The first officer agreed to transport a small package from Adelaide to Brisbane that had been mistakenly offloaded from another cargo ship.

[15] He applied to the Supreme Court of NSW for an order that the ship be detained until a security bond was paid to cover any compensation that might be awarded to Wilson.

The owners sought to have the order set aside however Justice Gordon refused, holding that there was some evidence that the ship was engaged in the coasting trade and whether this was correct was a matter to be determined at trial.

Griffith CJ held that the essence of trade was a contract of carriage made on behalf of the ship and the case was therefore not cargo.[1]: p.

696  Barton J similarly held that gratuitous carriage was not sufficient and that trading in this context connoted payment for freight.[1]: p.

Griffith CJ held that the Act intended to apply to all ships engaged in the coasting trade without distinction and that the provisions could not therefore be severed.[1]: p.

721–2 The Commonwealth argued that the Act was a valid exercise of power under section 76(iii) of the Constitution, asserting that "the Parliament may make laws in any matter of admiralty and maritime jurisdiction".

703–4  Isaacs J noted that section 76 related solely to Parliament conferring original jurisdiction on the High Court.

[21] More recently Justice Gummow, then sitting in the Federal Court, noted that Barton J's reasoning that Australia was not, in 1910, a "separated nation of independent sovereignty in its relation to the United Kingdom" no longer represented the modern constitutional position.

[22] A replacement Seamen's Compensation Act was passed in 1911, which was limited in its application to ships engaged in trade and commerce with other countries or among the States.

The report noted that the High Court had held in the Sea and Submerged lands case,[28] that the territory of the States stopped at the low-water mark or at the line closing a bay, such that the external affairs power would permit the Parliament to make laws about ships voyaging from one port in Australia to another, even if those ports were in the same State.

The Court held it was unnecessary to decide the complex questions, arising from the decision in SS Kalibia v Wilson around whether the employer's business dealings were such that the ship was engaged in overseas or interstate trade or commerce.

[20] The Labor Party twice held referendums to consider proposed changes to the Constitution to overcome the decision of the High Court by removing the limitation on the trade and commerce power to be with other countries or among the States.

[32] On 30 November 1917, the SS Kalibia was in the Atlantic Ocean 29 nautical miles (54 km) south west of The Lizard, Cornwall (49°31′N 5°32′W / 49.517°N 5.533°W / 49.517; -5.533) when it was torpedoed and sunk by the German submarine SM UB-80 with the loss of 25 of her crew.