would be intra vires the Act. In these circumstances, it is difficult to see in what sense such an order is "implicit" in the structure of the 1988 Act.
  121. In my view, the four features do not indicate a clear intention on the part of parliament to authorise the Secretary of State to produce a scheme under which double assessment was possible. It is true that the central list does not require each hereditament to be shown individually, and that they may be shown as a class expressed by reference to Powergen's occupation or ownership, but that says nothing about the frequency at which the rateable value is to be recalculated or the criteria by which that frequency is to be determined. It is also true that the hereditaments (identified as a class) are to be rated "en bloc" and valued "as a whole". But that is dealing with the hereditaments that are shown from time to time on the list. It says nothing about the circumstances in which the rateable value may be altered. It is true that a person is subject to a non-domestic rate in respect of a chargeable financial year if for any day his name appears in a central non-domestic rating list in force for the year. But that says nothing about the calculation of the chargeable amount. For that one must turn to section 54(2)-(7).
  122. As for the judge's fourth point, I do not agree that the daily amount of the charge is based on a formula which takes no account of changes in occupation, but simply takes an annual rateable value divided by the number of days in the year. If that were a correct analysis of the effect of section 54(4)-(7), then paragraph 3(2) would have to be construed as not empowering the Secretary of State to make an order under which the rateable value could be recalculated at other than annual intervals. That would be inconsistent with the concession made by Mr Drabble to which I have already referred. But I do not consider that section 54 does provide that the rateable value may not be changed other than annually. The letter A in the formula is the rateable value "shown for the day in the list against the ratepayer's name". Section 53(3) provides that for each day in each chargeable year for which the list is in force, the list must show against the name of the designated person the rateable value (as a whole) of the "hereditaments so shown". The words "so shown" refer back to section 53(2) which provides that a central list must show for each day in each chargeable financial year for which it is in force each hereditament which on the day concerned satisfies the criteria in subparagraphs (a) and (b). Section 53(3) does not state that what must be shown is the rateable value of the hereditaments that were occupied or (if unoccupied) were owned by the designated person at the beginning of the chargeable financial year. What must be shown in the list is the rateable value of each hereditament which on the day concerned satisfies the criteria in section 53(2). It is true that the Act does not specify a mechanism for adjusting the rateable value for the purposes of applying the formula in section 54(4). But I fail to see how the provisions of section 54 (4)-(7), when read in conjunction with section 53(2) and (3) show that Parliament intended that the rateable value could only be adjusted at annual intervals. If anything, it seems to me that the statutory wording points strongly the other way.
  123. In my view, therefore, the four features do not show that Parliament required that the paragraph 3(2) power should be exercised so as to produce a scheme under which the rateable value could only be adjusted at annual intervals, or that it could not be adjusted if a hereditament ceased to be occupied or owned by a person whose name was shown on the central list. In my judgment, there is nothing in the language of the Act which points to the conclusion for which Mr Drabble contends.
  124. I can see that it might well be very convenient not to have to adjust the rateable value of the hereditaments shown on the central list each time a hereditament ceases to be occupied and (if unoccupied) owned by the person named in the list. Indeed, Mr Drabble suggested that if it were necessary to make an adjustment in each time there were a transfer, that would be very onerous for the rating authorities. The evidence of Mr Rogers shows that so far as Powergen and Edison were concerned, the change in rateable value resulting from the transfer of the two power stations to Edison involved a very simple calculation. But I can accept that in other circumstances, and perhaps in the case of other industries which are subject to the central list, the position might well be more complicated and time-consuming. Unless compelled to do so by the clearest language, the courts should not impute to Parliament an intention to produce an absurd result. But on the material that has been placed before us, it is not even suggested that the construction of the 1988 Act contended for by Edison is absurd. In a letter dated 8 September 1998, the Department wrote that "in the interest of good administration" it was decided to make only one adjustment a year based on the position as at 31 March. In my view, that is not a sufficiently cogent consideration to justify imputing an intention to Parliament to authorise the Secretary of State to introduce a scheme for determining rateable values in a manner which could lead to double assessment.
  125. For the reasons that I have given, I do not find any indications in the 1988 Act that Parliament so intended. On the contrary, it seems to me that section 54(5) when read in conjunction with section 53(2) and (3) points the other way.
  126. I would therefore allow this appeal on the grounds that the 1988 Act does not empower the Secretary of State to make an order which allows double assessment. I would not, however, have granted relief any wider than necessary to remedy the effects of the ESI Order on Edison. In particular, I would not have quashed the ESI Order in view of the fact that it has been in force for several years, and parties affected have regulated their affairs on the basis of it accordingly.
  127. Other issues

  128. For completeness, I should add that I am in complete agreement with what Simon Brown LJ says on the remaining issues.
  129. ORDER: Appeal dismissed by a majority. The appellant to pay the respondent's costs of the appeal. Permission to appeal to the House of Lords refused.
    (Order does not form part of approved Judgment)


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