Ed Barton, LLM, CPA, CFA

Statutory Interpretation

The common law has largely been enveloped in a web of statutory regulations. The ability to interpret these statutes is an important skill for the modern legal practitioner. This article will discuss the rules around statutory interpretation and how to apply them in practice.

Literal Rule

The Literal Rule states that it is presumed that the words selected by the legislature and used in that context were the true intent of the legislature when the law was passed.  If the words are clear and explicit, the court should give them effect regardless of the consequences.  The context in which the words are used is important – not just how it is used, but in the time in which it was written. The literal meaning of a term used at a particular time and place is the context in which it is interpreted.

A further presumption is the plain meaning rule is that the drafters must use precise and unambiguous words in drafting. The assumption is that the words ate used in a statute are accurate and unambiguous. There is also a presumption that the court must give effect to the words in a statute be given legal effect regardless of the consequences – both those consequences intended by the legislature and those not explicitly intended by the legislature. Over time, however, other elements indicating legislative intent can use other information, such as committee reports, to help understand legislative intent.

Doctrine of Absurdity

When the plain rule results in an obviously absurd answer when the literal rule of interpretation is applied, then there may be an interpretation that does more justice or appears more desirable may be chosen. The most important factor is that both interpretations are possible given the language. This approach, however, cannot be used to modify the express legislative language for the sake of justice and common sense.  There is a limit to the judge’s power to identify an absurdity. It is used only in cases where the application of the plain meaning rule will be absurd in context with the legislation read as a whole. When two interpretations are equally possible, the interpretation that appeals more to common sense and equity may be chosen.

Legal Interventions and Evasions

Where the language is clear and unambiguous and represents the legislature’s intention, the court should not lean on equity principles to derive an outcome inconsistent with the statute.  Additionally, where the text is clear and unambiguous, it still does not prevent lawful evasion of the law by citizens. This is most often found in tax planning – which is a lawful evasion of paying taxes based on the literal reading of the tax statute and is largely determined by the elements of honesty and dishonesty in structuring the action or transaction.

Temporal Elements

There is a significant question as to whether the court should follow the old meaning of a text contemplated by the legislature when the statute was passed or whether the court should adopt the new meaning. Traditionally, the rule has been that legislation should be interpreted so it would have been interpreted at the time it was made. Within the last 25 years or so (since 1990), the rule has changed, and unless otherwise intended by the legislature, the legislative text is read holistically. It can be construed to adopt the meanings of modern times.  When interpreting legislation, the legislative text is to be construed to adopt the relevant modern time meanings and no further.

Mischief Rule

Heydon’s Case [1584] (EWHC Exch J36)

Heydon’s case established the mischief rule. This rule can be summarized as follows.  There are four things to be considered and discerned when interpreting all statutes:

  •  What was the common law before doing the Act?
  • What was the mischief and defect for which the common law failed to solve?
  • What remedy did Parliament use to cure the mischief or defect?
  • The interpretation is to be constructed to suppress the mischief, advance the remedy, and suppress inventions and evasions to continue the mischief.

An English example, where the statute says prostitutes could not loiter in the street, but where the prostitute was offering services from the porch was found guilty as the court extended the meaning of street to the porch. (Smith v. Hughes [1960] 2 All ER 859).  In the 16th Century, the primary law was common law, and when laws were drafted mostly by judges to address mischief that the common law failed to address.  Now, courts look not only to the common law but also to the laws and statutes in force at the time.

What is “Mischief?”

The mischief here is a term of legal art.  It may also be read as “general legislative purpose” or “legislative intent.”

There are two main types of mischief:

  1. Social Mischief – which is a factual position that existed, exists, or is expected to occur.
  2. Statutory Mischief – a defect or deficiency in a statute due to drafting error, inadequate legal provision, or unconstitutional legislation.

When faced with interpreting statutory mischief, the court needs to keep these limits in mind and interpret legislation as narrowly as possible.

Determination of Mischief

the titles, preambles, legislative history, debates, committee work, relevant agreements, and cross-references are all considered valid sources for determining the target mischief of the legislature.  The default rule is that the court will reject the mischief argument unless there is an exceptional reason to support it.

The no good reason approach is that there would be no good reason why the legislature would have defined a word or words in a certain way to limit the scope of the statute.  See Knowles v. Liverpool City Council [1993], where flagstone was accepted as “equipment” under the Act.

There is a rule of manifest injustice. There are two possible constructions of meaning. Where one construction will cause a manifest injustice, the court may adopt the construction that does not create an injustice.

Additionally, there is a rule of split mischief. In this case, there are different mischief within the same legislation and overarching mischief targeted by the legislation. This is often found in tax statutes – where multiple taxes and definitions of income may be interpreted differently within the same statute.

In de facto or de jure mischief, the original mischief intended to be remedied is modified through changes in the act as it moves through the legislative process. In such cases, the interpreter must clearly understand the mischief that was actually legislated to solve.

