Doyle’s Farm Produce Pty Ltd atf Claredale Family Trust v Murray-Darling Basin Authority

Supreme Court New South Wales Medium Neutral Citation: Doyle’s Farm Produce Pty Ltd atf Claredale Family Trust v Murray-Darling Basin Authority [2026] NSWSC 1036 Hearing dates: 11–28 August, 1–5, 10–19 September, 8–9 October, 10–14 November 2025 Date of orders: 31 August 2026 Decision date: 31 August 2026 Jurisdiction: Common Law Before: Faulkner J Decision: (1) The proceedings on the Fifth Further Amended Statement of Claim filed on 30 September 2025 brought by the Plaintiffs on behalf of the Group Members described in paragraphs 8 and 9 of the Fifth Further Amended Statement of Claim be dismissed. (2) The Plaintiffs pay the Defendant’s costs. (3) Any party which wants to apply for a different or further costs order has liberty to apply, such liberty to be exercised within 21 days by email to my Associate. Catchwords: TORT – Negligence – duty of care – statutory authority – Murray-Darling Basin Authority established under the Water Act 2007 (Cth) – river system to be operated in the public interest – Authority’s functions include executing the agreement between States for sharing the water between the States – Authority required to operate in the face of conflicts – duty alleged to be owed to private irrigators – statutory framework does not erect or facilitate a sufficient relationship between the Authority and private irrigators – duty of care to some private irrigators

would distort the focus of the statutory framework – alleged duty would be incongruous with the statutory framework TORT – Negligence – duty of care – pure economic loss – novel case – assumption of responsibility – salient features – reasonable foreseeability – actual foresight – identification of the risks of harm – control over the risks of harm and vulnerability – no specific reliance – no indeterminacy – equivalent duties of care would be owed to others – no assumption of responsibility – salient features do not warrant imposition of duty of care to avoid pure economic loss TORT – Negligence – alleged breach of duty in the conduct of river operations – whether failure to take precautions which a reasonable person in the Authority’s position would have taken – no breach of duty TORT – Negligence – alleged breach of duty in the conduct of commercial negotiations for access to privately-owned infrastructure – no breach of duty TORT – Negligence – causation of loss – factual causation – identification of counterfactual river operations – expert evidence TORT – Negligence – causation of loss – factual causation – determination of what the person who suffered harm would have done – admissibility of evidence – s 5D(3)(b) of the Civil Liability Act 2002 (NSW) – “statement made by the person suffering the harm” – farming business conducted through corporate trustee of family trust

– family member involved in the management of business authorised to swear affidavit on behalf of corporate trustee – evidence inadmissible under s 5D(3)(b) TORT – Negligence – quantum of loss – price elasticity of demand for water – expert evidence – the price of hay PRIVATE INTERNATIONAL LAW – Choice of law – tort – Authority established to operate independently of the States – Authority’s place of work in the Australian Capital Territory – negligence alleged to arise from exercise of power to “give directions for the release of water” – directions variously received and acted upon in New South Wales and Victoria – negligence committed in the Australian Capital Territory – substantive issues in the case to be determined in accordance with the law of the Australian Capital Territory PRIVATE INTERNATIONAL LAW – Civil Law (Wrongs) Act 2002 (ACT) – Chapter 4 Negligence – does not apply of its own force to claim against the Authority – applies by virtue of s 64 of the Judiciary Act 1903 (Cth) PRIVATE INTERNATIONAL LAW – Choice of law – procedural issues governed by law of the forum – Court exercising federal jurisdiction – s 79 of the Judiciary Act 1903 (Cth) – whether s 5D(3)(b) of the Civil Liability Act 2002 (NSW) applicable to a case governed by Chapter 4 of the Civil Law (Wrongs) Act 2002 (ACT) – “the determination of factual causation” – whether s 5D(3)(b) applies to the

determination of “factual causation” for the purposes of s 45(1)(a) of the Civil Law (Wrongs) Act 2002 (ACT) – s 5D(3)(b) applicable for the purposes of s 79 of the Judiciary Act 1903 (Cth) WORDS AND PHRASES – “statement made by the person suffering the harm” – “the determination of factual causation” Legislation Cited: Australian Capital Territory (Self-Government) Act 1988 (Cth), s 27 Civil Law (Wrongs) Act 2002 (ACT), ss 40, 42, 43, 45, 46 Civil Liability Act 2002 (NSW), ss 5D, 5I Civil Liability Act 2002 (WA), s 5C Civil Procedure Act 2005 (NSW), ss 157, 179 Interpretation Act 1987 (NSW), s 21 Judiciary Act 1903 (Cth), ss 64, 79 Legislation Act 2001 (ACT), s 121 National Parks and Wildlife Act 1974 (NSW), s 90 Productivity Commission Act 1998 (Cth), ss 6, 12 Public Governance, Performance and Accountability Act 2013 (Cth), ss 29, 35 Public Services Act 1999 (Cth) Uniform Civil Procedure Rules 2005 (NSW), rr 14.14, 28.4 Water Act 1989 (Vic), ss 33AC, 33F, 64GB Water Act 2007 (Cth), ss 3, 10, 18A, 18C, 18E, 19, 20, 22, 33, 50, 52A, 86A, 86C, 86D, 86F, 86G, 86J, 87, 89, 171, 172, 173, 174, 176, 178, 182, 186, 189, 199, 201, 202, 203, Sch 1 Water Management Act 2000 (NSW), ss 56, 57, 58, 59, 63, 66, 85 Wrongs Act 1958 (Vic), s 55 Cases Cited: A.I. McLean Pty Ltd v Hayson [2008] NSWSC 927 Anchorage Capital Master Offshore Ltd v Sparkes (2023) 111 NSWLR 304; [2023] NSWCA

88 Armory v Delamirie (1722) 1 Stra 505; (1772) 93 ER 664 Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd and Woolworths Limited [2006] FCA 826 Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; [2001] HCA 1 AvWest Aircraft Pty Ltd v Clayton Utz [2018] WASC 167 Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 Bevan v Coolahan (2019) 101 NSWLR 86; [2019] NSWCA 217 Brodie v Singleton Shire Council (2001) 206 CLR 512; [2001] HCA 29 Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36 Bryan v Maloney (1995) 182 CLR 609; [1995] HCA 17 Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24 Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 Central Highlands Regional Council v Geju Pty Ltd [2018] 3 Qd R 550; [2018] QCA 38 Cessnock City Council v 123 259 932 Pty Ltd (2024) 281 CLR 39; [2024] HCA 17 Chamberlain v Ormsby [2005] NSWCA 454 Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 Commonwealth v Mewett (1997) 191 CLR 471; [1997] HCA 29 Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297; [1981] HCA 26 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1; [1999] HCA 59 Cullen v New South Wales [2026] HCA

19 Dansar Pty Ltd v Byron Shire Council (2014) 89 NSWLR 1; [2014] NSWCA 364 Deputy Commissioner of Taxation (Cth) v Moorebank Pty Ltd (1988) 165 CLR 55; [1988] HCA 29 DFX v Coventry City Council [2021] EWHC 1382 (QB) Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575; [2002] HCA 56 Doyle’s Farm Produce Pty Ltd v Murray Darling Basin Authority [2025] NSWSC 1070 Doyle’s Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) (2021) 106 NSWLR 41; [2021] NSWCA 246 Duchess of Argyll v Beuselinck [1972] 2 Lloyd’s Rep. 172 East Metropolitan Health Service v Ellis (by his next friend Ellis) [2020] WASCA 147 Electricity Networks Corporation v Herridge Parties (2022) 276 CLR 271; [2022] HCA 37 Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 Farriss v Axford [2023] NSWCA 255 Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; [1986] HCA 3 Geju Pty Ltd v Central Highlands Regional Council [2016] QSC 279 Glavinic v Commonwealth [2023] ACTSC 361 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54 Gunns Limited v State of Tasmania [2015] TASSC 52 Hazlett v Presnell (1982) 149 CLR 107; [1982] HCA 58 Hill v Van Erp (1997) 188 CLR 159; [1997] HCA 9 Hunt Leather Pty Ltd v Transport for NSW [2025] HCA 53 HXA v Surrey County Council; YXA v Wolverhampton City Council [2024] 3 All ER 341 Ibrahimi v Commonwealth of Australia (2018) 366 ALR 341; [2018] NSWCA

321 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 JP SPC 4 and another v Royal Bank of Scotland International Ltd [2022] 4 All ER 431 Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 M & E M Hull Pty Limited v Thompson [2001] NSWCA 359 Maguire v Simpson (1977) 139 CLR 362; [1977] HCA 63 Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135 Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20 Mallonland Pty Ltd v Advanta Seeds Pty Ltd (2024) 418 ALR 639; [2024] HCA 25 McLennan Asset Services Pty Ltd v Macquarie Investments Ltd [2017] NSWSC 1811 Minister for the Environment v Sharma (2022) 291 FCR 311; [2022] FCAFC 35 Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3 N v Poole Borough Council [2020] AC 780 Neal v Ambulance Service of New South Wales [2008] NSWCA 346 Pabai v Commonwealth of Australia (No 2) [2025] FCA 796 Paul v Cooke (2013) 85 NSWLR 167; [2013] NSWCA 311 Perez de la Sala v Perez de la Sala [2026] NSWCA 160 Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36 PPK Willoughby Pty Ltd v Baird [2019] NSWSC 704 PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR

541 Pyrenees Shire Council v Day (1998) 192 CLR 330; [1998] HCA 3 Queensland Bulk Water Supply Authority (t/as Seqwater) v Rodriguez & Sons Pty Ltd (2021) 393 ALR 162; [2021] NSWCA 206 Re Metal Storm Limited (in liq) (receivers and managers appointed) (No 2) [2019] NSWSC 1682 Richtoll Pty Ltd v WW Lawyers Pty Ltd (in liq) [2016] NSWCA 308 Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23 Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HCA 42 Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 22) [2019] NSWSC 1657 Rogers v Whitaker (1992) 175 CLR 479; [1992] HCA 58 Roo Roofing Pty Ltd v Commonwealth of Australia [2019] VSC 331 Rosenberg v Percival (2001) 205 CLR 434; [2001] HCA 18 Samm Property Holdings Pty Ltd v Shaye Properties Pty Ltd (2017) 345 ALR 633; [2017] NSWCA 123 Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262; [2000] NSWCA 29 Sibley v Kais (1967) 118 CLR 424; [1967] HCA 43 Solomons v District Court of New South Wales (2002) 211 CLR 119; [2002] HCA 47 Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287; [2012] WASCA 79 Strong v Woolworths (2012) 246 CLR 182; [2012] HCA 5 Sullivan v Moody (2001) 207 CLR 562; [2001] HCA

59 Sutherland Shire Council v Heyman (1985) 157 CLR 424; [1985] HCA 41 Tabet v Gett (2010) 240 CLR 537; [2010] HCA 12 Tabet v Mansour [2007] NSWSC 36 Tame v New South Wales (2002) 211 CLR 317; [2002] HCA 35 Tekin v Stratford [2026] NSWCA 54 Timberland Property Holdings Pty Ltd v Bundy [2005] NSWCA 419 Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602; [1961] HCA 35 Transport for NSW v Hunt Leather Pty Ltd (2024) 115 NSWLR 489; [2024] NSWCA 227 UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd [2014] NSWSC 1959 University College Cork – National University of Ireland v Electricity Supply Board [2018] IECA 82 Vairy v Wyong Shire Council (2005) 223 CLR 422; [2005] HCA 62 Voli v Inglewood Shire Council (1963) 110 CLR 74; [1963] HCA 15 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; [1990] HCA 55 Ward v The Queen (1980) 142 CLR 308; [1980] HCA 11 Weber v Greater Hume Shire Council (2019) 100 NSWLR 1; [2019] NSWCA 74 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [2012] FCA 1028 Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460; [2002] HCA 9 Wyong Shire Council v Shirt (1980) 146 CLR 40; [1980] HCA 12 X (Minors) v Bedfordshire County Council [1995] 2 AC 633 Texts Cited: M Davies, A S Bell, P L G Brereton and M Douglas, Nygh’s Conflict of Laws in Australia (LexisNexis Buttwersworths, 10th ed, 2020) M Leeming, Statutory Foundations of

Negligence (The Federation Press, 2019) Category: Principal judgment Parties: Doyle’s Farm Produce Pty Ltd (ACN 119 734 539) atf Claredale Family Trust (First Plaintiff) John Gerard Doyle (Second Plaintiff) Coobool Downs Pastoral Co Pty Ltd (ACN 002 806 617) atf the Dunn Family Trust (Third Plaintiff) Rodney James Dunn (Fourth Plaintiff) Valerie Jeanette Dunn (Fifth Plaintiff) Murray-Darling Basin Authority (Defendant) Representation: Counsel: T Bannon SC / D Sulan SC / S Hartford Davis / S Hoare / D Morris (Plaintiffs) S Callan SC / T Prince SC / H Rogers / A Hall (Defendant) Solicitors: Banton Group (Plaintiffs) Ashurst Perkins Coie (Defendant) File Number(s): 2019/00150651 Publication restriction: Nil

TABLE OF CONTENTS

JUDGMENT Introduction The Murray River Operation of the Murray River by the Murray-Darling Basin Authority Overbank transfers in 2017 and 2018 Irrigators in New South Wales Pleadings Representative proceedings Common questions Preliminary issues

WITNESSES Plaintiffs’ lay witnesses Defendant’s lay witnesses Mr Reynolds Dr Davis Ms Hickey Mr Bishop Mr Foreman and Mr Korn Mr Johnson Specific submissions about acceptance of a witness’s evidence Jones v Dunkel Expert witnesses Dr Ladson Other expert witnesses

RAIN Rainfall and rain forecasting Short-term rain forecasts Three-month climate outlook Four seasons Temperature

RIVER OPERATIONS FUNDAMENTALS

APPLICABLE LAW Introduction Principled approach State boundaries Plaintiffs’ submissions on choice of law Defendant’s submissions on choice of law Determination – the tort was committed in the Australian Capital Territory The Defendant’s conduct occurred in the Australian Capital Territory Not where the decisions were directed nor where they assumed significance Summary of where the tort was committed Nonetheless the Civil Law (Wrongs) Act 2002 (ACT) does not apply directly Civil Law (Wrongs) Act 2002 applies by virtue of s 64 of the Judiciary Act 1903 (Cth) Section 5D(3)(b) of the Civil Liability Act 2002 (NSW) applies

DUTY OF CARE The first issue Plaintiffs’ pleaded case Duty to avoid a risk of pure economic loss Principled approach to determining a duty to avoid pure economic loss Duty to avoid pure economic loss is not generally owed Duty to be determined by the salient features of the case The role of assumption of responsibility The role of indeterminacy The role of incongruency Principled approach to determining a duty owed by a statutory authority Structure of the next part of these reasons Statutory framework Overview of regulation The Commonwealth Statute Establishment of the Defendant The Agreement between the Commonwealth, the States and the ACT The Ministerial Council and the Basin Officials Committee Water Liaison Working Group Functions and powers of the Defendant Objectives and Outcomes Document Accountability of the Defendant The NSW Statute and the Victorian Statute Plaintiffs’ submissions on duty of care Submissions that duty arises from an assumption of responsibility Alternative submissions about the salient features of the case Defendant’s submissions on duty of care The duty would be incongruous with the statutory framework Structure of the reasons for finding incongruity with the statutory framework The Murray River system is to be operated in the public interest The regulatory framework is centred on the interests of the States There is no sufficient relationship

between the Defendant and the Plaintiffs The statutory framework requires the Defendant to function in the face of conflict Conflict arises from South Australia’s entitlement to receive monthly quantities of water Other conflicts Provision for accountability of the Defendant within the statutory framework There is imperfect knowledge of the Murray River system Summary of incongruity There was no assumption of responsibility Not sufficient without more Undertaking alleged by the Plaintiffs not sufficient Matters relied upon by the Plaintiffs Operational and policy functions Conclusion on assumption of responsibility The salient features of the case do not give rise to a duty of care Reasonable foreseeability and actual foresight Identifying the risks of harm with more precision The Defendant had control over the source of the risks of harm The Plaintiffs were vulnerable There was no specific reliance Some support for a duty of care in the salient features of the case Indeterminacy Liability arising from a duty owed to Plaintiffs and Group Members not indeterminant Equivalent duties of care owed to others undermines duty owed to the Plaintiffs A duty of imprecise and uncertain consent Other cases An incremental and analogical approach to a novel case The Queensland Floods case The Electricity Networks case Sharma and Pabai Brodie v Singleton Shire Council Cases about local councils and development approval Cases of liability beyond direct contractual relationships Summary of authorities relied upon by the Plaintiffs Summary of finding that no duty of care was owed All other issues to be considered nonetheless

STANDARD OF CARE BREACH OF DUTY – 2017/2018 WATER YEAR Introduction Duty of care which the Defendant is assumed to have owed Overbank transfers in the 2017/2018 water year Precise statement of the Plaintiffs’ case on breach Background to the exercise of the release power on 3 October 2017 Regulatory framework – Yarrawonga Weir Regulatory framework – Lake Victoria Regulatory framework – Menindee Lakes Regulatory framework – inter-valley trade Annual Operating Plan – requirements and preparation Provision in the O&O Document for the Annual Operating Plan Preparation of the Annual Operating Plan and the Fortran Assessment Model Other aspects of the Defendant’s operation of the Murray River system The Defendant’s River Operations Team from May 2017 Daily Operations Spreadsheet The events in the 2017/2018 water year Preparation of the 2017/2018 Annual Operating Plan Terms of the 2017/2018 Annual Operating Plan Using the Fortran Assessment Model for testing on 20 September 2017 Daily Operations Spreadsheet for 28 September 2017 Daily Operations Spreadsheet for 29 September 2017 Daily Operations Sheet for 29 September 2017 The exercise of the release power Principled approach to breach of duty of care Relevance of statutory framework to the case in negligence Onus of proof Proof of breach without expert evidence Structure of reasons about breach in the 2017/2018 water year Three

preliminary points There is no complaint about the 2017/2018 Annual Operating Plan The decision on 3 October 2017 was not a significant or unusual decision Who made the decision and when was it made? First alleged failure: misreading the Climate Outlook dated 28 September 2017 Plaintiffs’ submissions Defendant’s submissions Determination Second alleged failure: failure to act in accordance with the 2017/2018 AOP Plaintiffs’ submissions Defendant’s submissions Review and amendment of the AOP Determination – no failure to act in accordance with the AOP Text of the O&O Document Subject matter of the AOP Text of the AOP Document No expert evidence on the meaning of the figures in the AOP Evidence of the Defendant’s river operators Having regard to more than one scenario at any given time Summary of the nature and effect of the AOP What was the applicable scenario at the start of October 2017? The rate of release specified in the AOP for October 2017 Summary of conducting river operations “in accordance with the AOP” In any event, no breach of the duty of care owed to the Plaintiffs Third alleged failure: failure to adhere to the Fortran testing in mid-September Plaintiffs’ submissions Defendant’s submissions Determination – no failure to adhere to the testing conducted on 20 September 2017 Defendant’s obligations in relation to the adherence to the testing Approval by the WLWG on

26 September 2017 No failure to be guided by the testing (or to act in accordance with it) Summary In any event, no breach of duty to the Plaintiffs Fourth alleged failure: failure to conduct further testing with the Fortran Assessment Model Plaintiffs’ submissions Defendant’s submissions Determination Premise not made out Fortran Assessment Model not “the best tool” Summary Fifth alleged failure: inappropriate modelling in Daily Operations Spreadsheets Plaintiffs’ submissions Defendant’s submissions Determination – loss rates Modelling more efficient releases from the Menindee Lakes Modelling a call on the Goulburn IVT account Summary Sixth alleged failure: failure to prioritise Menindee Lakes and Goulburn IVT Plaintiffs’ submissions Defendant’s submissions Preliminary point – something needed to be done in October 2017 Determination – this part of Plaintiffs’ breach case is impermissibly based on hindsight Determination – Menindee Lakes Salient facts No breach of duty because commencement of transfers was too late No breach of duty because water not transferred “in preference to” No breach of duty because the rate of increase was too slow No breach of duty because rate of release only reached 1,800 ML/day Summary of Menindee Lakes Determination – Goulburn IVT Internal spill Salient facts Determination – no breach of duty The real issue was when, not whether Risk of internal

spill Conflict from risk of internal spill Goulburn River channel constraints Replenishment risk Summary of sixth alleged failure Seventh alleged failure: failures of process Plaintiffs’ submissions Defendant’s submissions Determination Delegation Record keeping Consultation with the WLWG Summary on process failures Summary – no breach of duty CAUSATION OF LOSS – 2017/2018 WATER YEAR Plaintiffs’ submissions Defendant’s submissions Principled approach General principles What the defendant would have done acting with reasonable care Determination – counterfactual river operations First alleged breach: misreading the Climate Outlook dated 28 September 2017 Second alleged breach: failure to act in accordance with the 2017/2018 AOP Third alleged breach: failure to adhere to the Fortran testing in mid-September Fourth alleged breach: failure to conduct further Fortran testing Fifth alleged breach: inappropriate modelling in Daily Operations Spreadsheets Sixth alleged breach: failure to prioritise Menindee Lakes and Goulburn IVT. Seventh alleged breach: failures of process Summary of the counterfactual river operations Counterfactual environmental water use Position of the Plaintiffs had Scenario P2 occurred Scope of liability – 2017/2018 water year Summary of causation in the 2017/2018 water year New South Wales holders of water entitlements Victorian holders of water

entitlements QUANTUM for the 2017/2018 WATER YEAR to be ADRESSED LATER BREACH OF DUTY – 2018/2019 WATER YEAR Introduction Temporal framework of the Plaintiffs’ case Background to the (non) exercise of the release power in June 2018 In-channel watering Events leading up to the commencement of the 2018/2019 water year June 2018 After June 2018 Plaintiffs’ submissions Defendant’s submissions Circumstances in June 2018 Vigilance about the storage level at Lake Victoria WLWG’s preference to avoid overbank transfers in the “dry” scenario Observed underperformance of Lake Victoria by mid-June Historically low levels Not performing relative to plans Forecast on 25 June 2018 that Lake Victoria would fall In-channel watering Summary of the circumstances in June 2018 Determination: not deciding to make earlier and greater in-channel transfers Plaintiffs’ submissions Defendant’s submissions Pleading issue Introduction Fifth Further Amended Statement of Claim Particular (a)(x)(1) of Annexure B Particulars in paragraph (d) of Annexure B Particular (d)(i) Particular (d)(iii) Particular (d)(iv) Summary of pleading The Plaintiffs are precluded from relying on the new allegation Merits of the new allegation Introduction Plaintiffs have not proved that a river operator acting with reasonable care would have increased the release rate at Yarrawonga Weir in June 2018 There was a risk of

spill Tolerance of the risk of spill was not inbuilt in the modelling Consequences if a spill occurred Summary of risk of spill Bank erosion in the Barmah Choke Hoping for rain Departure from the AOP planning documents Documents subsequently prepared by the Defendant which acknowledged failings Particular (d)(iA) and the failure to allow for in-channel watering Summary – no breach of duty Determination: not calling on the Goulburn IVT account in June, July and August Pleading Facts Plaintiffs’ submissions Defendant’s submissions Plaintiffs have not proved that a river operator acting with reasonable care would have called on the Goulburn IVT account Reasonably perceived need for action not proved Risk of spill still needed to be taken into account Want of essential specificity Calling water from the Goulburn IVT account would have permitted future trade Summary – no breach of duty Further arguments by the Defendant Need to save the Goulburn IVT account for summer Peak demand for water in summer Risk of not having sufficient water in the Goulburn IVT account for summer Advantage of flexibility Replenishment would generally have been expected, but over what time period? A call on the Goulburn IVT account would not have provoked new trade The Defendant had previously made a call on the Goulburn IVT account in June Summary Limited channel capacity of the Goulburn River Case based

on hindsight Summary Alternative IVT case based on a decision made in July Summary of breach in the 2018/2019 water year CAUSATION OF LOSS – 2018/2019 WATER YEAR Plaintiffs’ submissions on causation Defendant’s submissions Structure of reasons on causation in the 2018/2019 water year Counterfactual river operations Counterfactual river operations not adequately identified Scenario P10 and Scenario P9 lack essential detail No rational relationship between the breach and Scenario P10 or Scenario P9 Scenario P10 positively implausible Counterfactual river operations not otherwise apparent Summary of counterfactual river operations Position of the Plaintiffs had Scenario P9 (or Scenario P10) occurred The agreed model is to be relied upon What would the environmental water holders have done? Results of modelling work carried out by Mr Podger and Mr Barma Error consequent upon changing the assumption about demand Higher allocation to the Plaintiffs not proved under Scenario P9 Higher allocation to the Plaintiffs not proved under Scenario P10 No further modelling Summary of the position of the Plaintiffs in the 2018/2019 water year Loss of opportunity Plaintiffs’ alternative claim Defendant’s submissions Principled approach The Plaintiffs had a commercial opportunity to take additional water In the premises the Defendant caused the loss of the opportunity Plaintiffs have not proved that the opportunity had a non-negligible or substantial value Other parts of the loss of opportunity case Loss of opportunity to pay lower price for temporary water Same position in Victoria Scope of liability – 2018/2019 water year Summary of causation in the 2018/2019 water year Consequences for the Plaintiffs’ case CAUSATION OF LOSS – 2019/2020 WATER YEAR

