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Faculty of Law, University of Sydney
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Kingsford Smith, Dimity --- "Interpreting the Corporations Law Purpose, Practical Reasoning and the Public Interest" [1999] SydLawRw 7; (1999) 21(2) Sydney Law Review 161

Interpreting the Corporations Law – Purpose, Practical Reasoning and the Public Interest

DIMITY KINGSFORD SMITH[1] [2]

1. Introduction

A. The Corporations Law as a Modern Regulatory Scheme

We live in the ‘Age of Statutes’,[3] and the vast bulk of Australian corporate law, is now of legislative, delegated legislative or administrative origin. Most new laws about corporations are of this type. The trend is evident in primary legislation, and in rule and policy making powers of administrative bodies empowered to implement legislation. The ‘statutorification’[4] of the Australian corporations law reached a new level in 1990, with the creation of the Australian Securities Commission: a national agency, with wide-reaching powers, to administer the national Corporations Law scheme for companies and securities regulation.[5] A national legislative scheme, administered by the Australian Securities and Investments Commission (ASIC), consolidated a number of changes in the legal control of corporations and securities in Australia.

Creation of ASIC and passage of the Corporations Law were a national priority to restore confidence in Australian companies and securities markets after the failures of the 1980s. This draws attention to the first element of this type of modern regulatory scheme which is distinctive. This type of regulation is created to achieve some end or goal; it is made in the public interest. As Rubin argues, legislation is a deliberate act of transformative social policy.[6] By contrast, doctrines of equity and contract capture private interests, which may be ‘unacceptable because of [their] inconsistency with the fabric of the modern regulatory state.’[7] In the Corporations Law, with investor protection as a cardinal object, it may not always be appropriate to refer to norms of private law such as party autonomy, or to assume equality of information. Interpretation of regulatory rules should recollect the purposes for which Parliament created the regulation in the first place; it should be ‘public regarding.’[8]

Secondly, legislation and rules dominate in an area that was the province of open-textured principles of equity and contract. Once we could say ‘the Corporations Law, like other legislation, is only a lot of patches on the coat of the common law,’[9] but the reverse is now closer to the truth. We cannot ignore the volume and complexity of legislative rules governing companies and securities. It has been argued that as a result the Corporations Law lacks transparency to ordinary readers, that its complexity increases the costs of investment and innovation. Reasons have been given for this proliferation of rules[10] Even those who desire a return to the elegant conformations of equity and contract must accept that the modus operandi of modern regulation is rulemaking. This is not to suggest that rules cannot be more effective; this is one important aim of the study of regulation. Rather than resisting rules, we should inquire into their juridical nature, into their interaction with general law principles, and take notice of the results of research about what sorts of rules work in particular regulatory circumstances.

Much modern regulation such as the Corporations Law, is expressed in terms of wide grants of discretion. Indeed many regulatory rules are made in the course of ‘structuring’[12] and elaborating discretions.13 Discretions are granted to a body or agency, empowered by Parliament, to implement the social or economic program of the regulatory scheme. Under the Corporations Law that body is ASIC. Parliament cannot anticipate, and lacks the time and expertise to legislate for, all the circumstances which might fall within the legislation even broadly expressed. Ideally, the underlying policy of the legislation will be realised through the rulemaking and adjudicative acts of the body given responsibility for implementation of the legislation. Discretions allow flexibility, responsiveness and autonomous action by the implementation authority, guided by the purposes and objects underlying the legislation. This role is quite different to that of the courts, as they have acknowledged. Courts react to particular litigants and not a larger problem, and they are ill equipped and reluctant to make policy.[14] The role of the courts in the regulatory state is one of review and appeal, and much less central than in the creation and implementation of general law.

This change from general law to legislation, is evident more widely than just company law; it has prompted one writer to ask ‘Has the Common Law a Future?’[14a]Whatever the answer, policies implemented through legislation and administrative regulation represent a qualitative shift in the control of corporations and financial markets. Behind them lies a social and political consensus in the public interest and legitimacy of such regulation, which supplies different values to those emanating from the general law and the market. These two forms of control give priority to values reflecting the private interests of corporate and market participants. Although it co-exists with general law and market forces of control, regulation elevates a public interest which sometimes subordinates those private interests. When this occurs there is a clash or at least a tension, between the background values which we reach for to make sense of, or interpret, the rules to be applied in a particular case. These tensions will never disappear as long as we maintain, as we should, a mixed economy. The rest of this article is directed to how these public and private values might co-exist. Instead of looking at every word as if the purpose of statutory interpretation is to advise Oliver Wendell Holmes’ ‘Bad Man’, it suggests a method that approaches interpretation with good will towards the text, in deference to the collective authority of public legislation.

B. The Implications of the Modern Regulatory Scheme for Statutory Interpretation

This article is about the implications of the changes constituting the regulatory state, for the law and practice of statutory interpretation.[15] It investigates how we can encourage the expression of public interest values in a context mostly informed by private values in the past. In particular the question is how we can use the features of modern regulatory schemes, such as pre-enactment policy, legislative structure, operational effect and post-enactment regulatory policy to illuminate the purpose and object of legislation. These are features of modern regulation not evident in older statutes where coherence or ‘fit’[16] with existing law was considered important. Most regulatory schemes, while they assume continuation of the general law to a greater or lesser degree, effect a distinct rupture in the flow of law in an area. Instead of a string of emendations to existing law, modern regulation is the basic architecture of vast areas of legal control, bringing with it a distinctive program of policy justification, agency implementation, discretions and rules, and throwing into uncertainty the contribution to meaning available from the general law. This all has telling implications for interpretive law and practice.

In fact these characteristics of modern regulation, especially agency implementation and the wide discretions by which this is authorised, have been the features of regulation most heavily criticised in the course of interpreting regulatory statutes. Modern legislation has been attacked for using standards whose latitude is so wide as to be meaningless, and granting authority in terms too wide to supervise.[17] This along with the belief that policy is an illegitimate source of meaning,[18] has combined in a recurring criticism that modern regulation is dangerously indeterminate, and a charter for arbitrary exercise of power by the implementing agency. These views may explain why in the interpretation of the Corporations Law Australian courts have sometimes looked too readily to the general law with its private law values, in establishing the meaning of legislative standards and other operating provisions.[19] This has had a conservatising effect on important provisions of the Corporations Law, and has even resulted in the effective reversal of legislative changes. The hope of suggesting alternative sources of interpretive material, more relevant to modern regulation, is the immediate catalyst for the thoughts that follow.

This article begins by considering this alleged indeterminacy arising from the structure, language and implementation of modern regulatory statutes. There have been two main responses to the supposed indeterminacy of modern legislation, which are relevant to statutory interpretation. The first is a return to formalistic techniques of interpretation in an attempt to limit indeterminacy. Inspired by the public choice outlook on legislative process and administration, this approach is shown to be based on untenable assumptions when applied to statutory interpretation, and unsuccessful in reducing indeterminacy.

The other response consists of approaches, all designed to further legislative purpose with its inherent public values. Of particular interest are methods which seek meaning from context, allowing characteristics of a regulatory scheme to be referred to as sources of meaning. From the variety of approaches that are broadly purposive, the most persuasive are influenced by modern hermeneutic insights on interpretation, such as those proposed by Sunstein, Dworkin, Fish and Eskridge.[20] Some purposivists adopt a practical reasoning method, often in tandem with a hermeneutic approach. Practical reasoning does not insist on interpretive arguements being in the standard forms of deductive or inductive logic. It acknowledges arguments of different types and the different weight that strands of an argument may have. It leaves room for utilitarian reasoning of the sort which supports policy, not just arguments from pre-existing principle.[21]

A model to guide interpretation is useful for a number of reasons. To begin with, section 109H of the Corporations Law requires that it be interpreted to promote the ‘purpose or object’ underlying the Law. While requiring a purposive approach, section 109H does not specify any content or method for the identification of ‘purpose or object’. It is this failure which has left open the possibility of using general law principles to supply meaning for public legislation.

This article argues that the approach to statutory interpretation proposed by Eskridge with Phillip Frickey,[22] can supply a content and method that furthers statutory purpose, in a fashion relevant to the public interest ideals of modern regulation. Next, this model has a close correspondence with the best examples of purposive interpretation already evident in the cases, such as Morley v Statewide Tobacco Services Ltd,[23] which will be discussed later. Any credible model of interpretation must be able to explain existing best practice, and not just complain about cases that fail to acknowledge their context in a modern regulatory scheme. Last of all, the model brings into account and suggests a way of using, a variety of sources or interpretive factors pertinent to the creation and implementation of modern regulation. Elaborating this practical aspect of the model against the current law of interpretation, is the major concern of the second part of this article.

In summary, this article argues for a practical reasoning approach to purposive interpretation of legislation of the distinctive variety which establishes modern regulatory schemes. It approaches the interpretive task with goodwill towards the legislative text, because the text expresses public values with the imprimatur of collective authority. By demonstrating the weaknesses of the sceptical public choice approach to legislative process and statutory interpretation, it makes room for an interpreter to look for the public values inherent in legislation, and suggests a practical method for doing so. Moreover, the argument made is illustrated by elaboration of a list of interpretive factors, supported by Australian judicial authority. Together the hope is to supply a content and method to operationalise the purposive approach required by section 109H of the Law. Although the argument is located in the Australian Corporations Law, and the role of ASIC, it is hoped the approach may also be relevant to other regulatory statutes, and even more widely.[24]

2. Indeterminacy in Modern Statutes

Probably the most important distinction between earlier forms of legislation[25] and a scheme like the Corporations Law, is the combination of ASIC and its wide discretions for implementation of the legislation. These are delegations of Parliamentary authority which require ASIC to interpret its powers, in order to implement them. Because the powers are wide, interpretive limits must be found by reference to the context in which the legislation operates, including the economic or social policy which impelled Parliament to pass it. This breadth of delegation is endemic to modern regulation. It allows an authority like ASIC to respond to unforeseen circumstances and innovation and to administer flexibly. It adds what might be called ‘structural ambiguity’ to the traditional sources of linguistic ambiguity, such as under-inclusiveness, over-inclusiveness and uncertainty in application.[26]

While not expressly referring to an agency, the courts have recognised Parliament’s inability to foresee all eventualities. As McHugh JA said in Kingston v Keprose:

Purposive construction often requires a sophisticated analysis to determine the legislative purpose and a discriminating judgment as to where the boundary of construction ends and legislation begins. But it is the technique best calculated to give effect to the legislative intention and to deal with the detailed and diverse fact patterns which the legislature cannot always foresee but must have intended to deal with if the purpose of the legislation was to be achieved. Moreover, it is the technique which may finally induce the draftsmen of statutes to state broad principles rather than to draw the detailed enactments which now emanate from the legislature.[27]

Twining and Miers remind us that there is a further source of interpretive indeterminacy arising from the different standpoints of interpreters. Statutory interpretation, usually concentrates on judicial interpretation, and it is true that judicial interpretation has special authority. Consequently judicial interpretations of legislation influence the interpretive practices and conclusions of other interpreters.[28] In a regulatory scheme like the Corporations Law, most interpretation is done by administrators, here the officers of ASIC. They too are instructed to promote the ‘purposes and objects’ underlying the Law, but act in a different context. For example, in deciding whether a takeover has occurred in ‘unacceptable circumstances’ warranting a declaration application under section 733 of the Corporations Law, ASIC acts under time pressures, and the threat of public criticism. A court is not usually afflicted by either of these factors, most review applications being determined after the event.[29] Officers of ASIC interpreting the Corporations Law, may take into account expert or empirical information about the impact of the regulatory scheme which is unlikely to be admissible in a court. They will also observe the terms of policy statements, practice notes and other statements of regulatory policy, to which a court may or may not defer.[30] This difference of standpoint is a potent source of indeterminacy, which can only be understood by reference to the context of the interpreter. Modern legislation with these attributes, is said to introduce too much indeterminacy into the law.[31] Wide discretions combine with new approaches to statutory interpretation which allow the introduction of many interpretive factors. This, it is argued, undermines accountability to Parliament[32] and predictability and consistency in the law.[33] There have been two main responses to this criticism of the legal techniques of the modern regulatory state; they apply to the Corporations Law, as well as to other regulation.

3. Literalism and Textualism

The first combines a retreat to formalism or textualism in interpretation, with a view that modern regulation is simply a vehicle for powerful interests to do ‘deals’ that are in their own and not the public interest. Easterbrook is perhaps the strongest proponent of this view.[34] He contends that legislation is simply the formalisation of bargains between interest groups, cast into a sort of ‘contract’ by the legislative process. As such it has little public interest content, and no purpose to justify an interpretive process which fills, up-dates or responds to circumstances unforeseen by legislators. Easterbrook’s idea of statutory interpretation matches his vision of the legislative process. The parties, like those to a classical contract, should get only what they bargained for. The court should adhere strictly to the core meaning of statutory words; it should ignore contextual factors such as preenactment policy, extrinsic materials, legislative antecedents, structure and operation of the statute.

There are several variations on this public choice school of thought about the legislative process. Although he accepts that all statutes are ‘deals’, Macey’s contribution is to argue that all statutes should be interpreted as if they are ‘public regarding’.[35] Consider the civil penalty regime in Part 9.4B of the Corporations Law, in its relation to director’s duties. If it were not for the express saving of general law liability in section 232(11) there would be doubt as to whether the ‘deal’ creating Part 9.4B, left those actions still available, given the comprehensiveness of the sanctions under Part 9.4B. Macey would resolve the doubt in favour of investors and against directors, because this is ‘public regarding’. Other public choice theorists have developed typologies of legislation.[36] They argue that some types of statutes are not affected by ‘deals’ and should be interpreted broadly on purposive lines, while others are, and should be interpreted restrictively.

