Society of Trust and Estate Practitioners The Interface between Equitable Principles and Public Law


Equitable Interpretation and the Principle of Legality



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Equitable Interpretation and the Principle of Legality
Joseph Story, in his Commentaries on Equity Jurisprudence in 1884, invoked Aristotle as having 'defined the very nature of equity to be the correction of the law, wherein it is defective by reason of its universality'.10 Equity in that sense informed a purposive approach to statutory interpretation which Story called 'equitable interpretation'. Given the dominant role of statutes as the source of official power today the concept of 'equitable interpretation', even though it is not a fashionable term, has considerable significance for public law. Story explained it thus:

So, words of a doubtful import may be used in a law, or words susceptible of a more enlarged or of a more restricted meaning, or of two meanings equally appropriate. The question, in all such cases, must be, in what sense the words are designed to be used; and it is the part of a judge to look to the objects of the legislature, and to give such construction to the words as will best further those objects. This is an exercise of the power of equitable interpretation. It is the administration of equity as contradistinguished from a strict adherence to the mere letter of the law.11

The purposive approach described by Story in this way can be coupled with the well established presumption of legislative purpose that parliament does not intend, by mere implication, to displace fundamental principles of the unwritten law. That coupling supports the principle of legality. That principle, although only relatively recently12 attracting that name, has a long history. The usual starting point in discussion of that history in Australia is the decision of the High Court in Potter v Minahan13 and O'Connor J's quotation of the familiar passage from the 4th edition of Maxwell on The Interpretation of Statutes:

It is in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness; and to give any such effect to general words, simply because they have that meaning in their widest, or usual, or natural sense, would be to give them a meaning in which they were not really used.14 (footnote omitted)

The oft-quoted passage has a larger history. It was taken from the judgment of Marshall CJ in a case about priorities in bankruptcy decided in 1805.15 The principle of legality has been applied on many occasions in Australia.16 In Electrolux Home Products Pty Ltd v Australian Workers' Union, Gleeson CJ described it as:

… not merely a common sense guide to what a Parliament in a liberal democracy is likely to have intended; it is a working hypothesis, the existence of which is known both to Parliament and the courts, upon which statutory language will be interpreted. The hypothesis is an aspect of the rule of law.17

It is not entirely a play on words to observe that the principle of legality, which may be seen as an application of Story's equitable interpretation, has been applied to interpret a statute so as not to displace equitable principles. In Minister for Lands and Forests v McPherson18 the Court of Appeal of New South Wales held that the Supreme Court could grant relief against forfeiture of a statutory lease created under the Western Land Act 1901 (NSW). Kirby P, with whom Meagher J agreed, acknowledged the long-established principle relating to the effect of statute law on common law rights and freedoms. Kirby P posed the question whether a similar principle applied to the doctrines of equity. In the event he concluded:

In principle, there would seem to be no reason why a similar approach should not be taken to basic rules of equity. The justice of equity may equally supply the omission of the legislature, filling the silences of the statute.19

The decision left open the possibility that other equitable doctrines might fill statutory silences in relation to the exercise of official power.20


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