MIL ACCESS BREACH Introduction Plaintiffs’ case Background facts MIL infrastructure Commercial framework Negotiations for access prior to September 2018 Plaintiffs’ submissions Defendant’s submissions Pleading issue Determination The Defendant had no need for an interim agreement prior to 1 June 2018 There are other flaws in the Plaintiffs’ case The Defendant did not conduct the negotiations with MIL The Defendant was subject to the direction of multiple governments The Defendant’s interests stretched beyond the 2018/2019 water year It was a commercial and governmental negotiation The Defendant’s budgetary constraints Summary of breach Causation not proved Not proved that WaterNSW wanted an interim agreement MIL’s attitude to an interim agreement Summary of causation Summary of the MIL access case

QUANTUM Principled approach Structure of the Plaintiffs’ claim Factual background Doyle’s Farm Coobool Downs Pastoral Co. RyanAG Basis upon which quantum of loss is to be addressed Assumptions as to increased allocations of water Doyle’s Farm counterfactual Objection to Mr Dunn’s evidence Coobool counterfactual Ryan AG counterfactual Outstanding issues on quantum Price of temporary water The issue Water entitlements and temporary water The evidence The relevant market Supply of water in the market (or markets) Proportionate increase in market supply by reason of increased allocations to the Plaintiffs Summary Price elasticity of demand Doyle’s Farm’s use of its own potato seed in the 2019/2020 water year The price of hay Issues Coobool to be compensated as a buyer, not a seller The price of vetch hay Mr Dunn’s evidence about the purchase price and market data Summary Summary of quantum

INHERENT RISK Issue does not arise Defendant’s submissions Not harm as a result of the materialisation of inherent risk

COMMON QUESTIONS Governing Law Duty of care Breach of duty Causation Loss or damage Inherent risk

ORDERS

ANNEXURE

JUDGMENT Introduction The Murray River This case concerns the Murray River. As neatly summarised by the Plaintiffs, the Murray River and its tributaries, including the Barwon-Darling River north of the confluence at Wentworth, drains the Murray-Darling Basin. The Basin extends from central Queensland through New South Wales, the Australian Capital Territory and Victoria to eastern South Australia. The Basin accounts for the vast bulk of irrigated agricultural production: roughly 85% of Australia’s irrigation water is used in the Basin. It has been referred to as Australia’s food bowl, containing 65% of Australia’s irrigated land area and around 40% of Australia’s farms. The Murray-Darling Basin is divided into the northern basin and the southern basin. This case directly concerns the southern basin which comprises the Murray River and its tributaries, including the lower Darling River and the Menindee Lakes. The upper Murray River refers to the Murray River to the east of the border between New South Wales and South Australia. Operation of the Murray River by the Murray-Darling Basin Authority Like most rivers in Australia, the Murray River no longer flows freely from its numerous sources in southern New South Wales and northern Victoria down to the ocean off the coast of South Australia. Over the last century many dams, weirs and locks have progressively been constructed which

are now operated as a coherent whole to exercise a measure of control over the water in the River. Since 2008, the Murray-Darling Basin Authority has been the entity which has had primary responsibility for the exercise of that control. I will refer to the Authority as the “Defendant”. The Defendant was established by an enactment of the Commonwealth Parliament called the Water Act 2007 (Cth). I will refer to it as the “Commonwealth Statute”. To some extent the purpose and functions of the Defendant are to be determined by reference to the Commonwealth Statute but there is a larger picture. On 3 July 2008 the governments of New South Wales, Victoria, South Australia, Queensland, the Australian Capital Territory and the Commonwealth entered into an Agreement about how the water of the Murray River is to be shared amongst the States and Territory. As will be seen in more detail below, a central element of their agreement is the appointment of the Defendant as an independent expert to execute the provisions of the Agreement for the sharing of the water. The Agreement is an important part of the regulatory framework in which the Defendant operates and by reference to which its purpose and functions are to be understood. Depending upon where they are located, the dams and weirs along the Murray River are generally owned and operated by different State water authorities. One of the

powers which the States have agreed to give to the Defendant is the power to direct the release of water from some of the dams and weirs. By exercising the release power, the Defendant is able to move water about the river system so as to meet the entitlements of the States when and where they require. Overbank transfers in 2017 and 2018 On 3 October 2017 the Defendant gave a direction as a result of which water was released at Yarrawonga Weir at a rate which exceeded the channel capacity of the River. That particular river operation is called an “overbank transfer”. The intention is that some of the water will return to the River further downstream. The Defendant maintained overbank transfers until 16 October 2017 when it started to rain. As a result of the overbank transfers some of the water which went out of the River stayed in the adjacent Barmah-Millewa Forest and was lost. One estimate of the lost water is approximately 40 GL. In late-June 2018 the conditions of the River were such that the Defendant gave consideration to directing the release of more water at Yarrawonga Weir so as to meet the downstream entitlements of some of the States. It decided not to. By mid-August it became apparent that more water was indeed required downstream. The Defendant directed releases, once again at a rate which exceeded the channel capacity of the River. This time the overbank

transfers were prolonged into December 2018. Once again water was lost in the Barmah-Millewa Forest, this time estimated to be significantly more than 100 GL. It is argued that less water would have been lost had the Defendant commenced the releases in June 2018 because then the water could have been released at a lower rate. Irrigators in New South Wales The Plaintiffs carry on businesses of irrigated agricultural production on properties near the upper Murray River. In 2017 and 2018 they held, or had the use of, water access licences which had been issued under the Water Management Act 2000 (NSW). By those licences the Plaintiffs had a right to take a share of water sourced from the Murray River in accordance with periodic determinations by the Minister of the amount of available water. In the 2017/2018 water year, [1] the Plaintiffs received an allocation of 51% of their full entitlement. In the 2018/2019 water year they received an allocation of 0% of their full entitlement. They claim that in each water year they would have received a higher allocation if the overbank transfers had not occurred. The evidence makes clear that every megalitre matters for businesses like those carried on by the Plaintiffs. Had they received higher entitlements their businesses would have been more profitable. The Plaintiffs claim that the Defendant owed a duty to avoid causing economic loss

which it was reasonably foreseeable they would suffer if the Defendant did not perform its river operations functions with reasonable care. They claim that the Defendant did not act with reasonable care when it directed the release of water on 3 October 2017 and when it failed to direct the release of water in late-June 2018. By these proceedings the Plaintiffs seek compensation for the economic loss which they say was caused by the overbank transfers. Pleadings The claims made by the Plaintiffs are formally defined in the Fifth Further Amended Statement of Claim which was filed on 30 September 2025. I will generally refer to it as the “Statement of Claim” although there are some places in the Judgment where the context is assisted by a reference to the “Fifth Further Amended Statement of Claim”. The Defence to the Fourth Further Amended Statement of Claim is dated 8 August 2025. It stands as the Defence to the Fifth Further Amended Statement of Claim. The Plaintiffs filed an Amended Reply on 7 August 2025. The Plaintiffs readily accept that their case about the Defendant’s alleged breaches of the alleged duty of care (and also some other matters) has changed over the years, a process which continued during the course of the hearing. As more fully explained below, the Plaintiffs reduced to writing a statement of the breaches which they still allege at the end of the hearing.

The document is referred to as “MFI-38”. The statement of breaches in MFI-38 is significant for two reasons. First, some of the breaches alleged in the Fifth Further Amended Statement of Claim are not referred to in MFI-38. As I explain below, any such allegation is taken to have been abandoned and has not been decided by me. Secondly, the formulation of some of the breaches in MFI-38 has given rise to a debate about whether a new case is being run which cannot fairly be decided by the Court. The way the case was conducted at the hearing is sometimes important. I have set out at the appropriate places below precisely what allegations are open to the Plaintiffs, why that is so, and precisely which allegations I have decided. Representative proceedings The Plaintiffs bring these proceedings as representative proceedings under Part 10 of the Civil Procedure Act 2005 (NSW). The definition of the Group is pleaded in paragraph 8 of the Statement of Claim as follows: “The Group Members for the purposes of this proceeding are all persons or entities who, for all or part of the period between 1 July 2017 and 30 June 2020: a. held NSW Murray Regulated River general security water entitlements under the Water Management Act 2000 (NSW) or high reliability water shares issued under the Water Act 1989 (Vic) for the Murray declared water; b. held water supply entitlements under contractual

arrangement with the holder of a NSW Murray Regulated River general security bulk water access licence under the Water Management Act 2000 (NSW) or held water supply entitlements under contractual arrangement with Goulburn-Murray Water as the bulk entitlement holder of WSE000139; (the persons or entities described in subparagraphs 8(a)-8(b) are together described Water Entitlement Holders); or, not being Water Entitlement Holders c. conducted irrigated agriculture operations in the NSW Central Murray or the Goulburn-Murray irrigation region using water entitlements owned by Water Entitlement Holders (Related Parties); d. in the case of the Water Entitlement Holders and Related Parties, or both, received and/or utilised an allocation of water in: i. [Not used]; ii. the 2017/2018 year; iii. the 2018/2019 year; and/or iv. the 2019/20 year which was lower than the allocation which they would have received and/or utilised had the conduct the subject of complaint in this Fourth Fifth Further Amended Statement of Claim not occurred; and e. suffered loss or damage by reason of the conduct of the [Defendant] and/or the Delegates as set out in this Fourth Fifth Further Amended Statement of Claim.” The technical details in the definition relate to the system of water allocation to holders of water entitlements in New South Wales. The details are addressed below. As defined, the Group

includes not just irrigators in the relevant parts of New South Wales but also irrigators in parts of Victoria. In each of the 2017/2018 water year and the 2018/2019 water year the holders of high reliability water shares under the Water Act 1989 (Vic) received an allocation of 100% of their full entitlement. It is not generally alleged that loss was suffered by Victorian water entitlement holders in those two years although there may be a claim based on higher water prices in those years for irrigators who received 100% of their allocations but needed to purchase more water. In any event, the Plaintiffs allege that, had water not been lost as a result of the overbank transfers, there would have been a knock-on effect such that Victorian water entitlement holders would have received a higher allocation in the 2019/2020 water year. As none of the Plaintiffs make a claim as a water entitlement holder in Victoria they have identified a sample Group Member from Victoria who gave evidence at the hearing about loss which he claims to have suffered. Common questions For the purposes of s 157(1)(c) of the Civil Procedure Act 2005 the parties have identified sixteen questions. The questions are set out in a document entitled “Amended Common Questions” which was adduced into evidence and marked Exhibit “P”. On 12 November 2025 I ordered that the questions set out in Exhibit P be heard

and determined in advance of all other issues in the proceedings. Apart from one minor detail, I have found that all the questions are common to some or all of the Group Members. The answers to the common questions are set out at the end of the Judgment. In addition to the common questions evidence was adduced about the particular circumstances of the Plaintiffs and the sample Group Member from Victoria for the purposes of assessing the quantum of loss. Preliminary issues Before turning to the substantive issues in the case, it is convenient to say something about: the witnesses who gave evidence at the hearing; rain; the fundamentals of river operations; and the law which is applicable to the determination of the issues in the case and to the procedures by which the hearing was conducted.

WITNESSES Most of the evidence which was adduced at the hearing comprises contemporaneous documents, including reports, briefing materials, minutes of meetings and emails. In the usual way, the contemporaneous documents are the best guide to the making findings about the events which occurred. They are also the best guide to making findings about the objective facts at any particular time which in turn shed light on what events would have occurred had the Defendant acted differently. Plaintiffs’ lay witnesses Evidence was also adduced from a number of lay witnesses. For the Plaintiffs, evidence was given by John Doyle, Brett Dunn and Evan Ryan, each of whom is involved in a business of irrigated agricultural production using water from the Murray River. Their evidence is confined to questions of causation and loss. Each gave his evidence in forthright and frank terms. I accept their evidence. The Plaintiffs also adduced evidence from Michael Renehan who was the CEO of the private irrigation company Murray Irrigation Limited, which is generally referred to as “MIL”. Mr Renehan was the counterparty in negotiations which were undertaken for the Defendant to gain access to the MIL infrastructure in 2016, 2017 and 2018. As he himself made clear in his Affidavit dated 3 July 2023, Mr Renehan’s evidence about the negotiations was generally reliant on the contemporaneous documents

which were exhibited to his Affidavit. It is not generally necessary to address Mr Renehan’s evidence beyond the documents, but some specific aspects of his evidence are addressed below in the context of considering the Plaintiffs’ case about access to the MIL infrastructure. Defendant’s lay witnesses The Defendant adduced evidence from six officers who were involved in operating the Murray River in the 2017/2018 and 2018/2019 water years. For the most part, their evidence added little to the contemporaneous documents although some of the documents are technical and I have been assisted by appropriate commentary given by the witnesses. Their Affidavits generally comprise convenient chronological summaries of documented events. River operation concepts have also been explained, usually in uncontroversial terms. Four of the Defendant’s lay witnesses were cross-examined extensively and it is necessary to make some observations. Mr Reynolds David Reynolds was the most senior officer of the Defendant who gave evidence. At the relevant time he was the Executive Director of the Defendant’s River Management Division, first on a temporary basis as he began to take over from his predecessor and then permanently. The River Operations Team, which is the focus of most of the allegations of negligence, was one part of the River Management Division and subject to Mr Reynold’s oversight.

Whilst Mr Reynolds had a high-level involvement in the relevant river operation decisions, his evidence was largely directed to a discrete allegation about negotiating with Mr Renehan for access to the MIL infrastructure. Like Mr Renehan, Mr Reynolds’s Affidavits were structured around the contemporaneous documentary records. Listening to Mr Reynolds’s cross-examination it became clear that he had limited independent recollection of the details of the negotiations in 2016, 2017 and 2018 which is not surprising given the time which has passed. When answering questions, I have no doubt that Mr Reynolds tried to be as correct and accurate as possible. The Plaintiffs do not submit otherwise. However, there were a number of instances when Mr Reynolds was quick to agree to a proposition about a document when a more considered and complete review of the document suggests a more nuanced position. Where relevant, each such occasion is addressed below. Dr Davis The Defendant also adduced evidence from Joseph Davis who was the Senior Director of the River Operations Team. He reported to Mr Reynolds. Dr Davis was an impressive witness. He demonstrated a keen understanding of the precise issues with which the Defendant is confronted in the case. He had a clear understanding of what he knew and what he relied upon his staff to know. There is no suggestion that Dr Davis’s evidence cannot be

relied upon. Having said that, it was apparent from Dr Davis’s demeanour during cross-examination that he was an obliging witness who sought to avoid confrontation. The structure of his answers was generally first to agree to a proposition but then to add a qualification in a way which made it doubtful that he really did agree. There were a number of occasions, not always apparent in the transcript, when Dr Davis gave a general answer and then began upon a qualification before leaving off. Another aspect of Dr Davis’s evidence is that he consistently used an understated turn of phrase. The transcript of Dr Davis’s cross-examination needs to be read in that light. Ms Hickey At the beginning of the 2017/2018 water year Jacqui Hickey commenced as the Director of River Operations. She was the head of the River Operations Team and reported to Dr Davis. Her role in the decisions which are subject of these proceedings was important. The Plaintiffs submit that little weight ought to be given to Ms Hickey’s evidence for two reasons. First, it is submitted that she has a poor memory as demonstrated by a long list of matters which Ms Hickey readily accepted she could not remember. Secondly, Ms Hickey also accepted that she had limited understanding of the operation of the Defendant’s key modelling tools, although her acceptance did not extend to the output from the modelling. There is

nothing in Ms Hickey’s evidence which warrants a finding that she has a memory which differs from that encountered in common human experience. The fact that there were particular circumstances in 2017 and 2018 which Ms Hickey does not remember, including conversations, does not mean that her evidence is not to be accepted about the things which she says she does remember. Nor does it undermine the reliability of her evidence generally. I accept that Ms Hickey had less understanding of the programming behind the Defendant’s modelling tools compared to other witnesses called by the Defendant (such as Mr Bishop (see below)) but the significance of that fact cannot be assessed at large. Ms Hickey understood the outputs produced by the models for the purpose of informing decisions to be made by the River Operations Team. Ms Hickey did not purport to give evidence about the programming behind the modelling. Her evidence does not suffer from the limitation suggested by the Plaintiffs. There is no reason not to accept Ms Hickey’s evidence. Mr Bishop Andrew Bishop was a Senior River Operator within the River Operations Team. His Affidavits contain the most comprehensive explanation of the events surrounding the river operation decisions which are now the subject of the negligence allegations, both in 2017/2018 and 2018/2019. The Affidavits are lengthy and address a large volume of

complex material ranging from high-level concepts right down to some line items in spreadsheets. Mr Bishop was cross-examined across four days, some of which was combative. The Plaintiffs submit that Mr Bishop was a poor witness. They give four reasons but none of them survives scrutiny. First, Mr Bishop accepted in cross-examination that he was an “advocate” for the Defendant’s decisions. The passage of the cross-examination where Mr Bishop accepted the word “advocate” occurred on day 7 of the hearing. [2] From the full passage it is clear that Mr Bishop’s idea of advocacy is that he was prepared to defend a decision which he believed to be correct but not in a way that was contrary to the true facts. Mr Bishop’s use of the word “advocate” was not intended to convey the partisan meaning which made all the lawyers sit up when they heard it. His use of the word does not warrant caution being given to his evidence. Secondly, on four occasions Mr Bishop laughed when responding to a question in cross-examination (leaving aside the grimace when asked about the preferred style of address of his colleague, Dr Davis). In order to understand the reason for Mr Bishop’s laughter it is necessary to see how each such instance came about. The Plaintiffs came to Court with a theory that a release of an environmental flow of water from the Goulburn River (known as a “Goulburn Pulse”) had to be

supplemented (“topped up”) by water stored in Lake Victoria to replace water diverted by irrigators (“consumptive use”) as the pulse flowed past their properties on its 15-day passage to the South Australian border. The Defendant’s modelling of the future storage level of Lake Victoria made an allowance for other consumptive use from the Murray River system but not for extra consumptive use referrable to a Goulburn Pulse. The result, as reasoned by the Plaintiffs, was that the Defendant’s modelling of future storage levels of Lake Victoria was too low in the 2017/2018 and 2018/2019 water years. This simple explanation will make more sense after other details are given below about the operation of the Murray River system. For current purposes it is sufficient to know that the Plaintiffs’ theory had a superficial efficacy but it is in fact wrong. The correct position is that diversions for consumptive use by irrigators occur (and at the same volume) whether or not a Goulburn Pulse is in motion. Mr Bishop explained the correct position as follows: Q. “Mr Bishop, Mr Bannon is asking you about a link between the quantum of the consumptive demand and whether or not there’s a Goulburn Pulse. Can you just explain that please?” A. “There is no link between that. The consumptive demand and the variation in that is independent of if there’s a Goulburn Pulse or not.” The Plaintiffs’ theory

can be seen to be illogical once consideration is given to other aspects of river operations including the procedures for using water for environmental purposes (such as the Goulburn Pulse) and the Defendant’s measures to meet all demands within the system throughout the water year. The extra demand on Lake Victoria which the Plaintiffs theorised had been overlooked in the Defendant’s modelling did not exist. Adequate allowance was made for all demands, including all consumptive use. The Plaintiffs’ expert hydrologist ultimately accepted the correct position. Inadequate allowance for the Goulburn Pulse was prominent in the Plaintiffs’ pleadings and the argument was referred to in opening submissions, but by the end of the hearing it had been expressly abandoned. Against that background, Mr Bishop first laughed on the morning of the third day of his cross-examination. [3] The laugh was preceded by a lengthy passage of questioning. [4] The questioning outlaid the constituent parts of the Plaintiffs’ theory about the Goulburn Pulse. Obviously thinking that a relevant concession had been obtained, Mr Bishop was asked eight successive questions which were premised on the (incorrect) proposition that a Goulburn Pulse resulted in extra consumptive use. [5] Mr Bishop laughed in response to the eighth question and said: “I’m sorry, I’m laughing but it makes no sense what you are saying.

The consumptive demand is in the model and the effect it will have on it will be shown, will happen in the model.” Mr Bishop was then asked a further five questions based on the same (incorrect) premise. A laugh was included as part of his answer to the last question. [6] The transcript records the fourth and fifth answers as follows: Q. “And if the consumptive demand is taken from that extra water which is designed to serve an environmental order, then the rest of the system, absent a pulse, doesn’t have to satisfy that demand, does it?” A. “No.” Q. “You agree with me?” A. “I don’t agree with you. It doesn’t make sense what you’re saying. That - that pulse is not made meeting that demand.” Q. “And can I just say, I want to put to you, I know you are amused by my propositions and questions. I want to suggest to you, sir, you understand perfectly what I’m saying and you are deliberately not trying to assist the court in these answers and these outbursts of laughter; do you agree with that?” A. “I apologise for my laughter. It’s just that you’re making the same point, which I disagree with and I don’t know why you keep going to the same point when I’ve said it - what you’re saying doesn’t make sense and it’s what I’ve said.” Mr Bishop was then asked a further four questions making a total of seventeen successive questions based on the (incorrect) premise at which point Mr Bishop

asked for a break. [7] The final occasion when Mr Bishop laughed was when he was shown a document prepared by Ms Hickey which summarised the “reflections” of the members of the River Operations Team later in the 2017/2018 water year (see more below). This is a situation where the observation of the witness giving the evidence revealed more than the words subsequently recorded in the transcript. Whilst Mr Bishop himself used the word “laugh” to describe each occasion, a more precise description is “chuckle”. The Plaintiffs say there were “outbursts” but that is an overstatement. The chuckling was perceptible although on one occasion I did not realise that that is what I had seen until Mr Bishop self-reported and apologised. The transcript records that on each occasion when Mr Bishop’s response to a question included a chuckle he apologised. The exception was the occasion when Mr Bishop asked for a break. [8] Consistent with my observations, I infer from the apologies that Mr Bishop’s chuckling was involuntary. It was a sort of nervous reaction. The cause of Mr Bishop’s chuckling was also apparent. It was suggested to Mr Bishop that he was amused by some of the cross-examiner’s propositions and questions but that was not so. He was not amused. Mr Bishop was frustrated and eventually exasperated by his inability to explain the position to the questioner. The explanation for his

chuckling which he volunteered is to be understood in that way: “But we are modelling for it so – sorry, can I – may I have a break? I’m just getting a bit – I’m laughing, I know, and its just my emotion, okay.” The Plaintiffs submit that the chuckling shows that Mr Bishop had an emotional involvement in the substratum of the case. They further submit that the chuckling bespeaks a person so intolerant of a contrary perspective that he found it difficult to listen to that perspective. The chuckling is said negatively to impact the weight and reliability which the Court can attribute to Mr Bishop’s evidence. I reject those submissions. In particular, Mr Bishop was not asked to listen to a “contrary perspective”. With prolonged repetition, he was asked to accept a proposition which he knew to be wrong and illogical. The third reason given by the Plaintiffs for their submission that Mr Bishop was a poor witness (“unreliable”) is an instance when Mr Bishop gave emphatic evidence about the Defendant not calling on the Goulburn inter-valley trade (which is generally referred to as “IVT”) account early in the water year. The Plaintiffs submit that the evidence has been shown to be wrong because there was one occasion when Dr Davis authorised such a call in June 2018. I reject the submission. Mr Bishop’s emphatic evidence was directed to calling on the Goulburn IVT account for the

operational purposes of addressing the risk of system shortfall in the face of the competing risk of spill. It is true that Dr Davis did authorise a call on the Goulburn IVT account in June 2018 (and also in May 2018) but that was for a different purpose: it was for a specific environmental programme called the “River Murray Increased Flows”. It was irrelevant to the point which Mr Bishop was making. When the June 2018 call was brought to Mr Bishop’s attention he said that “there would be some reason, potentially for this” and he was right. The details which are relevant to these matters are addressed below. The fourth reason given by the Plaintiffs for why Mr Bishop was a poor witness is that he is said to have initially rejected a proposition about pre-empting a transfer of water from the Menindee Lakes to Lake Victoria, and then accepted the proposition after being shown an Affidavit by another member of the River Operations Team (Mr Waterworth). There is no substance in this reason. When the proposition was first put to Mr Bishop he said: “I don’t really know how to answer it. It’s more granular than that, I guess, in terms of the process of whether you’re going to make that decision or not. Because the forecasting, whether it is spilling or not, is very dynamic.” The answer was not a rejection of the proposition. In any event, the paragraph from Mr Waterworth’s Affidavit

