Commonwealth v Reeve [1949] HCA 22

Commonwealth v Reeve [1949] HCA 22

Compensation for the compulsory acquisition of land occupied by business tenants should reflect the value of their leasehold interest as enhanced by the local goodwill attaching to the premises, where this goodwill cannot be realized elsewhere and is destroyed by resumption. The compensation is not for loss of business as such, nor for the capitalized value of profits, but for the tenant's interest inclusive of features (like local goodwill) that would increase its value to a willing purchaser in the open market, subject to evidence. The value found by the trial judge, based on expert evidence, was within these principles and so stands.

Parties
Appellant: The Commonwealth of Australia; Respondents: Rose Reeve and Dorothy Mavis Reeve
Jurisdiction
Australia
Procedural Posture
Appeal / High Court of Australia, on Appeal From the Full Court of the Supreme Court of New South Wales
Outcome
Appeal dismissed
Legal Topics
Compensation for Compulsory Acquisition, Goodwill in Compensation, Leasehold Interests, Local Vs Personal Goodwill, Valuation Principles
Property Law Compulsory Acquisition Compensation for Compulsory Acquisition Goodwill in Compensation Leasehold Interests Local Vs Personal Goodwill Valuation Principles

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Parties

The Commonwealth of Australia

Appellant

Rose Reeve and Dorothy Mavis Reeve

Respondents

Procedural Posture

Appeal / High Court of Australia, on Appeal From the Full Court of the Supreme Court of New South Wales

Legal Issues

  1. 1 Whether compensation for compulsory acquisition of land by the Commonwealth should include the value of local goodwill attached to the land where a business is conducted by tenants
  2. 2 What principles apply in assessing the value of a tenant's interest in land for compensation purposes, particularly where goodwill is involved
  3. 3 Whether profits or value of the business may form the measure for compensation or are simply factors in valuation

Ratio Decidendi

Compensation for the compulsory acquisition of land occupied by business tenants should reflect the value of their leasehold interest as enhanced by the local goodwill attaching to the premises, where this goodwill cannot be realized elsewhere and is destroyed by resumption. The compensation is not for loss of business as such, nor for the capitalized value of profits, but for the tenant's interest inclusive of features (like local goodwill) that would increase its value to a willing purchaser in the open market, subject to evidence. The value found by the trial judge, based on expert evidence, was within these principles and so stands.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed with costs