In response the DHA maintained that it was not bound by the Residential Tenancies Act 1987[2] as it was immune from state laws about tenant disputes due to the Commonwealth government enjoying Crown immunity from State laws.

By a 6:1 majority (Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ; Kirby J dissenting) the Court held that the DHA is subject to the NSW Act.

One judge (McHugh) thought it was unrealistic to make that distinction, but held a state law could affect the manner in which the performance of commonwealth duty.

By a 6:1 majority (McHugh J dissenting) the Court rejected the broad proposition that the Commonwealth cannot be bound by State legislation.

[4] While there were majorities in favour of general concepts in the matter, there were differing views on specific aspects concerning the distribution of legislative power:[5] The majority of Justices accepted that s. 64 of the Judiciary Act 1903[12] did not apply, as the DHA was not a body that was subject to the Cigamatic doctrine.