A recent tax case has a nice illustration of the ejusdem generis rule that where general words follow specific words, the general words must be confined to things of the same kind as those specified. The words in question are in the Eighth schedule of the Income Tax Act where section 35(3)(c) provides that the proceeds from the disposal of an asset by a taxpayer must be reduced by “any reduction, as a result of the cancellation, termination or variation of an agreement due to the prescription or waiver of a claim or release from an obligation or any other event” of an accrued amount forming part of the proceeds of that disposal.

The taxpayer sold shares for R842 million and wanted to deduct an amount that he applied from the proceeds towards the settlement of a damages claim arising from a previous sale of shares transaction which was indirectly connected to the latest sale. The taxpayer contended that the words “any other event” included the settlement.

The court applied the ejusdem generis rule (it means “of the same type”) and found that the general words “any other event” following the specific words take their meaning from the specific words. Therefore “other events” are restricted to events of the same type such as cancellation of a contract or loss of a right under a contract. Whilst “any” may ordinarily be a broad, unlimited term, in the context it referred to events falling within the previous categories.

The rule (sometimes called noscitur a sociis – it is known from its fellows) is a legal embodiment of the phrase ‘we are known by the company we keep’.