Through the decisions of the High Court, Australia's Federal system has been altered so that the relationship between the Commonwealth of Australia and the State governments today has become deeply imbalanced. The Melbourne Corporation principle marks a small concession towards a more balanced federal system however it has been largely ineffective in protecting the states from continual encroachment into their power by the Commonwealth. This essay will trace the history and the development of the Melbourne Principle, which can also be referred to as the doctrine of implied immunities of instrumentality, from the original Griffith High Court through to the High Court of today.

Griffith Court
The original High Court interpreted the Constitution as a federal compact between the separate Australian colonies and viewed federalism as an essential aspect of the system.1
The states and the commonwealth stood in relation to one another as mutually independent, virtually sovereign, self governing bodies politic. To preserve this state of affairs the capacity of one governing body to interfere with another would have to be limited.2 The doctrine of implied immunities of instrumentality, the idea that the commonwealth and the states might impliedly be wholly or partly immune from each other's laws, was a result of this. In their 'governmental' functions neither governments could be touched by the operation of legislation emanating from the other level of government as this would be inconsistent with its 'sovereignty' as a political entity. 3 The Griffith High Court asserted this principal along with the doctrine of reserved powers in a number of early decisions.4 However with the appointment of Issacs and Higgins to the High Court, immunities cases produced a steady series of dissents and distinctions and increasingly awkward concessions by the majority.5 This lead to a steady erosion of the immunity doctrine which was finally exploded in 1920.6

Engineers' Case7
While the Engineer's Case is one of the worst written and organised in Australian history, the case is one of Australia's most important and significant.8 Engineers exploded the doctrines of implied immunities of instrumentality and reserved powers of the states and began a new era of literal constitutional interpretation. The decision could be viewed as a result of Isaacs and Higgins' failure to convince their fellow delegates (in the Constitutional conventions) to construct a federal constitution reflecting their own nationalist theory of the federal state. Then using their good fortune, by being joined by three other judges who were prepared to overturn 17 years of compactualist interpretation by the Griffith Court, established their own idea of what the federal state should look like.9 It has also being argued that after the Great War the nation had advanced in status while the states stood still, and that a merely contractual view of the Constitution was out of date and, by taking a literalistic approach to the words of the constitution, the federal relationship could be expanded as the times demanded.10

The importance of the decision stems from the proposition that the federal legislative powers are to be interpreted in priority to and without substantial consideration of the remaining legislative capacities of the States.11 In reaching this decision the High Court gave no weight to the fact that the constitution was that of a federation and not a unitary state. Since Engineers the powers of the Commonwealth have been interpreted in a way that attaches no real significance to the constitutional position of the states. 12
Or put another way by Chief Justice Barwick: Earlier, the first judges thought the way to interpret the words was to say you interpret them against powers reserved to the States. But in the Engineers' Case that was departed from and it was pointed out – and we have always followed the same plan since – you take the words, you decide