International Perspective-Shift In trends of Approaches of Interpretation

An international perspective

The dominant approaches in the European Court of Justice (ECJ) have been the contextual and the teleological.[ Natalie Lee, ‘A Purposive Approach to the Interpretation of Tax Statutes?’ (1999) 20(2) Statute Law Review 131, this was the conclusion reached by L Neville Brown and T Kennedy in The Court of Justice of the European Communities (4th Ed 1994) 321.]The contextual approach requires the judiciary to take the provision in question in its context and interpret it in relation to its parallel provision in the Community Law. The teleological approach requires the judiciary to base a decision ‘on the purpose or object of the legislation appropriate for Community legislation where the reasons for the adoption of a particular provision, along with its objectives, are to be found in the legislation itself.’ Both approaches clearly sway towards a more purposive approach than the literal approach.

New Zealand  and Australia

In New Zealand the trend in statutory interpretation has been similar to that of Australia. There have been shifts in the old presumptions that prescribed that certain Acts, in particular criminal and tax Acts, must be strictly construed in favour of the individual. Thus in one New Zealand case where compensation paid by the Crown was treated as income, Cook J said [Duff v Commissioner of Inland Revenue [1982] 2 NZLR 710, 716.] :

if this be alleged to be too bold an approach to statutory interpretation, I can only say that it seems to me manifestly in accord with the intention of Parliament evinced by the subsection as a whole.

 Canada

In the civil jurisdictions of Canada the use of the purposive approach is not novel. It has been applied for quite some time, with Nathan Boidman CA and Bruno Ducharme30 noting that the Supreme Court of Canada has not expressly resorted to the literal approach since 1955. Moreover, a method of construction is expressed by EA Driedger in ‘The Construction of Statutes’ which would serve to oust entirely the literal rule. The use of the purposive approach in Canada has been seen in numerous cases. See Allied Farm Equipment v MNR 73 DTC 5036; Harel v The Deputy Minister of the Province of Quebec 77 DTC 5438; No 473 v MNR 57 DTC 559; McMahon v MNR 59 DTC 1109; Sunbeam Corporation (Canada) Ltd v MNR 63 DTC 1390; Home Oil Company Ltd v MNR 55 DTC 1148.]

In the United States however, such an approach is not as evident.[ See City Council of Augusta v Mangelly, 254 SE2d 315, 322 (1979) (‘[w]e have here…overly strict contructionalism resulting in constitutional amendments upon constitutional amendments for which this court is famous.’)].With specific reference to Europe, New Zealand and especially Canada, it can be generally concluded that most tax jurisdictions are either heading towards a pure purposive interpretation system or have been there for quite some time (as is the case of Canada). But is this a wise move? Is the purposive approach effective and appropriate in the tax sphere?

The appropriateness of the purposive approach

Various technical difficulties arise when attempting to apply the purposive approach to statutory interpretation. Here, the question arises, how does one know what the   intention of parliament is? This question, as suggested by Natalie Lee, raises difficulties at two levels – theoretical and practical. First, on a more theoretical level is whether such a thing as ‘parliamentary intention’ can exist. Natalie Lee points out that parliament is made up of more than one person, and it is questionable whether two or more people, with differing opinions, can share the same mental state of mind. Moreover, she recognises that not all of these people will have voted in favour of the Bill to be enacted; it may not have been their intention that the Act in its present form should have even been passed appearing on the statute book. It is therefore apparent that we cannot possibly know precisely whose intention is being sought.

Further, even if parliamentary intention did exist, who is to say that one could determine such an intention, or that different people would agree upon such an apparent intention or purpose? If one studies the nature of human communication it is clear that different people, however honestly and reasonably they attempt to find the meaning of the same document, can reach different interpretations. [Such a difficulty was declared in BP Oil Development Ltd v CIR (1991) 64 TC 498, 532 and was also evident in Frankland v IRC.