But as Mashaw points out in a wounding critique of public choice approaches to legislation and interpretation:[37]

Indeed, certain public choice ideas have proved to be seriously unhelpful. The notion that legislation is a “deal” among private interests manages to disparage public action while shedding virtually no light on the realities of law-giving or the appropriate approach to interpretation.[38]

While acknowledging that some of the more refined contributions to public choice scholarship give useful insights,[39] Mashaw catalogues unsubstantiated assumptions, theoretical misunderstandings and fixations with modes of private law thinking, used inappropriately in a public context. Most damaging of all, he shows that the ‘deals’ on which much public choice analysis rests, are hypothetical, and just as conjectural as the supposed intention of the legislature in more traditional approaches to interpretation.[40] He is not alone in these criticisms. Sunstein also points out that the terms of any deal will be hopelessly unclear, and that empirical evidence in support of the fact of legislative ‘deals’ is equivocal.[41] He argues that the construction of relations on a private law model, inherent in public choice, is inconsistent with the values that underlie modern government. It often means that legislation will be interpreted against the interests of its supposed beneficiaries.[42]

As Bottomley and Parker point out[43] there is no doubt that public choice analysis is an influential theory about the legislative process inspiring antipathy towards public regulation. That influence has been felt in Australia, where deregulation and privatisation policies have received bi-partisan political support, accompanied by the rhetoric if not always the reality, of ‘rolling back the state’.[44] On the other hand there is very little, if any, evidence of public choice techniques being adopted in Australian statutory interpretation.

In Australia until the early 1980s statutory interpretation was mainly associated, though not exclusively, with the literal approach to interpretation. This approach concentrates heavily on the text, admitting a very limited range of other interpretive factors. Jeffrey Barnes[45] discusses the course of change to a purposive approach[46] in Australian interpretation. As he explains, the literal approach, which dominated until the early 1980s required the court to effect the ordinary meaning of legislation, exclusive of context.[47]

The claim that they produce greater certainty of interpretive outcome[48] has been the main claim of textualist and literalist approaches. But as a cure for indeterminacy, this is an illusion. As Sunstein[49] points out, the dependence of the meaning of words on both culture and context, is a conventional point in both Anglo-American and Continental philosophy. He captures the idea that is a leitmotif of modern interpretive scholarship as follows:

In its purest form, however, the textualist approach is inadequate. The central problem is that the meaning of words (whether “plain” or not) depends on both culture and context. Statutory terms are not self-defining, and words have no meaning before or without interpretation. To say this is emphatically not to say that words used in statutes or elsewhere can mean anything at all. But it is to say that statutory terms are indeterminate standing “by themselves”, and, even more important, they never stand by themselves.[50]

4. Purposive Interpretation

The other response to indeterminacy in modern legislation, is best described as the development of ideas to make more sophisticated purposive approaches to statutory interpretation. Purposive approaches have as their hallmark a willingness to take into account a greater number of interpretive factors, both intrinsic and extrinsic to the legislation being construed.[51] They have also benefited from the insights of hermeneutics and linguistic theory. Purposive approaches attempt to capture in interpretation the dramatic increase in the complexity of the conditions of social and economic life, to which legislatures are called to respond. As Unger has put it:

As government assumes managerial responsibilities, it must work in areas in which the complexity and variability of relevant factors of decision seem too great to allow for general rules, whence the recourse to vague standards. These standards need to be made concrete and individualised by persons charged with their administrative or judicial execution.[52]

The idea is that the process of interpretation is opened to more factors which can guide the interpreter in the right general direction. As Twining and Miers cogently express it:

... because purposes or other reasons are often vague or indeterminate, it does not follow that they are unhelpful or useless. As aids to interpretation they may not on their own resolve all of an interpreter’s problems ... but where elucidation of purpose can provide a general sense of direction it provides a broad context or framework within which detailed consideration of other kinds of factor may be fitted. Purposes and reasons can still be an interpreter’s best aid.[53]

The essence of all purposive approaches which show the influence of hermeneutics and linguistic theory, is that identification of purpose is a process of attribution of meaning. It is not only the discovery of an original purpose, or even the meaning of that purpose updated for modern circumstances. It is a process of attribution of meaning which takes these matters into account, and also the purposes of the interpreter, constrained by interpretive factors of the type elaborated later in this piece. These factors arise from the context of the interpretive process. As Dworkin explains:

interpretation is not conversational but constructive. Interpretation ... is essentially concerned with purpose not cause. But the purposes in play are not (fundamentally) those of some author but of the interpreter. Roughly, constructive interpretation is a matter of imposing purpose on an object or practice ... . It does not follow, even from that rough account, that an interpreter can make of a practice or work of art anything he would have wanted it to be ... For the history or shape of a practice or object constrains the available interpretations of it, though the character of that constraint needs careful accounting, as we shall see.[54]

The essence of this conception of interpretation is ‘that there is no such thing as the ‘text-in-itself’, independent of any reading or interpretation’.[55] Rather, interpretation is an interactive process, in which the interpreter grasps important factors from the relevant context including the precise situation or case in which the final meaning of the statutory language will be applied. These factors, the text, its origin and history, earlier interpretations, changes in social, political or economic views or practices combine with the specific purposes of the interpreter, in the final production of meaning. So while the text and context of enactment continue to have weight, so do subsequent events, including the standpoint of the interpreter. But the interpreter’s purposes are not substituted for those of the author; ‘contextual factors condition the reader’s grasp of the text, not the other way around’,[56] for these shape the interpreter’s approach to the text, before and during the process of interpretation.

These shaping factors may derive from context or from those the interpreter interacts with.[57] Meaning is derived not only from interaction with the text and its context, but the like meaning derived by others who interpret and apply the text – the interpreter’s ‘interpretive community’.[58] An interpretive community might be a group of intermediaries (or their legal advisers) to which regulation applies, who trade in a particular financial market. The more homogenous their underlying assumptions, largely derived from context, the closer the meaning attributed by group members to a text such as a rule. Interactions between the members of the interpretive community, including the regulator, will tend to confirm the central meaning of the rule, though adjustments of meaning may occur at the edges. The less reference there is to context and the more heterogenous the underlying assumptions about how things do and should operate, the more indeterminate the meaning of the rule will be. The members may share knowledge of the rules, but they may not share understanding of their norms and operation, and this leads to indeterminacy.[59]

Some readers may find this description of the interpretive process at odds with their views on legislative sovereignty, and find more traditional originalist or intentionalist notions of statutory interpretation more acceptable. Consideration of the following persistent problems of interpretation shows how the process of interpretation inevitably involves the attribution of meaning, though as we shall see contextual factors which clearly defer to the legislative process limit the meanings available.

First, is it the original purpose of the legislature that the interpreter should seek, or one which it could be reasoned that the legislature would have adopted in the current circumstances?[60] As Eskridge and Frickey and Twining and Miers all point out, ‘Modern historiography suggests that a present-day interpreter can never completely or accurately reconstruct past understandings.’[61] In addition to theoretical reasons62 for rejecting an originalist position, there are good policy reasons for adopting an approach which up-dates the operation of a statute.

Modern regulation such as the Corporations Law is enacted to deal with a dynamic area of human activity. The techniques of discretionary justice, subordinate rule making, and adjudication are designed to keep pace with innovation, be responsive to the regulated community and adaptive in protecting the beneficiaries of regulation. In the Corporations Law there are further structural indicators in favour of a contemporary interpretation. In a number of places the Law[63] empowers the regulator to modify, or exempt from, the operation of the primary legislation. This all suggests that an approach to discovery of purpose, which includes the purposes of the current interpreters, is more appropriate. This must involve the construction of an attributed intent or purpose.

Second, the traditional purposive approach required the interpreter to determine what Parliament as a whole desired. Suggestions that it is really the purpose or meaning of the legislation[64] that is in issue, are really dodging the point. There is unanimous agreement amongst modern critics of interpretation that a unitary Parliamentary intent or purpose is a fiction[65] and its discovery is quite hopeless of achievement. Similarly, underlying purposive interpretation, is the assumption that Parliament as a whole has rational, public interest reasons for passing legislation. As we have seen, public choice criticisms of this assumption are over-stated, but they are a salutary reminder that the complexity of the legislative process can never correspond with a single collegiate rationale for a piece of legislation.[66] Therefore here too, the enterprise of interpretation must be one of constructing an attributed intent or purpose.

These points, in one form or another, underlie all modern contributions to the debate on purposive interpretation. The consequence of it for literal or textualist approaches to interpretation, is to deny their capacity to eradicate indeterminacy. The derivation of meaning by literal or textual means still requires reference to factors and assumptions outside the words, however invisible the language of such interpretation might make them. For example, it is an assumption of the context and culture surrounding Australian literalism that the common law should remain unaltered, unless the contrary is made clear by legislation.[67] But what is the trigger for the contrary to be made clear? Express words of the statute? Necessary intendment? And if the latter, what is required to show it? What if the very architecture of a modern regulatory statute suggests the end of the existing relationship with the common law?[68] Even if there are answers to these questions, there is great fluidity in their application.[69] All this reminds us again, that even in relatively narrow approaches to interpretation, statutory meaning is heavily dependant on contextual factors and in reality involves the attribution of meaning.[70]

By now it is obvious that indeterminacy arises from the language of statutory provisions, the structure of regulatory schemes and the variety of interpretive standpoints. This is not to suggest that modern regulation is ‘radically indeterminate’[71] being either incapable of any meaning, or permitting any meaning at all to be attributed to a provision. As the rest of this article will demonstrate, there are sufficient contextual sources for fixing the meaning of provisions, in a scheme like the Corporations Law, to avoid radical indeterminacy.

5. Constraints on Meaning

While modern approaches to purposive interpretation accept that meaning is produced by the interaction of text, context and interpreter, whether or not a member of an interpretive community, all of them[72] theorise, in different ways, about how the production of meaning is limited or constrained. Under the broad description of purposive interpretation we have adopted, there have been a number of attempts to provide explanations of legal interpretive practices, that constrain meaning.

Flowing from the insight that interpretation can only occur in a particular context or culture, Sunstein argues that background interpretive principles constrain statutory meaning.[73] His view is that the traditional interpretive canons[74] provide the wrong interpretive background assumptions for the aims of the regulatory state. He argues the traditional canons relate to an interpretive era that privileged private relations over the public interest aims of the regulatory state.

This results in interpretations that undermine the public goals of modern regulation, because the courts are free to adopt private baselines in interpretation. Instead he proposes a comprehensive list of new canons, which directly address the aims of modern regulatory schemes.[75] For example, he proposes canons promoting political accountability, taking account of collective action problems, promoting consistency between regulatory programs and protecting non-market values. While this is an attractive view of the future of interpretation of modern regulation, it is probably optimistic to think that such principles are sufficiently well developed to constrain current interpretation of the Corporations Law. We need something closer to current practice.

Dworkin of course proposes a general system in which law is interpretation. Constraints in his view, emerge from the ideal coherence of new interpretations with existing law, from new interpretations having ‘integrity’ with old ones, in both case law and statutory construction.[76] Though a most important modern theory, it is for several reasons a system of constraint that is difficult to operationalise in statutory interpretation. First, although coordination and coherence between parts of the law is an ideal, the institutional reality of the creation and implementation of modern regulation is that it is full of exceptions, and even of internal inconsistencies.[77] This is one reason that the identification of purpose and the public interest is so difficult. The Corporations Law is a prime example of this. It is a mix of broadly worded standards[78] and closely defined ‘mini-codes’.[79] There are sections which more or less explicitly replace the general law, others which operate in parallel with it. The Corporations Law is quite unlike the cohesive product of a single drafting exercise, which is generally presented in discussions of interpretation or adjudication, and which seems to underlie Dworkin’s coherence approach to constraint on meaning.

Secondly, coherence or resonance with what has gone before, may not always be the purpose and object underlying the legislation. One point of the passage of regulatory statutes is to create a rupture or a change in the flow of the law, impelled by a consensus in favour of reform. It may be that too great a coherence with what has gone before, will reverse or dilute the purpose or pre-enactment policy underlying the passage of the legislation in the first place. This possibility is seen in Dworkin’s insistence that policy reasons should be excluded from interpretive reasoning[80] or at least they are of much less importance than reasoning based on rights.[81] As we have seen,[82] the essence of modern regulation is that it pursues a social or economic program, and is deeply imbued by policy and ‘consequentialist’[83] in nature. This is complemented by the text of section 109H of the Corporations Law which instructs the interpreter to promote the ‘purpose and object’ underlying a statute, implying ends oriented reasoning situated in the context of the regulatory scheme.

Theories of rights such as Dworkin’s, and Rawls’[84] concentrate on basic liberties and the distribution of primary goods; they have been developed to assist in the interpretation of political rights, not economic relations. Rights theories tend not to be very developed in relation to economic relations, which may be one reason for the predominance of policy reasoning in this area. As Lyons points out in relation to Rawls, ‘the principles of justice are meant to regulate the effects of basic institutions and do not apply to private arrangements and transactions’.[85] Whether or not it is correct to characterise relations such as those regulated by the Corporations Law as wholly private, the fact is that much work is still required to elaborate rights arguments for interpretation of rules designed to govern what are largely economic relations.[86]

Another possibility of constraint on meaning in statutory interpretation, is Stanley Fish’s idea of an ‘interpretive community’.[87] His notion is that we understand the world, including texts such as the Corporations Law, by overlaying grids of intelligibility (or paradigms), through which we make sense of our experience. If these paradigms or structures are shared with other members of the interpretive community, then the meaning of the text being interpreted will be the same to all members. There is disagreement about whether these interpretive structures come from shared behaviour or activity, or from some sort of preinterpretive understandings.[88] But the essence of Fish’s idea is that the closer the shared context of those using or interpreting a provision, the less indeterminate the meaning of that provision will be, and the more effective the community paradigm will have been in constraining meaning.[89]

The idea is compelling, but what if the interpretive community lays down a grid that contains values at odds with those underlying the provision, as seen from objective evidence surrounding the creation and implementation of the statute? What if the interpretive community places a grid promoting private values, over a provision that has a public interest purpose or object underlying it? What if the legislator and regulator apply a public regarding paradigm, and other interpreters adopt one predominantly private in outlook? Here there are effective constraints on meaning, but they are not those which promote the public interest values which impels the passage of most regulation.

