Whether both parties paying rates in respect of same hereditaments over same period of time amounting to double taxation — Whether wording of Local Government Finance Act 1988 displacing presumption against double taxation — Appeal dismissed
Powergen UK plc agreed to sell two power stations to Edison First Power Ltd. The purchase was completed and Edison took up occupation in July 1999. Powergen was rated under a special statutory scheme comprising the Local Government Finance Act 1988 and the Electricity Supply Industry (Rateable Values) Order 1994 (SI 1994/3282) (the ESI Order). Its rates were assessed as a fixed sum per year, which meant that the disposal of hereditaments during that period did not affect its rates assessment for that year. Edison was rated in the ordinary way as from the date of its occupancy of the two hereditaments.
Edison claimed that, as a result, the Secretary of State was receiving two lots of rates in respect of the same hereditaments, which amounted to double taxation. Since its own liability, based upon its occupation, was not open to challenge, it disputed the legality of the Powergen rating scheme, arguing that the ESI Order was ultra vires and void in so far as it imposed a liability upon Powergen in respect of the power stations as from 19 July 1999, the date upon which Edison had become the occupier.
Held: The appeal was dismissed.
Per Lord Hoffmann: The presumption that a statute should not be construed as imposing or allowing double taxation was rebuttable if clear, express words were used, or if circumstances surrounding the enactment of the particular legislation led to the inevitable inference that parliament intended that those presumptions should not apply; see R v Inland Revenue Commissioners, ex parte Woolwich Equitable Building Society [1990] 1 WLR 1400. In the present case, the question was whether the wording of para 3(2) of Schedule 6 to the Act was sufficiently clear or was appropriately contextualised to authorise such a proceeding. The historical background of the statute was therefore admissible as evidence.
Prior to the Act, public utilities, including nationalised electricity corporations, were assessed upon the basis of their national undertaking (a global valuation) rather than upon a location-specific rateable value. This was done by way of an annual figure prescribed by parliament and adjusted by way of a formula. Therefore, any hereditament that a nationalised corporation was treated as occupying was entirely notional, and the disposal of any specific hereditament in the course of a year would have no direct effect upon that public utility’s overall rateable liability. Against that background, the purpose of para 3 was to allow for the retention of the existing system.
Under the formulaic rating system, the hereditaments occupied by Powergen were considered en bloc for rateable purposes, and the sale of one or more of them would not affect Powergen’s liability, as assessed for the purposes of that rating year. On that basis, the ESI Order was not ultra vires.
Per Lord Millett: The central question was whether, upon its true construction, para 3(2) of the Act authorised so radical a departure from the conventional principles of rating as established in Part III of the ESI Order. The answer was yes. It gave the Secretary of State the express power to disapply the conventional methods of valuation and substitute a different, albeit unconventional, but not irrational, one. It expressly authorised him to specify the rateable value of Powergen’s hereditaments as a single global sum.
The apparent double recovery by the Secretary of State was therefore illusory because it resulted from the provision for annual adjustment.
Per Lord Bingham of Cornhill (dissenting): Both parties paid rates over the same period in respect of the same hereditament. The Secretary of State received payment twice. It was therefore a case of double recovery so as to engage the presumption against double taxation. Neither party suggested that the presumption against double taxation was displaced by sufficiently clear, express statutory words. Thus, the question was whether the circumstances surrounding the enactment of the legislation raised the inevitable inference that, in using the words that it had in the Act, parliament intended to displace the presumption.
The proper construction of Schedule 6 to the Act did not authorise the Secretary of State to prescribe rules that would permit the double recovery of rates. Certainly, no “inevitable inference” could be drawn that parliament intended to authorise such a proceeding. On that basis, Edison should succeed.
Per Lord Steyn (dissenting): On balance, the statutory language was susceptible to different interpretations, and did not give sufficiently clear authorisation for a scheme of double recovery. On that basis, Edison should succeed.
Michael Beloff QC, Nigel Pleming QC and Christopher Lewsley (instructed by Jones Day Gouldens) appeared for the appellant; Richard Drabble QC and Timothy Mould (instructed by the Treasury Solicitor) appeared for the respondent.
Vivienne Lane, barrister