The second difficulty Natalie Lee raises, which is more practical, is that it may well be that the words used in the statute do not enable an interpreter to detect any purpose.[Such a difficulty was declared in BP Oil Development Ltd v CIR (1991) 64 TC 498, 532 and was also evident in Frankland v IRC [1997] STC 1450 and Pepper v Hart (above n 15) ]

A further impracticality lies in the fact that common-law judges will, under the guise or even the delusion of pursuing unexpressed legislative intents, pursue their own objectives and desires, extending their lawmaking activities from the common law to the statutory field. If judges are told to decide on the basis of what the legislature meant, rather than what is said, and there is no necessary connection between the

two, then surely there is the potential of the judge favouring his own intention, as it suits. The criteria for evaluating a taxation system include those of equity and fairness[ See the Ralph Committee, Discussion Paper, Review of Business Taxation, A Strong Foundation – Establishing objectives, principles and processes, November 1998, Overview, para 3.9]and the observance of taxpayer rights. Surely, then, we must consider the equity and fairness of the purposive approach to interpreting the tax statutes. In the past, equity, used in assessing a tax system, has referred to ‘horizontal’ and ‘vertical’ equity. used in assessing a tax system, has referred to ‘horizontal’and ‘vertical’ equity.

Equity or fairness also depends on or encompasses clarity and certainty. For the reasons given above, in relation to the difficulty in determining parliamentary intention, it is most probable that the adoption of a pure purposive interpretation system would result in inconsistency. Furthermore, accountants, lawyers and individual taxpayers would be expected to guess what meaning a judge will read into a provision when completing a tax return. A purposive regime militates against clarity or consistency.  Equity or fairness also depends on or encompasses clarity and certainty. For the reasons given above, in relation to the difficulty in determining parliamentary intention, it is most probable that the adoption of a pure purposive interpretation

system would result in inconsistency. Furthermore, accountants, lawyers and individual taxpayers would be expected to guess what meaning a judge will read into a provision when completing a tax return. A purposive regime militates against clarity or consistency.

Furthermore, while taxes are arguably a necessity in any modern society, the status of income tax has long been accepted as a punitive measure. Taxes have the effect of confiscating one’s right to property and hence liberty. The revenue statutes constitute penalties imposed by the state which encroach on a citizen’s liberty, that is, their right to prosper from free enterprise. Given that there exists no doctrine in the courts to

support the notion that there is a duty to contribute to the upkeep of the state through tax, and given there exists a right to avoid but no duty to pay taxes, it seems most appropriate that before the state confiscates a taxpayer’s liberty it should make its grounds for doing so crystal clear. For this very reason tax laws should be construed in highly technical terms, without regard for the purpose they were designed to serve, just as criminal penalties, which similarly impose a restriction on one’s liberty, are construed.

This change from literal to purposive approaches has had significant effect on our legal system. So much so that the powers of the legislative and judicial arms are beginning to converge. Parliament has enacted laws telling the judicial branch how they must interpret legislation, and the judicial arm can read words into legislation (as suggested by Kirby J) to promote what they believe is the apparent purpose of the legislature, when, in fact, unrestrained by obedience to the specific words of the statute, they could be promoting their own policy agenda. As stated by Bryson J, in relation to statutory interpretation and the purposive approach, ‘what is at stake is the separation of powers and respect by the judicial branch of government for the powers of the legislative branch.’ More so it must be realised that ‘[w]e are to be governed not by Parliament’s intentions but by Parliament enactments’. It is clear that although the purposive approach may result in some benefits, its application brings with it significant difficulties and problems. The greatest threat is to the taxpayer’s rights. Contrary to recent cases, the practice that should be adopted by a judge when a tax provision is absurd or does not make sense is to read the provision strictly and in favour of the taxpayer, and the responsibility should rest with the legislature to amend the provision.45 It can work injustice to adopt a pure purposive approach to the interpretation of the revenue statutes in the manner suggested by Kirby J and some others. Such a practice brings with it a greater threat – to basic human rights. The approach that should be adopted is the literal approach – the approach that will enable the taxpayers to protect what is rightfully theirs. 