Another approach to interpretation is William Eskridge’s ‘dynamic interpretation.’[90] As with the three models already discussed, dynamic interpretation has a hermeneutic method, which it combines with practical reasoning. Dynamic interpretation is also informed by empirical investigation of the operation of legislative bodies in the public choice literature.[91] Eskridge argues that interpretation is the process of attribution of purpose by the interpreter, constrained by the history and context of the text, to assert that interpretation should be ‘evolutive’. As we have seen, the idea that interpretation is a process of attribution of meaning, is hardly novel in contemporary interpretive practice.

Instead of canons, coherence or interpretive communities as a constraint on meaning, Eskridge develops a scheme of interpretive factors to be taken into account by the interpreter. These factors are familiar in interpretive arguments – the statutory text, extrinsic materials and legislative antecedents, operational factors and policy. These factors are marshalled using techniques of practical reasoning to attribute a meaning to a statutory provision. They also operate to constrain statutory meaning.[92] Crucially they acknowledge the primacy of legislative authority, the weight given to those factors closest to the legislative process being the greatest.[93] Signifying the authority of Parliament, the text of the statute will have more weight than other factors such as post-enactment policy. But statutory text will not always prevail, if there is an accumulation of strong contrary factors.[94]

Eskridge and Frickey argue[95] that an interpreter will look at a number of interpretive elements: text and its antecedents, structure of the statute and any statement of purpose, extrinsic materials, operational factors and possibly, postenactment policy. The interpreter will derive an initial view of the statute, and then test the view against all the relevant interpretive factors. Which factors are eventually most persuasive will depend jointly on their closeness to the legislative process and the strength of the arguments supporting them. In easy cases the text and all the other interpretive factors will point in the same direction. In hard cases the text may have to be read down, strained, supplemented or even substituted because other factors point to a meaning that is closer to the purpose of the provision, but away from its literal meaning.[96]

Practical reasoning asserts that it is possible to come to a right answer to a problem, without an overarching theory or explanation of how the answer is arrived at. The process of practical reasoning is one of taking a number of factors present in an actual situation into account, and developing a number of possible alternative answers. These possibilities are then weighed against the factors relevant to the reasoning process, until the best explanation for the situation is understood. In the absence of an alternative explanation that illuminates the problem better, the best explanation is then accepted as the right one.[97] The philosopher John Wisdom describes this sort of practical reasoning:

In such cases we notice that the process of argument is not a chain of demonstrative reasoning. It is the presenting and re-presenting of those features of the case which severally co-operate in favour of the conclusion, in favour of saying what the reasoner wishes said, in favour of calling the situation by the name which he wishes to call it. The reasons are like the legs of a chair, not the links of a chain.[98]

Both Twining and Miers[99] and Eskridge and Frickey[100]use practical reasoning as a basis from which to better understand the variability and fragmentation of the practice of purposive interpretation. Attention to practical reasoning is important, because as Twining and Miers point out, it has strong affinities with the approach to statutory interpretation already in use.

Eskridge and Frickey’s model of dynamic interpretation, already outlined, has as a crucial component a practical reasoning approach to the use of the interpretive factors. It identifies and weights interpretive elements and is predicated on the reasoning involved in statutory construction being complex. It recognises that it is impossible and futile to prescribe in advance the relative weight of the elements in every case. These will be indicated by the nature of the statute, its context and the values at stake in the interpretive exercise.

Practical reasoning is apt for interpretation of the Corporations Law, because of the heterogenous nature of its provisions.[101] Practical reasoning is flexible and adaptive. The interpretive significance of the different styles of provision can be reflected through arguments drawn from any of the interpretive factors about to be discussed. The rest of this article will argue that Eskridge’s dynamic interpretation model and the practical reasoning dimension introduced in his work with Frickey, provides a method to give substance to the direction in section 109H of the Law that interpreters promote the purpose and object underlying the Law.

6. Current Interpretation of the Corporations Law

In Australia the purposive approach to construction is now part of the judge made law of statutory interpretation[102] and mandated by s15AA of the Acts Interpretation Act 1901. The unusual legislative structure used in Australia to ‘federalise’ the Corporations Law,[103] has resulted in the repetition of provisions of the Acts Interpretation Act in the Corporations Law. Section 15AA is reproduced in section 109H of the Corporations Law and section 15AB, the extrinsic materials provision, is repeated in section 109J of the Corporations Law.[104] Section 109H of the Corporations Law reads:

s109H In the interpretation of a provision of this Law, a construction that would promote the purpose or object underlying the Law (whether that purpose or object is expressly stated in that Law or not) is to be preferred to a construction that would not promote that purpose or object.

By contrast with textualism or literalism, purposive approaches add factors to the process of interpretation, in addition to the language of the statute. As Dixon J explained in R v Wilson; Ex parte Kisch:[105]

The rules of interpretation require us to take expressions in their context, and to construe them with proper regard to the subject matter with which the instrument deals and the objects it seeks to achieve, so as to arrive at the meaning attached to them by those who must use them.

In Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation Mason and Wilson JJ extended the factors which may be taken into account in purposive interpretation, by allowing reference to a provision’s operation and policy:

But the propriety of departing from the literal interpretation is not confined ... It extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions.[106]

The purposive approach has recently received further endorsement from the High Court, in Newcastle City Council v GIO General Limited.[107] There the court agreed to read down the literal words of section 40(1) of the Insurance Contracts Act 1984 (Cth) and to give a wide interpretation to section 40(3) of that act. In doing so it relied on the remedial purposes disclosed by the preamble to the act, the explanatory memorandum and a law reform commission report. The court also gave weight to operational matters. These four factors indicated that the literal meaning of the section was at odds with Parliament’s purpose as indicated by the extrinsic materials and the preamble.

In the period since the enactment of section 15AA of the Acts Interpretation Act and the Cooper Brookes decision, we have been given little consistent guidance on what is required to interpret purposively, and to promote the ‘purposes and objects’ underlying a statute. We know that an interpreter must seek the ‘purpose and object’ as soon as the interpretive process begins.[108] Contextual factors and extrinsic materials[109] operate immediately on the interpretive process. There is no need to find an ambiguity or obscurity arising from the text only, before other factors may be considered. We also know that it is proper to consider a variety of elements both internal[110] and external to the statute.[111]

On the other hand, it has been suggested that, where there is more than one competing purposive interpretation, it is not necessary to adopt the one that best promotes the purposes of the act.[112] Barnes suggests that it is not required to seek the ‘purpose or object’ from the beginning of the interpretive process, if a provision leaves only one meaning ‘reasonably open’.[113] At common law, even the most liberal judgments do not require the purposive approach to be adopted; the court may depart from the literal approach ‘in any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent’.[114] The contradictions in these authorities make it difficult to see method surrounding the purposive approach.

As already mentioned, it is now clear that the purpose rule operates as soon as interpretation begins. In Newcastle City Council v GIO General Limited[115] the literal meaning of section 40(3) of the Insurance Contracts Act 1984 favoured the insurer. From the beginning of its analysis, the High Court allowed contextual elements to suggest alternative meanings. The elements which raised the alternative meaning in favour of the insured, were the preamble of the act, extrinsic materials, the policy evident in those, and operational factors. The purpose disclosed by these eventually determined the outcome of the case against the insurer.[116]

The weight of authority now supports a wholly contextual approach,[117] but that approach lacks a consistent method, and this increases indeterminacy in meaning. Twining and Miers argue that lack of methodology is the norm in statutory interpretation.

... although dicta of the House of Lords are generally persuasive, it is only a few of its members who have attempted to systematize judicial approaches to interpretation .... judicial practice does not, for the most part, explicitly reflect this structured procedure. In most cases involving statutory interpretation courts resolve their doubts by reference primarily to the legal context of which the statute is part – company, family, tax law – and in particular to any prior decisions. References to the ‘intention of Parliament’ and ‘the purpose of the statute’ are reasonably frequent, though used in various senses, and there are occasional references to presumptions or canons of interpretation. On the other hand there are usually very few explicit references to what are or what ought to be the methodological principles guiding interpretation; nor is it easy to discern whether the judges are implicitly following some procedure.[118]

They rightly say that because of the variability of context and institutional circumstances in which interpretation occurs, it is easier to diagnose the conditions which lead to doubt about meaning, than to suggest the answers.[119] There is a central problem caused in the interpretation of the Corporations Law by this absence of methodology. In the above quote Twining and Miers point out that in most cases courts resolve interpretive questions by reference to the legal context of which the statute is part. That is also true of the Corporations Law, the general law of companies having exerted a strong influence on the meaning of statutory provisions. The problem with this is one already identified by Sunstein[120] and in our discussion of interpretive communities. The existing general law of companies contains ‘private law baselines’ or values, and is not public regarding, unlike the underlying ‘purposes and objects’ of modern corporate regulation. The absence of any settled method of purposive interpretation has allowed continuing use of general law principles as interpretive material for provisions of the Corporations Law which do not always share the same underlying philosophy.

Not all interpretation of the Corporations Law ignores the requirement to interpret purposively. In the decisions in newer parts of the Law, primarily those regulating securities, managed investments and futures, there is often reference to the need to interpret purposively, though there is little elaboration of what this requires.[121] That absence of a developed method of interpretation has sometimes had the following effects.

Most obviously, the use of principles of the general law of companies in interpretation has served to reverse the statutory abolition or reform of general law doctrines.[122] This incites a legislative response adding detail and complexity to the legislation, as Justice Kirby predicted:

Courts should endeavour to give effect to the purpose of the legislation. When they do this, courts are not indulging in the idiosyncratic pursuit of policies which the judges conceive to be desirable. On the contrary, they are avoiding idiosyncratic perpetuation of law or policy which Parliament has overridden ...To the extent that courts fail to adopt this modern approach to statutory construction they invite cumbersome, detailed and sometimes unintelligible legislation in the attempts by Parliament to spell out its purpose in such detail as to prevent the frustration of the legislative purpose by the courts.[123]

The use of general law principles in interpretation has also dramatically reduced the effectiveness of remedial provisions. For example in Mesenberg v Cord Industrial Recruiters Pty Ltd[124] section 1324 of the Law was interpreted subject to the rule in Foss v Harbottle[125] which limits shareholder actions to very narrow circumstances, and provides no standing to creditors at all. This was rejected by the Federal Court in Airpeak Pty Ltd v Jetstream Aircraft Ltd[126] similar treatment was accorded section 50 of the Australian Securities and Investments Act in ASC v Deloitte Touche Tomatsu.[127] Ramsay makes the same point about the early interpretation of section 246AA of the Corporations Law.[128]

Particularly where a provision has been in the Corporations Law for a long time, and its interpretation influenced by general law seems settled, there is uncertainty about whether the legal task is one of interpreting the statutory provision, or elaborating the general law principle.[129] This is exacerbated when the provisions under interpretation are statutory analogues, in various states of reform, of what was the general law of companies.[130] Further, if a provision has been in the statutory law of companies for a long time, it may be that extrinsic materials as to the original ‘purpose and object’ of Parliament are impossible to obtain, and that precedent is seen as a barrier to shifting from an interpretation that became established before the introduction of the purposive approach.[131]

There is the highest authority that the courts will usually assign to a word its ordinary grammatical[132] or current meaning.133 However, they may depart from the ordinary current meaning when a word has acquired a technical legal meaning. There has been, in the interpretation of the Corporations Law, an overuse of the technical legal meaning of words. Instead of construing the current ordinary and grammatical meaning, ascertained from statutory context, the courts have adopted technical legal meanings derived from the general law of companies. This practice has been one of the main techniques for the maintenance and reintroduction of concepts from the general law of companies, in the face of the public interest purposes of the Corporations Law.

Pearce agrees that the courts have demonstrated ‘a tendency ... to move overreadily to the familiar legal meaning of words.’[134] As has been argued, this tendency is apparent in the interpretation of the Corporations Law[135] and indicates a ‘resistance to change in established legal doctrine.’[136]

In the past it has been said that in ‘construing Acts of Parliament, it is a general rule ... that words must be taken in their legal sense unless a contrary intention appears.’[137] But the adoption of a purposive approach to interpretation by the High Court, and the requirement in section 109H of the Corporations Law to promote the purpose and object of the statute, must put this authority in doubt. Of greater authority now must be the many statements by the High Court that the ‘ordinary and grammatical’[138] meaning of words set in their proper context, is to be preferred. This then places an onus on the interpreter, contending for the legal technical meaning, to show that it furthers the purpose and object of the statute.

There is one decision which demonstrates a self conscious attempt at a methodology of statutory interpretation to great effect. It is worth dwelling on here. The case contains important correspondences with insights about legal reasoning in interpretation in the work of Twining and Miers, and with Eskridge and Frickey’s model of practical reasoning in interpretation. The case and these scholars together may supply a methodology for Australian purposive interpretation, perhaps wider than the Corporations Law.

7. Morley v Statewide Tobacco Services Ltd and Practical Reasoning in Interpretation

In Morley v Statewide Tobacco Services Ltd[139] (‘Morley’), Mrs Morley was sued personally as a director of a family company for debts incurred by the company while it was insolvent. It was argued by Statewide, which had supplied goods, that Mrs Morley was liable under section 556 (1) of the Companies (Victoria) Code.[140] Mrs Morley’s ability to resist liability rested on her making out one or both of two defences. Under the first defence Mrs Morley had to prove that the company had acquired the debts ‘without [her] express or implied authority or consent.’ Under the second, she had to show that at the time the debt was incurred, ‘[she] did not have reasonable cause to expect that the company would not be able to pay all its debts as and when they became due.’ In previous cases, the fact that passive directors had taken no part in the management of the company had assisted them in showing an absence of consent or authority to the incurring of the debt.[141] Their lack of knowledge of the financial circumstances of the company, also arising from passivity, had been accepted as a proper basis for absence of an expectation of insolvency, under the second defence.[142]

The conclusion of the case was a finding that Mrs Morley was liable for the debt incurred by the company to Statewide. This was confirmed on appeal[143] with no significant departure from the reasoning of Justice Ormiston, who delivered the original judgment. What interests us is not only the dramatic difference in outcome, but more importantly, the approach to interpretation by which it was obtained.