which was next shown to Mr Bishop appears to deal with an altogether different proposition. The paragraph does not address pre-empting a transfer of water on a given date (for example by giving a direction to the operator of the relevant weir and by giving notice to people who might be affected by the resultant rising river level). It addresses making a transfer of water on an earlier date to pre-empt a trigger which was forecast but which had not yet occurred. Mr Bishop’s ready acceptance of the latter does not make his answer to the former unreliable, much less his evidence generally. The Plaintiffs also point out that Mr Bishop gives extensive evidence about the decision by the Defendant to commence overbank transfers of operational water on 3 October 2017 even though Mr Bishop was on leave from 25 September until 16 October 2017. It is true that Mr Bishop was not involved in any decision-making process on the day when the Defendant gave the direction for the water to be released (3 October 2017 – see below) or in the week leading up to that day. Mr Bishop says in his First Affidavit that he was on leave and does not claim otherwise. It is clear from his Affidavit that his evidence about the overbank transfers in 2017 is based on the contemporaneous documentary record. With that clarity, the Plaintiffs’ criticism of Mr Bishop’s evidence on this topic is undermined by their

artificial portrayal of the decision-making process within the River Operations Team. This is addressed in detail below. For current purposes, it is sufficient to say that up until he went on leave Mr Bishop personally conducted the Defendant’s regular modelling which was the integral basis for the River Operations Team’s decision to commence overbank transfers on 3 October 2017. Mr Bishop was well placed to explain the decision and to have an opinion about the reasonableness of the decision. There is no doubt in my mind that Mr Bishop was an honest witness. He too sought to give answers which were as correct and accurate as possible. It was often a difficult task. Some of the cross-examination did not make allowance for the detail, complexity and nuance in the operation of the Murray River system. There were extended periods when the questioner and the witness were at cross-purposes, especially on the topic of the operation of the Defendant’s Annual Operating Plans (see further below). Sometimes Mr Bishop was presented with a binary choice between two incorrect options. I observed that Mr Bishop found the cross-examination process frustrating and tiring. He sometimes struggled to reduce complicated answers to short, precise and coherent statements. I am nonetheless satisfied that at all times Mr Bishop tried to be responsive to what he was asked. There was no sign that he

tried to anticipate where a line of questioning might be going. He was not evasive. He made concessions when appropriate but would not be persuaded to make concessions when not. His evidence is to be accepted. My conclusion is reinforced by the fact that the Plaintiffs have not identified any instance of a deficiency in Mr Bishop’s evidence despite the length of the cross-examination. Mr Foreman and Mr Korn The other two officers called by the Defendant were Jim Foreman and Alistair Korn. They were both from the Basin Science and Knowledge Division, not the River Operations Team. Their evidence was limited to discrete matters. The Plaintiffs make no adverse submission about either witness other than the universal frailty of human memory. They also include Mr Foreman and Mr Korn in their generalised submission about a “pull” of self-interest (potentially subconscious) but there is no particular application for that submission for these two witnesses. Mr Johnson The Defendant’s final lay witness was Hilary Johnson. He was not an officer of the Defendant but a senior officer of the Commonwealth Environmental Water Holder’s Office. His evidence is said to be relevant to the consideration of counterfactuals for the purposes of causation. The nature of his evidence is such that it includes a degree of hypothetical summation about what decisions might have been made in certain

circumstances. In each instance Mr Johnson explains the matrix of factual circumstances which pertained at the relevant time and how those circumstances have informed his summation. Mr Johnson was well versed in the detail of the function of his office. Unusually, the impression I got from listening to Mr Johnson is that he had a genuine recollection of the circumstances which pertained in 2018 and about which he gave evidence. His evidence is to be accepted for what it is. Specific submissions about acceptance of a witness’s evidence Any submissions made by the parties about particular parts of the evidence of any of the lay witnesses are addressed as they arise below. Jones v Dunkel The Plaintiffs make generalised submissions about the principles in Jones v Dunkel [9] because there are other officers in the River Operations Team who are named in some of the contemporaneous documents but who were not called by the Defendant to give evidence. The Plaintiffs point out that Affidavits were served from three other officers, namely Mr Dreverman (who was Mr Reynolds’s predecessor as the Executive Director of River Management), Mr Zouch and Mr Waterworth. Those Affidavits were not read and the deponents were not called. As the Plaintiffs accept, Jones v Dunkel is not a principle which can be applied at large. There must be some particular matter by reference to which an assessment

can be made about whether a particular person was in a position to cast light and whether the failure to call that person is unexplained. It is convenient therefore to address the Plaintiffs’ submissions about absent witnesses at the appropriate place below. For current purposes it is sufficient to say that the Plaintiffs have not identified any issue in the case on which Mr Dreverman, Mr Zouch or Mr Waterworth might have been able to shed light, other than Mr Dreverman’s personal understanding of the extent to which a draft Guidance Document reflected competent river operations about which there does not appear to be a dispute. Expert witnesses Dr Ladson Apart from the Defendant’s own officers, the only witness who gave evidence directed to the reasonableness of the decisions made by the Defendant was Dr Anthony Ladson. Dr Ladson was called by the Plaintiffs. Dr Ladson is a highly qualified and experienced hydrologist with expertise in the science of the movement, distribution and management of water. His vocational experience includes giving advice to the Defendant over a number of years, including in relation to studies about managing the Barmah Choke. In 2009/2010 Dr Ladson contributed to the Defendant’s Annual Operating Plan, although the evidence does not reveal the nature of his contribution (or indeed the format and content of the Annual Operating Plan in

2009/2010). Notwithstanding that past work for the Defendant, Dr Ladson made clear that he has no relevant experience as a river operator. He accepted that there may be aspects of river operations which are not hydrological, such as environmental, political and social considerations. There are a number of disputes about whether Dr Ladson’s is qualified to comment on a particular matter and, if so, what weight ought to be given to his evidence. Given the terms of the Fifth Further Amended Statement of Claim (which is generally particularised by reference to sections in Dr Ladson’s reports), the Plaintiffs’ opening of the case and the sheer volume of Dr Ladson’s reports, it is remarkable how infrequently the Plaintiffs refer to Dr Ladson’s evidence in their closing submissions. It is therefore convenient to address any residual issues arising from Dr Ladson’s expertise as those issues arise below. The Defendant makes a further submission about Dr Ladson which should be addressed at the outset. It arises from the circumstances in which Dr Ladson was retained by the solicitors for the Plaintiffs. The proceedings were commenced in 2019. There is no dispute that Dr Ladson was first retained in 2020. He said that his first task was to investigate the operation of the Murray River system and explain it to the lawyers. The fruit of that early investigation is apparent in the first 180

pages of Dr Ladson’s First Report dated 22 December 2023 which contain a detailed explanation of the Murray River system which is general in nature and is not tailored to any particular issue in the case. At some stage Dr Ladson was asked to prepare a report but it is not known when. Dr Ladson said variously that he did not initially anticipate that he would be asked to prepare a report for the Court and that he never thought that he would be doing anything other than preparing an independent report. Dr Ladson downloaded a copy of the Expert Witness Code of Conduct in October 2020. In a covering Affidavit affirmed on 22 December 2023 Dr Ladson stated that he has been provided with and read a copy of the Expert Witness Code of Conduct, that he understands it and that he has complied with it in preparing his First Report. The Defendant submits that there is evidence that Dr Ladson was first retained in early 2020 and that he performed extensive investigation work before he downloaded the Expert Witness Code of Conduct and before he was instructed to prepare an expert report for the purposes of being an independent witness. On the other hand the Plaintiffs submit that the evidence does not demonstrate that Dr Ladson was retained before October 2020 and that he was retained from the outset as an independent expert witness. There is a lack of clarity in the evidence about what

actually happened which seems surprising in the modern world of documented communications. The evidence which has been put before the Court suggests that the facts on the ground did not reflect a formality of instructions. Dr Ladson described his initial role as being a “consultant”. That description ought to be accepted whether or not the Plaintiffs’ solicitors actually used that word at that time. Despite the propositions agreed to in re-examination, the clear tenor of Dr Ladson’s evidence in cross-examination was that there was a point when his role transitioned from being a consultant to the Plaintiffs’ lawyers into being an independent expert witness. That point is probably not susceptible to identification by a precise date. It may not have been a point so much as a process. It is not possible to say how much investigation work and report writing had occurred when the transition was complete. It is, however, not necessary to make any findings about these details. Whilst the Defendant drew attention to the issue it did not make any submissions as to its impact on the admissibility or reliability of Dr Ladson’s evidence. His three reports were adduced into evidence without objection (other than two isolated paragraphs), as was Dr Ladson’s contribution to a Joint Report. The absence of objection may be explained by the fact that some of the evidence about Dr Ladson’s

retainer emerged in cross-examination. Even so, the Defendant does not take the point any further in its closing submissions. I observed Dr Ladson to be an impressive witness within the area of his expertise. In cross-examination he was diligent to observe the limits on his expertise. He made concessions where appropriate. He was constructive and accommodating throughout what the Plaintiffs fairly describe as lengthy cross-examination. Despite any handicap from the circumstances in which he was first retained, I have no reason to think that Dr Ladson did not successfully make the transition to an expert witness subject to the Expert Witness Code of Conduct. One further matter warrants mention. Dr Ladson’s understanding of the legal significance of hindsight appears to have developed as his involvement with this case has progressed. Some of Dr Ladson’s earlier analysis of what could have been done differently has been informed by hindsight and is not therefore relevant to any issue in the case. Caution is therefore necessary when considering any conclusory views expressed by Dr Ladson, to the extent that they are still relied upon by the Plaintiffs. Other expert witnesses Evidence has also been adduced from highly qualified witnesses along a sequence of expertise for the purpose of establishing (or challenging) proof of loss caused by the Defendant’s alleged negligence. Geoffrey

Podger and Daren Barma have expertise in using software to model the behaviour of waterways with which they have built a model of the relevant parts of the Murray-Darling Basin. Through a sequential process of commentary on each other’s work, the final version of the model has been agreed. The model replicates the conditions actually experienced by the river system in the relevant water years, the conditions which would have occurred had different river operations been undertaken by the Defendant and the differences. There are a small number of disputes between the parties about the conclusions to be drawn which are addressed below. Daniel Bunting and Chris Olszack are economists who have each formed an opinion about the price elasticity of demand for water in the relevant water years. They did not adopt the same approach to their task which has resulted in a dispute about which approach is to be preferred. That issue is addressed below. Tony Hartley and Michael Ryan are agronomists who gave evidence about a number of matters which are relevant to the quantification of the loss claimed by the Plaintiffs. Apart from the price of hay, they agreed on all matters. Any necessary findings about the price of hay are set out below, together with the reasons for those findings. Martin Cairns and Luke Howman-Giles are the accountants who have brought together the strands of evidence from the other experts and calculated the loss claimed by the Plaintiffs in dollar terms. To the extent that they were asked to make the same assumptions, they have generally agreed with each other. Any outstanding matters in dispute are addressed below.

RAIN Rainfall and rain forecasting Before addressing the issues in the case it is important to say something about rain. Rain is a critical aspect of the behaviour of the Murray River system and central to the operation of the river by the Defendant. Rainfall and, more particularly, rain forecasting inform almost every aspect of the case. For such an important issue, very little evidence was adduced at the hearing about the Defendant’s ability to forecast rain. The Plaintiffs’ evidence and submissions are almost entirely silent on this topic. Such evidence as there is shows that the Defendant works closely with the Bureau of Meteorology which forecasts and analyses weather across the Murray River system. At all relevant times, the Bureau issued two “products”. First, it issued short-term rainfall forecasts. Secondly, it issued three-month seasonal climate outlooks. Short-term rain forecasts Paragraph 2.2 of the Defendant’s Annual Operating Plan for the 2017/2018 water year contained the following statements: “There is extreme variability in the weather of the Murray-Darling Basin, and consequently inflows to the River Murray are amongst the most variable in the world. Short-term rainfall forecasts have improved substantially over recent years and are used to support operational decisions. Medium-term rainfall forecasts and run-off forecasts are also improving and serve as a

useful guide to what might happen in the future.” The meanings of the terms “short-term” and “medium-term” are not directly apparent from the Annual Operating Plan but they can be discerned from other evidence. Elsewhere, the Annual Operating Plan stated that “the reliability of weather forecasts decline[s] rapidly after one week”. Mr Bishop directly addresses the issue in paragraph 174 of his First Affidavit dated 30 June 2022 where he said: “In my experience in the more than ten years I have monitored rainfall forecasts as part of my roles in the River Operations team, [Bureau] weather forecasts are fairly reliable in the next four days. Beyond the next four days, weather forecasts provide a level of guidance out to eight days, and are then speculative at best.”8F Mr Bishop says at paragraph 176: “Day-to-day operations build-in the [Bureau’s] 4 day rainfall forecast and a hydrological recession to a dry outlook…If there is a strong indication of rainfall in the 5 to 8 day forecast, this forecast may also be considered in day-to-day operations. Day-to-day operations forecasts beyond 8 days assume dry conditions, and do not take rainfall outlooks into consideration.”9F Mr Bishop’s evidence was unchallenged on this topic. It follows that the only evidence before the Court demonstrates that the Defendant was able to forecast rain four days into the future. From five to eight

days, rain forecasts were “improving” in 2017 (and 2018) and were a useful guide. Beyond eight days, the Defendant had no ability to forecast rain. Mr Bishop said that it was poor practice to rely on long-term forecasts when conducting river operations. The Defendant in fact made its operational decisions based on the four-day forecasts, unless there was a “strong indication” of rain in which case the forecast for five to eight days may also be considered. Dr Davis gave evidence which is consistent with this practice. There is nothing to suggest that a reasonable person in the position of the Defendant would have done differently. Three-month climate outlook The Bureau also issued a document which provided a climate outlook for the next three months. A number of maps taken from particular climate outlooks are set out below. There is limited evidence about the meaning of the information contained in the climate outlooks. Mr Bishop stated at paragraph 175 of his First Affidavit: “A seasonal climate outlook is probabilistic, and as such will have no bearing on day-to-day river operations. A seasonal climate outlook is used by the River Operations team to get an idea of whether conditions are more likely to trend wet or dry when considering the potential implications and timing of bulk-system operations.” Having regard to the maps, by “probabilistic” Mr Bishop evidently meant that

the climate outlooks did not contain a forecast but a continent-wide depiction of the chance that rainfall over the next three months would be more than (or less than) the median. In each of its climate outlooks the Bureau included statements about its own ability to forecast future rain. For example, the Climate Outlook dated 6 July 2018 contained the following statement: “The latest Bureau of Meteorology (BoM) climate outlook for June to August 2018 shows a greater than 80% chance of drier than above conditions for northern Victoria, southern and western New South Wales. As both the Pacific Ocean and Indian Ocean climate drivers are forecast to remain near neutral preventing the formation of a strong weather pattern, the skill in the winter forecast remains low.” Mr Bishop’s unchallenged evidence is that the Bureau’s climate outlooks were irrelevant to conducting river operations to the extent that they addressed rain. Dr Davis said that they were not sufficiently reliable and no more than an “indefinite indication”. There is no evidence that a reasonable person in the position of the Defendant would have had regard to the information about future rain in the climate outlooks for the purposes of making any of the decisions which are at issue in this case. Four seasons One aspect of rain in the Murray-Darling Basin which was not in dispute is that winter is generally the

wettest season of the year. Within the months of June, July and August, Dr Davis referred to August as the wettest month. Temperature The evidence referred to above was directed to information about future rain in the climate outlooks. The climate outlooks also addressed future temperature. The evidence is that the Bureau of Meteorology has greater skill at predicting future temperature than future rain. Although not as important as rain, temperature is a relevant condition which affects the behaviour of the Murray River system, especially in relation to evaporation and the demand for water by those entitled to take water from the system. There is no dispute that the Defendant generally had regard to the Bureau’s climate outlooks as they related to temperature.

RIVER OPERATIONS FUNDAMENTALS It is convenient to set out some fundamentals of operating the Murray River system which are relevant to the issues in the case. The purpose of setting out the fundamentals in this early part of the Judgment is to assist with understanding some of the topics addressed below, such as the applicable law. It will be necessary to explain some of the fundamentals in more detail, which I will do in the relevant parts of the Judgment will follow. Exhibit “B” is a diagram of the river system. It is annexed to this Judgment. The Murray River is operated with the basic intent that water is stored during periods which are wet or when there is low demand so that it can be used during periods which are dry or when demand is high. There are four primary storages along the upper Murray River: Furthest upstream is Dartmouth Dam which has an active storage capacity of 3,785 GL, which means that 3,785 GL can be stored in the Reservoir on top of the water which lies too low to be released (which is called “dead storage”). Dartmouth Reservoir is narrow and deep. Those features, combined with its relatively high elevation, mean that the evaporation loss of water from Dartmouth Reservoir is relatively low. Next downstream is Hume Dam which has an active storage capacity of 2,982 GL. It takes approximately 25-26 days for water to flow from Hume Dam to the South

Australian border. Hume Reservoir is also relatively narrow, deep and elevated. It has a relatively low evaporation rate, although not as low as Dartmouth Reservoir. The Menindee Lakes are not located on the Murray River but on the Darling River north of the confluence. Altogether the Menindee Lakes have an active storage capacity of 1,1251 GL. It takes approximately 14 days for water to flow from Weir 32 (the relevant outlet from the Lakes) to the South Australian border. The Menindee Lakes are broad and shallow. Located in western New South Wales they have a very high evaporation rate. There is evidence that in October 2017 water was being lost to evaporation at the rate of 1.5 GL per day. The Menindee Lakes are unique in the sense that the States have agreed that the water stored in them will not always be available for use in the operation of the Murray River system and, when the water is available, Victoria will generally be entitled to an equal share even though the Lakes are located entirely in New South Wales. Lake Victoria is the last storage before the South Australian border. It has a total storage capacity of 677 GL of which 577 GL is active storage. It takes about a day for water to flow from Lake Victoria to the South Australian border. The evaporation rate at Lake Victoria is lower than for the Menindee Lakes but higher than for Hume Reservoir. Lake Victoria is

subject to some regulations for the purposes of preserving its cultural and historic significance to the local Indigenous communities which means that there are restrictions on the quantity of water which may be stored in the Lake at different times of the year. The narrowest reach of the Murray River is called the “Barmah Choke”. It is located in the Barmah-Millewa Forest which is about a third of the way from Hume Dam to the South Australian border. Yarrawonga Weir is located just above the Forest. Yarrawonga Weir is the last river infrastructure by which the flow of water into the Barmah Choke can be regulated. For operational purposes the two main tributaries into the Murray River are the Goulburn River (from Victoria) and the Murrumbidgee River (from New South Wales). They converge with the Murray River below the Barmah Choke but above the confluence with the Darling River. It takes approximately 16 days for water to flow from the confluence of the Goulburn River to the South Australian border. As explained in more detail below, the States have agreed that South Australia is entitled to receive a specified quantity of water each month of the year. For example, South Australia is entitled to receive 159 GL each January. In broad terms, any excess water which flows across the border is for the benefit of South Australia and at the expense of New South Wales and Victoria

which are generally entitled to an equal share of the residue. The significance of that arrangement is that Lake Victoria is core to the operation of the Murray River system. It performs the essential functions of providing a store of water from which to meet South Australia’s upcoming monthly entitlements and also a reservoir into which excess approaching water may be diverted and stored should that accord with the sharing arrangement in the Agreement. The extent to which Lake Victoria is able to perform those functions at any particular time depends on it having enough stored water or, as the case may be, not too much. Especially in summer, there are periods of high demand for water below the Barmah Choke, including the demand for water to meet South Australia’s monthly entitlement (which is highest in the summer months). In addition to water stored in Lake Victoria, the demand may be met by releasing water from the Menindee Lakes (if available for use in the operation of the Murray River system) or calling for water from the Goulburn River and/or the Murrumbidgee River in accordance with the separate systems for regulating those rivers. Otherwise, water must be transferred from above the Choke (i.e. from Hume Dam) by a bulk transfer of water. The water transferred in this way is called “operational water”. There are three ways to transfer operational water from above to

below the Barmah Choke. First, it may be transferred within the channel capacity of the Murray River. Some of the documents refer to this as “in-channel transfer”. The extent to which this is possible depends on how much water needs to be transferred and the constraint of the Choke. Secondly, it may be transferred at a rate which is above the channel capacity of the Choke. This is overbank transfer which is referred to above. The third way is to use the privately owned MIL infrastructure to bypass the Choke. Use of the MIL infrastructure depends on MIL’s agreement which was not forthcoming for the 2017/2018 water year and for some of the 2018/2019 water year. The circumstances in which the Defendant did not have access to the MIL infrastructure and the steps taken by the Defendant to get access is the subject of a separate complaint by the Plaintiffs.

APPLICABLE LAW Introduction It is convenient at the outset to determine whether the Plaintiffs’ claims are governed by any of the Civil Liability Act 2002 (NSW), the Wrongs Act 1958 (Vic) or the Civil Law (Wrongs) Act 2002 (ACT). The applicable law may make a difference to the admissibility of some of the Plaintiffs’ evidence about hypothetical events and also to the Defendant’s reliance on an inherent risk defence. Beyond that, neither party submits that there is a material difference between the three civil liability statutes, or that any modification to the common law of Australia brought about by the statutes will make a difference to the outcome of the case. Each party has nonetheless made extensive submissions about the applicable law, on both sides illuminated with numerous maps, diagrams and photographs of river infrastructure. The choice of law issue is informed by the geography of the Murray-Darling Basin, this time focussing on the State boundaries. The full significance of different aspects of the geography will only become apparent when the Defendant’s key river operations decisions are addressed in detail below. It is nonetheless convenient to decide the choice of law at the outset because that will allow each affected legal issue to be addressed as it arises. Principled approach For a claim arising from a tort, all questions of substance are to be determined

according to the law of the place where the tort was committed. Questions of substance include the existence, extent and enforceability of remedies, rights and obligations. [10] They do not include procedural issues, namely the rules which regulate the mode or conduct of the proceedings. Procedural issues are governed by the law of the forum. [11] The place where the tort was committed is determined by looking over the events constituting the tort and asking “where in substance did this cause of action arise?”. The question is to be looked at with common sense. [12] If some quality of the defendant’s conduct is critical to the tort, as in the case of negligence, it is important to look at where the defendant acted, not to where the consequences of the conduct fell. [13] There is, however, no universally applicable rule. [14] State boundaries Before turning to the parties’ submissions on choice of law it is necessary to set out some detail about the physical location and operation of the Murray River system. Apart from the workplace of the Defendant’s River Operations Team, about which the Defendant itself expresses a faint reservation, none of the following is controversial. The Defendant does not dispute that its headquarters is in Canberra in the Australian Capital Territory. When they filed the Statement of Claim, the Plaintiffs were required to give an address for the

Defendant which they did by specifying the address of its headquarters in the Central Business District of Canberra. All the officers of the Defendant who subsequently made Affidavits in these proceedings, including the Chief Executive who verified the Defence, gave the headquarters address as the address of the deponent. The witnesses evidently conformed to the common practice in commercial cases of not giving their private residential addresses but their work addresses instead. The Plaintiffs have identified a number of references in the cross-examination of the Defendant’s officers where they referred to the Australian Capital Territory as their place of work. The inference to be drawn is that Canberra is (and was at the relevant time) the place of work of the River Operations Team. It is (and was) also the place of work of Mr Reynolds whose conduct is the primary focus of the separate complaint about the negotiations for access to the MIL infrastructure in 2017 and 2018. The Murray River is entirely within New South Wales. [15] There can be disputes about precisely where the southern bank of the river stops and Victoria begins, [16] but that is not an issue in this case. There are a number of dams, weirs and other features of the Murray River which are relevant. The relevant dam which is situated furthest upstream is Dartmouth Dam which is located on a tributary of the

