Commonwealth v Milledge

The Commonwealth appealed to the High Court of Australia against a decision of the Supreme Court of South Australia concerning compensation for land acquired under the *Lands Acquisition Act 1906-1936* (Cth). The dispute involved two primary matters: the unimproved value of certain freehold land and the compensation awarded for the disturbance of the respondent's dairy and racing stud business. The date for assessing compensation was fixed as 1 January 1946, a period when land sales were subject to legal controls.

The High Court was required to determine whether the trial judge had applied the correct legal principles in assessing the unimproved value of the land and in awarding compensation for business disturbance. Specifically, the court needed to consider how land sales controls should be factored into the valuation, whether an allowance for the fall in the purchasing power of money between the assessment date and the judgment date was permissible, and whether compensation for business disturbance could be awarded when the land was valued on the basis of a more profitable use.

The Court held that the trial judge had erred in his approach to valuation. The unimproved value of the land should be determined by the price a willing seller and a willing buyer would agree upon, assuming official consent to the sale, but with the buyer also subject to existing controls if they remained in effect. The additional sum awarded by the trial judge for the fall in the purchasing power of money was also disallowed, as the *Lands Acquisition Act* mandated valuation as at a specific past date and did not provide for adjustments due to currency depreciation. Furthermore, the Court found that compensation for business disturbance could not be awarded where the land had been valued based on its suitability for a more profitable use than the existing business.

The appeal was allowed, the judgment of the Supreme Court was set aside, and a new trial was ordered. The costs of the former trial were to be determined by the court at the new trial, and the parties were to bear their own costs of the appeal.