Fundamental Rights Based Approach-New ZealandValue

One of the most interesting points that Professor Burrows makes is that fundamental values have become a significant part of the interpretation process and that there is an increasing express recognition of their use.[ Professor John Burrows "The Changing Approach to the Interpretation of Statutes" Roles and Perspectives in the Law, 561, and John J McGrath "Reading Legislation and Ivor Richardson" Roles and Perspectives in the Law, 597.] What is described by Burrows as "value–based interpretation" fringes on the same idea as the golden rule that maintains that where possible the words of a statute should be interpreted to avoid an absurd, unjust or repugnant result. The New Zealand Bill of Rights Act 1990 (Bill of Rights Act) requires a value-based interpretation but there are many other fundamental values not included in the Bill of Rights Act (freedom from slavery, privacy and the sanctity of property are examples given by Professor Burrows).

Value-based interpretation is only applicable where there is some uncertainty over meaning. It is particularly helpful in situations where it is difficult to determine Parliamentary intent and so the purposive approach is of little help. In many cases extrinsic aids are unable to expressly state Parliament's intention in regard to a particular provision. In this situation the courts are able to consider fundamental values that exist outside of the statute when interpreting the statute. In one sense this can be seen as a way of making a presumption about Parliamentary intent. Burrows, however, argues that fundamental values operate as part of our legal system and are independent of Parliamentary intent. In other words, if Parliament intends to enact something that contravenes fundamental values but does not do so with clear enough language then the court can override Parliamentary purpose in favour of preserving a fundamental value. Parliamentary intent is only relevant in that it can exclude values by an express statement.

This type of value-based interpretation shifts the power to create laws away from Parliament and onto the judiciary. The "fundamental" values are outside of the statute and, unless they are rights under the Bill of Rights Act, they are left to be defined by the judges. The values may not always accord with Parliamentary intent. It is arguable that fundamental values "exist" only in so far as they are believed in and applied by the judiciary. Whether or not fundamental values are inherent in the nature of the world or whether they are a subjective human creation is a contentious issue. If they are subjectively defined then the personal morality of each judge may sometimes influence his or her assessment of the relevant fundamental values in any given case. For discussion on subjectivity and the lack of diversity on the Bench see Part I E The Effect of Judicial Personality on Interpretation.

Trends In Statutory Interpretation And The Judicial Process,Victoria University of Wellington Law Review, Victoria University of Wellington Law Review, [2002] VUWLRev 41 Kate Tokeley Senior Lecturer in Law, Victoria University of Wellington.

Purposive approach- New Zealand Constitution

In the following paragraph that have been taken from the Article cited below the learned author has emphasized very important facts and have reached at certain conclusions that are in line with the basic discussion that one should apply liberal approach while interpreting the Constitution as it is a live document and is not static in any manner, it changes as the society changes. It is an important expression of the learned author that I quote below.{blogger]

New Zealand The Bill of Rights Act, 1990

Section 6 of the New Zealand Bill of Rights Act,1990 requires a value-based approach to statutory interpretation . It provides:

6. Interpretation consistent with the Bill of Rights Act to be preferred – Wherever an enactment can be given a meaning that is consistent with the rights and freedoms contained in this Bill of Rights, that meaning shall be preferred to any other meaning.

The Courts have concluded that section 6 has a significant impact on statutory interpretation . In Ministry of Transport v Noort [Ministry of Transport v Noort [1992] 3 NZLR 260, 272 (CA) Cooke P]Sir Robin Cooke stated that section 6 is "perhaps of even greater importance" than the purposive approach in section 5(j) of the Acts Interpretation Act 1924. Both Professor Burrows and Justice McGrath describe the Bill of Rights Act as a qualification of the purposive approach.[ Professor John Burrows "The Changing Approach to the Interpretation of Statutes" Roles and Perspectives in the Law, 561 and John McGrath "Reading Legislation and Ivor Richardson" Roles and Perspectives in the Law, 597.]

In a recent article Michael Hodge questions the presumed importance of section 6 to statutory interpretation and its purported paramouncy over the purposive approach. [Michael Hodge " Statutory Interpretation” and Section 6 of the New Zealand Bill of Rights Act: A blank Cheque or a Return to the Prevailing Doctrine?"(2000) 9 Auckland U LR 1. ]Section 6 allows enactments to be give a "meaning" consistent with the rights in the Act. He argues that the "meaning" of an enactment is determined by the reasonable reader's best estimate of the legislature's meaning taking into account syntax and semantics together with all the pragmatic factors that are available to the hearer. These factors include the "general state of the law and the social concerns that the law addresses". Certainly where the Bill of Rights Act is not in issue this is the prevailing method that the courts use to determine meaning.

