Reaffirming the Primacy of Statutory Rating-Appeal Remedies over Judicial Review in Non-Domestic Rates Avoidance
A Detailed Commentary on Bridgeport Estates Ltd v Highland Council [2025] CSOH 69

1. Introduction

The Outer House of the Scottish Court of Session, per Lord Braid, has delivered an important decision that clarifies two interconnected points of Scottish administrative and rating law:

1. The exclusive or near-exclusive role of the statutory appeal procedure contained in s.238 of the Local Government (Scotland) Act 1947 (“the 1947 Act”) when a non-domestic rates liability has been imposed; and
2. The evidential threshold and evaluative approach a local authority may adopt when treating an owner as liable for rates under the 2023 Anti-Avoidance Regulations.

The petitioner, Bridgeport Estates Ltd (“Bridgeport”), sought judicial review of Highland Council’s determination that the company, as owner of 14 Inglis Street, Inverness, was liable for non-domestic rates notwithstanding a nominal £1 lease to companies claiming religious-use exemption. Lord Braid refused the petition on competence grounds, holding that the statutory appeal remedy under s.238 constituted an effective, alternative path that had to be pursued first. He nevertheless examined merits obiter, finding the Council’s decision neither unlawful nor irrational.

2. Summary of the Judgment

• Competency Ruling: The petition was incompetent because Bridgeport failed to utilise the statutory rating-appeal procedure set out in s.238. Judicial review lies only in “exceptional circumstances”, which were absent here.
• Alternative Remedy Effective: A s.238 appeal would have provided a “root-and-branch” reconsideration, including fact-finding, making it an “effective” remedy.
• No Exceptional Circumstances: The petitioner’s failure to lodge a rating appeal (due to forwarding only the first page of the demand notice) was an error of its own making and not “exceptional”.
• Merits (obiter): Even if the petition were competent, the Council’s findings— particularly that a £1 rent was “significantly below” market level and that the arrangement lacked commercial substance—were rational and legally tenable.
• Outcome: Petition refused; competency plea sustained; expenses reserved.

3. Detailed Analysis

3.1 Precedents Cited and Their Influence

Lord Braid anchored his competency analysis on a line of authority that favours statutory remedies:

1. British Railways Board v Glasgow Corporation (1976 SC 224)
   
   Inner House affirmed that judicial review is incompetent where Parliament has provided an alternative statutory appeal. Lord Braid treated this as the “general and long-established rule”.
2. McCue v Glasgow City Council 2014 SLT 891
   
   Lord Jones’ extensive survey confirmed the primacy of statutory pathways, even where non-statutory (administrative) internal remedies exist.
3. Tarmac Econowaste Ltd v Assessor for Lothian Region 1991 SLT 77
   
   Provided the test of “effective alternative remedy” and the narrow “exceptional circumstances” carve-out (e.g. procedural default by authority).
4. Mensah v SSHD 1992 SLT 177
   
   Distinguished: the defect there was a fundamental nullity (decision by unauthorised officer), whereas Bridgeport’s grievance concerned an allegedly erroneous but intra vires decision.
5. Hope v Corporation of Edinburgh (1897) 5 SLT 195
   
   Historically used to argue that an appeal “to the same body” lacks independence; Lord Braid, following British Railways Board, rejected that objection—if Parliament so provides, the remedy is sufficient.

These authorities collectively steered the Court towards refusing judicial review, reinforcing that rating disputes belong in the statutory appeal forum unless a genuine jurisdictional void exists.