Justice Ormiston began his interpretation by looking at the ‘structure and purpose of section 556’.[144] To explicate ‘structure and purpose’ he looked at legislative antecedents of section 556, interpolating references to the explanatory memorandum accompanying changes in the structure and content of the provision over time.[145] The comparison of the contemporary structure of the section with the antecedents revealed features from which the judge drew the implication that the purpose of the current section was to impose more stringent liability than in the past on directors whose companies incur debts in, or in the expectation of, insolvency. A significant reduction in the matters the plaintiff had to prove, a shift from the plaintiff to the defendant of the onus of proving elements of the defences, demonstrated this purpose. So did the change from ‘a blend of subjective and objective considerations’[146] to entirely objective circumstances, easier for the plaintiff to prove to establish the cause of action.[147]

The purpose disclosed by close analysis of the section was corroborated by considering related provisions in the wider statute. The growing severity of offences for breach of director’s duties was noted, as were judicial powers to disqualify individuals from acting as directors and administrative powers for banning directors involved in insolvencies.[148] More persuasively still, Justice Ormiston saw a number of sections imposing on directors a duty:

to inform him or herself as to the financial affairs of the company to the extent necessary to form each year the opinion required for the director’s statements. Although that is only an annual obligation, it presupposes sufficient knowledge and understanding of the company’s affairs and its financial records to permit the opinion of solvency to be formed ... Provisions such as these provide some indication of the attitude now taken by the legislative scheme in the Code towards the role and duties of directors and that altered attitude should be taken into account in interpreting provisions such as section 556.[149]

Having established the purpose of the section in this way, Justice Ormiston began an analysis of the actual words of the defences in section 556. Each was to be interpreted bearing in mind the existence of the other, and according to the natural meaning of the language employed.[150] Turning to the first defence, Justice Ormiston pointed out that the defence renders the defendant liable unless ‘a want of the authority or consent’[151] is shown. Previous judgments had suggested that the defendant would only be liable if active consent or authority to a particular debt was proved. This apparently small point of language, once made, allowed the revelation of the real conditions of authority and consent in which companies acquire debts. It allowed Justice Ormiston to demonstrate that the approach taken in previous cases had relied on an unacceptably artificial picture of the exercise of director’s authority in incurring company debts. It also allowed him to demonstrate how that, in turn, had stripped section 556 of any area of operation. The disparity between this outcome, and Justice Ormiston’s distillation of the purpose of imposing more stringent liability on directors, made the earlier interpretations seem even more unlikely. Here an acute reading of the text of the section, and operational factors, were given direction and meaning by being set against the purpose of the section.

The question in relation to the second defence was whether it was reasonable for Mrs Morley to have no expectation of the insolvency of her company, when she took no part in its management. Again, minute attention to the text of the section, and its comparison with antecedents, demonstrated that Mrs Morley had the burden of proving her defence.[152] She had to ‘negative “reasonable cause to expect’’ that the company was insolvent.’[153] Further, what was ‘reasonable’ was to be determined in the context of the other provisions of the act, requiring directors to inform themselves of the financial affairs of their company. Justice Ormiston held it would be reasonable to rely on illness or being overseas to negative an expectation of insolvency. But in the statutory context it was not reasonable to rely on a director’s complete ignorance of his or her duties.[154] Purpose was again useful to give meaning to the minute explorations of the text and the changes to it. The substance of other sections in the statute corroborated the meaning. Together they made ridiculous, any conclusion that a director who took no part in the business was less likely to incur liability than one who did. What does this elaboration of Morley tell us? Firstly, purpose can be identified from the structure and content of the provision under construction, its legislative antecedents and the wider statute. Not only has a statute the force of law, but it is a potent source of its own meaning.[155] Further, this method of detailed analysis of a provision to derive purpose in Morley may quiet the fears of some[156] who feel that more broad brush approaches[157] to identifying ‘purpose or object’ are inappropriate, though they may lead to the same result.[158]

Though an exemplar of statutory interpretation of the Corporations Law, the Morley decision leaves important questions for our consideration. Several interpretive factors were used in the judgment, but what others might have been considered, and are they permissible? Clearly current and antecedent texts may be used, as may explanatory memoranda, and operational factors. But might Justice Ormiston have consulted extrinsic materials more widely, and if so, which ones? Could he have consulted regulatory policy, ie post-enactment policy of ASIC? After all, the creation and presence of regulatory policy is contemplated by the fact of ASIC’s existence, its discretionary powers, and the predominantly administrative nature of the Corporations Law scheme.

Another aspect of interpretive method that remains implicit in Morley is the different weight given to each of the interpretive factors considered by Justice Ormiston. As members of the same interpretive community, we know that great weight is given to the current text of the statute, but this is not stated. We can see that the text of antecedent versions of section 556 also have weight, but the relative value of the current and antecedent texts is not explicit. What weight did the court give to the explanatory memorandum and operational factors? Why was purpose, endogenously derived from a mix of text, structure and legislative antecedents, given more weight in Morley, than the same purpose derived from exogenous sources by Justice Kirby in Metal Manufacturers v Lewis? Can we rationalise the complex reasoning[159] that goes on in a practical way in such cases, to make more explicit a methodology that will promote the public values inherent in the ‘purpose or object’ of the Corporations Law?

Legislative antecedents, extrinsic materials, and operational factors collaborate with purpose and the text to give direction and cumulative weight to the eventual interpretive conclusion. There are reasons of different types and weight in the Morley judgment: textual, functional and utilitarian, historical. But against the background of purpose, they gain cohesion and direction towards a single conclusion. A more detailed account of which factors might collaborate towards the identification of ‘purpose and object’ underlying the Corporations Law now follows.

8. Purpose, Practical Reasoning and the Corporations Law A. The Text of the Statute

Although other factors may challenge the text, the words of the statute remain the single most important guide to its meaning. Their ‘ordinary and grammatical meaning’ is the place to start.[160] However, ‘no part of a statute can be considered in isolation from its context – the whole must be considered’.[161]

That said, some cases disclose a view that seems antithetical to the practical reasoning model. In circumstances where the words of a provision ‘are reasonably capable of only one construction’[162] there will be no operation for section 109H of the Corporations Law, which it will be recalled, operates to give priority between competing interpretations.[163] Although not expressed as such, it may be that this view really operates as a presumption that is relatively easy to rebut by introduction of other interpretive factors. In practice, there will probably be very few instances where the introduction of other factors at the first level fails to raise a second reasonable construction.

There are a number of other matters which might appear, on first impression, to diminish the likelihood of arriving at the ordinary grammatical meaning of statutory words, as signified by their context. The literal tradition in Australia gave an understandable prominence to the rules or canons of construction.[164] The inflexible application of these does not fit well with practical reasoning and the purposive approach. The canons are only approaches and assumptions which have been developed as ‘aids to interpretation.’[165] In legal terms they are rebuttable assumptions, and may be ousted by implication.[166]

The same point was made in the interpretation of the Companies (NSW) Code by Justice McHugh in Corporate Affairs Commission (NSW) v Yuill,[167] where the rules of construction were referred to as ‘guides ... to meaning.’ The canons are now often rebutted, because their operation is incompatible with the purpose or object of the act, evidenced through the operation of relevant interpretive factors. The degree to which the canons have made way for the operation of statutory purpose can be seen in relation to the rule concerning the strict construction of penal provisions. As the High Court held in Waugh v Kippen,[168] and reiterated recently in Newcastle City Council v GIO General Limited,[169] in determining the meaning of a penal provision the ordinary rules of construction must be applied. That means the purpose of a provision should be sought, and especially where a remedial measure is in question, the rule of strict construction of penal provisions is one of last resort. In other words, where the purpose of a provision is remedial, that purpose should not be defeated by importing the strict construction rule, just because one consequence of the operation of the provision, may be penal. Viewed in this light, the canons should provide no obstacle to a purposive approach based on practical reasoning. As the High Court has said ‘it all depends on context.’[170]

The fact that some Corporations Law provisions have established meanings which owe more to the general law of companies, than their place in a modern regulatory statute, should not be a permanent obstacle to a purposive approach informed by practical reasoning. The doctrine of precedent is less binding in statutory interpretation than in other areas of law. Justice Gummow pointed this out in Brennan v Comcare.[171] So if an appellate court particularly, thinks that an interpretation is wrong, despite its longevity, it will depart from the earlier interpretation.[172]

Finally, traditional presumptions have developed, designating which words of a printed statute may be referred to in the process of interpretation, and which not; some of these are now found in legislative rules of interpretation.[173] For example, it was not permissible to rely on marginal notes as a source of meaning.[174] In most jurisdictions, for printing convenience, marginal notes have now become section headings, footnotes or endnotes.[175] Traditionally, the legal effect of not being part of the act has been to deny marginal notes any effect in the process of interpreting the sections to which they were adjacent. All of these rules must now be considered as operating subject to the requirement to seek the purpose or object of the provision under interpretation.

An alternative route to the use of headings to chapters, parts and section headings etc in the process of interpretation is provided by the extrinsic materials provision, section 109J of the Law. Section 109J treats material included in the act as printed, but which is not part of the act, as extrinsic material. This would allow reference to section headings etc as part of the context of the statute in which the text under interpretation appears.[176] The point of this is to ensure that as many parts of the printed act as possible are available as context. Then they can assist in establishing the meaning of a provision, even if they do not have the same weight as the text of the statute.

This discussion about the parts of an act raises starkly the question of what weight should be given to the authorised text of a statute. Even the shift to seeking purpose from all parts of the printed act does not remove the distinctive character of the authorised text. The text retains an authority and weight, which no other element commands, in the matrix of interpretive factors. As Eskridge and Frickey put it:

a persuasive textual argument is a stronger thread than an otherwise equally persuasive current policy or fairness argument, because of the reliance and legislative supremacy values implicated in following the clear statutory text. And a clear and convincing textual argument obviously counts more than one beclouded with doubts and ambiguities.[177]

But, as they also point out, text is not trumps, and ordinary grammatical meaning may be influenced or made to resound in a particular way:

Each criterion is relevant, yet none necessarily trumps the others. Thus while an apparently clear text, for example, will create insuperable doubts for a contrary interpretation if the other evidence reinforces it ... an apparently clear text may yield if other considerations cut against it.[178]

It is to these other considerations that we now turn.

B. Structure of the Statutory Scheme and Legislative Antecedents

In Morley we have seen already how a detailed study of the legislative antecedents of the insolvent trading provision of the Corporations Law was a powerful influence in revealing the purpose behind section 556, and its eventual interpretation. Examination of the statutory scheme as a whole, and identification of other provisions with similar subject matter and purpose, had the same effect.[179] Although not described as such, the use of the structure of the statutory scheme, or the context of the statute, is a traditional source of meaning for statutory provisions. In Attorney-General v Prince Ernest Augustus of Hanover it was said:

For words, and particularly general words, cannot be read in isolation: their colour and content are derived from their context. So ... I conceive it to be my right and duty to examine every word of a statute in its context, and I use ‘context’ in its widest sense ... as including not only other enacting provisions of the same statute, but its preamble, the existing state of the law, other statutes in pari materia, and the mischief which I can, by these and other legitimate means, discern the statute was intended to remedy.[180]

Clearly, a statement of legislative purpose such as in the previous section 161 Corporations Law, or reference to the statutory preamble,[181] will assist in identifying meaning. It has also become a regular feature of interpretive practice to use the overall structure or scheme of a statute or statutes which together create a scheme, as material from which to derive evidence of purpose, and identify meaning.

In Whitby v Deputy Commissioner of Taxation,[182] the Full Court of Western Australia recognised the Corporations Law as bringing into operation ‘a new national scheme for the regulation of companies and securities law’. Although the decision relied on extrinsic documents, rather than the structure of the Law, to come to this conclusion, it is important that the fact of a ‘scheme’ or ‘system’ to achieve a statutory purpose is recognised.[183] Justice Hill, in a decision of the Full Federal Court construing section 55(2) of the Copyright Act 1968, referred to the Part of the Act where that section appears as being ‘a departure from the normal statutory scheme.’

The idea of seeking meaning from the scheme of the statute can also be seen in the cases where close examination of other sections in the act dealing with the same subject matter or using similar techniques, has been adopted. In FCT v Prestige Motors Pty Ltd,[184] as in Morley, identification of meaning was assisted by the close examination of other sections in the legislation.[185] Here the meaning of section 100A of the Income Taxation Assessment Act 1936 was suggested by small but important differences in the wording of other anti-avoidance provisions in the Act. That meaning was reinforced by reference to extrinsic documents and operational matters, as further discussed below.

Another example of how advertence to the structure or scheme of legislation may influence meaning is demonstrated in Gidaro v Secretary, Department of Social Security,[186] in the construction of definition sections. There it was held that ‘Even a defined expression, or one with a technical legal meaning, may on occasion have to yield to context.’ This is more consistent with the purposive approach and the trend of authority than the more rigid view that ‘The defined expression can have no meaning other than that which is stated in the definition.’[187]

In Pasdale Pty Ltd v Concrete Constructions,[188] Justice Finn considered ‘the scheme of the Part’ of Part 5.3A of the Corporations Law, in ascertaining the meaning of words in section 440D(1). In doing so he was assisted by being able to refer to a statutory statement of the object of the Part, but also analysed the structure of the Part to corroborate the application of the object to the Part. Justice Finn described Part 5.3A as ‘a legislative scheme’, and also used extrinsic materials in the elucidation of meaning.