Murray River called the Mitta Mitta River. Dartmouth Dam is in Victoria. Pursuant to cll 52, 56 and Schedule A of the Agreement in Schedule 1 to the Water Act 2007 (Cth), Dartmouth Dam is operated by Victoria. In practice it is operated by Goulburn Murray Water. GMW is a Victorian statutory corporation established under the Water Act 1989. Downstream from Dartmouth Dam is Hume Dam on the Murray River itself. Hume Dam is located in New South Wales. Behind the dam sits Hume Reservoir which is bisected by the border between New South Wales and Victoria. Pursuant to the Agreement, Hume Dam is operated jointly by New South Wales and Victoria. Directions for releases of water from Hume Dam are given by the Defendant to a duty officer from WaterNSW which is a New South Wales government agency. The duty officer passes the direction to an officer of the private operator of the local hydro-electric power station. The power station is located in New South Wales. Water released from Hume Dam generally flows through the power station and into the Murray River. Hume Dam is operated in harmony with Dartmouth Dam such that a release of water from Hume Dam may sometimes result in a release from Dartmouth Dam. Downstream from Hume Dam is Yarrawonga Weir. The Weir is located mostly in New South Wales but the southern-most end protrudes into Victoria. Behind the Weir sits Lake Mulwala which is

bisected by the border between New South Wales and Victoria. Pursuant to the Agreement, Yarrawonga Weir is operated by Victoria. Directions for releases are given by the Defendant to a duty officer from GMW who is located at the GMW office on the Victorian bank of the Murray River. The directions are then passed to the private operator of the local hydro-electric power station which is located in Victoria. Water which is released at Yarrawonga Weir generally flows through the power station up to 13,000 ML/day and then returns to the Murray River. Above 13,000 ML/day the released water flows over the Weir (which is mostly in New South Wales). Water leaves the Murray River and flows into the MIL infrastructure via the Mulwala Canal which commences on the New South Wales side of Lake Mulwala. The MIL infrastructure is in New South Wales. It is operated by MIL which, as already observed, is a private irrigation company. Downstream from Yarrawonga Weir is the Barmah-Millewa Forest. It is bisected by the border between New South Wales and Victoria. More precisely, the Millewa Forest is on the New South Wales bank of the Murray River and the Barmah Forest is on the Victorian bank. There are regulators on either side of the border through which water can be released into the Forest(s) (see below). The Barmah Choke is located within the Forest and is part of the Murray River. The

Goulburn River flows into the Murray River downstream of the Barmah Choke. The Goulburn River is in Victoria. The flow from the Goulburn River is primarily regulated by Eildon Weir which is in Victoria and which is operated by GMW. The Darling River flows from New South Wales into the Murray River at Wentworth. Upstream from Wentworth, the Darling River is joined by the Menindee Lakes which are in New South Wales. The Lakes are operated by New South Wales, both when the Defendant has access to the stored water and when it does not. Downstream from Wentworth is Lake Victoria which is in New South Wales. It is operated by South Australia. Plaintiffs’ submissions on choice of law The Plaintiffs submit that their claims are governed by the common law of Australia as modified by the law of the place where the Defendant’s tort was committed. They submit that that place is to be determined by the location of the acts on the part of the Defendant which gives the Plaintiffs their cause of complaint. [17] In this case, the Defendant’s negligence was committed in the Australian Capital Territory where the Defendant has its office and from where the River Operations Team operated. That was where the decisions were made which give rise to the claims. The Plaintiffs see an analogy between this case and Pabai v Commonwealth of Australia (No 2). [18] In that case Wigney J held that any

negligence arising from Commonwealth decisions about emission targets and funding seawalls in the Torres Strait was governed by the law of the Australian Capital Territory because that was where the relevant decisions were made. The Plaintiffs see further analogy with the representative proceedings in Roo Roofing Pty Ltd v Commonwealth of Australia [19] where John Dixon J considered alleged negligence by the Commonwealth in the design, implementation and administration of an economic policy concerning home insulation. Amongst other reasons, the law of the Australian Capital Territory was held to apply because there were centralised acts of negligence in relation to a policy which had a national scope and which caused damage which was alleged to have occurred in many different places. The Plaintiffs emphasise that the breaches of duty which are alleged in this case affected the operation of river infrastructure in three States and affected the irrigated agricultural production of Group Members in two States. Defendant’s submissions on choice of law The Defendant submits that there is no single rule to determine the location of a tort and cites the tenth edition of Nygh’s Conflict of Laws in Australia for the proposition that the tendency in the cases is to stress the place to which the activity of the defendant was directed, rather than the place where the activity complained of

originated. The Defendant refers to a number of cases of negligent misstatement where the Court has found that the statement was in substance made at the place to which it was directed and where it was intended to be acted upon. The Plaintiffs rely on Voth v Manildra Flour Mills as authority for that approach. Where the tort arises from an omission of the defendant, the Defendant submits that the location of the tort is the place where the omission assumed significance. Even if the Defendant made its decisions in the Australian Capital Territory and from there communicated (or omitted to communicate) the directions which are alleged to constitute the breaches of duty, the Defendant submits that the directions were intended to be acted upon elsewhere. Although much of the analysis of the Defendant’s operational decisions is addressed to releases from Yarrawonga Weir, the Defendant’s choice of law submissions focus on releases from Hume Dam because releases at Yarrawonga Weir are said to be an intermediate part of bulk transfers of operational water from Hume Reservoir to Lake Victoria. The Defendant submits that the operational decisions which are said to be negligent were directed to releases from Hume Dam in the 2017/2018 water year and that it was at Hume Dam that the Defendant’s failure to direct earlier and greater releases in the 2018/2019 water year assumed significance.

The Defendant submits that the releases from Hume Dam occurred in New South Wales. It further points out that the Menindee Lakes and the MIL infrastructure are in New South Wales. Whilst it accepts that the Goulburn River is in Victoria, it submits that the Defendant’s failures to call on the Goulburn IVT account assumed significance when water from the Goulburn River failed to flow into the Murray River in New South Wales. The Defendant submits that the fact that the Defendant’s River Operations Team is located in the Australian Capital Territory is essentially fortuitous. The Defendant ultimately makes alternative contentions about the location of its alleged torts, namely New South Wales or Victoria. The Plaintiffs submit that the need to state alternatives demonstrates variability in the Defendant’s reasoning which is a flaw. Determination – the tort was committed in the Australian Capital Territory The Defendant’s conduct occurred in the Australian Capital Territory This is a case where the quality of the Defendant’s conduct is an integral part of the tort upon which the Plaintiffs sue. It is the failures to take certain precautions which gives the Defendant’s conduct the negligent quality which is central to the Plaintiffs’ case. The failures are addressed in more detail below but it is instructive to contextualise and summarise them here for the purposes of ascertaining

where the Defendant’s conduct occurred. Both parties agree that the heart of the Plaintiffs’ case is the Defendant’s exercise of the release power under cl 98 of the Agreement in Schedule 1 to the Water Act 2007. Clause 98 permits the Defendant to “give directions” for the release of water from certain storages on the Murray River. In passive language, cl 98 further provides that water must be released “in accordance with any such directions”. The Defendant’s power to give directions is to be understood in the context of the other provisions in the Agreement which address the circumstances in which the power may be exercised, including the requirement not to exercise the release power in a manner that has the potential to have a material effect on State water entitlements (cl 30(1)), the requirement to exercise the release power in accordance with the Objectives and Outcomes Document (cl 30(2)) and the requirement to consult the Basin Officials Committee in certain circumstances (cl 33). In the 2017/2018 water year the Defendant gave directions on 3 October 2017 and on the following days. As finally articulated, the Plaintiffs case is focussed not so much on the ultimate giving of the directions but on the anterior decision to give the directions. Either way, the Defendant’s conduct is said to have been negligent because of seven specified failures which are said generally to

have occurred before the directions were given. They include the failure to conduct modelling using the Fortran Assessment Model, the failure to document the decision, the failure to consult with the Water Liaison Working Group (also known as “WLWG”), the failure correctly to interpret the Bureau of Meteorology’s climate outlook and the failure appropriately to use the Daily Operations Spreadsheet. The Plaintiffs also rely upon the failure to prioritise releases from the Goulburn IVT account and failures in directing releases from the Menindee Lakes. In the 2018/2019 water year the Plaintiffs’ case is focussed on the failure of the Defendant to decide in June 2018 to depart from the 2018/2019 Annual Operating Plan by making earlier and greater releases from Hume Reservoir/Yarrawonga Weir. They also rely on the failure to decide to call on the Goulburn IVT account in June, July and August 2018. The allegation of negligence arising from the negotiations about access to the MIL infrastructure is directed to decisions made by the Defendant over an extended period whilst the negotiations were taking place. The inference to be drawn is that the Defendant’s conduct which gives rise to these allegations occurred in the Australian Capital Territory. The workplace of the River Operations Team and Mr Reynolds was in the Australian Capital Territory which in the ordinary course is where

the conduct would have occurred. The relevant time period is 2017 and 2018 which was before the disruption to work practices more recently seen in the wake of the Covid-19 pandemic. There is no suggestion that the Defendant’s officers worked from home, or that their homes were across the border in Queanbeyan or Collector or some other New South Wales town. The Defendant does not undermine the inference that the conduct occurred at the Canberra workplace by identifying two isolated occasions when officers of the Defendant attended meetings which were held in regional centres, nor by observing that some of the duties of the River Operations Team required river operators occasionally to visit other locations. Nor is it correct for the Defendant to submit that the place where the Defendant’s conduct occurred is fortuitous just because a Saturday telephone call might just as easily have been made from the sidelines of a sporting fixture across the border in New South Wales. The Defendant’s submissions do not reflect the professional, collaborative and focussed nature of the work of the River Operations Team. The work practices of the River Operations Team are addressed in more detail below. The Plaintiffs’ case is that the River Operations Team ought to have made reasonable decisions about the exercise of the release power (and calls on the Goulburn IVT account and releases from the

Menindee Lakes). The work which the Plaintiffs submit ought to have been undertaken as part of making reasonable decisions, such as further or different modelling with the Fortran Assessment Model and/or the Daily Operations Spreadsheet, record keeping and consultation with others, would properly have been undertaken by the River Operations Team at its workplace. The same applies to the negotiations about access to the MIL infrastructure where the alleged breach focusses not so much on individual communications with MIL or WaterNSW but on the commercial decisions made by the Defendant in relations to the negotiations. Not where the decisions were directed nor where they assumed significance Even if the Defendant’s conduct occurred in the Australian Capital Territory the burden of the Defendant’s submissions is that the choice of law ought to be determined not where the Defendant’s conduct occurred but at the place to which it was directed and the place where it assumed significance. For the purposes of identifying the applicable law, the Defendant’s submissions are unpersuasive for a number of reasons. First, it makes sense to refer to a negligent misstatement being “directed to” a particular location because receipt of the statement and action upon it are part and parcel of the wrong occurring. Until there is receipt and action, there is simply a statement albeit one which is

incorrect and made without reasonable care. Like the accountant’s negligence in Voth v Manildra Flour Mills, the present case is not comparable to negligent misstatement cases. For the purposes of determining where the tort was committed, the Defendant’s negligent decisions were acts complete in themselves. [20] Secondly, the Defendant’s argument depends on the content of the alleged negligent conduct being reduced functionally to the directions given (or not given) under cl 98 of the Agreement. Insufficient regard is had to the anterior decision-making process which is the substance of the alleged negligence. It may just as cogently be said that the River Operations Team’s decision making was “directed to” the Defendant’s own duty officer who was responsible for communicating a direction to the operator of the relevant storage. The Defendant’s duty officer was located in the Australian Capital Territory. The Defendant’s submissions do not grapple with the substance. Thirdly, the Defendant’s argument further depends on the content of the alleged negligent conduct being reduced geographically to directions given for releases from Hume Dam in New South Wales. Bulk transfers from Hume Reservoir to Lake Victoria lie at the heart of the Plaintiffs’ case but they are not the totality of the case. There are other essential parts. The releases which are most central to the Plaintiffs’

allegations occurred at Yarrawonga Weir with all its geographic intricacy. The measurement of the amount of water releases each day at Yarrawonga Weir is the touchstone for the alleged negligence as made plain by paragraphs 36, 141 and 178 of the Fifth Further Amended Statement of Claim. In both the 2017/2018 water year and the 2018/2019 water year another essential element of the Plaintiffs’ case is the failure to call on the Goulburn IVT account. On the Defendant’s own analysis, decisions about the Goulburn IVT account were directed to and assumed significance in Victoria, not New South Wales. That is where GMW would have released water if directed by the Defendant. The Plaintiffs rightly submit that the Defendant’s attempt to relocate the place to which its conduct was directed to the confluence of the Goulburn River and Murray River is contrived and cannot be accepted. In substance, the Defendant’s decisions were multifaceted. On the Defendant’s own analysis they were simultaneously directed to locations in both New South Wales and Victoria. The Defendant is not able to avoid that conclusion by focussing on Hume Dam. These circumstances underscore the centrality of the anterior decisions and the relatively peripheral nature of the multiple steps subsequently taken to give effect to the decisions. Fourthly, the contention that the Defendant’s decisions were directed to, or

assumed significance in, locations where water was physically released is incongruous with the nature of the Plaintiffs’ case. The Plaintiffs sue for pure economic loss suffered by reason of reduced water allocations to them. Their case is not like the Queensland Floods case [21] where the release (or non-release) of water caused physical damage to the property of the claimants. The physical release of water at Yarrawonga Weir (or Hume Dam) and its subsequent loss overbank in the Barmah-Millewa Forest is an important part of the Plaintiffs’ case but it is an overstatement to say that it is the gravamen of the case. The Plaintiffs say that the consequence of the water lost overbank was, first, less water in the storages of the Murray River system and, next, a lower allocation of water to each of New South Wales and Victoria. Under the statutory framework, the Defendant is responsible for accounting for water and for making allocations to the States (Subdivisions C and D of Division 1 of Part XII of the Agreement – see below). There is nothing to suggest that allocations to the States were not made by the Defendant at its workplace in Canberra. Making the allocations to the States was the Defendant’s final involvement in the process by which the Plaintiffs claim to have suffered loss. In this more complete context the place to which the Defendant’s decisions were directed is not

as simple or singular as the Defendant would have it. As stated in cl 4(2) of the Objectives and Outcomes Document, the general objective of the Defendant’s decisions was to operate the Murray River system efficiently and effectively in order to deliver State water entitlements, and to maximise the water available to the Southern Basin States after providing for operating commitments in the Murray River system. From the Defendant’s point of view, its decisions were ultimately “directed to” the allocations to be made to the States which happened in Canberra. That is where the Defendant’s decisions assumed significance. After the States received their allocations they, not the Defendant, made allocations to the Plaintiffs which in the ordinary course would have occurred in New South Wales (or in Victoria for some Group Members). The choice of law enquiry is not, however, about the place where the Plaintiffs suffered loss, even for a case of negligence where loss is the gist of the action. Fifthly, and related to the two preceding points, as the Water Act 2007 makes plain the management of the water resources of the Murray-Darling Basin is a matter of national interest. The relevant parts of the Water Act 2007 are set out later in this Judgment. The Defendant is a central part of the structure which has been put in place to achieve the purposes of that Statute, including by acting

as an expert which is independent of the States. The Defendant’s role is reminiscent of John Dixon J’s reference in Roo Roofing to “centralised” negligence occurring within a national scheme. [22] The political centralisation of the making of the Defendant’s decisions which are the subject of this case is an integral part of the structure. Whilst independence from the States does not necessarily entail physical separation of decision-making entities, it naturally follows within the Australian Federation with its national capital territory. The national character of the structure is consistent with the decisions of the Defendant assuming their significance at the centralised place where they are made and not simultaneously at multiple other locations. There is some substance in the analogy which the Plaintiffs seek to draw with Pabai. As Wigney J said, each case turns on its own facts and it is generally not appropriate to reason on the basis of factual analogies. [23] Nonetheless, Pabai is an illustration of the law found to be applicable to a tort which was said to have been committed by the Commonwealth making decisions in Canberra. The Defendant rightly points out that the decisions in Pabai concerned policy matters but the distinction is one of degree. [24] The decisions in Pabai included decisions about the funding and construction of seawalls. Like the present case, Pabai

focussed on the central making of the decisions more than the remote implementation of them. The law of the Australian Capital Territory was held to be applicable. Summary of where the tort was committed Having regard to these matters, the common-sense view of the events constituting the tort alleged against the Defendant is that in substance the cause of action arose in the Australian Capital Territory. Questions of substance are to be determined according to the law of the Australian Capital Territory. Nonetheless the Civil Law (Wrongs) Act 2002 (ACT) does not apply directly As an enactment of the Australian Capital Territory Legislative Assembly, the Civil Law (Wrongs) Act 2002 is part of the law of the Australian Capital Territory (I will refer to it as the “ACT Liability Statute”). It does not, however, apply to the Crown in right of the Commonwealth because s 27 of the Australian Capital Territory (Self-Government) Act 1988 (Cth) provides: 27 Crown may be bound Except as provided by the regulations, an enactment [of the ACT Legislative Assembly] does not bind the Crown in right of the Commonwealth. As set out in more detail below, the Defendant is a statutory entity established by the Commonwealth Water Act 2007. Section 121(4) of the Legislation Act 2001 (ACT) provides: 121 Binding effect of Acts … (4) To the extent that an Act does not bind a government, the same degree

of immunity extends to a government entity in relation to an authorised act or omission of the entity. The definition of “government entity” is in s 121(6) and it includes an instrumentality of the government. For the purposes of these provisions, there is no dispute that the Defendant is either the Crown in right of the Commonwealth or an instrumentality of it. It follows that the ACT Liability Statute does not of its own force apply to claims against the Defendant. Civil Law (Wrongs) Act 2002 applies by virtue of s 64 of the Judiciary Act 1903 (Cth) The Defendant submits that the ACT Liability Statute nonetheless applies by virtue of s 64 of the Judiciary Act 1903 (Cth). Section 64 provides as follows: 64 Rights of parties In any suit to which the Commonwealth or a State is a party, the rights of parties shall as nearly as possible be the same, and judgment may be given and costs awarded on either side, as in a suit between subject and subject. As they did in a previous hearing in these proceedings, both parties submit that the Defendant is the Commonwealth for the purposes of s 64. [25] The Defendant submits that therefore s 64 operates to pick up the ACT Liability Statute and apply it to the parties’ rights in this case. [26] The Plaintiffs put forward two arguments as to why that submission should not be accepted. First, the Plaintiffs submit that s 64 is inconsistent with

s 27 of the Australian Capital Territory (Self-Government) Act 1988, and the latter provision is to prevail as the more recent and more specific enactment of the Commonwealth Parliament. The Plaintiffs rely on the High Court’s decision in Deputy Commissioner of Taxation (Cth) v Moorebank Pty Ltd, [27] where it said that the provisions of the Judiciary Act 1903, including s 64, enjoy no special authority among the statutes of the Commonwealth and may be expressly or impliedly amended or repealed by subsequent Commonwealth legislation. The application of s 64 to cases falling within the provisions of subsequent legislation will be excluded to the extent that such application would be inconsistent with the subsequent legislation. [28] I do not accept that there is any inconsistency. Section 27 is directed to the power of the Australian Capital Territory Legislative Assembly to make enactments which bind the Crown in right of the Commonwealth. It does not address the circumstances in which any such enactment may be applied by force of the Judiciary Act 1903 to determine the rights of the parties to a suit to which the Commonwealth or a State is a party. As a matter of construction, there is no inconsistency between the two provisions. The Plaintiffs’ second submission is that the nature and function of s 64 is to fill what would otherwise be lacunae or gaps in the law in a suit to

which the Commonwealth or a State is a party. [29] It is submitted that the common law of Australia is complete in itself and that there is no gap which needs to be filled by the various provisions of the ACT Liability Statute. The submission does not need to be considered beyond Chapter 4 of the ACT Liability Statute which governs negligence. As far as Part 4 is concerned, I do not accept the Plaintiffs’ submission. There is no dispute that s 64 may extend to substantive rights. [30] The provisions of Chapter 4 are intended to have effect as modifications to the common law of negligence in accordance with their terms. They are not intended to be meaningless by filling gaps which do not exist. It is often submitted, as the parties submit in the present case, that the operation of the provisions in Part 4 will not give rise to a result which is different to that which would have occurred under the common law. Even if that is true, the provisions nonetheless provide the framework within which the parties’ rights are to be determined. They have work to do no less in a case to which the Commonwealth or a State is a party than in any other case. The application of Part 4 to the rights of the parties in these proceedings conforms to the nature and function of s 64. The Plaintiffs alternatively submit that the question of the operation of s 64 of the Judiciary Act 1903 ought not to be

decided because none of the provisions of the ACT Liability Statute will affect the outcome of the case. Once it is accepted that the applicable law of the wrong is the Australian Capital Territory and not New South Wales or Victoria, the Defendant agrees that the operation of s 64 is not significant. The Defendant nonetheless submits that the question ought to be decided. Even if no different result would have followed had the unmodified common law of negligence been applied it is still necessary to decide this case in accordance with the correct governing principles. The application of s 64 determines what those principles are and it is therefore appropriate that the question be decided. In any event, as explained below the applicability of the Part 4 provisions about negligence is indirectly material to the question of the admissibility of some of the Plaintiffs’ hypothetical evidence. For these reasons, I find that in this case the provisions of Part 4 of the ACT Liability Statute apply by virtue of s 64 of the Judiciary Act 1903. Section 5D(3)(b) of the Civil Liability Act 2002 (NSW) applies Whilst substantive issues in the case are governed by the law of the Australian Capital Territory, procedural issues are governed by the law of the forum which is New South Wales. [31] Section 5D of the Civil Liability Act 2002 (which I will refer to as the “NSW Liability Statute”)

provides: 5D General principles (1) A determination that negligence caused particular harm comprises the following elements— (a) that the negligence was a necessary condition of the occurrence of the harm (factual causation), and (b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (scope of liability). (2) In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. (3) If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent— (a) the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and (b) any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest. (4) For the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether or not and why responsibility for

the harm should be imposed on the negligent party. Section 5D(3)(b) goes to the admissibility of evidence in the circumstances addressed by the provision. For the reasons given by Rees J in Re Metal Storm Limited (in liq) (receivers and managers appointed) (No 2) I agree that s 5D(3)(b) is a procedural law. [32] Rees J said at [7]: “I agree with ASOF that the rules of evidence are procedural, and therefore are governed by the law of the forum, since they are “rules which are directed to governing or regulating the mode or conduct of court proceedings”: John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 543–4; Bain v Whitehaven and Furness Railway Company (1850) 3 HL Cas 1 at 19; Mahadervan v Mahadervan [1964] P 233 at 243. While there are exceptions where rules of evidence are in fact of a substantive character such as the Statute of Frauds, I do not consider that section 5D(3)(b) of the Civil Liability Act 2002 (NSW) or section 11(3)(b) of the Civil Liability Act 2003 (Qld) is a rule which affects the “existence, extent or enforceability of rights”: John Pfeiffer at 544. The learned authors of Nygh’s Conflict of Laws in Australia (9th ed., LexisNexis, 2014) give section 5D(3)(b) of the New South Wales Act and its interstate analogues as an example of a rule of evidence governed by the law of the forum, although no authority is cited, and I have not found a case that so

holds. But the learned authors’ view is consistent with the view that I have reached and thus the New South Wales legislation applies.” However, the application of s 5D(3)(b) is more complicated in this case because the Court is exercising federal jurisdiction, about which there is no dispute because the defendant is the Defendant. [33] The Parliament of New South Wales does not have the power to enact a provision such as s 5D(3)(b) to regulate the manner of exercise of federal jurisdiction by the Court. [34] Whilst a State provision about the admissibility of evidence might ordinarily be picked up by s 79(1) of the Judiciary Act 1903 and applied by force of that federal law, [35] the Plaintiffs submit that s 79(1) does not pick up s 5D(3)(b) in this case. The argument is based on a passage in Solomons v District Court of New South Wales where the plurality emphasised the compulsive effect of s 79 and the fact that it only picks up State laws in “cases to which they are applicable”. [36] Section 79(1) provides: 79 State or Territory laws to govern where applicable (1) The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to

which they are applicable. The purpose and operation of s 79(1) was explained in Rizeq v Western Australia where the plurality said: “The incapacity of a State Parliament to enact a law which governs the exercise of federal jurisdiction by a court, whether it be a federal court or a State court, explains the necessity for s 79 of the Judiciary Act and is the key to understanding the nature and extent of its operation. Section 79 is a law, enacted under s 51(xxxix) of the Constitution, which serves to ensure that the exercise of federal jurisdiction is effective. The section fills a gap in the law governing the actual exercise of federal jurisdiction which exists by reason of the absence of State legislative power. The section fills that gap by picking up the text of a State law governing the exercise of State jurisdiction and applying that text as a Commonwealth law to govern the manner of exercise of federal jurisdiction. The section has no broader operation.” [37] The Plaintiffs submit that the evidential provision in s 5D(3)(b) is to be read in the context of s 5D as a whole. In its terms, s 5D(3)(b) does not make the specified evidence inadmissible in all cases. The chapeau of s 5D(3) provides that the evidence is not admissible where the determination of what the person would have done is relevant to “the determination of factual causation”. Section 5D(1)(a) defines what

is meant by “factual causation”: that the negligence “was a necessary condition of the occurrence of the harm”. Section 5D(1) further provides that factual causation is one of two elements which “comprises” a determination that negligence caused particular harm. Within these provisions, the words “negligence” and “harm” are defined in s 5 although nothing is said to turn on those definitions. The Plaintiffs submit that on the literal reading of s 5D the “determination of factual causation” referred to in s 5D(3) means the determination of that element for the purposes of s 5D(1). As such, the only cases to which s 5D(3)(b) will be applicable for the purposes of s 79 of the Judiciary Act 1903 are cases where there is to be a determination of factual causation for the purposes of s 5D(1) of the NSW Liability Statute. For the reasons given above, that is not this case because the parties’ rights are governed by the ACT Liability Statute, an enactment of the Legislative Assembly of the Australian Capital Territory. Although the wording is not identical, there is no material difference between s 5D(1) of the NSW Liability Statute and s 45(1) of the ACT Liability Statute. Section 45(1) provides: 45 General principles (1) A decision that negligence caused particular harm comprises the following elements: (a) that the negligence was a necessary condition of the happening of the harm

