State of New South Wales; State of South Australia; State of Western Australia v The Commonwealth of Australia

The parties to this proceeding before the High Court of Australia were the Commonwealth of Australia and the States of New South Wales, South Australia, and Western Australia. The dispute concerned the interpretation of the phrase "corporations formed within the limits of the Commonwealth" as it appears in section 51(xx) of the Australian Constitution, which grants the Commonwealth Parliament power to legislate with respect to "foreign corporations, and trading and financial corporations formed within the limits of the Commonwealth." The matter was referred to the High Court pursuant to section 18 of the Judiciary Act.

The central legal issue before the Court was the precise meaning and scope of the phrase "formed within the limits of the Commonwealth." Specifically, the Court was required to determine whether this phrase served to define what constitutes a "domestic" or "Australian" corporation, as opposed to a "foreign" corporation, and whether the place of formation was the sole criterion for this distinction, irrespective of the corporation's place of business or shareholding. The Court also considered the historical context and the intention behind the inclusion of this phrase, particularly in contrast to the use of the term "companies" in various Companies Acts.

The submissions presented to the Court focused on the grammatical construction and intended meaning of the constitutional provision. It was argued that the phrase "formed within the limits of the Commonwealth" functions as an adjectival phrase designed to contrast with the term "foreign." This interpretation posits that the provision delineates two distinct categories of corporations: firstly, foreign corporations, and secondly, trading and financial corporations that have been formed within Australia. The place of formation was submitted as the decisive factor in categorising a corporation as either foreign or domestic, rendering the location of its business operations or shareholders irrelevant to this classification. The use of the word "corporations" rather than "companies" was also discussed, with the submission that it avoids ambiguity regarding unincorporated entities like partnerships.