Finally, in Morley, meaning was also sought from treating as related the paragraphs of the defence in section 556 of the Law, so that one was construed taking into account its articulation with the other. This, it seems, was using the ‘scheme of the section’ to assist with interpretation.

Another factor which has become an important source of meaning for sections of the Corporations Law is the legislative antecedents of a provision. In recent Australian cases legislative antecedents have been analysed, interposed with extrinsic materials such as explanatory memoranda and commissioned reports. This creates a narrative of the development of a provision, elaborating its form and the policy which informs it, by contrast with what has gone before. This has been called the ‘legislative history’ of a provision or Part. This approach was taken by Justice Ormiston in Morley, and with equal persuasiveness by Justice Hill in Schott Musik International GmbH v Colossal Records of Australia Pty Ltd.[189] In both cases conclusions from the ‘legislative history’[190] and the statutory context or structure were used as a strong source of meaning for the words under construction.

What conclusions can we draw from this use of statutory structure or context, and legislative antecedents? Firstly, being part of the statute as legislated, the various characteristics which make up the statutory structure or context are a powerful and weighty source of legislative meaning. They show that a statute is a potent source of its own meaning. Being part of the statute, the features of the statutory structure have a good claim to being weighty in the reasoning of the interpreter towards the meaning of the words under construction. Legislative antecedents have perhaps less force, being past forms of the legislation. However, they are immensely useful as a source of corroboration of purpose and meaning of existing provisions. They, like extrinsic materials, form another ‘leg of the chair’ in the process of practical reasoning, towards the final interpretation of words.

C. Extrinsic Materials

What extrinsic materials may a court refer to in the search for meaning, and what weight should they bear? Should they, as has been suggested is the case in the United States,[191] be as influential as the statutory text itself? Or should extrinsic materials be just another type of evidence of the imputed purpose of Parliament, as Eskridge and Frickey suggest?[192] If so, should all extrinsic materials bear the same weight, or are there good reasons why some might be weightier than others? No Australian decisions give to any type of extrinsic material the same status as the text of the legislation.[193] This is so, even when extrinsic materials are used to add to, or strain, the text of a provision. In all instances there have been other factors, such as structure of the scheme, legislative antecedents or operational factors operating with the extrinsic materials, to suggest the reading which prevailed.[194] If we accept, then, that extrinsic materials provide evidence of purpose, Eskridge and Frickey’s model would suggest that the closer to the legislative process the materials have their origin, the greater weight they have. If this is so, is there any evidence that the contents of Hansard are more persuasive than, say, reports commissioned by the executive or on reference to the Australian Law Reform Commission?

In Australia, there is no schema of the relationship of extrinsic materials to the legislative process that is generally evident. The only approximation might be the weight which the High Court has placed on being able to see the evolution of a provision under interpretation from policy recommendations in a Law Reform Commission Report, through the draft provision annexed to the Report, into the final form of the enacted provision. Being able to see the connection between the Commission Report and the enacted provision encouraged the High Court to rely on pre-enactment policy as an interpretive factor in Newcastle City Council v GIO General Limited[195] and CIC Insurance Limited v Bankstown Football Club Limited.[196] This is not to say that documents containing statements of preenactment policy are not otherwise referred to.[197] It is just that when extrinsic materials show this connection between policy and enacted form, there seems to be more reliance placed in the judgments on the pre-enactment policy.

Otherwise courts seem to adopt or dismiss extrinsic materials, more on the basis of the relevance of their content to the issue in question. In Newcastle City Council v GIO General Limited[198] Brennan CJ found ‘that question is not assisted, in my respectful opinion, by reference to the Explanatory Memorandum laid before Parliament when the Bill for the Act was debated’,[199] and preferred to seek meaning from the preamble. By contrast in Morley, Justice Ormiston put some reliance on the terms of the Explanatory Memorandum.[200] In some cases, the courts have followed the American habit of quoting treatises and academic works[201] in search of statutory purpose.[202] At the other end of the scale, even a reasonable statement of purpose made by a Minister in a second reading speech, may not be given priority. In R v Bolton; ex parte Beane[203] general law principles were applied in interpretation, to negative an unambiguous statement by the Minister that the legislation under construction was to apply to persons in the appellant’s position.[204]

Australian courts demonstrate no consistent approach to the weighting of extrinsic materials according to their type. They prefer to rely on the pertinence of the materials to the interpretive question, and the value of the arguments made in them. In most cases there is actually very little analysis of the content of the materials, and they are most often referred to in passing, usually relied on as corroborating conclusions drawn from analysis of the text, legislative antecedents or the statutory structure. The cases where the analysis of the content of extrinsic material is most thorough, and incorporated into the court’s own reasoning, is where there is a clear line from pre-enactment policy, through a draft Bill, to the legislation, as enacted.

Along with these judge made rules concerning the use of extrinsic materials, the Corporations Law itself supplies rules to govern the use and weight to be given to extrinsic materials during interpretation. Section 109J[205] gives a legislative permission to the interpreter to refer to materials outside the statute. By contrast with the judge made rules governing the availability of extrinsic materials in interpretation, section 109J is restricted. The provision allows regard to be given to extrinsic materials only when ‘the provision is ambiguous or obscure’ or leads to ‘a result that is manifestly absurd or is unreasonable’.[206] This means that the ordinary meaning of a provision is not open to challenge by the introduction of alternative possible interpretations, unless there is ambiguity or absurdity. As we have seen, under the judge made interpretive rules alternative interpretations may be introduced by a variety of factors including extrinsic materials, whether or not there is an ambiguity at the beginning of the process of interpretation.[207]

D. Operational Factors

As well as being the case that is generally considered to have established the purposive approach to interpretation in Australia, Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation is also the authority which first gave prominence to operational factors in Australian interpretation.[208] Operational factors have continued to be influential in ascertaining meaning in recent High Court decisions.[209] The importance of operational factors lies in the ability of the court to consider alternative meanings to statutory words that are suggested by observing the operation of a provision. If one meaning of a provision would result in an ‘inconvenient or improbable operation’ [210] of the statute, and another would not, the court may choose the meaning facilitating favourable operation. In an extreme example, one meaning renders a provision virtually inoperable, and another promotes the purposes of the statute. A purposive approach, informed by operational factors, allows the court to depart from the literal meaning of the words to avoid rendering a provision inoperable.

The judgment in Morley, contains an example of operational factors at work. The interpretation in Metal Manufacturers Pty Ltd v Lewis of the defence in section 556(2)(a) of the Code, meant that in order to find directors liable under the section, it had to be shown that they gave express authority or consent to their company incurring a debt. The day to day operation of companies, as shown in Justice Ormiston’s judgment, made it virtually impossible for a director ever to fail to make out the defence, and so rendered section 556, virtually inoperative. It must be assumed, as captured in the so-called ‘golden rule’,[211] that Parliament never intended its legislation to be inoperable. An alternative interpretation, which allows the operation of a provision, must promote the ‘purpose and object’ underlying a provision, in preference to one that does not.

Operational factors have particular significance in relation to the interpretation of the Corporations Law. As was evident in Kingston v Keprose[212] the court had difficulty in determining a meaning of section 43 of the Companies (NSW) Code, because of the complexity of the background circumstances in which the provision operated. In cases involving, for example, markets in complex securities and derivatives, the careful elucidation for the Court of the context in which a provision operates will have a large impact on the final interpretation of the provision. It is clear that operational factors are now an established interpretive factor. It makes sense to heed judicial suggestions that the parties, or ASIC as amicus curiae, might assist the court with evidence about the operation of a provision under construction.[213]

Finally, operational factors, though only a consequence of statutory provisions, tend to be weighty and influential in judicial reasoning. At the initial stage of interpretation, they are important in pointing up alternative meanings to the literal meaning. In the process of identifying purpose and final meaning, operational factors are influential again. Although courts search for extrinsic materials or other factors to corroborate a meaning suggested by operational factors, cases like Cooper Brookes, Newcastle City Council v GIO and Qantas Airways v Christie[214] demonstrate how powerful this interpretive factor may be in the final identification of meaning.

E. Governmental and Regulatory Policy

It is necessary to make an initial distinction between pre-enactment and postenactment policy, in order to clarify discussion. Pre-enactment policy informs the legislation, before it is passed. Post-enactment policy arises from legislative or agency activity after a statute is passed.[215]

We have already seen a number of ways in which pre-enactment policy is influential as an interpretive factor. There is high authority supporting the use of policy as ascertained from provisions of an act, as one factor in statutory interpretation.[216] Policy may be evident from the structure of a provision and its legislative antecedents, as in Morley. It may be evident from the scheme as a whole, or from other provisions in the act, again as in Morley. Pre-enactment policy may also be distilled from extrinsic documents, as in Newcastle City Council v GIO General Ltd[217] and CIC Insurance Limited v Bankstown Football Club Limited.[218] Extracted from some or all of these interpretive sources, policy becomes an important factor in determining the ‘purpose and object’ of a statute: an important factor, but not the only one. As we have seen in Morley, and in Eskridge and Frickey’s model, interpretive factors work together to corroborate a particular interpretive conclusion, and policy is no different. In discussing the rich variety of meanings which ‘purpose’ carries, Barnes points out that it sometimes means ‘reason’ or ‘motive’, which is closely related to the idea of policy.[219] Despite this easy congruence of meanings, policy is insufficient alone to show legislative purpose.

Metal Manufacturers Ltd v Lewis,[220] it will be recalled, is one of the cases prior to Morley, in which section 556 of the Companies (NSW) Code was interpreted to place no liability on a passive director whose company had acquired debts while insolvent. The judgment in Metal Manufacturers Ltd v Lewis demonstrates three approaches to the use of pre-enactment policy in interpretation. Justice Kirby candidly adopts purpose and policy as central to his decision.[221] Justice McHugh acknowledges the policy of section 556 in the opening paragraph of his decision, but does not advert to it again for the rest of his decision, which mostly relies on principles of agency law. Finally, Justice Mahoney uses a long passage to express traditional reservations about the usefulness and legitimacy of policy in statutory construction.[222]

As this article argues, there are now a number of reasons which make it important to include policy in statutory interpretation. In doing so, we should not overlook the difficulties in using policy in interpretation raised by Justice Mahoney, especially in a statute as diverse as the Corporations Law. What, for example, is to be done with the provision that is informed by two, potentially conflicting, policies?[223] In Metal Manufacturers Ltd v Lewis,[224] Justice Mahoney argues that the use of policy in statutory construction gives judges unacceptable latitude in interpretation. Is this so, and what can be done about it?

One of the important themes of this article is to demonstrate that indeterminacy is endemic to modern regulatory schemes; it arises not just from the traditional linguistic sources, but from the necessary broad delegations of power to authorities authorised to implement regulation, and from the different standpoints held by persons called to perform interpretive tasks in the course of implementation. It is therefore irresistible that interpreters, whether administrative or judicial, will have a law creation role, as part of their interpretive function. In deference to constitutional norms, this role involves very limited law creation. Much of this piece has been directed to suggesting a method of interpretation that will both constrain and limit the variations, in the law creation aspect of interpretation. So, in the case of BNZ v Fiberi, where two policies underlying section 164 Corporations Law were evident, the appropriate response was to look to other interpretive factors, to see which of the competing policies was best corroborated. This method uses the statute itself, and its legislative context, to adduce meaning. This gives higher regard to constitutional norms, than resorting to general law doctrines to establish which policy best promotes the underlying purpose or object of the Corporations Law.

The same is true of latitude in judicial law making. If policy were the only guide to purpose, its protean and open-textured nature may allow an unacceptable degree of interpretive discretion. But the requirement that policy be only one factor in the interpretive matrix, that statutory text and statutory structure be much weightier considerations, does much to quell concerns about judges introducing their own views in the process of interpretation. There is a further point. Judges are not the only, or in numerical terms even the most important, interpreters. Officers of ASIC are called to interpret the Corporations Law constantly, and it is not at all clear that they should be as constrained in this process as judges. In terms of accountability of interpreters, ASIC is subject to much closer scrutiny than the courts. Through gazettal of decisions, the tabling of an annual report to Parliament, scrutiny by the joint Parliamentary Committee on Corporations and Securities and governmental control of ASIC’s budget, it is made more answerable to Parliament than the courts. This is all in addition to its liability to administrative reconsideration and judicial review of its decisions. We have already noted that ASIC is the primary authority charged with the implementation of the Corporations Law, and that the juristic nature of its powers and discretions is designed to give it flexibility and responsiveness in this role. It may be that ASIC should be able to give greater weight to pre-enactment policy in its decisions than courts. It still remains the case that ASIC, along with the courts, should observe the primary importance of the statutory text and structure. These and other interpretive factors are important constraints on the process of administrative as well as judicial construction.

Finally, writing in relation to both administrative and judicial discretions, Galligan suggests that, in addition to the legal constraints we have just discussed, there are potent organisational factors which limit the latitude interpreters view themselves as having. All these arguments militate strongly against the use of policy in purposive interpretation, ever becoming a run-away train in disregard of constitutional norms.

If the use of pre-enactment governmental policy is still an uncertain art, what case can be made for using post-enactment policy, made by ASIC, as an interpretive factor? As we have seen, the structure of the regulatory scheme of the Corporations Law contemplates the implementation by ASIC of aspects of the Law, under discretions granted by Parliament. The reasons for the grant of powers and discretions to ASIC are complex,[225] and in exercising the discretions ASIC is inevitably required to interpret the provisions of the Law under which it acts. Further, for reasons of good administration,[226] ASIC will ‘structure’ its discretions by the promulgation of regulations, policy (often presented in the form of rules), and class orders. Clearly, in making these rules, ASIC will reflect the interpretive conclusions it has arrived at about the scope and content of the provisions of the Corporations Law, under which it acts. The interpretive question is the extent to which interpreters other than ASIC should take into account ASIC’s view of the meaning of the Law, and ASIC’s regulations and policy, in the process of interpretation.

