Eastaway v The Commonwealth

The Commonwealth acquired land owned by Eastaway, on which Eastaway conducted a business. The business was forced to close due to the acquisition, and Eastaway sought compensation for the loss of goodwill and the business as a going concern. The matter came before the High Court of Australia.

The central legal issue before the High Court was the proper assessment of compensation payable to Eastaway under the *Lands Acquisition Act 1906-1936* for the compulsory acquisition of their land, specifically concerning the value of the business conducted on that land, including its goodwill and status as a going concern.

The Court considered the principles for valuing a business that has ceased to operate due to compulsory acquisition. It was held that the value of a business as a going concern, including its goodwill, should be assessed by reference to its capacity to earn profits. The Court applied the method of capitalizing profits to determine this value, acknowledging that the business's closure was a direct consequence of the acquisition.

The appeal was allowed with costs, the judgment of the lower court was set aside, and judgment was entered for the plaintiffs for £4,843 with costs.