To use a remedy to determine the mischief, the remedy itself must be distilled to figure out what mischief the remedy was intended to cure.  Where a difficulty arises in the operation of an Act impacting the effectiveness of the remedy prescribed, the court should interpret the statute to suppress the precise mischief and advance the remedy.  Additionally, the court needs to make sure that its interpretation doesn’t unintentionally create new mischief occur.

Purposive Rule

The purposive rule is a modern interpretation of the Mischief Rule and states that courts interpret legislation in light of the purpose for which it was passed. In this context, it is important to note that legislation is designed to provide a remedy to curb mischief and not curb the mischief directly.

This rule was adopted in English and Welsh courts in 1969.  It essentially states that:

  • Courts will construe language which promotes the general legislative purpose underlying the provision in question, and
  • Courts will construe language consistent with international obligations.

Courts were then able to resort to the purposive approach to interpret legislation when the traditional methods were in doubt or where they result in absurdity.  Additionally, the courts could now use extraneous material to elucidate and highlight the background of the legislation.

Nature of Purposive Construction

The concept of purposive and literal construction applies where the literal meaning of the legislative text and the legislative purpose agree with each other.  In this case, the literal reading will hold.

Non-purposive literal construction is applied when:

  • The court cannot determine the legislative purpose
  • The literal meaning absent the purpose is too strong to be overruled, or
  • the court determines a predictable construction is required.

There is a concept of purposive and strained construction – the usual application – where the precise literal meaning does not confirm legislative purpose. So the principle of strained construction is applied.

Duty of the Court

The court has a duty to follow the legislature’s purpose, even if it disagrees with it. Unless the law is unconstitutional, the courts and the judge have an obligation to follow that law.  If there is a doubt regarding the legislature’s purpose, the courts can use these established principles of the court to determine it.

Interplay Between the Literal and Purposive Approaches

The rules of interpretation indicate that the first option to be applied in interpreting a statute is the literal rule.  Only where the natural construction of the legislation doesn’t answer the question should the court look outside the strict letter of the legislation for meaning. Over time, the purposive approach evolved into purposive-literal or purposive-stained construction, and legislation is given construction by reference to its context.

Presumptions and Maxims of Interpretation of Statutes

A list of “Canons of Construction” guides courts when interpreting statutes or their provisions. It is important to note that these presumptions and maxims are only applied when the legislature’s intention is unclear from the legislative text.  Oh, and welcome to Latin…

Maxims of Interpretation

Ejusdem Generis – when general words follow an enumeration of persons or things, such general words are not to be construed at their widest extent but are to be held as applying only to persons or things of the same general kind or class specifically mentioned.

Statutes in pari materia A statute is in pari materia when, though enacted at different times, they relate to the same subject or object and form part of a single code on a particular matter.  In the case of ambiguity regarding statutes dealing with the same subject matter, their definitions are to be interpreted in light of and concerning each other in as much as they have a common purpose for comparable times or events.

Expression unius est exclusio alterius – The expression of one subject, object, or idea excludes another subject, object, or idea.  Where the legislature expressly supplied the exceptions concerning exclusions, the rule does not apply.

Natural versus Technical Meaning – The words used in legislation are given their natural meaning in ordinary English conversation unless used technically. The term ‘technical’ does not mean only the terms of science, art, trade, or other specific use. It also includes any term designed to refer to specific ideas or bear specific connotations in a particular legal context.

No Change of Meaning Without Change of Language  – Drafters do not change the language from one context to another unless a change of meaning is desired.

Casus Omissus –  This is the omitted case. It occurs when any legislative instrument looks to foresee and provide for a contingency, and through an inadvertent error, fails to do so. Under this rule, the courts can supply omissions when interpreting the statute in question.

Rebuttable Presumptions of Interpretation

Presumption against unfairness – There is a general presumption that the legislature does not intend to be unfair, unreasonable, or arbitrary.

Presumption against double jeopardy – There is a general presumption that a person cannot be tried twice for the same offense.

Presumption against expropriation  –  There is a general presumption that property acquisition without compensation is unlikely, but if subject to compensation is possible.

Presumption against the protection of human rights   – There is a requirement in EU countries to interpret legislation, as far as practicable, with the European Convention on Human Rights. In the US, there would be a presumption of constitutionality in interpretation.

Presumption against absurdity   – When the meanings of the text are clear, the courts may not refuse to give a statute effect because the result appears unjust or absurd.  However, if two constructions are possible, then the courts must choose the less absurd or unjust one.

Presumption against penalty  – There is a presumption that a criminal or civil penalty requires express and clear words of the legislature, and absent such words, no penalty was intended.

Presumption against creating or removing judicial jurisdiction –  There is a presumption that conferring or taking away jurisdiction from the court requires expressing a statute or obvious implication.

Presumption against delegation of powers  –  There is a presumption that the legislature will not delegate the power of legislation to another body unless it does so by express provision.

Presumption of notice –  There is a presumption that the authority’s decision does not have legal effect unless the person notices it, and this can be rebutted only by clear legislative words.

Presumption against retrospectivity –   There is a presumption that unless a contrary intention appears, the laws impacting people’s rights and obligations are not construed retrospectively.

 

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