Given that Parliament has, by the creation and empowerment of ASIC, contemplated that the agency will have both interpretive and law creation roles, there is little weight in objecting to ASIC’s views as interpretive factors, just because they are post-enactment. The promulgation by the agency, of interpretations, rules and policy contemplated by the scheme of regulation, is another example of Mitchell Franklin’s point that major pieces of legislation are potent sources of their own meaning.[227] There is also authority from tax law that in ascertaining a legislative scheme subordinate legislation may be called in aid.[228] The question is, what legal significance should the rules and policy promulgated by ASIC have?

In a number of cases the High Court has discussed the weight which should be given to post-enactment administrative policy made under a regulatory statute.[229] In a recent decision this authority was adopted by the full bench of the Federal Court in relation to ASIC’s policy in implementing the takeover provisions of the Corporations Law.[230] All the judgments accept that, for reasons of good administration, a body like ASIC will issue policy as a guide to the exercise of its discretion, and will not lightly depart from its published policy. In Re Drake v Minister for Immigration and Ethnic Affairs (No2)[231] particularly, it was held that courts reviewing the exercise of discretions relying on policy should not be quick to overturn them. There is in this, and in decisions that the Administrative Appeals Tribunal is expected to apply ASIC policy in its de novo hearings,[232] It should be distinguished from the position in the US where there seems to be an absolute rule requiring judicial deference to agency interpretations of their own policy. We should see agency policy as one factor in ascertaining the legal meaning of statutory provisions.

Although these cases concern the exercise of discretions, questions of interpretation of the provision conferring the discretion are necessarily raised. In Minister for Aboriginal Affairs v Peko-Wallsend Ltd Mason J said:

What factors a decision-maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion .... If the relevant factors – and in this context I use this expression to refer to the factors which the decision-maker is bound to consider – are not expressly stated, they must be determined by implication from the subject matter, scope and purpose of the Act.[234]

It has been one of the important foundations of this article that those concerned with the interpretation of regulation such as the Corporations Law must consider the role of the implementing agency. The High Court accepts that agency policy may be influential or even dispositive of the legal limits of discretion, and that intimately entwined is the construction of the statute. It should not be too difficult to also accept that agency policy, and the agency’s view of the proper construction of the empowering provision,[235] should be important considerations in the process of statutory interpretation.

This conclusion has the benefit of fitting well with the current Australian treatment of post-enactment agency policy. It also accords with the variable weight accorded to interpretive factors in Eskridge and Frickey’s model of practical reasoning.

9. Conclusion

This article was stimulated by the observation that in interpretation of the Australian Corporations Law courts can not always be relied on to carry forward the Law’s public purposes in preference to the private values inherent in the general law of companies. That this is not a new observation[236] demonstrates how resilient these general law values are, after half a century’s experience of the regulatory state.

Perhaps one reason for this lies in the fact that the general law sometimes moderates its operation, but not its underlying values, in line with adjacent statutory changes.[237] A second may be the use in the Corporations Law of provisions that are statutory analogies of existing general law doctrines, which make it difficult to determine whether or not the legislature intended to break with pre-enactment values. A third reason is that the regulation we have been discussing is, desirably, of a mixed economy, where both public and private values coexist.

The point of this article is, emphatically, not to deny the importance of private transactions and the values they embody. Rather, it is to argue that there is often a public interest in the regulation of undesirable by-products of otherwise beneficial private transactions. Therefore, it cannot be assumed that the meaning of regulation such as the Corporations Law will naturally be found in pre-enactment doctrines of private law. After all, the purpose of the enactment is to change the law to more adequately reflect the public interest in the corporate or financial activity in question. Or it is in response to collective opinion, which in a democratic system is entitled to respect from both Parliament and its interpreters.

Another reason for the resilience of general law interpretive approaches may well be that while the significance of policy, discretions and administrative rulemaking have been well explored in the judicial review literature, their significance in statutory interpretation is not well developed. For like reasons Rubin identifies the need to develop our understanding of the nature and the juristic techniques of legislation, and its implementation. An example of the development of interpretation in regulatory circumstances is Twining and Miers, point about the standpoint of the interpreter, which we can imagine personified as an officer of ASIC interpreting the Law. This expressly recognises the role of the regulator, a distinctive feature of the ‘Age of Statutes’. It invites us to think about how the law should treat an interpreter who can never approach the task in the same way as a judge. What limits, if any, should there be, on the interpretive factors an ASIC officer may consider? Should an ASIC officer be able to give postenactment policy greater weight than a court? What interpretive latitude should an officer have, especially given the additional avenues of accountability to which they are subject?

Prehaps the single most important factor in identifying and promoting the purpose and object underlying a statute, is settling a method of interpretation which is adapted to the features of the regulatory state. As Dworkin points out,[238] it is a commonplace of contemporary interpretation that, although heavily constrained by context and practice,[239] interpretation is a process of attribution of meaning, not discovery of pre-existing meaning. It is the legislative and administrative processes of regulation which provide the context from which these constraints derive. These processes produce a lot of interpretive material, such as antecedent provisions, extrinsic materials and post-enactment policy. As all of these are more closely connected to the primary legislation than pre-enactment doctrine, they commend themselves as better able to illuminate statutory meaning.

The complexity and variability of factors inherent in responding to any regulatory context, commends a type of reasoning or method, which is not totally reliant on deriving meaning from existing principles. That method must be free to include, and if necessary give substantial weight to new factors, which have not been taken into account before. The introduction of operational factors in the process of practical reasoning, is a strong example of this. It is not enough simply to direct that an interpreter shall ‘promote the purpose or object underlying the act’;[240] as we have seen purposive interpretation is a ‘black box’, and there have been many attempts to elaborate its contents. It is surely a better guarantee of the realisation of the public purposes of statutes such as the Corporations Law to develop a method and context for interpretation which addresses the complexity, the changes of meaning over time and the perspectives of different interpreters involved in the implementation of regulation. The alternative is to go by default, and hope that busy judges and ASIC officers will resist the temptation to delve into familiar bodies of general law doctrine for answers to problems that, by definition, the general law has been unable to solve.

Judicial latitude, and how to curb it, is an enduring theme of literature on statutory interpretation. The insight that indeterminacy of meaning is an inevitable condition of communication is liberating, in the sense that we no longer have to be wedded to narrow techniques of interpretation, such as literalism. These techniques, in asserting that meaning is patent from statutory terms, can operate to obscure the public purpose of legislation, which may only be obvious from context. On the other hand Parliamentary sovereignty is a core value of our system of government, and for both judicial and agency interpreters, organisational restraints may be insufficient; nor do they provide transparent criteria for accountability.

Most criticism that Australian judges ‘put their own ideas of justice or social policy in the place of the words of the statute’[241] complains of radicalism, and of judicial attitudes outstripping community values and Parliamentary purpose.[242] In the interpretation of the Corporations Law the reverse seems to be more the case.[243] Although recognisable interpretive factors are now appearing in Australian interpretive practice, especially in the High Court and Federal Court, there has been a reluctance to apply these consistently in Corporations Law cases. Instead the values of the market, captured in precedent from the general law of companies, have persisted through interpretation. What the argument presented here suggests is a method of practical reasoning, seeking meaning from the context of the Corporations Law itself. It commends itself as a method which will both constrain the idiosyncracies of all interpreters of the Corporations Law, and promote its public – regarding purposes and objects.