3.2 The Court’s Legal Reasoning

a) Competency / Alternative Remedy

• Statutory Architecture: The 2023 Regulations (reg.6) make a demand note inevitable once an owner is treated as liable. That demand note triggers the s.238 appeal right.
• Effectiveness: A s.238 appeal is not limited to points of law; it enables a full merits rehearing, including the taking of evidence (reference to Coalburn Miners Welfare).
• “May” vs “Shall” in s.238: The permissive wording only indicates that an aggrieved party is entitled, not obliged, to appeal. Choosing not to exercise the right does not open the judicial review door.
• Exceptional Circumstances: The petitioner’s administrative mishap (omitting the reverse of the demand note) was neither caused by the authority nor extraordinary.
• Fundamental Nullity Argument Rejected: The decision was within the Council’s jurisdiction; alleged error does not nullify the entire act in the Mensah sense.

b) Merits (Obiter)

Lord Braid nevertheless scrutinised the substance:

1. Evidential Sufficiency:
   • Advertisement for offers “in excess of £32,500 per annum” was a legitimate adminicle of evidence on achievable market rent.
   • A nominal £1 rent starkly underscored that actual rent was “significantly below” market, satisfying reg.4(6)(d).
   • The petitioner’s argument that “real-world” evidence requires a concluded lease at a higher rent would neuter the regulation.
2. Artificiality & Purpose:
   • The arrangement lacked commercial substance (s.40(3)).
   • Pursuit of religious-use relief was consistent with (not contradictory to) a finding of artificiality; the statutory test focuses on the purpose and whether the arrangement exploits legislative shortcomings.
3. No Irrationality: Reasoning was internally coherent; no perversity shown.

3.3 Potential Impact of the Judgment

i. Procedural Consequences

• Reinforcement of s.238 Appeals: Ratepayers and their advisers must treat the 28-day appeal window as the primary—and usually exclusive—route. Failure to do so will rarely be rescued by judicial review.
• Local Authority Confidence: Councils can rely on the statutory structure without fearing immediate judicial-review challenges, provided they issue demand notes promptly.

ii. Substantive Guidance on Anti-Avoidance

• Evidential Flexibility: Market advertisements and the nominal nature of rent can suffice to prove “significantly below market” for reg.4(6)(d) purposes.
• Religious-Use Schemes Scrutinised: Entities attempting to rely on religious-relief exemptions at peppercorn rents are on clear warning that such structures risk being branded “artificial” and ineffective.

iii. Broader Administrative-Law Significance

• The decision harmonises Scottish practice with wider UK principles that judicial review is usually unavailable where Parliament made a bespoke appeal mechanism (mirroring e.g. tax-tribunal cases south of the border).
• Affords predictability: litigants know precisely when the Court of Session will entertain review—only when jurisdictional error or unavailability of remedy is demonstrable.

4. Complex Concepts Simplified

Non-Domestic Rates

Property taxes payable on commercial or otherwise non-residential premises in Scotland.

Anti-Avoidance Regulations

Rules designed to prevent artificial arrangements whose main purpose is to obtain rates relief or other fiscal advantages.

Artificial Arrangement (s.40)

An arrangement lacking economic or commercial substance or otherwise exploiting legislative gaps. Hallmarks include nominal consideration, circular transactions, or conduct that no reasonable business would adopt.

Fundamental Nullity

A decision so tainted (e.g., made by a person with no legal authority) that it is void ab initio. Errors within jurisdiction, even serious ones, are not usually fundamental nullities.

Competency vs Discretion

“Competency” addresses whether the Court has jurisdiction to entertain a claim at all. “Discretion” concerns whether it should exercise that jurisdiction in the circumstances. Lord Braid followed authority casting the alternative-remedy rule as one of competency.

5. Conclusion

Bridgeport Estates is a robust reaffirmation that, in Scottish rating law, the statutory appeal process under s.238 is the correct and generally exclusive forum for challenging a rates liability, including determinations under the modern anti-avoidance regime. Parties must act promptly within the 28-day window; administrative oversights will seldom count as “exceptional circumstances”. Substantively, the decision illustrates that councils may legitimately infer a “significantly below market” rent—and thus artificiality—where premises previously commanded commercial rents yet are suddenly leased for a nominal sum in tandem with applications for religious relief. The judgment’s dual procedural and substantive guidance will likely steer future disputes, fortify councils’ anti-avoidance efforts, and sharpen advisers’ focus on statutory remedies and evidential presentation.

© 2025 – Commentary prepared for educational and professional reference.