Eastaway v The Commonwealth [1951] HCA 80

Eastaway v The Commonwealth [1951] HCA 80

Because the acquisition destroyed the plaintiff company's business, compensation was to be assessed by reference to the value of the whole undertaking as a going concern. The appropriate calculation used the company's net profits for the three years ended 30 June 1944, 1945 and 1946, adjusted only by adding back preliminary expenses, without adding back directors' salaries, without deducting company tax, and without charging a notional rent. Capitalising average net profits of £2,550 at six per cent produced £42,500, from which retained tangible assets of £7,657 were deducted, leaving compensation of £34,843; after crediting the £30,000 already paid, judgment was entered for £4,843.

Jurisdiction
Australia
Procedural Posture
Claim for Compensation for Compulsory Acquisition of Land Under the Lands Acquisition Act 1906 1936 / Appeal to the Full Court of the High Court From Judgment of Webb J. Dismissing the Action
Outcome
Appeal allowed with costs; judgment below set aside; judgment entered for the plaintiffs for £4,843 with costs.
Legal Topics
['assessment of Compensation' 'value of Land to Owner' 'goodwill of Business' 'going Concern Valuation' 'capitalisation of Profits']
['property Law' 'compulsory Acquisition' 'compensation'] ['assessment of Compensation' 'value of Land to Owner' 'goodwill of Business' 'going Concern Valuation' 'capitalisation of Profits']

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Procedural Posture

Claim for Compensation for Compulsory Acquisition of Land Under the Lands Acquisition Act 1906 1936 / Appeal to the Full Court of the High Court From Judgment of Webb J. Dismissing the Action

Legal Issues

  1. 1 ['Whether the plaintiff company was entitled to compensation exceeding the £30,000 already paid by the Commonwealth.' "Whether compensation for acquisition of the land should include the value of goodwill where the acquisition destroyed the company's ability to carry on its business." 'How the net profits of the business should be calculated and capitalised in valuing the undertaking as a going concern.']

Ratio Decidendi

Because the acquisition destroyed the plaintiff company's business, compensation was to be assessed by reference to the value of the whole undertaking as a going concern. The appropriate calculation used the company's net profits for the three years ended 30 June 1944, 1945 and 1946, adjusted only by adding back preliminary expenses, without adding back directors' salaries, without deducting company tax, and without charging a notional rent. Capitalising average net profits of £2,550 at six per cent produced £42,500, from which retained tangible assets of £7,657 were deducted, leaving compensation of £34,843; after crediting the £30,000 already paid, judgment was entered for £4,843.

Court Disposition

Appeal allowed with costs; judgment below set aside; judgment entered for the plaintiffs for £4,843 with costs.

Orders

  • ['Appeal allowed with costs.' 'Judgment appealed from set aside.' 'In lieu thereof enter judgment for the plaintiffs for the sum of £4,843 with costs.']