R v. Central Valuation Officer & Ors

Factual and Procedural Background

The Appellant purchased two coal-fired power stations from Company A on 19 July 1999. Under a long-standing “formula rating” regime created by the Electricity Supply Industry (Rateable Values) Order 1994, Company A remained liable for central list rates that had been calculated at the start of the 1999-2000 financial year. Following completion of the sale, the power stations were entered on local rating lists, rendering the Appellant liable for local rates as the new occupier. Consequently, the Secretary of State received rates calculated on the same hereditaments from both Company A (central list) and the Appellant (local list) for the period 19 July 1999–31 March 2000. The Appellant had also contractually indemnified Company A for the apportioned central rates (about £13.5 million).

Contending that this amounted to impermissible double recovery and that the 1994 Order was ultra vires the Local Government Finance Act 1988, the Appellant sought judicial review. Judge Carnwath dismissed the claim. A majority of the Court of Appeal affirmed that decision; Judge Dyson dissented. The Appellant appealed to the House of Lords.

Legal Issues Presented

1. Does paragraph 3(2) of Schedule 6 to the Local Government Finance Act 1988 authorise the Secretary of State to prescribe a central rating formula that leads to rates being paid by two different occupiers in respect of the same hereditament during the same period?
2. If so, is the resulting “double recovery” so unreasonable or oppressive that it must be disallowed unless Parliament’s intention is expressed in clear terms?

Arguments of the Parties

Appellant's Arguments

• Rates are generally payable by only one occupier at any given time; a strong presumption exists against double rating.
• The 1988 Act contains no express words permitting rates to be levied twice on the same hereditament; therefore paragraph 3(2) must be read narrowly.
• The 1994 Order’s annual-recalculation mechanism unlawfully delays any adjustment following disposal of a power station, producing an unfair windfall for the Respondent.

Respondent's Arguments

• Paragraph 3(2) grants a broad power to disapply conventional valuation and introduce formula rating; historic practice since 1948 shows Parliament contemplated annual adjustments.
• The scheme is rational and pragmatic, avoiding continual recalculations across many localities.
• Any “double recovery” is incidental, mitigated by advantages that utilities may obtain in other years (“swings and roundabouts”).

Table of Precedents Cited

Court's Reasoning and Analysis

The House split 3-2.

Majority (Judges Hoffmann, Millett, Scott):

• Paragraph 3(2) deliberately continues the long-standing formula-rating system for public utilities; its language (“such as is specified … or determined in accordance with prescribed rules”) is ample to authorise global valuations and annual recalculation.
• Historical context—from nineteenth-century “profits methods” through post-1948 formula rating—shows Parliament accepted schemes in which liability did not fluctuate daily with changes in occupation.
• The alleged double recovery is incidental and not oppressive: disposals can disadvantage a utility in one year but early commissioning of new plant can advantage it in another (“swings and roundabouts”).
• Because the scheme is rational and procedurally consulted upon, it is not ultra vires nor a violation of property rights.

Minority (Judges Bingham, Steyn):

• The presumption against rating two parties for the same hereditament is “well-established.”
• No “clear express words” or “inevitable inference” in the 1988 Act displaces that presumption.
• The 1994 Order therefore exceeds the statutory power in so far as it permits double recovery.

Holding and Implications

APPEAL DISMISSED.

The House of Lords held that the Local Government Finance Act 1988 authorised the Secretary of State to implement a formula-rating scheme that, in practice, can cause two rate payments on the same hereditament within one financial year. The decision preserves the flexibility of wide enabling powers in Schedule 6 and confirms the continuing legality of global, annually adjusted valuations for centrally listed public-utility undertakings. No new precedent was created on human-rights grounds, but the judgment clarifies the limited strength of the presumption against double rating when weighed against explicit statutory context.