(‘factual causation’); (b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (the scope of liability). This issue raises a question of construction of the chapeau of s 5D(3) and, in particular, the limiting words “If it is relevant to the determination of factual causation”. The thing the subject of a qualifying determination is “factual causation”. Do those words refer to factual causation for the purposes of, and only for the purposes of, s 5D(1), or do they extend at least to factual causation for the purposes of s 45(1) of the ACT Liability Statute? Both s 5D(1)(a) and s 45(1)(a) are statutory statements of the “but for” test which has long been recognised as a valuable negative criterion for causation at common law. [38] It is not necessary to decide whether the exclusion of evidence by s 5D(3)(b) applies to the determination of causation at common law. In Project Blue Sky Inc v Australian Broadcasting Authority, the plurality said: “…the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of

construction ay require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.” [39] As the Plaintiffs submit, the most grammatical construction of s 5D(3)(b) gives it an operation as one part of a coherent whole by which the exclusion of evidence applies in the circumstances described in the chapeau and “factual causation” takes its meaning from s 5D(1)(a). That construction accords with the convention of defined terms taking their meaning from the definition in the statute in which they are used. It should, however, be noted that the attribution of meaning to “factual causation” is not by way of an explicit definition, of which examples are to be found in s 5. Section 5D(1)(a) describes a concept and concludes the description with “(factual causation)”. Beyond these matters there is little to commend the Plaintiffs’ construction. Because the ACT Liability Statute also uses the phrase “factual causation”, no violence to the text and only a minimal imposition on the context is necessary for the reference to “factual causation” in the s 5D(3) chapeau to include the attribution of meaning to that term by s 45(1)(a) of the ACT Liability Statute. Not only is the phrase the same but the meaning attributed to it is materially the same in both statutes. That is borne out in this case where both parties agree that it

does not matter whether the NSW Liability Statute or the ACT Liability Statute (or the Wrongs Act 1958 (Vic)) governs the question of causation. Nor is there any risk that the operation of s 5D(3)(b) will be distorted if it is applied to proof of causation under the ACT Liability Statute. The purpose of s 5D(3)(b) is to prevent a trial judge placing any weight on the sort of evidence described in the provision. [40] Whether or not a civil liability statute applies, the vice which is sought to be addressed by the measure is the same. Even where the plaintiff is an honest witness, it is notorious that the plaintiff’s own evidence about what he or she would have done may be unreliable. [41] An inference drawn from the objective facts is to be preferred. These are common law principles which accord with purpose of s 5D(3). That purpose applies equally whether the trial judge is making a determination of factual causation for the purposes of s 5D or s 45 of the ACT Liability Statute. There is no rational reason why the New South Wales legislature should be taken to have intended that s 5D(3)(b) not apply in the circumstances of this case. As a variation on the same theme, the Plaintiffs make the further submission that s 79(1) will not pick up a law which is an integral part of a State legislative scheme if to do so would give the law an altered meaning. Reference is made to

Commonwealth v Mewett where Gummow and Kirby JJ referred to a State limitation period which would be given an altered meaning if it were to be picked up without other parts of the State statute which allowed for an extension of the limitation period in certain circumstances. [42] That principle has no application in this case. As already observed, there is nothing in the application of s 5D(3)(b) which would be altered if it were to be picked up and applied to a determination of factual causation for the purposes of s 45(1) of the ACT Liability Statute. Apart from generalities the Plaintiffs do not identify any such alteration. Whilst the text of a State statute may mean that there will be no cases where it is applicable when the Court is exercising federal jurisdiction, there is sufficient flexibility in the operation of s 79 of the Judiciary Act 1903 to pick up some State laws which are expressed by reference to the State context. [43] Section 5D(3) of the NSW Liability Statute is one such law even if “factual causation” is construed narrowly. For these reasons s 5D(3)(b) of the NSW Liability Statute is picked up and applies to these proceedings by force of s 79(1) of the Judiciary Act 1903. The Defendant’s specific objections to the Plaintiffs’ evidence are addressed below in the context of the parties’ submissions on quantification of loss.

DUTY OF CARE The first issue Turning then to the substantive issues, the first issue to decide is whether the Defendant owed a duty of care to the Plaintiffs. The duty of care is to be considered prospectively, not retrospectively. The determination of whether a duty of care was owed and, if so, the content of the duty is not assisted by looking first at the alleged breach by the defendant nor by looking first at the damage sustained by the plaintiff, and working back to see if there was a relevant duty. [44] There may be a danger in focussing on the alleged breach in a particular case when addressing the anterior question of the duty of care. [45] As Hayne J explained in Vairy v Wyong Shire Council, if there is a premature focus on the breach or the loss, a duty of care may be crafted to address the specifics of the immediate case without proper attention to the prospective implications the duty would in reality have had for the defendant prior to the events which have given rise to the dispute. [46] Plaintiffs’ pleaded case The Plaintiffs contend for a duty of care which is pleaded in paragraph 86 of the Statement of Claim. The allegation is in the following terms: “In light of the facts and matters in [77]-[85] above, the [Defendant] owed a duty to the Plaintiffs and Group Members to take reasonable care or alternatively to ensure that reasonable care was taken in: a.

exercising the River Operations Functions; further or alternatively b. exercising the Environmental Water Functions; further or alternatively c. exercising the Release Power, to avoid the Risks of Harm that a failure to take care would cause loss to persons in the position of the Plaintiffs and other Group Members” The three subparagraphs are pleaded both in accumulation and as alternatives. Nothing was said at the hearing about the exercise of Environmental Water Functions and paragraph 86(b) may be put to one side. Paragraph 86(a) refers to the exercise of river operations functions which is defined in paragraph 15 of the Statement of Claim as follows: “The term “River Operations Functions” in this Fifth Further Amended Statement of Claim describes the functions of the [Defendant] under the Agreement and s 18E(1) of the Act which relate to the operation and maintenance of works connected to the upper River Murray storages...” Section 18E(1) of the Water Act 2007 (Cth) provides as follows: 18E Additional functions, powers and duties of the Authority (1) Without limiting sections 172 and 173, the Authority has, in a referring State or the Australian Capital Territory, the functions, powers and duties that: (a) are expressed to be conferred on it by or under the Agreement; and (b) relate to the water and other natural resources of the Murray - Darling Basin. Tracking through

these definitions, it can be seen that the duty of care formulated in paragraph 86(a) of the Statement of Claim is not alleged to apply to the exercise of all the Defendant’s functions, but only those expressed to be conferred on it by or under the Agreement and then only to those which relate to the operation and maintenance of works connected to the upper River Murray storages. The duty of care formulated in paragraph 86(c) is more focussed, alleged only to apply to the exercise of the Release Power which is the power specified in cl 98(1) of the Agreement. The duty of care is pleaded in terms of avoiding the “risks of harm”. Although not perfectly clear, it is not alleged that the Defendant owed a duty to avoid all risks of harm but only those that a failure to take care would cause loss to persons in the position of the Plaintiffs and other Group Members. There is some circularity in this formulation of the content of the duty of care. It is a duty to take care to avoid loss which would be caused if the Defendant did not take care. [47] The risks of harm are defined in paragraphs 77 and 78 of the Statement of Claim as follows: “77 At all material times, there were risks during regulated and dry years that: a. the conduct of River Operations Functions; further or alternatively b. the conduct of Environmental Water Functions; further or alternatively c. the exercise of the

Release Power; would: d. reduce or eliminate the amount of water that would otherwise have been available for allocation to the Plaintiffs and Group Members, and thereby cause economic loss or damage; and/or e. cause a loss of water of such magnitude as to reduce or eliminate the supply of water available to the Plaintiffs and Group Members and thereby cause economic loss or damage to the Plaintiffs and Group Members; and/or f. cause: i. greater losses of water; ii. greater reductions in active storage; iii. greater reductions in available water determinations; iv. greater reductions in the volume of entitlements available to states for allocation to entitlement holders; v. greater reductions in allocations and/or diminished reliability of allocations for general security access entitlement holders; than would occur if the [Defendant] properly discharged its role and functions. 78 The risks referred to at [77] above are referred to below as the Risks of Harm.” There is some important precision in the pleading of the risks of harm. The risks are not that the Plaintiffs and Group Members would not have sufficient water for the purposes of their irrigated agricultural operations during the relevant years, but that they would receive less water pursuant to the water entitlements which they held. The Group Members are defined in paragraph 8 of the Statement of Claim which is set out

above. One final aspect of the alleged duty of care needs to be observed. A postulated duty of care must be stated in reference to the plaintiff or a class of which the plaintiff is a member. [48] The duty alleged in paragraph 86 of the Statement of Claim is a duty to avoid the risks of harm that a failure to take care would cause loss “to persons in the position of the Plaintiffs and other Group Members”. The Statement of Claim does not expressly address the attributes which a person must have to be “in the position of” the Plaintiffs and Group Members. The attributes are to be discerned from the definition of Group Members in paragraph 8. There are three pertinent attributes of Group Members which set them apart from persons who carry on businesses of irrigated agricultural production generally: the Group is limited geographically by the description of the water entitlements which Group Members held or had the use of (paragraph 8(a)); the Group is limited by the reliability of water entitlements which Group Members held or had the use of, in circumstances where there were other water entitlements issued for the same geographical area but with different priorities to the allocation of the available water (paragraph 8(a)); and The Group is limited temporally by the time when they held or had the use of the water entitlements (paragraph 8 chapeau) and when they received an

allocation of water (paragraph 8(d)). In Closing Submissions the Plaintiffs stated the duty of care in terms which are more succinct but different to those alleged in paragraph 86 of the Statement of Claim: “…a duty to take reasonable care in performing its River Operations Functions to avoid the risk that its inefficient operation of the River Murray System would reduce or eliminate the amount of water that would otherwise have been available for allocation to Irrigators, and thereby cause them economic loss or damage” where “irrigators” means the Group Members. The Defendant denies that it owed the alleged duty of care. The duty of care for which the Plaintiffs contend is novel in the sense that there has been no previous case in which the Court has held that such a duty was owed in circumstances analogous to this case. Duty to avoid a risk of pure economic loss The loss which the Defendant is alleged to have had a duty to avoid was not consequential upon injury to person or property. The alleged duty is correctly characterised as a duty to take reasonable care to avoid pure economic loss. [49] To the extent that Chapter 4 of the ACT Liability Statute addresses duty of care, the risk of harm to which such a duty may relate includes the risk of economic loss. [50] The Plaintiffs submit that the distinction between damage to person and property and economic loss not consequent

on such damage may at times be porous. They say that receipt of a lower water allocation may be conceived as an insult to their property rights in their water licences. Even if that is right in theory, the Plaintiffs do not contend that the loss which the Defendant had a duty to avoid was anything other than economic loss. Nor do they allege that they suffered any loss or damage which was consequential on physical damage to property. [51] The damages which they claim are formulated as compensation for suffering economic loss and not for any insult to their water licenses or any other proprietary interest. Principled approach to determining a duty to avoid pure economic loss Duty to avoid pure economic loss is not generally owed The principles governing a duty of care are different where the risk of harm is pure economic loss. The care which the law requires people to show for the person or property of others is not matched by a corresponding requirement to have regard to their financial interests. [52] Where damage to the person or property of another is reasonably foreseeable if the defendant does not take reasonable care, the law will prima facie impose a duty of care. [53] That starting point is to be contrasted with the general rule that a person does not owe a duty to take reasonable care to avoid causing pure economic loss to another. In the Mallonland case the plurality

said: “This general rule reflects the well-established position at common law that the infliction of economic loss does not, by itself, infringe any right or legally protected interest of the plaintiff. The general rule is also said to reflect policy concerns about the potentially excessive scope of liability for financial loss, referred to by Cardozo CJ as liability “in an indeterminate amount for an indeterminate time to an indeterminate class”. [54] The general rule applies even where the economic loss is a reasonably foreseeable consequence of the failure to take reasonable care. [55] Whilst reasonable foreseeability of pure economic loss is essential, it is not sufficient. [56] Duty to be determined by the salient features of the case In a novel case such as this, the existence, nature and scope of a duty of care to avoid pure economic loss is to be determined by a judicial evaluation of the salient features of the case which tend for or against the duty. The evaluation is not an exercise in going through a checklist, nor is it an instinctive synthesis of the salient features of the particular case taken as a whole. The evaluation is a chain of reasoning linking the salient features of the case to the conclusion that the alleged duty is or is not owed as a matter of principle. The evaluation of the salient features in the particular case is a means of facilitating the

incremental and analogical development of the common law from relevant precedents. [57] In the abstract, the features of a case which may be salient to the question of duty are not capable of exhaustive statement. [58] The parties made submissions about the features of this case which they contend are salient. Having regard to those submissions, the following paragraphs describe some features which have been found to be salient in other cases. A feature which has been found to support the imposition of a duty of care to avoid pure economic loss is where the defendant had actual knowledge of the risk to a person or class of persons of the particular type of loss that eventuated, and the magnitude of that loss. [59] In Perre v Apand McHugh J said that the knowledge may also be constructive for some kinds of economic loss. [60] Another feature which has been found to support the imposition of a duty of care to avoid pure economic loss is where the defendant had control over the activity which caused the loss. [61] It is necessary to consider the degree and nature of the control exercised by the defendant over the risk of harm which eventuated. [62] Another feature which has been found to support the imposition of a duty of care to avoid pure economic loss is where the plaintiff was vulnerable to the economic loss which eventuated because he or she was unable to protect him or

herself from it. To be a feature of the case which is supportive of the imposition of a duty of care, the vulnerability must be special in the sense that the plaintiff is in a different position to the general public. [63] A capacity of the plaintiff to protect him or herself has been found to tell against the imposition of a duty of care being owed. [64] A feature which has been found to support the imposition of a duty of care to avoid pure economic loss is where the plaintiff has relied on the defendant and where the defendant is aware of the reliance. [65] Again, the reliance must be special in the sense that general reliance that a public entity will perform a public function is not sufficient. [66] The role of assumption of responsibility A duty of care to avoid pure economic loss has also been found in cases where there was an undertaking (express or implied) by the defendant to take on a task for the plaintiff or for a class of which the plaintiff is a member from which it could be inferred that the defendant accepted that he or she would take reasonable care when engaging in that task. In such cases there is said to be an assumption of responsibility. [67] The responsibility may be assumed to the plaintiff or a class of which the plaintiff is a member, but not to the world at large. [68] The parties made different submissions about whether assumption of responsibility

is another feature which may be salient in the particular case or whether it is a separate basis for finding a duty of care. The latter position was stated to be correct by Edelman J in the Mallonland case and there is some support in the reasons of the plurality. [69] The difference between the parties on this issue was correctly described by the Plaintiffs as one of emphasis. Both parties accept that in this case consideration is to be given to whether there has been an assumption of responsibility by the Defendant. The role of indeterminacy A feature which has been found to tell against the existence of a duty of care to avoid pure economic loss is where the duty would give rise to indeterminant liability. Whilst indeterminacy is sometimes referred to as another salient feature, sight must not be lost of its importance. The passage set out above from the Mallonland case shows that the law of negligence’s different treatment of pure economic loss is in part reflective of a concern about indeterminacy. Indeterminant liability will “ordinarily deny” [70] or be a “valid reason to reject” [71] the existence of a duty of care. A liability will be indeterminate in the relevant sense if it cannot be realistically calculated having regard to the amount, the time and the class to which the liability may be incurred. [72] The touchstone is the inability to calculate, not the size of

the potential class nor the magnitude of the total loss once the calculation has been done. If there is sufficient certainty about the qualifications of class membership and the quantum of the loss which each member may suffer, the defendant’s liability will not be indeterminant even though the class is very large and the total loss is substantial. [73] A finding that there is a particular class with an ascertainable membership to which the defendant owes a duty of care will not be denied just because there may be other classes to which the defendant would owe similar duties of care but which have memberships which cannot be ascertained. Whilst the defendant’s overall liability may be indeterminant in such a case, the defendant’s liability to the particular class will not. In Perre v Apand, [74] McHugh and Hayne JJ held that the defendant owed a duty of care to potato growers within 20km of the relevant land but rejected a further duty of care to others who were indirectly affected by the economic loss suffered by those potato growers. The further duty of care would have given rise to an indeterminant liability because there was no rational basis to limit the persons theoretically within the class. The rejection of the further duty of care did not, however, preclude the duty of care owed to the potato growers. Indeterminacy is antithetical to the defendant’s actual (or

constructive) knowledge of the risk to a class of persons and of the magnitude of the potential loss. It may also be antithetical to reasonable foreseeability which is essential. The defendant cannot know of or even foresee that which is indeterminant in the relevant sense. The role of incongruency Finally, a feature which has been found to tell against a duty to avoid pure economic loss is where the duty would be inconsistent with other duties owed by the defendant, especially where the defendant is subject to statutory duties. In Sullivan v Moody, the Court said: “The circumstance that a defendant owes a duty of care to a third party, or is subject to statutory obligations which constrain the manner in which powers or discretions may be exercised, does not of itself rule out the possibility that a duty of care is owed to a plaintiff. People may be subject to a number of duties, at least provided they are not irreconcilable. A medical practitioner who examines, and reports upon the condition of, an individual, might owe a duty of care to more than one person. But if a suggested duty of care would give rise to inconsistent obligations, that would ordinarily be a reason for denying that the duty exists. Similarly, when public authorities, or their officers, are charged with the responsibility of conducting investigations, or exercising powers, in the public interest, or in the

interests of a specified class of persons, the law would not ordinarily subject them to a duty to have regard to the interests of another class of persons where that would impose upon them conflicting claims or obligations.” [75] A duty of care may be precluded in circumstances which fall short of an actual conflict with a statutory duty, as may occur where the imposition of the duty of care would distort the focus of the statutory regime [76] or would discourage the performance of statutory duties. [77] Principled approach to determining a duty owed by a statutory authority In a case such as this where the Defendant is a statutory authority, consideration of whether a duty of care is owed and, if so, the contents of the duty starts with the statutory framework in which the Defendant operated. [78] The terms, scope and purpose of the statutory framework must be examined closely. The examination must identify the functions, duties and powers of the statutory authority. Consideration must be given not only to the powers which were exercised in the immediate case but also those which were not. [79] Consideration must also be given to any other duties imposed on the statutory authority and whether those duties may conflict with the alleged duty of care. [80] The need for such an examination is a pertinent example of the reason why the alleged duty of care has to be considered

prospectively and not by reference to the particular breach which is said to have occurred in the immediate case. After the event the power which was exercised and the circumstances in which it was exercised are known. If the alleged duty was owed to a particular class of persons, the statutory authority may also have had to take reasonable care to avoid the risk of harm to that class when deciding to exercise other powers, or not to exercise other powers from which other consequences may have flowed. All the potential consequences of the alleged duty need to be considered. The ultimate question is whether, in all the circumstances, the statutory regime erects or facilitates a relationship between the statutory authority and a class of persons which displays sufficient characteristics answering the criteria for intervention by the tort of negligence, such that the common law imposes a duty of care as to the manner in which the statutory authority exercises the power which was exercised. If so, the common law duty of care operates alongside the rights, duties and liabilities created by statute. [81] In answering the question, the relationship which is erected or facilitated must be considered as a whole and not only by reference to an isolated aspect of the relationship. [82] As stated above the duty which is imposed by the common law must not be incompatible with the powers and

duties imposed by the statute. [83] Structure of the next part of these reasons In light of these principles, the structure of these reasons is first to review the statutory framework by which the Defendant was established and in which it operates. The parties’ respective submissions about the imposition of the alleged duty of care are then summarised, followed by my reasons for the determination of the issue. Statutory framework Overview of regulation The statutory regime which established the Defendant and the legal framework in which it has subsequently operated has some features and complexity not commonly (or at all) found in other statutory regimes. The statute which lies at the centre of the legal framework is the Water Act 2007. It is an enactment of the Commonwealth Parliament. The measure enacted by the Commonwealth Statute which is most (but not exclusively) relevant to the current case is the establishment of the Defendant as a statutory authority to operate in accordance with the Murray-Darling Basin Agreement. The text of the Agreement is set out in Schedule 1 to the Commonwealth Statute. The Agreement takes its legal effect not from the reference to it in the Commonwealth Statute but from the consent of the parties to the Agreement which are the Commonwealth and the States and Territory directly concerned with the Muray-Darling Basin. The Agreement contains the

primary level of regulation of the Murray-Darling Basin. The Agreement in turn provides for other documents to be prepared and approved in which more detailed regulation is set out. Amongst those other documents, and of importance in the current case, is the Objectives and Outcomes Document. I will generally refer to this as the O&O Document. There is a further layer of regulation which is relevant in this case which is to be found in the statutes regarding the distribution of water to the individual holders of water entitlements, such as those who carry on businesses of irrigated agricultural production in the relevant parts of New South Wales and Victoria. The Defendant is a creature of the Commonwealth Statute but the question whether it owed the alleged duty of care cannot be determined without considering the State regulatory regimes. In the Statement of Claim the persons to whom the duty is alleged to have been owed and the risks of harm it is said the Defendant had a duty to avoid are defined by reference to water entitlements under the State regimes. In New South Wales, the relevant statute is the Water Management Act 2000 which I will refer to as the NSW Statute. In Victoria it is the Water Act 1989 which I will refer to as the Victorian Statute. Before turning specifically to the establishment and functions of the Defendant, it is necessary to address the framework

generally. The Commonwealth Statute The long title of the Commonwealth Statute is: An Act to make provision for the management of the water resources of the Murray-Darling Basin, and to make provision for other matters of national interest in relation to water and water information, and for related purposes Whilst there may be grammatical ambiguity in the long title, a reading of the Commonwealth Statute as a whole makes clear that the management of the water resources of the Murray-Daling Basin is to be regarded as a matter of national interest. Section 3 specifies the objects of the Commonwealth Statute as follows: 3 Objects The objects of this Act are: (a) to enable the Commonwealth, in conjunction with the Basin States, to manage the Basin water resources in the national interest; and (b) to give effect to relevant international agreements (to the extent to which those agreements are relevant to the use and management of the Basin water resources) and, in particular, to provide for special measures, in accordance with those agreements, to address the threats to the Basin water resources; and (c) in giving effect to those agreements, to promote the use and management of the Basin water resources in a way that optimises economic, social and environmental outcomes; and (d) without limiting paragraph (b) or (c): (i) to ensure the return to environmentally sustainable levels of

extraction for water resources that are overallocated or overused; and (ii) to protect, restore and provide for the ecological values and ecosystem services of the Murray-Darling Basin (taking into account, in particular, the impact that the taking of water has on the watercourses, lakes, wetlands, ground water and water - dependent ecosystems that are part of the Basin water resources and on associated biodiversity); and (iii) subject to subparagraphs (i) and (ii)–to maximise the net economic returns to the Australian community from the use and management of the Basin water resources; and (e) to improve water security for all uses of Basin water resources; and (f) to ensure that the management of the Basin water resources takes into account the broader management of natural resources in the Murray-Darling Basin; and (g) to achieve efficient and cost effective water management and administrative practices in relation to Basin water resources; and (h) to provide for the collection, collation, analysis and dissemination of information about: (i) Australia’s water resources; and (ii) the use and management of water in Australia. There are three aspects of the objects which warrant emphasis. First, the objects underscore the perspective that the water resources of the Murray-Darling Basin have a benefit which is collective, to be used in the national interest, to give effect to