Although a provision may at first appear ambiguous, Hodge points out that after a full consideration it is rare that there are two or more best estimate meanings. His concern is that the courts are applying section 6 to allow any "meaning" that is a "tenable" estimate of the legislature's meaning and that this shows a failure to appreciate the nature of meaning. Only the best estimate of meaning should be recognised as the meaning of a provision.

Under this approach, section 6 has a far more limited scope. It does not allow the courts to ignore the purposive approach or the natural meaning of the word in context, in favour of a possible meaning that is consistent with the Bill of Rights. Instead, Hodge argues, the courts are required to determine the true meaning of a provision in light of its purpose and if this meaning is clear then section 6 is irrelevant. It is only on the rare occasions where there is genuine ambiguity that section 6 is applicable.

The approach advocated by Hodge is not presently used by the courts and does not reflect how Professor Burrows and Justice McGrath view section 6. The courts apply section 6 wherever a possible meaning is consistent with the rights in the Act. The word "meaning" is therefore interpreted widely as including all tenable estimates of legislatures' meaning as well as the best estimate of meaning. This is arguably in accordance with the words of section 6, which simply require that the preferred meaning must be "a" meaning that an enactment "can" be given. The broad interpretation of "a meaning" also allows the Bill of Rights Act to best ensure it meets its stated objective of affirming, protecting, and promoting human rights and fundamental freedoms in New Zealand.

One may Like to refer to this important document by the learned author.[Blogger]

Trends In Statutory Interpretation And The Judicial Process,Victoria University of Wellington Law Review, Victoria University of Wellington Law Review, [2002] VUWLRev 41 Kate Tokeley Senior Lecturer in Law, Victoria University of Wellington.

Chapter-16 Courts Authority over extrinsic Aids-part-3

Of course it can help in understanding a statute to examine the social and economic facts which led to its passing, and the social and economic context in which it must now operate. Sometimes that context is general knowledge. But some statutes are of a more specialist kind where the context in which they must operate requires evidence and explanation to sharpen our understanding. I refer, for example, to the Commerce Act 1986. A proper understanding of the concepts in that Act can only be obtained after the reading of much literature, both national and international. The same is true of the Resource Management Act 1991. You cannot read an Act like that in a vacuum. SIR IVOR has been one Judge who has openly advocated the presentation to the court of contextual material in cases like this.[1]

The desirability of this goes without saying. Better-informed decisions are likely to be more correct decisions. Yet it would be idle to ignore the difficulties. Too much material can confuse, and undesirably lengthen court proceedings. An even greater danger can lie in members of one profession trying to acquire expertise in another. To inform a court properly of the social and economic background to a specialist piece of legislation can require much time, skill and knowledge on the part of the advocate. And there is always the danger that if the advocate is outside his or her own area of expertise the information presented may be partial or even inaccurate. The difficulties of venturing into unfamiliar territory occasionally receive interesting expression in the Privy Council. There have been occasions where their Lordships, rather than entering into a thorough examination of New Zealand history and context, have preferred to decide a case by old-fashioned reliance on the dictionary meaning of the words in the statute itself.[2] There is, I think, simply no answer to this paradox. Contextual material is desirable; to acquire it fully and accurately may be very difficult indeed. Similar difficulties beset the interpretation of contracts in specialist areas such as the construction industry. To become thoroughly acquainted with trade practice and "the matrix of fact" surrounding such contracts is a formidable task.

Secondly, there has been a revolution in the admission of Parliamentary material. Once it was totally excluded. Now it is regularly admitted.

Over the past 15 years or so in New Zealand, and more recently in England, it has become a common occurrence for counsel to cite, and courts to refer to, extracts from Parliamentary debates, explanatory notes to Bills, amendments to Bills, and, more recently, reports of select committees. Most commonly they are used to provide contextual background and evidence of the genesis of the Bill in question. But sometimes our courts are using them for statements by the policy makers as to the purpose of a piece of legislation and the intent behind it, and sometimes even for evidence of a specific intention about the problem before the court. In the not-so-distant past that would have been regarded as unthinkable.

