The court in Savage v CIR [1951] 4 All SA 249(A) stated: "What seems to be a clear meaning to one man may not seem clear to another." The local arrival of the purposive approach to statutory interpretation to some extent coincided with the advent of the constitutional era in the mid-1990s.
In 1995, in S v Zuma 1995(2) SA 642 (CC), the Constitutional Court expressly approved of the purposive approach to the interpretation of the Constitution. Commentators speculated that this reflected a transition away from strict literalism towards a more purposive approach, thereby promoting the democratic values underlying the Constitution. A respected tax author announced the dawn of a "new approach", while a highly regarded tax guru warned of "a far more judicial activist approach to the handling of tax cases".
The purposive approach was ready to grow and blossom - or was it?
In a recent tax appeal, XYZ v CSARS (Case 12895, decided in the Pretoria Tax Court on June 15 2011), the taxpayer's representative argued strongly in favour of the purposive approach. He urged the court not simply to attribute to the words in question their prima facie meaning, but also to have regard to their context and purpose as indicated in the relevant explanatory memoranda.
The commissioner's representative in turn contended that the plain wording used by the legislature was central to the interpretation of all statutes and that applied equally to tax legislation.
The battle lines were drawn between the purposive approach to interpretation and the more traditional approach of ascertaining the intention of the legislature from the text of the applicable provision.
Among others, the taxpayer's representative referred to CSARS v Airworld CC [2008] 2 All SA 593 (SCA), in which it was stated that in recent years, courts have placed emphasis on the purpose with which a specific provision had been enacted. The interpreter must accordingly seek an interpretation giving effect to such purpose. In this way, the purpose acts as a guide to ascertain the legislature's intention. There was also reliance on SARS v Dunblane Transkei (Pty) Ltd [2002] (1) SA 38 (SCA). Dunblane indicated that the legitimate field of interpretation should not be limited by focusing excessively on the language to be interpreted, without paying sufficient attention to the contextual scene.
All of the above gave the XYZ court the chance to do a thorough stock-take of the current position relating to the interpretation of tax provisions. Referring to precedent, the court stated as follows:
- The language of legislation must be respected. The words chosen by Parliament cannot be subverted in favour of the spirit of the law or by referring to background policy considerations that were not reflected in the language of the particular statute itself.
- Acts are expressed in words. Interpretation concerns the meaning of words used by the legislature and it is therefore useful to approach the task by referring to the words used and to leave extraneous considerations for later.
- Although South African law is an enthusiastic supporter of purposive construction, the purpose of a statutory provision can be a reliable pointer to the intention of the legislature, but only where there is ambiguity.
Although there is a role for purposive interpretation, this recent case strongly indicates that it can come into play only where the intention of the legislature is not readily discernable from the wording of the applicable provision.
For now, it appears that the traditional 'intention of the legislature' approach to statutory interpretation has carried the day against the upstart purposive approach.
The problem faced by taxpayers is that it is difficult accurately to capture ideas in words - a problem which is exacerbated by the inherent complexity of tax. However, according to the XYZ court, taxpayers' salvation lies in the hands of the draftspersons responsible for tax statutes. The warning of the court in Spies v Lombard [1950[ (3) SA 355 (A) might be apt: "The Dutch, like the Romans, did not rely too much upon the draftsman of statutes."
For further information on this topic please contact Johan Van der Walt at Cliffe Dekker Hofmeyr Inc by telephone (+27 11 562 1000), fax (+27 11 562 1111) or email ([email protected]).