Australia’s international agreements, to maximise returns to the Australian community and to improve security for all uses. There is no reference to any groups or classes of individuals. Secondly, environmental sustainability features prominently, which is a further aspect of collective benefit. The Defendant submits that there is a degree of hierarchy with the environment at the top, but that overstates the position when submitted in the abstract. Thirdly, the objects implicitly recognise scarcity by virtue of the express concern for efficiency, optimisation, maximisation, cost effectiveness and security. In that context, the provisions of the Commonwealth Statute make clear that water markets and water trading are regarded as an important means of achieving an efficient allocation of the scarce resource, not just for economic purposes but for all purposes including environmental purposes. Amongst other relevant provisions, Part 4 of the Commonwealth Statute provides for rules to be made for the price of water and water markets. The “basis for dealing with” water prices and water markets is set out in s 10(2) as follows: (2) The basis for dealing with those topics is that: (a) the Basin water resources are physically interconnected; and (b) the Basin water resources are a major Australian water resource and, because they are interconnected, are the major Australian water

resource in relation to which: (i) tradeable water rights are able to be traded between States; and (ii) water is, pursuant to that trade, able to be delivered between States; and (c) the Basin water resources are scarce and at risk of continuing scarcity and further depletion; and (d) the Basin water resources are subject to significant environmental threat; and (e) there are important and significant environmental assets that are associated with the Basin water resources and that need protection; and (f) the inefficient and/or inappropriate use of the Basin water resources would have a significant detrimental impact on: (i) the availability of the Basin water resources; and (ii) the health of the Basin water resources or the environmental assets associated with the Basin water resources; and (g) the inefficient and/or inappropriate use of the Basin water resources would have a significant detrimental economic and social impact on the wellbeing of the communities in the Murray-Darling Basin; and (h) this Act and the plans and rules relating to: (i) water charging; and (ii) trading; and (iii) the transfer of tradeable water rights and eligible tradeable water rights; and (iv) water markets; will promote: (v) the more efficient use of the Basin water resources; and (vi) the continued availability of the Basin water resources; and (vii) the health of the Basin water resources and

the environmental assets associated with the Basin water resources; and (viii) the economic and social wellbeing of the communities in the Murray-Darling Basin. With the s 3 objects, the Commonwealth Statute makes provision for the management of the Murray-Darling Basin water resources in Parts 2 and 2A. The centrepiece is the Basin Plan. Section 19(2) provides: 19 Simplified outline … (2) There is to be a Basin Plan for the management of the Basin water resources. The Basin Plan will provide for limits on the quantity of water that may be taken from the Basin water resources as a whole and from the water resources of each water resource plan area. It will also provide for the requirements to be met by the water resource plans for particular water resource plan areas (these water resource plans are dealt with in Division 2). The purpose of the Basin Plan is to provide for the integrated management of the Basin water resources in a way that promotes the objects of this Act. [84] A detailed process was prescribed for the development of the Basin Plan which has now been completed. The Defendant had a role, namely to prepare the Basin Plan for adoption by the Commonwealth Minister for Water after a process of consultation with the concerned States and Territory. The Basin Plan was signed into law by the Minister on 22 November 2012. It is now a legislative instrument. [85] The

Basin Plan is arranged into 13 Chapters which broadly take their content from a list of matters specified in s 22 of the Commonwealth Statute. Chapter 6 addresses the long-term average sustainable diversion limits on taking water from the Murray-Darling Basin. For each region, cl 6.04 specifies the number of gigalitres which may be taken each year. The Defendant may review the sustainable diversion limits (cl 6.06) and propose adjustments (cl 7.01). Chapter 8 sets out an environmental watering plan. Chapter 11 deals with the amount of water necessary to meet critical human needs. Chapter 12 sets out detailed water trading rules. Chapter 13 specifies a programme for monitoring and evaluating the effectiveness of the Basin Plan, for which the Defendant is primarily responsible. The subject of critical human needs is addressed in Part 2A of the Commonwealth Statute. It provided that the Basin Plan had to be prepared having regard to the fact that the governments have agreed that the highest priority water use is the core human consumption requirements in urban and rural areas and those non-human consumption requirements that a failure to meet would cause prohibitively high social, economic or national security costs as far downstream as Wellington in South Australia. [86] Provision is also made for monitoring conditions. In extreme conditions, provision is made for departure from

the usual water sharing arrangements to ensure that critical human needs are met. [87] Establishment of the Defendant Another principal measure contemplated by the Commonwealth Statute is the establishment of the Defendant which is addressed in Part 9. The Defendant is established [88] as a body corporate which may sue and be sued. [89] The Defendant consists of a full-time chief executive and five part-time members. Members are appointed by the Governor-General for a fixed four-year term, with a possible renewal for a further fixed term, and are remunerated as determined by the Remuneration Tribunal. The Governor-General may terminate an appointment for cause. [90] To be eligible for appointment as a member of the Defendant, an individual must have a high-level of expertise in one or more of the fields of water resource management, hydrology, freshwater ecology, resource economics, irrigated agriculture, public sector governance, financial management or Indigenous matters relevant to the Basin water resources. [91] A member must be independent of relevant interest groups, which include entities which represent the holders of water access rights, water delivery rights or irrigation rights. [92] The Defendant is to meet at least nine times each year and make decisions by majority vote. The staff of the Defendant are engaged under the Public Services Act 1999 (Cth). The Defendant

may generally delegate any of its functions and powers, including to staff members, and there may be sub-delegation, in every case in writing. [93] The Defendant is required to establish an advisory committee known as the Basin Community Committee which is to advise the Defendant about “community matters relating to the Basin water resources”. Sub-committees are to be established referrable to irrigation, environmental water and Indigenous matters. [94] The functions and powers of the Defendant are addressed below. The Agreement between the Commonwealth, the States and the ACT A further aspect of the Commonwealth Statute is the recognition of the Murray-Darling Basin Agreement. The provisions of the Commonwealth Statute which address the Agreement were added in 2008 as Part 1A. The Agreement is defined in s 18A by reference to the document in Schedule 1 to the Commonwealth Statute. Apart from defining the Agreement and making provision for recording any subsequent amendments (s 18C), the Commonwealth Statute makes no substantive provision for the operation or legal effect of the Agreement. Section 18A is followed by a note to the effect that the Agreement operates as an agreement between the parties to it. In its form the Agreement in Schedule 1 is like any other contract. It describes itself as the “Murray-Darling Basin Agreement” and lists six parties, namely the Commonwealth

of Australia, the States of New South Wales, Victoria, Queensland, South Australia and the Australian Capital Territory. It was signed by the Prime Minister, the Premiers and the Chief Minister on 3 July 2008 at a meeting of the Council of Australian Governments. Whilst they are parties, the application of the Agreement to Queensland and the Australian Capital Territory is limited in accordance with their respective geographic location relative to the Murray-Darling Basin (Part VI of the Agreement). It will not generally be necessary to refer to Queensland and the Australian Capital Territory in the reasons which follow. Unless explained otherwise, references to the “States” will mean New South Wales, Victoria and South Australia. Clause 1 of the Agreement provides as follows: 1. Purpose The purpose of this Agreement is to promote and co‑ordinate effective planning and management for the equitable, efficient and sustainable use of the water and other natural resources of the Murray‑Darling Basin, including by implementing arrangements agreed between the Contracting Governments to give effect to the Basin Plan, the Water Act and State water entitlements. Clause 6 of the Agreement provides: 6. Parties to Provide for Enforcement of Agreement Each of the Contracting Governments so far as its jurisdiction extends and so far as it may be necessary shall provide for or secure the

execution and enforcement of the provisions of this Agreement. The heart of the Agreement is an agreement about how the water in the Murray-Darling Basin is to be shared between the States. The water sharing agreement is in Part XII which is entitled “Distribution of Waters”. It is agreed that South Australia is to receive a fixed number of megalitres during each of the twelve months of the year. That agreement is in cl 88 which provides as follows: 88. South Australia’s Monthly Entitlement South Australia is entitled to receive: (a) the following monthly quantities of River Murray water – July ........................................................... 50 500 megalitres August ...................................................... 66 000 megalitres September ................................................ 77 000 megalitres October ................................................... 112 500 megalitres November ............................................... 122 000 megalitres December ............................................... 159 000 megalitres January ................................................... 159 000 megalitres February ................................................. 136 000 megalitres March ...................................................... 128 000 megalitres April .......................................................... 77 000 megalitres May

........................................................... 35 000 megalitres June .......................................................... 32 000 megalitres except as provided in clause 128; and (b) 58,000 megalitres per month for dilution and losses, unless the Ministerial Council determines otherwise; and (c) such additional quantities for dilution as the Ministerial Council determines from time to time. South Australia may request limited variations between months (cl 90). Any such request is to be made to the Defendant. South Australia may also defer receipt of water by, in effect, requiring the Defendant to store the water in storages located upstream in New South Wales and Victoria (cl 91). Excess water which flows into South Australia for lack of upstream storage is not included in South Australia’s entitlement (cll 92 and 93). The excess water is described in cl 92 as follows: 92. Use of Lake Victoria If the Authority decides that the flow or prospective flow of the River Murray downstream of its junction with the Great Darling Anabranch is, or will be for any month in excess of the sum of: (a) the quantities which South Australia is entitled to receive in that month under clause 88 or 90; (b) any quantities which, in the opinion of the Authority, ought to be and can be impounded in Lake Victoria during that month with the object of filling that storage at some time

before the end of the next ensuing month of May; and (c) any quantities required for use by New South Wales and Victoria, downstream of the junction of the River Murray and the Great Darling Anabranch, South Australia may receive that excess in addition to the quantity of water which it is entitled to receive under clause 88 or 90. After South Australia’s entitlement has been deducted, New South Wales and Victoria share the remaining water equally, although there are a number of important qualifications. Clause 94(1) of the Agreement provides: 94. Entitlements of New South Wales and Victoria (1) Except as otherwise expressly provided in Subdivision D of this Division and subject to South Australia’s entitlement under clause 88 or 90, New South Wales and Victoria are each entitled to use: (a) all the water in tributaries of the upper River Murray downstream of Doctors Point within its territory, before it reaches the River Murray; (b) half the natural flow at Doctors Point; (c) half the water entering the Menindee Lakes from the Darling River, subject to the prior entitlement of New South Wales to use water from the Menindee Lakes Storage as provided in clause 95; (d) subject to paragraph (1)(c), an amount of water from the upper River Murray equivalent to any water contributed by any tributary or any outfall approved by the Ministerial Council entering the upper River Murray

from its territory downstream of Doctors Point; and (e) half the volume of water calculated in accordance with clause 8 of Schedule F. The consequence of this provision is that each of New South Wales and Victoria is entitled to all the water from any tributary on its own territory if the tributary enters the Murray River below Doctors Point. Water in the Menindee Lakes, despite being located entirely within New South Wales, is shared equally between New South Wales and Victoria until the storage level falls below 480 GL and then not again until after the storage level rises above 640 GL (cl 95). Otherwise, the practical outworking of the sharing arrangement is that the water stored in Dartmouth Reservoir, Hume Reservoir, Lake Victoria, the Menindee Lakes (when included) and otherwise in the Murray River is shared half each by New South Wales and Victoria. The water delivered to South Australia is deducted equally from the water allocated to New South Wales and Victoria (cl 96). There are mechanisms for the sharing arrangements to be suspended in times of insufficiency for critical human needs (Division 2) and extreme or unprecedented circumstances (Division 3). As more fully addressed below, the provisions in the Agreement for sharing water between the States are followed by Subdivision C which is entitled “Control by Authority”. The first provision in Subdivision C is cl 98

which empowers the Authority to give directions for water to be released from the River Murray storages. The Defendant’s power under cl 98, which is referred to as the “release power”, is addressed below. The agreement about sharing the water between the States cannot operate without agreement on the rules to account for the storage, transfer, loss and use of the water in the river system. Subdivision D of Division 1 of Part XII contains the parties’ agreement about the accounting rules. The rules address the circumstances in which a State is taken to have used part of its entitlement (cl 109). They also provide for the deduction from each State’s entitlement of any water “lost by evaporation or other means” (cl 110). For example, evaporation from a storage which includes water deferred by South Australia is deducted first from South Australia’s entitlement (cl 110(1A)). Special rules are made for accounting for water released from each of Dartmouth Reservoir (cl 118), Hume Reservoir (cl 119), Menindee Lakes Storage (cll 120 and 121) and for upper River Murray storage spills (cl 117). There is also provision for periods of special accounting when there is a declared shortage of water (cl 106). The Defendant has a central role in accounting for the water in the river system which is addressed below. The Ministerial Council and the Basin Officials Committee The Agreement also

establishes a governance structure to manage and implement the water sharing agreement. In addition to addressing the circumstances in which the Agreement may be amended by the governments which are party to it (Part II), the Agreement establishes a hierarchy of three entities with specified functions and powers. Those entities are the Ministerial Council (Pt III), the Basin Officials Committee (Part IV) and the Defendant (Part V). The Ministerial Council is established by cl 7 of the Agreement. It is made up of a Minister appointed by each of the contracting governments and chaired by the Minister appointed by the Commonwealth. Its function is to consider and determine outcomes and objectives on major policy issues of common interest to the contracting governments in relation to the management of water and other natural resources in the Murray-Darling Basin, including the role of those resources in providing critical human water needs, but otherwise only insofar as there is no provision in the Basin Plan. The Ministerial Council must meet once a year. It may only proceed by unanimous vote. Provision is made for the referral of disputes to arbitration, if necessary by an arbitrator appointed by the Chief Justice of Tasmania. The Basin Officials Committee is established by cl 17 of the Agreement. It is generally referred to as the BOC. The BOC has six members, one appointed by

each of the contracting governments. It is chaired by the Commonwealth appointee. It generally proceeds by unanimous vote. Clause 26(1) of the Agreement provides: 26. Functions and Powers of the [BOC] The functions of the [BOC] are: (a) to advise the Ministerial Council in relation to outcomes and objectives on major policy issues of common interest to the Contracting Governments in relation to the management of the water and other natural resources of the Murray‑Darling Basin, including in relation to the Ministerial Council’s role in the provision of critical human water needs, but otherwise only in so far as those issues are not provided for in the Basin Plan; (b) to give effect to any policy or decision of the Ministerial Council, as required by the Ministerial Council; (c) to exercise responsibility for high level decision making in relation to river operations, including by setting objectives and outcomes to be achieved by the Authority in relation to river operations; (d) to exercise the powers and discharge the duties conferred on it by or under this Agreement or the Water Act. Further provision is made for the BOC in the Commonwealth Statute. Section 201 provides that the functions of the BOC include advising the Defendant about the performance of the Defendant’s functions and facilitating cooperation and coordination between the Defendant, the Commonwealth, the States

and the Territory in managing the Basin water resources. The BOC may not require the Defendant to do anything which is not otherwise authorised by the Agreement. Water Liaison Working Group Under s 203 of the Commonwealth Statute the Defendant is empowered to establish advisory committees “to assist it in performing any of its functions”. Pursuant to s 203 the Defendant established the Water Liaison Working Group to which reference is made above. The WLWG features in many of the events out of which the allegations against the Defendant now arise. A convenient description of the WLWG comes from a draft of the Defendant’s internal Guidance Document: “River operations are undertaken in close consultation with the governments of the southern Basin states (New South Wales, Victoria and South Australia) and the Commonwealth, primarily through the Water Liaison Working Group (WLWG), an advisory committee established by the Authority under Section 203(1) of the Water Act. The WLWG meets on a regular basis and is consulted on a wide range of river operations activities. Members of this group are representatives of the SCAs and state departments and typically have a technical background and ‘hands on’ experience in water resource management in the River Murray System. Matters discussed at these meetings are often of a technical nature. The Objectives and Outcomes document requires

consultation between MDBA and WLWG when proposed river operations: ● could result in possible non-compliance with the Objectives and Outcomes document (clause 7 of that document) ● could result in a conflict between any objectives and/or outcomes (clause 8 of the Objectives and Outcomes document) ● are considered as being of particular significance by any southern Basin state (clause 16 of the Objectives and Outcomes document). The WLWG also provides a valuable forum for the jurisdictions to exchange information and advice with the MDBA and other jurisdictions on a range of subjects. For example any new or unusual operational situation that may arise with the RMS, coordination of tributary flows, use of water in Inter Valley Trade (IVT) accounts, releases from the Snowy Scheme and, increasingly, management of environmental water including in coordination with tributaries.” Functions and powers of the Defendant Within that statutory and governance framework, the position of the Defendant needs to be examined. As set out above, the Defendant is established not by the Agreement but by the Commonwealth Statute. Apart from preparing, monitoring and evaluating the Basin Plan, and a specific enforcement role, there are three sources of the Defendant’s functions, powers and duties. First, s 172(1)(b) of the Commonwealth Statute contains a list of functions of the Defendant. The listed

functions may be summarised as: measuring, monitoring and recording the quality and quantity of the Basin water resources and the condition of associated water-dependent ecosystems; supporting, encouraging and conducting research and investigations about the Basin water resources; developing and implementing measures for the equitable, efficient and sustainable use of the Basin water resources, including delivery of environmental water; collecting and analysing information, disseminating information and engaging with the Indigenous community on the use and management of the Basin water resources; making recommendations to the Commonwealth and the Basin States about any matter that the Defendant considers could affect the quality or quantity of the Basin water resources, which matters may include “the carrying out of any works or other measures by the Commonwealth, State or agency”; and “to develop, in consultation with the Basin States, an integrated water model for the Murray-Darling Basin”. Section 173(1) provides that the Defendant has power to do anything that is necessary or convenient to be done for or in connection with the performance of its functions. The s 172 functions are not directly relevant to the conduct of the Defendant which is the subject of this case but they provide relevant context. The second source of the Defendant’s functions is Part 2A of the

Commonwealth Statute under which the Defendant has obligations during extreme conditions to ensure that critical human needs are met. The Defendant is to formulate an emergency response and to take the action necessary to implement the emergency response, variously in consultation with the BOC and to some extent with the agreement of the Ministerial Council. [95] The third source of the Defendant’s functions and the one of direct relevance in this case is s 18E of the Commonwealth Statute. Section 18E(1) is set out above. The section is repeated here as relevant: 18E Additional functions, powers and duties of the Authority (1) Without limiting sections 172 and 173, the Authority has, in a referring State or the Australian Capital Territory, the functions, powers and duties that: (a) are expressed to be conferred on it by or under the Agreement; and (b) relate to the water and other natural resources of the Murray‑Darling Basin. (2) In performing these functions and duties and exercising these powers, the Authority must comply with any requirements under the Agreement. (3) The Authority has, in connection with: (a) the performance of its functions and duties under this Part; and (b) the exercise of its powers under this Part; such powers in a referring State or the Australian Capital Territory as it has in connection with the performance of its other functions under this

Act. Whilst the Defendant is not a party to the Agreement, the effect of s 18E(2) is that the Defendant must comply with the Agreement. Within the Agreement, the Defendant’s powers, functions and duties are generally but not exclusively expressed to be conferred in Part V. Within Part V cl 29 relevantly provides: 29. Functions, Powers and Duties of the Authority (1) The functions of the Authority are: (a) to give effect to any decision of the Ministerial Council, including any decision made under sub‑clause (3); (b) to give effect to any high level decision of the [BOC] in relation to river operations; (c) to provide advice to the Ministerial Council and the [BOC] as required to fulfil their functions; (d) to provide administrative support to the Ministerial Council and the [BOC]; and (e) to exercise the powers and discharge the duties conferred on it by or under this Agreement. (2) Subject to a decision of the Ministerial Council made under sub‑clause (3), in carrying out its functions the Authority is to act in accordance with: (a) the provisions of this Agreement; (b) the corporate plan; (ba) the work plan; (c) the asset management plan; (d) the asset agreement; (da) the service level agreement; and (e) in relation to river operations, the requirements of clause. Clause 29(3) relates to emergencies and is not relevant. The term used in cl 29(1)(b) is “high level decisions”

of the BOC. Clause 26(1)(c) refers to “high level decision making” in the context of the BOC’s functions and powers. These terms are not defined. The term “river operations” is defined in cl 2 as follows: “river operations” means activities under this Agreement relating to: (a) the construction, operation, maintenance and renewal of works on, adjacent to, or connected to the upper River Murray or the River Murray in South Australia; and (b) the execution of the provisions of this Agreement concerning sharing water between State Contracting Governments; and (c) the provision of other services relating to water, to State Contracting Governments and other persons. The upper River Murray is the part of the river system which is most relevant to the present case. It is defined in cl 2 as follows: “upper River Murray” means the aggregate of: (a) the main course of the River Murray upstream of the eastern boundary of the State of South Australia; (b) all tributaries entering that part of the main course upstream of Doctors Point; (c) all effluents and anabranches of that part of the main course, other than those excepted by the Ministerial Council; (d) the watercourses connecting Lake Victoria to that main course; (e) the Darling River downstream of the Menindee Lakes Storage; and (f) the upper River Murray storages. The term “upper River Murray storages” is defined as: “upper River

Murray storages” means Lake Victoria, the Menindee Lakes Storage, the storages formed by Dartmouth Dam and Hume Dam and by those weirs, and weirs and locks, described in Schedule A which are upstream of the eastern boundary of South Australia. Clause 30 of the Agreement provides as follows: 30. Authority’s Functions in Relation to River Operations (1) The Authority must not exercise any of its functions in relation to river operations in a manner that has the potential to have a material effect on State water entitlements unless it does so in accordance with a decision of the [BOC] made under this Agreement, or a provision of the document approved under clause 31. (2) Subject to sub‑clause (3), the Authority must carry out its functions in relation to river operations in accordance with objectives and outcomes specified in the document approved under clause 31 or, during the period before that document has been approved, clause 32. (3) If clause 33 requires the Authority to refer to the [BOC] a matter relating to the Authority’s functions in relation to river operations, the Authority must act in accordance with a determination made under that clause. The document approved under cl 31 is the Objectives and Outcomes Document referred to above. Clause 31 of the Agreement provides: 31. Objectives and outcomes for river operations (1) The [BOC] must each year, unless the [BOC]

determines otherwise, approve, and may from time to time amend, a document which specifies the objectives and outcomes to be achieved by the Authority in carrying out the Authority’s functions in relation to river operations. (2) A document (including an amended document) approved under this clause remains in effect until the [BOC] resolves to approve a new document. (3) A document approved under this clause may require the Authority to refer to the [BOC] for the purposes of a determination under clause 33 any specified matter relating to the carrying out of the Authority’s functions in relation to river operations, including any decision that the Authority proposes to make in relation to river operations, that has the potential to have a material effect on State water entitlements. (4) If a document approved under this clause includes a requirement to refer, the document must specify the criteria to be applied to determine whether a matter has the potential to have a material effect on State water entitlements and thus needs to be referred. As foreshadowed by cl 30(3), cl 33 imposes requirements for the Defendant to refer certain decisions to the BOC. It provides as follows: 33. Referrals and Determinations in Relation to River Operations (1) The Authority must refer to the [BOC] any matter relating to carrying out river operations: (a) that the document approved under clause

