Chapter-9 Areas of application: Plain Meaning Rule-Part-21

Areas of application of Plain meaning Rule

The second methodological caveat is as follows. It is clear that the "plain meaning" method, with its methodological estoppel that prevents the initiation of legal reasoning, can be used in situations in which it is justified and does not have undesirable side effects. I am thinking, for example, of the area of tax law, in which our case law clearly establishes that the basic approach is that involving the "plain meaning" rule: Alberta (Treasury Branches) v. M.N.R., [1996] 1 S.C.R. 963, at para. 14 (per Cory J.):

The appropriate principles to be considered in interpreting taxation legislation were clearly set out in Friesen v. Canada, [1995] 3 S.C.R. 103. . . .

In interpreting sections of the Income Tax Act, the correct approach, as set out by Estey J. in Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536, is to apply the plain meaning rule.

178 What are the underlying reasons for such an approach in taxation? In Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3, my colleague Gonthier J. set out the social and economic policy reasons in an analysis returned to by my colleague La Forest J. in Schwartz v. Canada, [1996] 1 S.C.R. 254, at para. 56:

In . . . Notre-Dame de Bon-Secours . . . my colleague Gonthier J. clarified the proper rules governing the interpretation of tax legislation. After explaining the underlying principles of the traditional rule providing for a strict construction of fiscal statutes, he analyzed the evolution that had occurred on the issue during the past decade. As he explained . . . this evolution was the logical consequence of the recognition of the social and economic purposes of such legislation. . . . Gonthier J. held, at p. 17:

[T]here is no longer any doubt that the interpretation of tax legislation should be subject to the ordinary rules of construction. . . . "[T]he words of an Act are to be read in their entire context and in their . . . ordinary sense. . . ." [Driedger, Construction of Statutes (2nd ed. 1983), at p. 87.] [Emphasis added.]

179 From the standpoint of the methodology of legal interpretation, it must be borne in mind that tax law is a technical field that has a language of its own, since it is, along with accounting and management, part of what may generally be called "the business world". Professor A. Belkaoui, Working Paper 76-7, Linguistic Relativism in Accounting (1976), at pp. 1, 9 and 11, has demonstrated this very clearly:

‘ Accounting is the language of business. It represents phenomena in the business world as language represents phenomena in the real world. Both linguistics and accounting have a great number of similarities.’

meaning unique to the business world. Since the business world occupies such an important place and has such profound ramifications in our society, there are a great many terms of business language that have already been precisely defined by those working in the field. In fact, taxation terms often have definitions that have been clearly established through empirical means, that are generally recognized and accepted or that have been standardized by various bodies: see, for example, the dozens of specialized dictionaries and glossaries in taxation, accounting and management.

Thus, the "plain meaning" used by this Court in the taxation field is actually the "plain meaning as already defined by the business world". But there is more. Not only have the terms already been defined by the business community, but terminological and lexicographic research is being done in that field and published in specialized literature. See, for example, Professor C. Nobes' nine-language comparative analysis ("The True and Fair View Requirement: Impact on and of the Fourth Directive" (1993), 24 Accounting and Business Research 35) of the expression "a true and fair view", which financial statements are required to present, in the context of the law applicable in the 12 European Economic Community countries.

It is thus the business world itself that develops its own contextualized definitions based on what is here being called the "modern" method. This Court then uses those definitions as what it views as the "plain meaning" generally accepted in the business world. The "plain meaning" method in taxation relies on methodological estoppel, which prevents us from initiating any reasoning on legal interpretation because those working in the field have already carried out the relevant analyses in situations in which we consider that there is a "plain meaning". In situations in which there is no "plain meaning" or there is ambiguity, this Court must then define the term in question by engaging in legal interpretation.

In summary, the "plain meaning" rule is justified in taxation because of the imperatives of stability and predictability of the law; moreover, the use of the "plain meaning" in taxation does not have any dysfunctional side effects. Accordingly, in such circumstances it is clear that the basic approach to legal interpretation in the field of tax law should be that involving the "plain meaning" rule. Since Hills, supra, I have constantly supported this approach, adopting the "plain meaning" rule in appropriate circumstances.