[1] Senior Lecturer, Faculty of Law, University of Sydney.
[2] This article has been a very long time in the writing – I owe that to Leila and Elisabeth. Along the way I have been much assisted and encouraged by the thoughtful comments of Professors Patricia Apps, Stephen Bottomley, Ralph Simmonds and Jeremy Webber, as well as two anonymous referees. I also acknowledge the invaluable research assistance of Sally Forbes, Andrew Leigh, Dominic Hodson, Jonathan Kirkwood and Nigel Semit.
[3] Calabresi G, A Common Law for the Age of Statutes (1982); Ramsay I, ‘Corporate Law in the Age of Statutes’ [1992] SydLawRw 33; (1992) 14 Syd LR 474; Rubin E, ‘Law and Legislation in the Administrative State’ (1989) 89 Colum LR 369; Beatson J, ‘Has the Common Law a Future?’ (1997) 56 Camb LJ at 291.
[4] ‘Statutorification’ is used by Calabresi to emphasise the progression toward the dominance of statute law in the 20th century, n3 at 1.
[5] The Australian Securities Commission became the Australian Securities and Invesments Commission on 1 July 1998.
[6] See n3 at 372; Finn P, ‘Statutes and the Common Law’ (1992) 22 UWALR 7; Bottomley S & Parker S, Law in Context (2nd ed, 1997) at 358.
[7] Sunstein CR, ‘Interpreting Statutes in the Regulatory State’ (1989) 103 Harv LR 405 at 461; Finn P, id especially at 9–10 and 28–29.
[8] Macey J, ‘Promoting Public–Regarding Legislation through Statutory Interpretation: An Interest Group Model’ (1986) 86 Col LR 223–268; Mashaw J, Greed, Chaos & Governance: Using Public Choice to Improve Public Law (1997).
[9] Ford HAJ, Ramsay I, Guide to the First Corporate Law Simplification Act (1995) at 2.
[10] For example, Kirby P, Metal Manufacturers Pty Ltd v Lewis Ltd (1988) 13 NSWLR 315 at 319; Emanuele v ASC [1997] HCA 20; (1997) 188 CLR 114 at 153. Ramsay I, n3 at 480–481.
[11] Most obviously the Simplification Task Force was set to work by the government to reduce the volume and complexity of the Corporations Law; other approaches have been suggested to achieve the same result. Green JM, ‘“Fuzzy law’ – A Better Way to Stop ‘Snouts in the Trough?’” (1991) 9 (3) C & SLJ 144. The problem has received judicial and extra-curial comment: The Hon Justice Michael Kirby, ‘Statutory Interpretation and the Rule of Law – Whose Rule, What Law?’ in St L Kelly D (ed), Essays on Legislative Drafting (1988); Sir Anthony Mason, ‘Future Directions in Australian Law’ [1987] MonashULawRw 6; (1987) 13 Mon LR 149; ‘Changing the Law in a Changing Society’ (1993) 67 ALJ 568.
[12] Davis KC, Discretionary Justice (1969); Galligan DJ, Discretionary Powers: A Legal Study of Official Discretion (1991) at 167–183; Stewart R, ‘The Reformation of American Administrative Law’ (1975) 88 Harv LR 1669 at 1669–1702; Black A, ‘The Control of Discretionary Powers as to Unacceptable Acquisitions and Unacceptable Conduct Under the Companies (Acquisition of Shares) Act and the Corporations Bill Part I’ (1989) 7 (3) C & SLJ 149; Black J, Rules and Regulators (1997) Ch 6.
[13] See, for example, ASIC Policy Statements.
[14] State Government Insurance Commission v Trigwell [1979] HCA 40; (1979) 142 CLR 617 at 633–34; The Hon Justice Michael Kirby, ‘In Praise of Common Law Renewal’ [1992] UNSWLawJl 20; (1992) 15 UNSWLJ 462 and n11; Mason, n11. [14a] Beatson, n3.
[15] There has been a renewed interest in statutory interpretation in the last decade or more. This is particularly evident in the United States, and also in Britain; Barnes JW, ‘Statutory Interpretation, Law Reform and Sampford’s Theory of the Disorder of Law – Part One’ (1994) 22 FLR 116, n9. The same is also true in Australia for which see Barnes, id and also Part 2 in (1995) 23 FLR at 77; Ramsay I, n3; Allerdice R, ‘The Swinging Pendulum: Judicial Trends in the Interpretation of Revenue Statutes’ (1996) 19 Syd LR at 162; Finn, n6 at 7; The Hon Justice Michael McHugh, ‘The Law-Making Function of the Judicial Process’ (1988) 62 ALJ 15 (Pt I), 116 (Pt II); Mason, n11 at 568.
[16] See Dworkin R, Taking Rights Seriously (1977); Law’s Empire (1986).
[17] See text surrounding nn32–33.
[18] Metal Manufacturers Pty Ltd v Lewis, n10 (Mahoney J).
[19] For example, in Bank of New Zealand v Fiberi Pty Ltd and Mesenberg v Cord Industrial Recruiters Pty Ltd nn122–126 and surrounding text.
[20] See nn75–93 and surrounding text.
[21] See nn95–100 and surrounding text.
[22] See n51.
[23] See n139.
[24] Given the general requirement to interpret purposively in Federal and State interpretation acts, and the common law of interpretation.
[25] For example, Sale of Goods Act 1923 (NSW).
[26] Sunstein, n7 at 418–423; Black, n12 at 6–19.
[27] Kingston v Keprose (1987) 11 NSWLR 404 at 423 emphasis added. Kingston v Keprose was a decision on the predecessor of the Corporations Law, s43 Companies (Acquisition of Shares) (New South Wales) Code.
[28] Twining W & Miers D, How To Do Things With Rules (1991) at 378.
[29] R v Panel on Take-Overs and Mergers; Ex-parte Datafin plc [1986] EWCA Civ 8; (1987) 2 WLR 699 (CA).
[30] Galligan, n12 at 108–206.
[31] Barnes, n15 Pt I at 118.
[32] Davis, n12; Stewart, Authority: Comparing the Wik Peoples and Thayorre People v State of Queensland and United Steelworkers of America v Weber [1998] SydLawRw 11; (1998) 20(2) Syd LR 244; Lowi T, The End of Liberalism (1969).
[33] Tucker D, id; Metal Manufacturers Ltd v Lewis n10 at 325–6.
[34] Easterbrook F, ‘The Supreme Court, 1983 Term – Foreword: The Court and the Economic System’ (1984) 98 Harv LR 4 at 14–18, 42–60; ‘What Does Legislative History Tell Us?’ (1990) 66 Chi-Kent LR 441.
[35] Macey, n8 at 240–256.
[36] Mashaw, n8 at 91–96.
[37] Id at 81–105.
[38] Id at 104.
[39] Id at 97–101.
[40] Id at 90–91.
[41] Sunstein, n7 at 448.
[42] Id at 443–4.
[43] Bottomley & Parker, n6 at 376.
[44] Treasury, Financial System Inquiry: Final Report (Canberra: AGPS, 1997) at 131, 195–97.
[45] Barnes, ‘Part One’ & ‘Part Two’, n15.
[46] Barnes, ‘Part One’ at 140–169, n15.
[47] Amalgamated Society of Engineers v Adelaide Steamship Co Ltd [1920] HCA 54; (1920) 28 CLR 129 at 161–2.
[48] And are thereby faithful to the democratic value of parliamentary sovereignty.
[49] Sunstein, n7 at 416 n33.
[50] Id at 416–7. Also see Eskridge & Frickey, n51.
[51] Twining & Miers, n28 at 321–386; Sunstein, n7; Eskridge W & Frickey P, ‘Statutory Interpretation as Practical Reasoning’ (1990) 42 Stan LR 321; Tucker, n32; Calabresi, Barnes, n15 and MacCormick DN & Summers R, Interpreting Statutes: A Comparative Study (1991).
[52] Unger RM, Law in Modern Society (1976) at 196.
[53] Twining & Miers, n28 at 215.
[54] Dworkin R, Law’s Empire, n16 at 52, although I argue for a variety of interpretive factors rather than coherence as a constraint.
[55] Hoy DC, ‘Interpreting the Law: Hermeneutical and Post-Structuralist Perspectives’ (1985) 58 S Calif LR 136 at 143.
[56] Id at 138.
[57] Black J, ‘Talking About Regulation’ [1998] Public Law 77; Rules and Regulators (1997) at 37.
[58] Fish S, Is There a Text in This Class? (1980); The idea of interpretive community is developed and defended in Fish S, Doing What Comes Naturally – Change, Rhetoric and the Practice of Theory in Literary and Legal Studies (1989); The idea is given a brilliant analysis in Patterson D, Law and Truth (1996) Ch 6.
[59] Drahos P & Parker S, ‘Rule Following, Rule Scepticism and Indeterminacy in Law’ (1992) 5 Ratio Juris 109 at 114–118.
[60] Eskridge & Frickey, n51 at 330; Sunstein, n7 at 419; Twining & Miers, n28 at 174 and 364–366; Barnes, n15 at 128.
[61] Eskridge & Frickey, n51 at 330; Twining & Miers, n28 at 174.
[62] Lyons D, Moral Aspects of Legal Theory (1997), ch 7; ‘Original Intent and Legal Interpretation’ (1999) 24 Australian J of Legal Philosophy 1 [forthcoming].
[63] For example the modification power vested in ASIC in ss728, 730 and in Part 5C.11, ss601QA, 601QB of the Corporations Law.
[64] Some judgments equate the purpose generally with the meaning; Kirby P in Department of Corrective Services v Mitchelson (1992) 26 NSWLR 648 at 653; Royal Automobile Club of Australia v Sydney City Council (1992) 27 NSWLR 282 at 293.
[65] Twining & Miers, n28 at 446–451. Kirby J in Emanuele v ASC n10 at 146 seems to share this view and Brennan J seems to hold this view expressly in Mills v Meeking [1990] HCA 6; (1990) 169 CLR 214 at 234.
[66] In this the techniques of public choice theory have been helpfully revealing. For example, Eskridge & Frickey, n51 at 334–5, Sunstein, n7 at 448–51 and Mashaw, n8 at 104–5.
[67] Such, wrote Pollock, ‘cannot well be accounted for except on the theory that Parliament generally changes the law for the worse, and that the business of judges is to keep the mischief of its interference within the narrowest possible bounds’: Pollock F, Essays in Jurisprudence and Ethics (1882) at 85. A similar attitude is perhaps disclosed by Sir Owen Dixon’s comment in 1965 that ‘the common law until recently had been disfigured but little by statute’: Sir Owen Dixon, Jesting Pilate (1965) at 13.
[68] In the United States, where it is arguable that the law is most developed in its response to the regulatory state, there is probably not such a strong assumption against alteration of the common law by statutes; see Isbrandtsen v Johnston [1952] USSC 79; 343 US 779, 783 (1952).
[69] Gambotto v WCP Ltd [1995] HCA 12; (1995) 182 CLR 432 displays great uncertainty between the judgments, as to what degree of statutory specificity, and what conditions, are required to oust the fundamental common law right to protection from compulsory acquisition of property. For a statement of the law in the area, see Pearce DC & Geddes RS, Statutory Interpretation in Australia (1996) at 2–4.
[70] Kirby J seems to accept this proposition in Telstra Corporation Ltd v Australian Performing Rights Association [1997] HCA 41; (1997) 191 CLR 140 at 185, where he says ‘the primary duty of a court in such a case [where legislative meaning is not clear] is to give effect to the imputed will of Parliament as expressed in the legislation’ (emphasis added).
[71] Twining & Miers, n28 Epilogue at 376–385; Hoy n55 at 164 ff; Patterson n58, Ch 8.
[72] Barnes, n15 is an exception to this. He accepts the disorder of law at 116–125 (Part One) and at 132 (Part Two).
[73] Sunstein, n7 at 411–413 and 462–483.
[74] Pearce & Geddes, n69 at 21–44.
[75] Sunstein, n7 at 469–489.
[76] Dworkin R, Taking Rights Seriously n16; ‘Law as Interpretation’ (1982) 60 Texas LR 527; Law’s Empire n16 and; ‘How to Read the Civil Rights Act’, New York Review of Books, 20 December 1979 esp at 37.
[77] Eskridge also makes this observation in ‘Dynamic Statutory Interpretation’ (1987) 135 Univ Pennsylvania LR 1479 at 1549.
[78] For example, s232(2) Corporations Law.
[79] For example, Pt 9. 4B Corporations Law.
[80] Twining & Miers, n28 at 267.
[81] Dworkin, Law’s Empire, n16 at 164–167; Taking Rights Seriously, n16 at 84, 90–100.
[82] Rubin, n3 at 372.
[83] McCormick DN, Legal Reasoning and Legal theory (1978) at Ch 5.
[84] Lyons D, Ethics and the Rule of Law (1984) at 128–29.
[85] Id at 132.
[86] For an argument suggesting rights in an economic context (though modelled on political rights) see S Bottomley S, ‘From Contractualism to Constitutionalism: A Framework for Corporate Governance’ [1997] SydLawRw 17; (1997) 19(3) Syd LR 277.
[87] See n58.
[88] Patterson, n58 at 105.
[89] Black, n12 at 30.
[90] Eskridge, n77; Eskridge WN, Dynamic Statutory Interpretation (1994), Eskridge & Frickey, n51.
[91] The latter is especially evident in Eskridge WN & Frickey P, Cases and Materials on Legislation: Statutes and the Creation of Public Policy (1995).
[92] Eskridge & Frickey, n51 at 358ff.
[93] Eskridge & Frickey, n51 at 345ff.
[94] This occurred in Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 CLR 85 (hereinafter ‘Newcastle City Council v GIO) and Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 (hereinafter ‘Cooper Brookes’).
[95] See n51 at 352.
[96] Mills v Meeking, n65, for refusal to read down; Newcastle City Council v GIO and; Kingston v Keprose, above n27 at 422 for circumstances where statutory words may be strained; Cooper Brookes, n94 at 304 for when words may be substituted.
[97] Patterson n58 at 8 puts this well when he draws the distinction between what ‘seems true’ and what ‘is true’, the former becoming the latter, because of the weight of reasoning.
[98] Quoted in Twining & Miers, n28 at 268; this metaphor is also used by Summers R, Instrumentalism and American Legal Theory (1982) at 156, and by Eskridge & Frickey, n51 at 352.
[99] Twining & Miers above n28 at 228–244.
[100] Eskridge & Frickey, n51 at 321–84.
[101] I am grateful to Professor Stephen Bottomley for emphasising the importance of this point to me.
[102] Cooper Brookes, n94; Newcastle City Council v GIO,
[103] Redmond P, Companies and Securities Law: Commentary and Materials (1992) at 70.
[104] Section 109J is as follows: Use of extrinsic material in the interpretation of this Law 109J (1) [Extrinsic law capable of assisting] This section applies where, in the interpretation of a provision of this Law, any material not forming part of this Law is capable of assisting in working out the meaning of the provision. 109J (2) [Consideration of extrinsic material] Subject to subsection (4), consideration may be given to that material: (a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Law and the purpose and object underlying the law; or (b) to determine the meaning of the provision when: (i) the provision is ambiguous or obscure; or (ii) the ordinary meaning conveyed by the text of the provision, taking into account its context in the law and the purpose or object underlying the Law, leads to a result that is manifestly absurd or is unreasonable.
[105] [1934] HCA 63; (1934) 52 CLR 234.
[106] See n94 at 321.
[107] See n94 at 623; Qantas v Christie (1998) 152 ALR 365 at 405.
[108] Newcastle City Council v GIO n94 (McHugh J); Saraswati v R [1991] HCA 21; (1991) 172 CLR 1 at 21 (McHugh & Toohey JJ); Mills and Meeking n65 at 222 (Mason CJ, Toohey & Dawson JJ); Pearce & Geddes n69 at 24–31 and; Barnes, n15 at 158.
[109] Wacando v Commonwealth [1981] HCA 60; (1981) 148 CLR 1 esp at 25–6 and CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 407–9.
[110] For example, use of Preamble to the Act, Newcastle City Council v GIO, n94 at 627 (Brennan CJ); legislative antecedents, Statewide Tobacco Services Ltd v Morley, n139; structure of the regulatory scheme, Statewide Tobacco Services Ltd v Morley, n139.
[111] For example, operational factors, Cooper Brookes, n94; variety of extrinsic material, CIC Insurance Ltd v Bankstown Football Club Ltd, n109; policy expressed in extrinsic materials, Newcastle City Council v GIO n94; policy and overall legal context of the Act, Metal Manufacturers v Lewis, n10 (Kirby P); and regulatory policy, Drake v Minister for Immigration & Ethnic Affairs (1979) 24 ALR 577; 46 FLR 409.