31 requires the Authority to refer; or (b) that two or more members of the [BOC] have notified the Authority and the [BOC] in writing is a matter that should be referred to the [BOC] because the document approved under clause 31 has not made relevant specifications about the matter, and the matter has the potential to have a material effect on State water entitlements. (2) A notification made under paragraph (1)(b) may be withdrawn at any time before a determination is made under this clause, by notice in writing given to the Authority and the [BOC] by the members of the [BOC] who made the notification. (3) The Authority must refer to the [BOC] any decision that the Authority proposes to make in relation to river operations that has the potential to have a material effect on State water entitlements, unless the decision is authorised by the document approved under clause 31 or a previous determination made under this clause. (4) The Authority may, before the [BOC] has approved a document under clause 31, refer to the [BOC] a proposal by the Authority to carry out its functions in relation to river operations in a manner other than in accordance with the resolutions, practices and procedures referred to in clause 32. (5) If the Authority refers a matter to the [BOC] under this clause, the [BOC] must consider the matter and may make a determination in relation to it. (6) A

determination under sub‑clause (5) will be made: (a) by a unanimous vote of all [BOC] members present who constitute a quorum; or (b) by majority vote of the [BOC] members present who constitute a quorum, if those members by a unanimous vote agree that the resolution will be carried in that way. (7) If the [BOC] cannot make a determination in relation to a referred matter, the matter must be referred to the Ministerial Council as if it were a motion submitted by a [BOC] member for the purposes of clause 140. (8) After a matter has been referred to the [BOC] under this clause, the Authority must: (a) continue to carry out its functions in relation to river operations in accordance with resolutions, practices and procedures that were in effect before the matter was referred; and (b) in the case of a proposed decision, must not make the decision, until such time as the [BOC] makes a determination under this clause. The scheme of these provisions is to impose a prohibition on the Defendant making any decision in relation to river operations if the decision has the potential to have a material effect on State water entitlements. Such a decision requires the approval of the BOC. The BOC’s approval may be provided in advance by virtue of approval in the O&O Document. If the O&O Document does not approve the decision, the Defendant is required to seek the BOC’s approval by a referral

under cl 33(3). The Agreement does not specify when a decision will have the potential to have a material effect on State water entitlements. Clause 31(4) contemplates that the O&O Document will specify criteria. As set out below, the O&O Document specifies a number of specific matters which the Defendant must refer to the BOC but it does not specify general criteria for materiality. Other matters addressed by Part V of the Agreement are preparation of an annual corporate plan for the purposes of s 35 of the Public Governance, Performance and Accountability Act 2013 (Cth) and preparation of an annual work plan which sets out the Defendant’s activities relating to the Agreement for the next four years. The physical infrastructure which is critical to the regulation of the flow of water in the river system is addressed in Part VIII of the Agreement. Certain works are listed in the Schedule to the Agreement, including Dartmouth Dam, Hume Dam, the Lake Victoria works, Yarrawonga Weir and thirteen other weirs and locks in New South Wales, Victoria and South Australia. The Defendant does not own any of the works but has a role in planning the relevant State authority’s management and operation of the works. Management includes maintenance, repair, renewal and replacement (cl 53(2)). The Defendant must prepare an asset management plan and submit it for approval, first to the BOC and

then to the Ministerial Council (cl 53). The Defendant may determine procedures for the operation of the works (cl 66) with which the State authority must comply (cl 68). Provision is made for the construction of new works. The Defendant performs important functions in the implementation of the States’ agreed water sharing arrangement. Whilst the Defendant does not own or directly operate storages such as Hume Dam and Yarrawonga Weir, cl 98 of the Agreement provides: 98. Authority’s Role in Operation of Storages (1) The Authority may give directions for the release of water from upper River Murray storages and water must be released in accordance with any such directions. (2) The Authority may give directions under sub-clause (1) in the form of standing procedures, which it may amend or suspend at any time, except as provided in clause 100. (3) In giving directions under this clause the Authority must have regard to: (i) maintaining supply to South Australia of the quantities of water which that State is entitled to receive; (ii) facilitating the exercise by South Australia of its right under clause 91, including the delivery of water stored in exercise of that right; (iii) maintaining a minimum reserve of water as provided for in clause 103; and (iv) facilitating the exercise by New South Wales and Victoria of their respective rights to use water from the upper River Murray,

as they require. (4) In giving directions under this clause the Authority may also have regard to: (i) the improvement or maintenance of water quality in the River Murray (including the upper River Murray); and (ii) other water management and environmental objectives consistent with this Agreement. As already observed, the parties refer to the Defendant’s power to give directions under cl 98(1) as the release power. It is the power which is referred to in paragraph 86(c) of the Statement of Claim. Clause 98(3) specifies four mandatory considerations to which the Defendant must have regard when exercising the release power, three of which relate to the respective rights and entitlements of South Australia, New South Wales and Victoria and one of which relates to maintaining a minimum reserve of water. Other water management and environmental objectives consistent with the Agreement are considerations to which the Defendant may have regard but which the Defendant is not obliged to have regard. For the purpose of the important task of accounting for the water, the Defendant has the function of determining the amount of water in the relevant parts of the system, including water stored or flowing at various locations. Critically, the Defendant must periodically determine the amount of water available for distribution to each of South Australia, New South Wales and Victoria before

the end of the following May (cl 102). Aspects of the determination include a conveyance reserve (cl 102D), a minimum reserve (cl 103) and an initial requirement to meet the critical human water needs of each State to be set aside by each State and reviewed by the Defendant (cl 102A). Provision is made for one State to advance water to another without an increase in the total volume of water available for distribution (cl 102C). The Defendant’s functions apply both when normal sharing arrangements are being implemented and in emergencies. Clause 104 provides: 104. Use of State Works to Convey Murray Water The Authority may arrange for water to be conveyed from one part of the upper River Murray to another via works under the control of a State Contracting Government, on such terms as may be agreed between the Authority and that State Contracting Government. Elsewhere in the Agreement provision is made for the Defendant to co-ordinate and carry out surveys, investigations and studies regarding the desirability and practicability of works or measures for the equitable, efficient and sustainable use of water and other natural resources of the Murray-Darling Basin (Part VII). The Defendant may monitor (cl 44), establish, maintain and operate systems of measurement (cl 45) and formulate water quality objectives (cl 48). Along with the governments of New South Wales and Victoria, the

Defendant has a role in protecting the catchment of Hume Reservoir (cl 51). The administrative and other expenses of the Defendant, and the costs of operating and maintaining works, are provided by the Commonwealth and the contracting States in proportions determined from time to time under Part IX of the Agreement. The Defendant must prepare detailed forward estimates annually (cl 74) for approval by the Ministerial Council (cl 72). The Defendant must account for money received from the Commonwealth and the States (cl 76). The money must be applied in accordance with the approved estimates, the work plan and the Agreement (cl 77). Whilst water is described in the Agreement as being under the control of the Defendant (e.g. cl 101), the Defendant does not itself own any water or have any interest in any water. It is not entitled to receive any share of the water. Objectives and Outcomes Document As set out at above, each year the BOC is required to approve an Objectives and Outcomes Document which specifies the objectives and outcomes to be achieved by the Defendant. It is an important document which has an elevated status by virtue of cll 30(1) and 31 of the Agreement. The Defendant is required (and permitted) to carry out its functions in relation to river operations in accordance with the O&O Document. The O&O Document for the 2017/2018 water year was dated 18 May 2017. The

2018/2019 document was dated June 2018. Both parties referred to the two versions interchangeably. Any difference between them which is relevant to the case is identified below but otherwise the version I will refer to is the 2017/2018 version. Clause 1(2) of the O&O Document provided as follows: “(2) This document: (a) specifies certain general objectives and outcomes to be achieved by the Authority in clause 4; and (b) provides for the [BOC] progressively to specify in Appendices Specific Objectives and Outcomes relating to matters such as those specified in clause 5.” Clause 4 of the O&O Document specified general objectives and outcomes. Clause 4(1) provided: “(1) Subject to sub-clause 30(1) of the Agreement and clause 6, the Authority must achieve the objectives and outcomes required by the following sub-clauses 4(2) to (6), when performing its river operation functions, but is not required to do so in any particular order of priority.” The following five subclauses of cl 4 each addressed a different topic. For each topic a number of “objectives” and a number of “outcomes” were listed. The five topics were: water storage, delivery and accounting; River Murray operating assets; people and communities; environment; and communication and information management. For water storage, delivery and accounting, cl 4(2) provided: “(2) Water storage and delivery and accounting (a)

Objectives (i) To operate the River Murray System efficiently and effectively in order to deliver State water entitlements. (ii) To maximise the water available to the Southern Basin States, after providing for operating commitments in the River Murray System. (b) Outcomes (i) The conservation of water and minimisation of losses. (ii) The accurate and timely preparation, delivery, review and, where necessary, amendment of water accounts and water resource assessments, in accordance with this document. (iii) The delivery to the Southern Basin States of their authorised water orders (including water traded under Schedule D of the Agreement), unless physical constraints of the River Murray System prevent this from occurring.” The general objectives and outcomes for River Murray operation assets included flood management. [96] The general objectives and outcomes for people and communities were specified in cl 4(4) as follows: “(4) People and communities (a) Objectives (i) To contribute to the safety of communities along the River Murray. (ii) To contribute to, and have regard for the economic, social, environmental and cultural activities and values of people using the River Murray System. (iii) The provision of water to meet critical human water needs. (b) Outcomes (i) Productive relationships with river managers, users and other stakeholders with an interest in river operations

are maintained (ii) Consistently with sub-paragraph 4(3)(b)(iv), damage to downstream communities is limited, when managing flooding. (iii) Events that may adversely affect the quality of water available for urban, irrigation, industrial, environmental, recreational or stock and domestic use are mitigated. (iv) The requirements of major public events using parts of the River Murray System are properly considered. (v) Navigational and recreational uses of the River Murray System are properly considered. (vi) Appropriate regard is given to cultural heritage matters.” The general objectives and outcomes for the environment were specified in cl 4(5): “(5) Environment (a) Objectives To contribute to the protection and, where possible, restoration of priority environmental assets and ecosystem functions within the River Murray System. (b) Outcomes (i) River operations are managed in ways which improve environmental attributes and support ecosystem functions and processes. (ii) Environmental watering activities are facilitated having regard to the environmental watering plans of the Commonwealth, The Living Murray, and Southern Basin States. (iii) The knowledge, documentary and practice bases for effective environmental watering are all improved, together with collaboration between relevant stakeholders relating to these matters. (iv) The Water Liaison Working Group and any other

relevant committee receive timely information about any significant actual or predicted change to the River Murray System’s water resources, in accordance with sub-clause 15(5). (v) The risk of significant adverse environmental events is reduced and, where such an event is unavoidable, its impact is mitigated. (vi) River operations are managed and operational practices reviewed, and if necessary altered, to ensure that rivers can be managed to achieve multiple objectives.” For communication and information management, the general objectives were specified as follows: “(6) Communication and Information management (a) Objectives To ensure that the Authority, in operating the River Murray System: (i) uses the best available data, tools and systems; (ii) keeps all stakeholders with an interest in the Authority’s river operations well informed of its plans and activities; (iii) acts transparently; and (iv) is accountable for its actions in accordance with the Agreement.” Clause 5 of the O&O Document contained a lengthy list of matters for which the BOC would specify “Specific Objectives and Outcomes”. They were to be specified progressively as appendices to the O&O Document. Clause 5(3) provided that the Defendant must achieve the specific objectives and outcomes when undertaking its river operations. As at 2017/2018 a number of specific objectives and outcomes had been specified by

the BOC. They addressed functional parts of the river system, such as Hume Dam, Yarrawonga Weir, the Barmah-Millewa Forest, Lake Victoria and the Menindee Lakes Storage. They also addressed water accounting, water resource assessment and aspects of water sharing arrangements. Some of the specific objectives and outcomes specified by the BOC are relevant to issues in the case, especially the allegations that the Defendant breached the duty of care. The relevant specific objectives and outcomes are addressed as they arise. For present purposes it is sufficient to provide an example. In relation to Yarrawonga Weir specific objectives and outcomes were specified for the maximum planned regulated flows in ML/day, the minimum planned regulated release rate in ML/day, flood operations, management of Lake Mulwala during irrigation season and supporting social and recreational use of Lake Mulwala. Whilst the Defendant’s achievement of the specified objectives and outcomes was expressed in cll 4 and 5 in mandatory language, the chapeau of cl 4 provided that achievement was subject to cl 6. Clause 6 introduced a qualification of reasonable practicability. Clause 6 provided: “Each general or specific objective and outcome specified under clause 4 or 5 includes a provision that it may be achieved: (1) only by acting at all times in accordance with the Agreement and this document; and (2)

without limiting paragraph 6(1), by doing only what is reasonably practicable in all the circumstances, after taking into consideration: (a) whether or not each of the Southern Basin States has provided the Authority with timely and accurate hydrometric and other data required by the Authority to perform its river operations effectively; (b) the high variability and uncertainty of the River Murray System relating to: (i) weather conditions and associated factors (such as precipitation and evaporation rates); (ii) inflows to rivers; (iii) use of water pursuant to water allocations and by other users; (iv) carry-over of water allocations between water years; (v) the interaction of, and movement of water between, ground water and surface water sources; (vi) the quality of water; (vii) the difficulty of accurately predicting any of the matters referred to in paragraph 6(b)(ii) [there is an error in this cross reference – logically it could mean paragraph 6(2)(b) or paragraph 6(2)(b)(ii)]; (viii) the time that water takes to travel and other physical constraints of the River Murray System; (ix) rainfall and stream flow forecasts by the Bureau of Meteorology for the River Murray System; and (x) the social and/or economic consequences of particular activities. (c) limits to the accuracy of hydrological models (such as models for water accounting and water resource assessment) and of

rainfall and stream flow forecasts; (d) uncertainty about changes to the geomorphology of river channels near flow gauging stations; (e) the need to implement particular river operations activities such as maintaining or refurbishing RMO assets; (f) the occurrence of any unforeseen event; and (g) uncertainty about the environmental consequences of particular activities (for example, because of uncertainty about ecosystem, natural biological or biophysical processes).” Clause 10 of the O&O Document provided for the preparation and adoption of another document called the Annual Operating Plan. I will refer to this document as the “AOP”. Something more will need to be said about the AOP, including the provisions of cl 10. For current purposes, the Defendant was required to give copies of the AOP to the WLWG, a committee called the River Murray Operations Committee (which I will refer to as the “RMOC”) and the BOC. A procedure was prescribed for the Defendant to amend the AOP after seeking advice from the WLWG and, potentially, the RMOC and the BOC. Clause 10(1)(d) of the O&O Document provided: “The [Defendant] will carry out its functions under Parts XII (Distribution of Waters) and XIV (Effect of Snowy Scheme) of the Agreement in accordance with the Annual Operating Plan adopted for the relevant water year, unless this document, the Agreement or the Act requires the [Defendant]

to do otherwise.” Clause 11 of the O&O Document provided for the Defendant to prepare each month a water resource assessment for the purposes of determining the volume of each State’s water entitlement. The Defendant was also required to prepare monthly water accounts. [97] Provision was made for the Defendant to refer matters first to the WLWG and then to the BOC if the Defendant concluded that it may be unable to achieve any of the specified objectives and outcomes (cl 7) or where it considered that there was a conflict between different objectives and outcomes (cl 8). In either case the Defendant could obtain “advice” (from the WLWG) or approval for a departure from the O&O Document (from the BOC). In addition, cll 13 to 17 provided a general framework for the Defendant to refer matters to the WLWG, the RMOC and/or the BOC, including referrals as contemplated by cl 33 of the Agreement. One such matter which had to be referred was addressed in cl 14(1)(a) which provided that, after first seeking advice from the RMOC, the Defendant had to refer for determination by the BOC any direction to exercise the release power under cl 98 of the Agreement if the Defendant considered that implementation of the release power was reasonably likely to result in insufficient water being available to meet all downstream orders or that the channel capacity would be exceeded if all downstream

orders for water were met. Accountability of the Defendant The statutory framework incorporates a number of layers of accountability of the Defendant. One of the general objectives specified in the O&O Document was to ensure that the Defendant is accountable for its actions “in accordance with the Agreement”. [98] Clause 12(2) provided that on 31 July each year the Defendant had to give to the RMOC and the BOC a document called the “Annual River Operations Report”. Amongst other things, the Annual River Operations Report had to summarise the river operations carried out by the Defendant and “indicate the degree to which any general or Specific Objectives and Outcomes specified under cll 4 or 5 were achieved by [the Defendant]” and any departures which were approved by the BOC. As a separate matter, cl 12(3) of the O&O Document recorded that the Defendant had determined to appoint an Independent River Operations Review Group to assist it in performing its functions under the O&O Document. The Defendant appointed the four members of the review group from a list of nominees provided by the BOC. The members had to have significant expertise in river operations. One member had to have significant expertise in relation to environmental water delivery. The review group was annually to determine the Defendant’s compliance with the O&O Document for the preceding water year. Having

obtained the report from the review group, the Defendant had to give it first to the WLWG, then to the RMOC and ultimately to the BOC. Under cl 12 of the Agreement the Ministerial Council is entitled to require a report from the Defendant regarding any of the Defendant’s functions. Under s 182 of the Commonwealth Statute the Defendant is financially accountable as a public authority under s 29 of the Public Governance, Performance and Accountability Act 2013. Section 174(1) of the Commonwealth Statute provides that the Commonwealth must pay any amount: …in discharging any liability of the Authority arising: (a) from an act of omission in the bona fide execution of the powers vested in the Authority by or under the Agreement; … The Commonwealth had to make any such payment from consolidated revenue. Clause 145 of the Agreement contains the parties’ agreement that any such payment by the Commonwealth will be borne by the contracting governments in equal shares. More broadly, Part 3 of the Commonwealth Statute prescribes mandatory periodic inquiries to be undertaken by the Productivity Commission. Section 87 provides that the Productivity Minister must refer to the Productivity Commission for inquiry “the matter of the effectiveness of the implementation of the Basin Plan and the water resource plans”. The first reference to the Productivity Commissioner had to be made by 31

December 2018 and thereafter every five years after the completion of the previous inquiry. Each reference is made under s 6(1)(a) of the Productivity Commission Act 1998 (Cth). The Chair of the Productivity Commission is required to establish a “stakeholder working group” which is to consist of unpaid members who are representatives of any agricultural, environmental, industry, Indigenous or urban water body or other body with an interest in the matter. [99] The members of the stakeholder working group are to exchange information and views and are to provide advice to the Productivity Commission. [100] The Productivity Commission is to submit a report to the Productivity Minister, the Defendant and a Minister from each Basin State. The report must be tabled in each House of the Federal Parliament. [101] Section 50 of the Commonwealth Statute further provides that the Basin Plan must be reviewed by the Defendant at least once every ten years. The Defendant must give a report of the review to the Minister and to the States. A detailed review process is prescribed in Subdivision G of Division 1 of Part 2. Each year the Defendant must also conduct an analysis of the “Basin Plan’s effectiveness” and give a written report to the Minister and each member of the Ministerial Council, which report must be tabled in Parliament. [102] The NSW Statute and the Victorian Statute Turning then

to the States, at the time relevant to this case the distribution of water within New South Wales was regulated by the NSW Statute. Part 2 of Chapter 3 of the NSW Statute establishes a regime of access licences to be granted by the NSW Minister [103] upon such conditions as the Minister thinks fit from time to time. [104] Access licences give the holder an entitlement to take and use water in a specified area, one of which is the “Murray Regulated River”. [105] There are different categories of access licences. [106] The water which is made “available” to the holders of access licences is determined by the Minister from time to time. [107] The position is essentially the same in Victoria although the terminology used in the Victorian Statute is different. The relevant provisions are contained in Part 3A of the Victorian Statute. The allocation of water to individual entitlement holders is determined by the Victorian Minister or a Victorian water authority from time to time. Neither the NSW Statute nor the Victorian Statute specifies any role for the Defendant to play in the allocation of water to holders of water entitlements in either State. Plaintiffs’ submissions on duty of care Submissions that duty arises from an assumption of responsibility The Plaintiffs submit that a duty to take reasonable care to avoid pure economic loss may arise where there has been an assumption of

responsibility without the requirement separately to consider the salient features of the case. The Plaintiffs rely on Edelman J in the Mallonland case at [61] and [66] and a number of English cases [108] for the proposition that an undertaking by a defendant to take on a task for a plaintiff (or for a class of which the plaintiff is a member) may be implied not only from the defendant’s conduct but also from its “office”. It is submitted that there may be an assumption of responsibility from the performance of a statutory obligation or the operation of a statutory scheme. The Plaintiffs submit that in this case the Defendant has expressly or impliedly undertaken to perform river operations with due care, amongst other things, to protect the Plaintiffs from the risk of economic loss that arises from inefficient river operations. As submitted, the Plaintiffs identify the relevant function of the Defendant to be the requirement in cl 29(1)(b) of the Agreement to give effect to high-level decisions of the BOC. The high-level decisions are said relevantly to be found in the O&O Document. The Plaintiffs’ case is that the Defendant owed them a duty of care when giving effect to the objectives and outcomes in the O&O Document. In support of their argument the Plaintiffs emphasise a number of matters. First, it is submitted that the BOC made policy decisions. The Defendant’s

implementation of those decisions may be characterised as operational because the Defendant made decisions which were a product of administrative direction, expert or professional opinion, technical standards or general standards of reasonableness. That perspective is said to be supported by the requirement that the Defendant refer certain matters to the BOC for approval in accordance with cl 33 of the Agreement and cll 13-17 of the O&O Document. Next, the Plaintiffs submit that the Defendant’s river operations functions are subject to “empirical, hydrological standard[s]” which are apt to supervision by the Court, although the Plaintiffs do not identify a precise or measurable content of the standards. The Plaintiffs instead refer to numerous statements in the documents about efficiency, effectiveness, maximisation, minimisation of waste and reasonable practicability. The Plaintiffs submit that the Defendant’s conduct is amenable to review by the Court and therefore it is capable of being subject to a duty of care. The Plaintiffs further submit that the provisions of the O&O Document recognise and formalise a direct relationship between the Defendant and irrigators such as the Plaintiffs when the Defendant undertakes its river operations functions. The Plaintiffs rely on statements which refer to people using the Murray River system and stakeholders. The Plaintiffs

particularly rely on cl 14(1)(b) of the O&O Document which required the Defendant to refer to the BOC any decision which would likely require a State to reduce the volume of allocations it has previously announced as being available to water entitlement holders. The Plaintiffs further submit that a direct relationship with irrigators arises from the “interconnected statutory framework” which includes the NSW Statute and the Victorian Statute by which the States allocate water to individual water entitlement holders. The Defendant’s obligation to maximise the water available to the States is to be seen in that light. A relationship between the Defendant and irrigators is said further to be created and facilitated by the objects of the Commonwealth Statute which refer to optimisation of economic outcomes and the use of markets to achieve efficiency. Reference is also made to the extrinsic materials which recognise the importance of the Murray River to irrigated agriculture in Australia and the national leadership and integrated management to be provided by the Defendant as an “independent expert”. [109] The Plaintiffs submit that the release power in cl 98 of the Agreement is central to the Defendant’s river operations functions. By reference to what Beech-Jones J said in [20] of Chapter 11 of his Honour’s Judgment in the Queensland Floods case, the release power is not a mere

statutory power because the non-exercise of the release power is the positive exercise of a power to store water which would otherwise be released. By reason of these matters, the Plaintiffs submit that the Court ought to find that the Defendant assumed responsibility to the Plaintiffs when it exercised the release power. Whilst much attention was given to the Defendant’s exercise of the release power in 2017 and 2018, there is one aspect of the Plaintiffs’ case which does not arise from an exercise of the release power. Prior to 10 September 2018 the Defendant operated the river system without the benefit of access to the infrastructure privately owned by MIL. The Plaintiffs submit that the Defendant’s duty of care included an obligation to obtain access to the MIL infrastructure. The Plaintiffs submit that this part of their case falls within the pleading. The Defendant’s function of giving effect to high-level decisions of the BOC as set out in the O&O Document included the specific objectives and outcomes in cll 5.1 and 12.9 of Annexure A to the O&O Document. Those specific objectives and outcomes addressed bypassing the Barmah Choke with a controlled flow which “may be directed” through the MIL infrastructure in certain circumstances. The specific objectives and outcomes contemplated discussions and agreement with MIL for that purpose. The Plaintiffs do not identify a

specific power of the Defendant in respect of which there was an assumption of responsibility for this part of their case, although under s 173 of the Commonwealth Statute the Defendant has the power to do anything that is necessary or convenient to be done for or in connection with the performance of its functions. The Plaintiffs appear to contend that the Defendant assumed a responsibility to them when negotiating with MIL about access to the MIL infrastructure. In addition to the statutory framework, the Plaintiffs submit that the assumption of responsibility is further demonstrated by contemporaneous communications from the Defendant to irrigators and the general public in which the Defendant repeatedly referred to its awareness of and responsibility variously to farmers, communities, irrigators, agricultural industries, entitlement holders and stakeholders. The Plaintiffs also rely on two of the Defendant’s internal documents (a draft reference manual and an email between two employees of the Defendant on 3 September 2018) which contained expressions of responsibility to irrigators, together with the subjective views expressed by the witnesses from the Defendant who gave evidence in these proceedings. The Plaintiffs emphasise that some of the views expressed by officers of the Defendant were expressed in terms of irrigators ordering water from the States which then

collated the orders and passed them on to the Defendant. The Plaintiffs also rely on some minutes of contemporaneous meetings where similar expressions of responsibility are recorded, although the meetings were not meetings of the Defendant but meetings of the BOC (albeit attended by some officers from the Defendant). The Plaintiffs see further support for an assumption of responsibility by reason of charges levied on irrigators which charges were calculated by reference to the costs incurred by the Defendant in performing its functions. The fact that the Agreement addresses allocations to the States and not to individuals or even classes of individuals is said by the Plaintiffs to be a “lawyerly device” which is not reflective of reality. Alternative submissions about the salient features of the case The Plaintiffs alternatively submit that even if there was no assumption of responsibility by the Defendant it was nonetheless subject to a duty of care to avoid pure economic loss to the Plaintiffs because of the salient features of the case. The features of the case which are said to be salient and which support a finding that the alleged duty of care was owed are: the Defendant’s actual knowledge of the pleaded risks of harm (which knowledge is admitted), including the Defendant’s knowledge of the States’ systems of allocation of the water which the States received from the

