Shift in trend..Contd..III

The trend towards purposive statutory interpretation

The move away from literalism began over three decades ago. In 1969, the Law Commission of England and Wales, together with the Scottish Law Commission, recommended the adoption of a purposive approach to the construction of statutes.[ The Interpretation of Statutes, Law Com. No. 21 (1969).] The literal approach to revenue statutes had reached its height in Australia in the late 1970s and early 80s under the courts of Barwick CJ, an advocate for liberalism and commercial enterprise. The Whitlam government, at that time, was becoming weary of the tax evasion schemes that were becoming widely practised as a result of the strict approach to interpreting the legislation and therefore strengthened the movement towards a more purposive approach.

By 1981 the move towards the purposive approach in Australia was quite apparent after the commonwealth government introduced section 15AA of the Acts Interpretation Act (Cth). This section effectively set in concrete the purposive approach. It provides:

In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would

not promote that purpose or object.

Similar provisions have been enacted for individual State Acts Interpretation statutes. It is important to note that this section does not require that the purposive approach always be adopted. It is merely stating that if more than one construction is available, then the one which would promote the purpose of the act would be preferred to any other. Another important fact, which was pointed out in Mills v Meeking, [, when Dawson J, in speaking of a provision in terms almost identical to s 15AA: ‘The approach required by [s 15AA] needs no ambiguity or inconsistency; it allows a court to consider the purposes of an Act in determining whether there is more than one possible construction’. This point was presented by Robert Allerdice in ‘The Swinging Pendulum: Judicial trends in the interpretation of revenue statutes’ (1996) 19(1) University of NSW Law Journal 171] is that the provision does not require any ambiguity or inconsistency for its operation, and in this respect it can be differentiated from the mischief rule. It is clear then that the drafting of this provision was a considerable step towards a ‘pure’ purposive approach.

As stated by Kirby J, the last decade has seen numerous cases in which the purposive approach has been favoured, and indeed stated as the method that should be preferred. In Pepper (Inspector of Taxes) v Hart,[ [1993] AC 593.]  the result of which was to impact all areas of statute law, Lord Griffiths stated:

The days have long passed when the courts adopted a strict constructionist view of interpretation which required them to adopt the literal meaning of the language. The courts now adopt a purposive approach which seeks to give effect to the true purpose of the legislation and are prepared to look at much extraneous material that bears upon the background against which the legislation was enacted.[ Pepper Ibid 617. 17 [1997] 1 WLR]

Then four years later, Lord Cooke of Thorndon, in IRC v McGuckian[[1997] 1 WLR 991, 1005.], stated:

‘in determining the natural meaning of particular expressions in their context, weight is given to the purpose and spirit of the legislation … If the ultimate question is always the true bearing of a particular taxing provision on a particular set of facts, the limitations cannot be universals. Always one must go back to the discernable intent of the taxing Act.

There have been numerous other cases in which the judiciary has promoted the use of purposive interpretation in preference to the literal approach, both related and non-related to revenue,[ See Cooper Brookes (Woollongong) Pty Ltd v FC of T 81 ATC 4292; Cole v Director-General of Department of Youth and Community Services (1987) 7 NSWLR 541, 549 per McHugh JA; KP Welding Construction Ltd v Herbert (1995) 102 NTR 20, 40-41].18 and this despite the common adoption of the literal approach throughout the 1970s and early 80s. Today’s legal system has clearly adopted the purposive approach to statutory interpretation, that is, an approach that ‘advances and does not frustrate or defeat the ascertained purpose of the legislature’, as suggested by Kirby J.

The practice by judges of ‘reading words into the legislation’ is evident throughout Australian common law.[ Harrison v Nairn Williamson [1976] 1 WLR 1161; Marren v Ingles [1980] 1 WLR 983; FC of T v Ryan (2000) 42 ATR 694; Sweet v Parsley [1970] AC 132.] In Newcastle City Council v GIO General Ltd, [ 1997]it was stated by the High Court that their addition of words was in accordance with the purpose of the Act as expressed in the Act’s preamble. Furthermore, in a Draft Taxation Ruling, the Tax Commissioner ruled it was appropriate to read words into a tax act when failing to do so would result in an ‘incongruous result’. The support of such a practice is expected from the Tax Commissioner. Despite the wide spread practice, the judicial arm is divided as to its use. Gibson LJ, for example, states, ‘the courts function is to interpret the legislation and not legislate under the guise of interpretation’,[ Frankland v IRC [1997] STC 1450, 1455]. and he concludes that it would be ‘impermissible’ for the court to write in words that some may conjecture parliament to have intended. In fairly recent cases, TLC Group LP v Comptroller of Stamps25 and the Federal Court case Australian Tea Tree Oil Research Institute v Industry Research & Development Board,[ [2002] FCA 1127.] the Courts refused to read words into a statute. Before considering why such a practice would be impermissible and the practicality of the purposive approach in interpreting the taxation legislation, what are the approaches of other jurisdictions?.


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