[112] Barnes, n15 at 104.
[113] Id at 109.
[114] Cooper Brookes, n94 at 166 (Mason & Wilson JJ).
[115] See n94 at 642 (McHugh J), quoting Brennan CJ, Dawson, Toohey & Gummow JJ in CIC Insurance Ltd v Bankstown Football Club Ltd n109 at 408.
[116] See n94 at 642 quoting CIC Insurance Ltd v Bankstown Football Club Ltd, n109 at 408.
[117] Cooper Brookes n94 at 305.
[118] Twining & Miers, n28 at 366.
[119] Id at 228–244 and at 374–386.
[120] Sunstein, n7 at 409–411.
[121] Lam Soon Australia Pty Ltd v Molit (No55) Pty Ltd [1996] FCA 899; (1996), 70 FCR 34 at 40, 176 (Full Fed Court); ASC v Bank Leumi Le-Israel (1996) 14 ACLC 1577 at 1592–93; Simoon Pty Ltd v Renbay Systems Pty Ltd (1995) 13 ACLC 1792 at 1794; Pasdale Pty Ltd v Concrete Constructions [1995] FCA 1471; (1995) 59 FCR 446 at 448[1995] FCA 1471; , 131 ALR 268 at 270; Burmine Ltd v Mount Edon Gold Mines (Aust) Ltd (No2) [1994] FCA 971; (1994) 12 ACLC 214 at 218–19; Brown v Carpet Design Group Pty Ltd [1994] FCA 1118; (1994) 50 FCR 526 at 527–528[1994] FCA 1118; , 12 ACLC 448 at 449–50.
[122] See for example the legislative attempts to abolish the doctrine of ultra vires which appeared to be reinvigorated by judicial interpretation: Ford HAJ & Austin RP, Principles of Corporations Law (7th ed,) at 490; the text of the current s128(4) Corporations Law which is a response to the interpretation given to the predecessor section s164(4)(b), in Bank of New Zealand v Fiberi Pty Ltd (1994) 12 ACLC 48 (Kirby P); Wishart, ‘Simplification and Motherhood’ [1996] BCLB (2) 16.
[123] Metal Manufacturers Ltd v Lewis, n10 at 728.
[124] (1996) 39 NSWLR 128; (1996) 19 ACSR 483; 14 ACLC 519–30.
[125] [1997] FCA 158; (1843) 73 FCR 161; 67 ER 189.
[126] (1997) 19 ACSR 483; also Emlen Pty Ltd v St Barbara Mines Ltd (1997) 24 ACSR 303.
[127] [1997] FCA 158; (1996) 138 ALR 655; 23 ACSR 715.
[128] Ramsay, n3 at 480, 490–492.
[129] For example, s136 of the Corporations Law as discussed in Gambotto v WCP n69.
[130] For example, s136, power to change articles; s128, the indoor management rule; s232, director’s duties; s1324, the injunction power; all Corporations Law.
[131] For example, the now repealed s247(1) Corporation Law, as discussed in Toxic Treatments Ltd v LC O’Neil Enterprises Pty Ltd (1986) 10 ACLR 337 (Kirby P); and Vision Nominees Pty Ltd v Pangea Resources Ltd (1988) 14 NSWLR 38 at 48–50; (1988) 13 ACLR 529 at 538–40 (Bryson J). It is also worth noting that amendments to the Corporations Law resulting in the current s249F endorsed the views of Kirby P & Bryson J.
[132] Cooper Brookes, n94 at 305 (Gibbs CJ).
[133] Courts usually accept a current version of ordinary meaning, rather than that contemporaneous with the passage of the statute; Pearce & Geddes n69 at 91; Lake Macquarie Shire Council v Aberdare County Council (1970) 123 CLR 327; Chappell and Co Ltd v Associated Radio Co of Australia Ltd [1925] ArgusLawRp 40; [1925] VLR 350.
[134] Pearce & Geddes, n69 at 96.
[135] See text surrounding nn 120–130.
[136] Pearce & Geddes, n69 at 95; Thomas Australia Wholesale Vehicle Trading Co Pty Ltd v Marac Finance Australia Ltd (1985) 3 NSWLR 452; Gamer’s Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1985) 3 NSWLR 475 esp at 479–483 (Kirby, P), 483–4 (Priestley JA).
[137] Commissioner for Special Purposes of Income Tax v Pemsel [1891] AC 531 at 584 (Lord Macnaghten) and approved by the Judicial Committee in Ashfield Municipal Council v Joyce [1978] AC 122 at 134
[138] Cooper Brookes, n94; Kingston v Keprose, n27 at 421.
[139] [1993] 1 VR App Div; originally Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405 (Ormiston J).
[140] Section 556 of the Companies (Victoria) Code is a predecessor of s588G of the Corporations Law.
[141] Metal Manufacturers v Lewis n10.
[142] Heide Pty Ltd t/a Farmhouse Smallgoods v Lester & Anor (1990) 8 ACLC 958.
[143] [1993] VicRp 31; [1993] 1 VR 417 at 447 – 448.
[144] (1990) 2 ACSR 405 at 427.
[145] Id at 428.
[146] Id at 428 quoting Shapowloff v Dunn [1981] HCA 21; (1981) 148 CLR 72; 34 ALR 417 (Wilson J).
[147] Id at 428–9.
[148] Id at 429.
[149] Id at 430.
[150] Ibid.
[151] Ibid.
[152] Id at 447.
[153] Ibid.
[154] Ibid.
[155] Franklin M, ‘On the Legal Method of the Uniform Commercial Code’ (1951) 16 Law and Contemporary Problems 330 at 333.
[156] Metal Manufacturers v Lewis, n10 (Mahoney JA).
[157] Kirby P in Metal Manufacturers v Lewis, n10.
[158] Metal Manufacturers v Lewis above n10 (Kirby P) and; Morley, at 442 (Ormiston J).
[159] Twining & Miers, n28 at 271; Eskridge & Frickey, n51 at 348.
[160] Cooper Brookes, n94 at 305.
[161] Id at 304–5; Kingston v Keprose, n27 at 423.
[162] Newcastle City Council v GIO, n94 at 639 (McHugh J).
[163] This may be the explanation for Ipp J’s refusal to apply s5A of the Interpretation Act, in Golden Bounty Resources N/L v NCSC (1990) 3 ACSR 134 at 139.
[164] Pearce & Geddes, n69 at 4; Barnes, n15 at 127–141.
[165] Pearce & Geddes, n69 at 4, 23–25.
[166] Cooper Brookes, n94 at 320, Gibbs J made a similar point at 304.
[167] [1991] HCA 28; [1991] 172 CLR 319 at 347; Bropho v Western Australia [1990] HCA 24; [1990] 171 CLR 1 at 22.
[168] [1986] HCA 12; (1986) 64 ALR 195 at 200.
[169] See n94 at 640 (McHugh J).
[170] Clyne v Deputy Commissioner of Taxation [1981] HCA 40; (1981) 150 CLR 1 at 10 (Gibbs J) at 15 (Mason J) with whom Aickin & Wilson JJ agreed.
[171] [1994] FCA 1147; (1994) 122 ALR 615 at 633–4; see also further examples in Pearce & Geddes, n69 at 6–7.
[172] Barbantiaris v Lutony Fashions Pty Ltd [1987] HCA 19; (1987) 71 ALR 225 at 232 (Mason J); Pearce & Geddes, n69 at 9.
[173] For example, s109D of the Corporations Law, generally, in relation to headings of Chapters, Parts etc, if the language of the sections is clear, and inconsistent with the headings, then the headings give way. If the language of the sections is either more general or is doubtful or ambiguous, then the meaning of the sections which is consistent with the headings is the one that must be adopted: Ragless v District Council of Prospect [1922] SAStRp 28; [1922] SASR 299 and K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd [1985] HCA 48; (1985) 157 CLR 309 at 320–24; MacAdam & Smith, Statutory Interpretation at 80.
[174] Bradley v Commonwealth [1973] HCA 34; (1973) 128 CLR 557 at 576 and more recent authority has held that if the headings, footnotes etc were part of the Bill presented to Parliament, and survived in identical form into the statute, they may be considered ‘authenticated’, because they have been approved by Parliament: The Ombudsman v Moroney [1983] 1 NSWLR 317 at 321–326 (Street CJ).
[175] McAdam & Smith, n173 for a more complete explanation for this.
[176] MacAdam & Smith, n173 at 90 suggest that the effect of this may be to allow section headings, etc, an operation similar to that accorded to headings of chapters, parts etc under the authority of cases such as Ragless v District Council of Prospect, n173. This is however, subject to the limitations on s109J itself, discussed in text surrounding notes 205 and 206.
[177] See n51 at 351.
[178] Id at 352.
[179] This approach was also adopted in Eise v Commonwealth Bank (1991) 5 ACSR 115.
[180] [1957] AC 436 at 461.
[181] Newcastle City Council v GIO, n94 at 627 (Brennan J).
[182] (1996) 20 ACSR 247 at 259.
[183] As regards the interpretation of the Income Tax Assessment Act 1936 (Cth) (hereinafter ‘ITAA’), it has for some time been accepted that the provisions of the ITAA evidence a coherent and general legislative scheme, and that provisions should be given a meaning consistent with the policy of the scheme of which it forms part; DCT (Qld) v Moore Bank Pty Ltd [1988] HCA 29; (1988) 19 ATR 1156; FCT v Kentucky Fried Chicken Pty Ltd (1988) 19 ATR 1141; Brayson Motors Pty Ltd (in liq) v FCT [1985] HCA 20; (1985) 16 ATR 267.
[184] [1998] FCA 221; (1998) 153 ALR 19 at 38–44.
[185] Here by comparing s100A of the ITAA, which deals with the use of trusts, to minimise or avoid the proper payment of tax, with other anti-avoidance provisions. In Morley, it will be recalled, the court considered other provisions imposing duties on directors, especially in relation to the financial affairs of their company.
[186] [1998] FCA 400; (1998) 154 ALR 550 at 561.
[187] Gough v Gough [1891] UKLawRpKQB 124; [1891] 2 QB 665 at 674 quoted in FCT v Prestige Motors Pty Ltd [1998] FCA 221; (1998) 153 ALR 19 at 43.
[188] [1995] FCA 1471; (1995) 19 ACSR 693 at 695.
[189] (1997) 145 ALR 483 at 489–491.
[190] A small point of clarification should be made here. The term ‘legislative history’, as used in Australian cases, is different in content from the same term as used in North America, and in particular, in the literature advocating a return to textualism in interpretation. There the term ‘legislative history’ refers exclusively to the speeches of Congressional sponsors of a bill, and the reports of Congressional Committees to which bills are referred in the legislative process.
[191] See Scalia A, A Matter of Interpretation (1997) at 29–37; Manning, ‘Textualism as a Non Delegation Doctrine’ (1997) 97 Col LR 673.
[192] Eskridge & Frickey, n51; Manning characterises Eskridge’s & Frickey’s position in this way: Manning, n191 at 683 (note 41).
[193] In FCT v Prestige Motors [1998] FCA 221; (1998) 153 ALR 19 at 42 Hill & Sackville JJ said ‘examples given in explanatory memoranda or second reading speeches of transactions or arrangements intended to be caught in legislation may be very helpful in identifying the mischief to be addressed and construing otherwise ambiguous legislation ... But considerable care should be exercised before relying on examples given in this way in order to read down the statutory language. The extrinsic materials in the present case are entirely consistent with the legislation having been framed broadly ...’
[194] Newcastle City Council v GIO, n94; CIC v Bankstown FC, n109; FCT v Prestige Motors, n187; Schott Musik v Colossal Records of Australia, n189; Pasdale v Concrete Constructions n188; Whitby v Deputy Commissioner of Taxation, n182.
[195] See n94.
[196] See n109. This decision and Newcastle City Council v GIO, n94, are clear authority for reliance on Law Commission Reports as evidence of purpose, whether or not the connection between policy and enactment can be traced.
[197] Pasdale Pty Ltd v Concrete Constructions, n188 at 695 (Finn J).
[198] See n94.
[199] Id at 627.
[200] Morley, n139 (Ormiston J).
[201] For example Manning, n191; also see Manning, ‘Constitutional Structure and Judicial Deference to Agency Interpretation of Agency Rules’ (1996) 96 Col LR 612.
[202] Whitby v Deputy Commissioner of Taxation, n182 at 259, where Ford, Ramsay & Austin, Australian Corporations Law: Principles and Practice (Butterworths, Looseleaf Service) is relied on.
[203] [1987] HCA 12; (1987) 162 CLR 514.
[204] A similar treatment was given by the High Court to a second reading speech in Minister for Immigration and Multicultural Affairs v Tang Jia Xin [1994] HCA 31; (1994) 125 ALR 203 at 207; FCT v Prestige Motors Pty Ltd, n187 at 42.
[205] See text of s109J in n104.
[206] Section 109J(2)(b); Barnes n15 at 95, Pt II elaborates this point at some length.
[207] Newcastle City Council v GIO, n94.
[208] See n94 at 305; Mills v Meeking, n65 at 223–4.
[209] Newcastle City Council v GIO, n94; Qantas Airways v Christie, n107; also Mills v Meeking, n65 (Mason CJ).
[210] Cooper Brookes, n94 at 305 (Gibbs CJ) at 321 (Mason & Wilson JJ); affirmed unanimously in CIC v Bankstown FC, n109.
[211] Pearce & Geddes, n69 at 23–24.
[212] Kingston v Keprose, n27 at 418 and; Carragreen Currencies Corporation Pty Ltd v CAC (NSW) (1986) 7 NSWLR 705 and SFE Ltd v ASX [1995] FCA 1106; (1995) 13 ACLC 369.
[213] Kingston v Keprose n27 at 420 (Priestley J); also see The Hon Justice Michael Kirby, ‘Rethinking Company Law and Practice’ (1995) 5 AJCL 176.
[214] Qantas v Christie, n107 at 405.
[215] Eskridge WN, ‘Post-Enactment Legislative Signals’ (1994) 57 Law and Contemporary Problems at 75.
[216] Mason CJ in Cooper Brookes, n94; Newcastle City Council v GIO, n94.
[217] See n94.
[218] See n109.
[219] Barnes, n15 at 85.
[220] See n10.
[221] Id at 727–9.
[222] Id at 733–4.
[223] BNZ v Fiberi Ltd, n19 at 736.
[224] See n10.
[225] Davis, n12; Stewart, 619–29.
[226] Davis, n12; Galligan,
[227] Franklin, n155.
[228] Brayson Motors Pty Ltd (in liq) v FCT [1985] HCA 20; (1985) 16 ATR 267; FCT v Nimrod Theatre Company Ltd [1985] FCA 65; (1985) 16 ATR 232.
[229] Ansett Transport Industries (Operations) Pty Ltd v Commonwealth [1977] HCA 71; (1977) 139 CLR 54; Drake v Minister for Immigration and Ethnic Affairs (No2) (1979) 2 ALD 634 at 639–41 (Brennan J); Bread Manufacturers of New South Wales v Evans (1981) 180 CLR 404 (Mason & Wilson JJ)
[230] Otter Gold Mines Ltd v Australian Securities Commission (1997) 25 ACSR 382 at 384.
[231] (1979) 2 ALD 634.
[232] Collins v Minister for Immigration and Ethnic Affairs [1981] FCA 147; (1981) 58 FLR 407.
[233] This is not a thoroughgoing or absolute deference: Gerah Imports v Minister for Industry [1987] FCA 456; (1987) 14 ALD 351 (Davies J). It should be distinguished from the position in the US where there seems to be an absolute rule requiring judicial deference to agency interpretations of their own policy: Bowles v Seminole Rock & Sand Co [1945] USSC 102; 325 US 410, 414 (1945) and Manning, ‘Constitutional Structure’ n201.
[234] (1986) 162 CLR 24 at 39–40.
[235] Again, it is not suggested that courts should be absolutely deferential to the agency’s interpretation of a provision, which seems to be the position in the US: Chevron USA v Natural Resources Defence Council Inc [1984] USSC 140; 467 US 837 (1984), but that the agency’s view of construction should be one factor: Manning, ‘Constitutional Structure’ n201.
[236] This debate about precedence between private and municipal law was evident in the work of Pound ‘Common Law and Legislation’ 21 Harv LR 383 (1908) and Stone ‘The Common Law in the United States’ 50 Harv LR 4 (1936); I am grateful to Professor Ralph Simmonds for pointing this out.
[237] Finn, n6.
[238] Dworkin, n16.
[239] Galligan, n12.
[240] Compare Walker GR & Borrowdale A, ‘Statutory Interpretation and Securities Regulation in New Zealand’ 16 C&SLJ (1998) 64–70.
[241] Cooper Brookes, n94 at 305 (Gibbs J).
[242] For example the intense response to the High Court’s decision in The Wik Peoples and Thayorre People v State of Queensland (1996) 141 ALR 129; see Tucker, n32.
[243] As Professor Ralph Simmonds points out in (1990) 20 UWA LR 641 at 651 practitioners often adhere to a ‘plain meaning’ or literal analysis of the Corporations Law, even though encouraged by members of the High Court to develop a recognisably ‘legal’ analysis, which can further the purposes of legislation and the Constitution.


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