The literal rule, as applied in statutory interpretation, basically states that statutes or laws are supposed to be interpreted in the ordinary meaning that is given to them. Also known as the plain meaning rule, the literal rule implies that words used in the law are to be taken in their ordinary context unless it is otherwise defined within the statute or by another law. The use of this principle is when there are certain definitions or words within the statute that are not clearly defined and resort to statutory interpretation is necessary. In such a case, the courts and the parties are expected to apply the plain, ordinary and literal meaning of the words that are used. It is often said that this rule focuses on what the law says instead of what it means.
The application of the literal meaning rule is not always accurate and neither does it always guarantee the best results. As such, the golden rule was developed in order to deal with situations wherein a literal construction would lead to an absurdity in the law. The Golden Rule therefore allows justices and judges to provide the appropriate interpretation to the law at hand. Based on the case of Becke v Smith (1836) 2 M&W 195 per Parke B, which states that when a too literal construction of the words derogates from the spirit of the law judges must do what they can to ensure that it does not lead to any absurdity. This is often applied to make sure that the resulting construction is not irrational and is in line with the true intent of the law.
The Acts Interpretation Act of 1901 states that the construction of a statute is supposed to lead to the promotion of the intent or purpose of the law and any construction that is contrary to such is to be avoided. This Purposive Approach mandates the courts to disregard any interpretation that derogates from the law. Courts are supposed to consider the real intent of the legislators in passing the law when making their own interpretation of the provisions of the statute. This rule is applicable not only in situations wherein there is an ambiguity or absurdity with the law but also in all other situations. As mentioned in the case of CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408, the courts are allowed to examine other records in order to ascertain the real intent and purpose of the law. They may also consult with the other bodies of the government who were responsible for the passage and implementation of such a law in order to aid them in its statutory interpretation.