No doubt time is sometimes wasted by reference to proceedings that turn out to be unhelpful. Indeed a member of the House of Lords has stigmatised the newfound power as an expensive luxury,[3] and there has been a recent attempt by the House of Lords to confine its use.[4] One also has to be alive to the dangers of a Minister, or an official, "planting" statements with the intention that they should influence interpretation. And particular care must be taken to ensure that statements of policy made early in the process remain reliable after amendments to the Bill in select committee or at committee of the whole stage; in the new MMP environment that risk is greater than ever before. However, quite often reference to Parliamentary materials does produce something of value. Occasionally judges expressly acknowledge how helpful they have found, say, a statement by a Minister in the House.[5] Overall, the ability to have resort to Hansard has been much more productive than the pessimists predicted.

But it is important not to misconstrue what is going on here. The statements found in these documents are not the word of Parliament. Parliament's authority attaches only to the words of the legislation that it passes. It is therefore not really true to say, as sometimes is said, that one is using these Parliamentary documents as direct evidence of the intention of Parliament. But it is clearly relevant and helpful to know what the proponents of a Bill or clause, normally but not always the government, and those responsible for drafting it, intended to achieve by it. The intentions and purposes of those most directly responsible for the legislation cannot be dismissed as having no value. There is no reason why the courts should not use their statements as a tiebreaker in a case of real ambiguity, or to add persuasive force to an interpretation to which the court is tending for a variety of reasons. (Indeed quite often decisions on statutory interpretation are arrived at by a number of separate arguments using language, scheme, purpose, history and perhaps statements in Hansard.)

However the courts might be said to have the best of both worlds. Since the statements in Hansard are not endorsed by Parliament, they are not binding and therefore do not have to be followed. It is perfectly legitimate for the court to decline to follow what a Minister has said in the House. It has happened. It is open to a court to say that a Minister has misunderstood the law;[6] or that the debates are confused and reveal shifts in stance by the government itself;[7] or (even) that they suggest that members failed to appreciate the significance of what they were about to enact.[8] In other words, statements in these Parliamentary materials can be used in rather the way that judicial dicta and academic commentary have been used over the years: to give weight to a particular argument but to be rejected if felt to be unhelpful. They are used to assist rather than to constrain. In LORD WILBERFORCE’s terms, they do not turn the court into "a reflecting mirror of what some other agency might say". They are an important accessory to the purposive style of interpretation.

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[1] Rt Hon Sir Ivor Richardson "The Role of Judges as Policy Makers" (1985) 15 VUWLR 46, 51-52; Williams v Attorney-General [1990] 1 NZLR 646, 681 (CA) Richardson J

[2] For example, New Zealand Apple and Pear Marketing Board v Apple Fields Ltd [1991] 1 NZLR 257, 262 (CA) Richardson J: “Their Lordships fully recognise the great importance which the Judicial Committee of the Privy Council should always attach to the opinion of Judges exercising jurisdiction in a Commonwealth country in any matter which may reflect their knowledge of local conditions. Yet, when an issue is wholly governed by statute, its resolution must be purely a matter of interpretation.”

[3] Lord Steyn "Pepper v Hart; A Re-examination" (2001) 21 Ox J Leg Stud 59

[4] R v Secretary of State for the Environment, ex parte Spath Holme Ltd [2001] 2 AC 349 (HL)

[5] See for example De Richaumont Investment Co Ltd v OTW Advertising Ltd [2001] 2 NZLR 831, 841 (HC) Priestley J; Everitt v Attorney-General [2002] 1 NZLR 82, 95 (CA) Richardson P.

[6] R v Bolton (1986) 79 ALR 225 (HC); McLennan v Attorney-General [1999] 2 NZLR 469 (CA), See also R v Poumako [2000] 2 NZLR 695, 702 (CA) Richardson P

[7]Te Runanga o Ngai Tahu v Waitangi Tribunal [2001] 3 NZLR 87, 102-103 (CA) Richardson P

[8]R v Pora [2001] 2 NZLR 37, 49 (CA) Richardson P