Defendant; the degree and nature of the Defendant’s control over the risks of harm which eventuated, which the Plaintiffs say was exclusive when the risks of harm are properly identified as the risk of receiving less water by way of allocation from the Murray River system pursuant to the State water entitlements which they held; the Plaintiffs were vulnerable because they were unable entirely to protect themselves, especially when the risks of harm are properly identified, and in any event; and the Defendant’s knowledge that irrigators were reliant upon the Defendant’s undertaking of its river operations in a way which was distinct from the general public. The Plaintiffs submit that the class of persons to whom the alleged duty was owed was not indeterminate. Whilst large, it was limited by reference to the water entitlements which had been issued under the NSW Statute and the Victorian Statute at the relevant time. It is accepted that the holders of water entitlements changed from time to time, but the members of the class can be determined after the event which is sufficient for them to have been owed a duty of care. [110] The quantum of loss is capable of determination by reference to each State’s system of allocation and the circumstance of each Group Member’s irrigated agricultural activities. The liability for breach of the alleged duty is therefore capable of calculation

for the purposes of indeterminacy. The Plaintiffs submit that the duty for which they contend is not inconsistent with the statutory framework. They submit that conflicting claims to the scarce water resources of the Murray River system have been “resolved conclusively” by the Agreement, and that now the Defendant is the independent expert which implements the high-level decisions of the BOC. The mere fact that the Defendant may be subject to other duties, or that the statutory regime constrains the manner in which the Defendant is to undertake its river operations functions, does not preclude the imposition of a duty of care to protect the Plaintiffs from economic loss. The Plaintiffs submit that the duty is harmonious with the statutory framework and indeed enhances its central feature by encouraging the Defendant to conduct the river operations functions efficiently. The Plaintiffs point out that s 174 of the Commonwealth Statute and cl 145 of the Agreement contemplate that the Defendant may incur liability from acts or omissions in the bona fide execution of its powers which is said to be consistent with the Defendant owing a duty of care in some cases, including this case. Defendant’s submissions on duty of care The Defendant submits that a novel duty of care is to be assessed having regard to the salient features of the case. For a statutory authority that assessment must

begin with the statutory framework. The Defendant makes a number of submissions about the statutory framework. It submits that the statutory framework establishes a relationship between the Defendant and the States but not between the Defendant and the Plaintiffs. The Defendant emphasises that the only entitlements specified in the Agreement are entitlements of the States. The individual entitlement holders do not feature anywhere in the statutory framework. It submits that the water entitlements of the Plaintiffs are creatures of the State statutes and that the allocation of water to those water entitlements depends upon the exercise of discretion by State ministers and agencies. Any protection for individual entitlement holders is through the States’ relationships with the Defendant. The Defendant submits that there are multiple different holders of water entitlements within each State as between which water is allocated by the State in accordance with its own policy interests. The Defendant further submits that accountability is intended to operate at the political level, not the legal level. The Defendant further submits that as a matter of practice there is no relationship between the Defendant and individual water entitlement holders. Whilst it accepts that the orders for water placed by the States with the Defendant reflect the orders placed by entitlement holders with

each State, the Defendant has no interest in the identity of individual entitlement holders. The States are responsible for retail water accounting. The Defendant is reliant on data from the States as to diversions of water from the Murray River system, which data is essential to the conduct of the Defendant’s river operation activities. The Defendant submits that the Plaintiffs’ demarcation between high-level policy decisions and operational decisions ought not to be accepted and that there are aspects of the decisions which the Defendant makes which are not neatly described as either policy or operational. In any event, the Defendant submits that the fact that the decision may be characterised as operational does not mean that a duty of care will exist. More pertinently, the Defendant submits that its decisions are not subject to an empirical, hydrological standard and that they are not apt for supervision by the Court. The Defendant submits that the O&O Document provided a mechanism for resolving conflicts between the various objectives and outcomes, namely consultation with the States through the WLWG, the RMOC and the BOC. Such a regime does not allow for a duty of care to be owed by the Defendant to one class of users when there may be a conflict with a duty owed to others. The Defendant submits that incompatibility with the statutory framework is fatal to an alleged duty

of care and that that is the position in the present case. At the very least the imposition of a duty of care to avoid pure economic loss to the Plaintiffs would distort the Defendant’s performance of its statutory functions. Indeed, it would subject the Defendant to conflicting and irreconcilable obligations. The Defendant submits that it is already subject to actual conflicts, including as between the States, between the environmental and other water entitlement holders and between different classes of water entitlement holders. Some specific examples of situations are given which the Defendant submits are actual conflicts. Beyond incompatibility with the statutory framework, the Defendant accepts that pure economic loss to the Plaintiffs was reasonably foreseeable. The Defendant nonetheless denies that it has control over the source of the risk of harm which it identifies as suffering “economic loss as a result of receiving less, or insufficient, water”. The Defendant says that the primary source of that risk of harm is low rainfall. The Defendant reasons that the Plaintiffs are not vulnerable because there are measures available to them to manage the risk of low rainfall, including purchasing temporary water, building dams, levies and sinking bores etc. The Defendant further submits that the duty of care alleged by the Plaintiffs would give rise to an indeterminant

liability. It points out that the definition of Group Member in paragraph 8 of the Statement of Claim extends beyond the holders of water entitlements to include contractual counterparties and entities which “utilised” the water entitlements of others. The Defendant submits that it is not apparent how it could have identified all class members or how it could estimate each person’s business or trading losses. The Defendant submits that if the duty of care is owed to the Plaintiffs and Group Members, a similar duty would be owed to others who use the Murray River for economic purposes, and others located elsewhere in the Murray-Darling Basin. The Defendant submits that assumption of responsibility is not a free-standing basis for the imposition of a duty of care. But even if it is, the analysis must begin with the statutory framework which in this case does not erect or facilitate the necessary relationship between the Defendant and the Plaintiffs. The Defendant submits that the salient features of this case are such that the Defendant did not owe a duty to avoid pure economic loss to the Plaintiffs. The duty would be incongruous with the statutory framework Structure of the reasons for finding incongruity with the statutory framework Before addressing the submissions of the Plaintiffs about assumption of responsibility and the salient features of the case, it makes sense to

address congruency with the statutory framework because this is a case where the statutory framework precludes the alleged duty of care. [111] This is not a case where a statute speaks directly to the existence of a duty of care. Rather it is a case where there is a more abstract notion of incongruity between the alleged duty of care and the purpose of the statutory framework which is to be ascertained by reference to the language of the Commonwealth Statute, the Agreement and the O&O Document. [112] On the topic of congruency, the immediately-following parts of these reasons address: the requirement that the Murray River system be operated in the public interest; the Defendant’s establishment within a regulatory framework centred on the interests of the States; the absence of a relationship between the Defendant and the Plaintiffs; the environment of conflicts in which the Defendant operates; the inherent operational conflict which specifically arises from South Australia’s entitlement to receive monthly quantities of water; other conflicts which arise; the provision for accountability of the Defendant within the statutory framework; the statutory framework’s recognition of our imperfect knowledge of the Murray River system. These reasons then proceed to address the topics of assumption of responsibility, the salient features of the case, indeterminacy and the imprecise and

uncertain content of the alleged duty of care. They conclude with consideration of the cases from which the Plaintiffs seek to draw analogies. The Murray River system is to be operated in the public interest The outline of the statutory framework which is set out above demonstrates the intention that the Murray River system be operated in the public interest. The intention is expressed in the long title of the Commonwealth Statute, where reference is made to the national interest, and is apparent from the objects specified in s 3. The purpose of the statutory framework for which the Defendant was established and in which it functions is further to be understood in light of the fact that the subject matter which is to be regulated is the water of the Murray-Darling Basin. The statutory framework proceeds from the premise that it is a valuable and scarce resource. Those features of the resource are consistent with an intention that the river system be operated efficiently but it is difficult to give meaning to the concept of efficiency without an understanding of who is intended to benefit from the efficiency. The statutory framework addresses itself to the benefits to be had from the water in the Murray River system in terms which are uniformly generalised. Reference is made to types of activity rather than to those who undertake the activity: economic, social, environmental,

cultural, irrigation, industrial, recreational, stock and domestic use, critical human needs and national security. Some of the identified benefits are susceptible to a degree of measurement but some not at all. Some of the benefits are non-financial, either entirely or in part. Apart from critical human needs, the statutory framework does not generally attempt to prioritise or even compare one kind of benefit to another. Harmoniously with referring to the benefits with a high degree of generality, the statutory framework contemplates that the enjoyment of the various benefits will be at a level which is collective. An example which is pertinent is the object of the Commonwealth Statute which is specified in s 3(d)(iii) which refers to “the net economic returns to the Australian community”. Nowhere in the statutory framework, including the O&O Document, is there a reference to the enjoyment of benefits by any particular group or a particular class of individuals. Indeed a prominent feature of the statutory framework is the absence of any reference to persons in an individual capacity and the absence of any reference to individual water entitlements. Leaving aside the NSW Statute and the Victorian Statute (see below), the Plaintiffs refer to only one place in the voluminous regulatory documentation where reference is made to holders of water entitlements, namely cl 14(1)(b) of

the O&O Document (there is a variation on the same theme in cl 15(1)(b)). Clause 14(1)(b) required the Defendant to refer a matter to the BOC after first seeking advice from the RMOC in the following circumstance: “(b) Reduction in Water Allocations within a State Any proposal by the [Defendant] to adjust the volume of water available to meet a State water entitlement, if the [Defendant] considers that such an adjustment is likely to require a Southern Basin State to reduce the volume of allocations it has previously announced as being available to water entitlement holders in that water year.” Clause 14(1)(b) made reference to water entitlement holders but the clause was concerned with the position of the State, not the position of individual water entitlement holders. The situation in which the Defendant was obliged to refer the matter to the BOC was not the physical movement of water but an account adjustment to the water allocation to a State. The situation turned on the State having already made an announcement, not the prospect of water entitlement holders receiving less water in the future. If no allocation had yet been announced by the State, cl 14(1)(b) did not require the Defendant to refer a decision to the BOC even if the decision would result in the State announcing a reduced allocation to water entitlement holders in the future. Clause 14(1)(b) was evidently

concerned with management of the State’s relationship with water entitlement holders by virtue of the State having already made an announcement which may not be fulfilled. The intention that the water of the Murray-Darling Basin be managed in the public interest is an unpromising framework to look for a duty of care being owed to individuals or classes of individuals such as the Plaintiffs. [113] The regulatory framework is centred on the interests of the States The structure which has been adopted to serve the public interest is for the States to agree upon a regime for the water of the Murray-Darling Basin to be shared amongst the States and for there further to be agreed accounting rules by which that water sharing regime will be implemented. The agreed water sharing regime and accounting rules are set out in the Agreement. Each year they were also addressed in cll 11 and 12 of the O&O Document. The terms of the Agreement and the O&O Document make clear that the role of the States is central and substantive. For example, the express purpose of the Agreement is to give effect to the Basin Plan, the Commonwealth Statute “and State water entitlements”. The term “river operations” is defined in the Agreement by reference to “sharing water between State Contracting Governments”. The Agreement establishes not only the Ministerial Council (Part III) but also the BOC (Part IV). No

less than the Ministerial Council, the BOC is populated by members who “represent” the States and Territory (cl 18). Matters are to be referred to the BOC if they have the potential to have “a material effect on State water entitlements”. Under cl 102A the initial requirement to meet critical water needs is to be distributed by the Defendant amongst the States. Under cl 102C the Defendant may arrange for one State to advance water to another. The Defendant’s general objective in cl 4(2)(a)(i) of the O&O Document was to operate the River Murray system efficiently “in order to deliver State water entitlements” and in cl 4(2)(a)(ii) to maximise the water available “to the Southern Basin States”. The general outcome specified in cl 4(2)(b)(iii) was delivery to the States of “their authorised water orders”. All entitlements to receive water are expressed as entitlements of the States. [114] There are many other provisions which are directed to the interests of the States. Specifically, and relevantly for this case, the interests of the States are the touchstone by which the Defendant is to exercise its power to direct the release of water from upper River Murray storages. In giving directions, the Defendant must have regard to maintaining supply to South Australia of the quantities of water to which it is entitled (cl 98(3)(i)) and facilitating the exercise of New South Wales and

Victoria of their respective rights to use water from the upper River Murray as they require (cl 98(3)(iv)). As will be seen, there is a direct conflict between those two matters. Whilst the Agreement provides a regime for the management of that conflict, a conflict subsists at the practical, operational level by virtue of the unpredictable, uncertain and dynamic nature of the Murray River system. The central role of the States is apparent from the Second Reading Speech of the Commonwealth Minister for the Environment, Heritage and the Arts on 25 September 2008 when the Commonwealth Statute was amended to recognise the Agreement. Hansard records the Minister’s statement that the States had referred powers to the Commonwealth as part of a new area of cooperative arrangements to face the challenges of water scarcity and water security. The Ministerial Council and the BOC were said to have been established so that the States would have a major role in putting the Basin Plan into effect. Within that framework the Defendant has been established as an expert which is independent of the States to deliver water to the States in accordance with their agreed sharing regime and utilising their agreed accounting rules. The Minister’s Second Reading Speech went on to refer to the establishment of the Defendant as an “independent expert” agency, first to prepare the Basin Plan and then to

ensure that the water resources are managed in an integrated and sustainable way. The independence to which the Minister referred is independence as between the States. It is necessary that the Defendant have that independence because the States have interests which provide the context in which Defendant was established to operate and between which there is potential for conflict. The independence of the Defendant is also to be understood in the context that by consent to the Agreement the States have in substance forfeited important controls to the Defendant. The States own and operate various dams and weirs by which the Murray River system is regulated but, if the Defendant directs a release of water, s 98(1) provides that water must be released in accordance with that direction. The statutory framework does not require or even acknowledge the existence of the allocation systems of the individual States (apart from the references in cl 14(1)(b) of the O&O Document). The position of individual holders of water entitlements is left to regulation by each State. Allocation of water in New South Wales is currently (and was at the relevant time) the subject of the NSW Statute and in Victoria it is currently (and was at the relevant time) the subject of the Victorian Statute. The Defendant submits that allocation within each State involves an exercise of discretion by Ministers and

government agencies but that should not be overstated. For another purpose (causation), the Defendant accepts that each State has a system of allocation to water entitlement holders which is deterministic or mechanistic once the allocation to the State by the Defendant has occurred. Nonetheless, each State’s system is a matter for it. New South Wales and Victoria’s respective systems are similar but not identical. There are differences between each State’s population, geography, infrastructure, environment and climate. Victoria has classes of water entitlements for which New South Wales does not have an equivalent. For the purposes of determining allocations to water entitlement holders, Victoria currently makes a different (less pessimistic) assumption about the probability of future rainfall to that made by New South Wales. Each State’s system gives rise to water being received by entitlement holders in different quantities. For example, by the first week of October 2017, the holders of general security access licences in New South Wales had been allocated 29% of their entitlements whereas the holders of equivalent entitlements in Victoria had been allocated 100%. Apart from New South Wales and Victoria, South Australia has different entitlements under the water sharing arrangement and its own system of allocation to water entitlement holders. Under cl 91 of the Agreement

South Australia had certain rights to defer receipt of some of its monthly entitlements. On 2 May 2018 there was a meeting of the WLWG at which the South Australian representatives said that there may be a change in the approach to the exercise of South Australia’s deferral rights following the recent state election. Any impact on the quantum or timing of allocations to South Australian water entitlement holders was a matter for the South Australian government. The role created for the Defendant within the statutory framework runs as far as allocation of water to the States and fulfilment of water orders from the States but no further. The Defendant has no role in the allocation or other use of water by each State. The Defendant does not know what water has been diverted by individual holders of water entitlements other than what the States report back to the Defendant for the purpose of the determination of future allocations to the States. Pursuant to cl 6(2)(a) of the O&O Document the Defendant’s obligation to achieve its objectives and outcomes was subject to the States providing timely and accurate data about allocations to their water entitlement holders. The absence of a role for the Defendant in the allocation of water to individual water entitlement holders is incongruent with the Defendant owing the Plaintiffs a duty of care. The tension between the focus of the

Defendant’s statutory role and the alleged duty of care is apparent from the way the Plaintiffs have sought to find a home for the alleged duty amongst the Defendant’s statutory functions and powers. The Plaintiffs ultimately submit that the specific function of the Defendant to which the duty “attaches” is the function in cl 29(1)(b) of the Agreement “to give effect to any high level decision of the [BOC] in relation to river operations”. It is a strange choice (not that there is a better one) because cl 29(1)(b) refers to another entity which is not the Plaintiffs. As explained above, the BOC is comprised of members who represent the Commonwealth, the States and the Territory. The members must act unanimously. Pursuant to cl 26(1)(c) of the Agreement the BOC’s functions relevantly include exercising responsibility for high-level decision making in relation to river operations, including setting objectives and outcomes to be achieved by the Defendant in relation to river operations. The definition of “river operations” is set out above, from which the focus on the States is apparent. The requirement that the Defendant give effect to the BOC’s objectives and outcomes may indicate an intention that the Defendant owes a duty to the BOC as a representative committee of the States, or directly to the States, but not a duty owed to the Plaintiffs. There is no sufficient relationship

between the Defendant and the Plaintiffs In that context, there is no support in the Commonwealth Statute, the Agreement, the O&O Document or in the State statutes for the Plaintiffs’ contention that a relationship has been erected between them and the Defendant. Nor can it be said that the statutory framework facilitates any such relationship, and certainly not one which displays sufficient characteristics to warrant the imposition of a common law duty of care to avoid economic loss to the Plaintiffs. The Plaintiffs submit otherwise but the provisions relied upon are insubstantial and fall well short of that which is required. The Plaintiffs submit that cl 14(1)(b) of the Agreement demonstrates an intention that there be a direct relationship between the Defendant and the Plaintiffs but for the reasons given above there is no support in cl 14(1)(b) for such a relationship. It is further to be observed that the reference in cl 14(1)(b) to “water entitlement holders” was not limited to the Plaintiffs and Group Members in this case but included all holders of water entitlements including those in South Australia, those in other parts of the Murray-Darling Basin, traders of water entitlements who do not use them for agriculture and environmental water holders. There is nothing to distinguish the Plaintiffs and Group Members from all other water entitlement holders. The Plaintiffs

also place reliance on s 174 of the Commonwealth Statute which provides that the Commonwealth must pay to the Defendant any amount paid by the Defendant to discharge a liability arising from an act or omission in the bona fide execution of the powers vested in the Defendant. Section 174 contemplates that the Defendant may incur a liability from an act or omission which occurs in the execution of its powers but it is a generic provision. It does not reveal anything about the sort of liability that the Defendant may incur (if any) and to whom (if anyone). The Plaintiffs also rely upon cl 145 of the Agreement which provides a mechanism for a payment made by the Commonwealth in respect of a liability of the Defendant to be shared with the States equally. Clause 145 contemplates that the Defendant may incur a liability, but it is another generic provision. Indeed, when the detail of the States’ agreement to contribute to liabilities of the Defendant is considered it undermines any expectation that the Defendant might incur a liability to a particular class of water entitlement holders by reference to their geographic location, such as the Plaintiffs and Group Members in this case. Under cl 145 New South Wales, Victoria and South Australia must contribute even if the Defendant’s liability arises from an execution of power which did not occur in that State and did not relate to that

State (cf the more limited obligation of Queensland (cl 37) and the Australian Capital Territory (cl 38)). The contribution regime may give rise to anomalous results if the Defendant incurs a liability as an incidence of a relationship with water entitlement holders located in a particular State. The present case illustrates the point. The Plaintiffs contend that the Defendant owed a duty of care to certain holders of water entitlements located in New South Wales and Victoria. If the Defendant is liable to pay compensation to those water entitlement holders, South Australia will be required by cl 145 to contribute equally to that liability. The Plaintiffs do not refer to any other provision of the statutory framework to support a finding that it erects or facilitates the necessary relationship between the Defendant and them. Of course the benefits to be obtained from the water of the Murray-Darling Basin concerns people as individuals and as members of classes. Different individuals and classes will have different interests in the various benefits, some more immediate than others. In light of the NSW Statute and the Victorian Statute, the Plaintiffs and other holders of water entitlements in those two States will be affected by the performance of the Defendant’s functions. It is not to be supposed that the statutory framework has been put in place in ignorance of that reality.

Nonetheless the present task is to examine the statutory framework to ascertain whether it is intended to erect or facilitate a relationship between the Defendant and the Plaintiffs which warrants intervention by the tort of negligence, and specifically a duty of care to avoid pure economic loss to the Plaintiffs and Group Members. The Plaintiffs’ submission that the interposition of a role for the States is a lawyerly device proceeds from a hindsight perspective of the events which have happened and finds no support in statutory framework. The Court’s task in considering the statutory framework is objectively to discern intention, in the first instance of the Commonwealth Parliament and then of the States and Territory acting directly as parties to the Agreement and indirectly through the BOC’s approval of the O&O Document. Especially in a Federation where the relevant river runs through (or along) four states, there is nothing to suggest that the statutory framework has been adopted to avoid the Defendant owing a duty of care it would otherwise owe to individual water entitlement holders in the various States. The statutory framework requires the Defendant to function in the face of conflict There is another aspect of the statutory framework which cannot be reconciled with the Defendant being subject to a duty to avoid economic loss to the Plaintiffs. Inherent in the waters

of the Murray-Darling Basin being a valuable and scarce resource is conflict amongst those concerned with the waters’ use. The Defendant is required to conduct its functions in the face of conflict. Decisions made by the Defendant may benefit some interests and prejudice others. Recognising the difficulty which potential conflict poses to subjecting the Defendant to the alleged duty of care, the Plaintiffs submit that all conflicting claims to the scarce waters of the Murray-Darling Basin have been “resolved conclusively” by the Agreement. They specifically rely upon cl 88 which provides for South Australia’s entitlement and cl 94 which provides for the sharing of the residual water between New South Wales and Victoria. The Plaintiffs submit that the result is that the Defendant has been left with a purely operational role. They submit that the efficient operation of the river system will serve that conclusive resolution of conflicts. There is therefore room for a common law duty of care. They say that such a duty would enhance the statutory framework’s expressed concern for accountability. The imposition of the alleged duty does not therefore conflict with the statutory framework. There are two difficulties with this argument. First, the only conflicting claims which have been addressed by the statutory regime are claims amongst the States. The statutory framework is not

concerned with and does not address conflicting claims between different classes of water entitlement holders, whether the difference be geographic, reliability of access, type of use, temporal or other. The Defendant is required to perform its functions in the face of all such conflicting claims. Secondly, the premise that there has been a conclusive resolution of all conflicting claims cannot be accepted even amongst the States. The Plaintiffs’ submissions to the contrary do not pay sufficient regard to the nature of the task required to operate the Murray River system and the inherently unpredictable, uncertain and dynamic environment in which that task is to be performed. When those matters are properly taken into account, it is clear that an important aspect of the Defendant’s functions is to manage competing risks in the delivery of State water entitlements. The parties to the Agreement have agreed a framework within which the Defendant is to manage the risks but they have not eliminated all potential for conflict in the performance of the Defendant’s functions. Conflict arises from South Australia’s entitlement to receive monthly quantities of water One key area of conflict which is relevant to the Defendant’s functions arises from the competing risks inherent in meeting South Australia’s water entitlement each and every month. The conflict is central to the issues in

the present case. In addition to informing the determination of whether the Defendant owed the Plaintiffs a duty of care, the conflict is also relevant to the allegations that the duty of care was breached. It is appropriate for the issue to be addressed in some detail. The Agreement provides that South Australia “is entitled to receive” a specified number of megalitres of water each month (cl 88) measured as the water flows past specified locations along the Murray River and the Lindsay River close to the border with New South Wales (cl 89). South Australia’s monthly entitlement to receive is subject to South Australia’s right to defer (cl 91). It is further subject to the South Australian member of the BOC making a request to the Defendant that there be a limited variation between months, to which request the Defendant “may” accede (cl 90). New South Wales and Victoria are generally entitled to half the water in the Murray River system after South Australia’s entitlement has been deducted (cl 94). Water which flows over the border in excess of South Australia’s entitlement therefore increases the water received by South Australia at the expense of the water remaining in the system for allocation to New South Wales and Victoria (cll 92 and 93). Apart from cl 90, these provisions are expressed in mandatory terms. The Plaintiffs specifically submit that this regime means that

there is no conflict between the States because “South Australia’s entitlement must be met”. The simplicity of that submission accords neither with the practical reality of implementing the Agreement nor with the full terms of the Agreement. Taking the practicalities first, receipt of South Australia’s entitlement might be implemented with precision month after month if there was an unlimited reservoir of water immediately adjacent to the South Australian border which could be accessed by a tap, turned on and off at will. [115] The reservoir would need to be unlimited not just as to the water available to be released from it but also as to its capacity to store any additional water which flows down. In reality the achievement of South Australia’s entitlement depends upon a large and complex river system which behaves in an inherently dynamic, imprecise and uncertain way. Key aspects of the river system which affect the receipt of water by South Australia include natural flows in the river, inflows resulting from rain, diversions for use, conveyance losses, evaporation losses, the location and capacity of upstream storages, flow times from storages, channel capacity and temperature. Future rainfall and inflows into the river system upstream of the South Australian border are unknowable within time frames which are critical to the operation of the river. Winter months are

generally wetter than summer months but rainfall cannot be predicted with reliability beyond four days into the future and not at all beyond eight days. In accordance with the law of gravity, it is possible for water to flow to the South Australian border from other parts of the river system. The primary storage of operational water is Hume Reservoir. It generally takes 25-26 days for water to flow from Hume Reservoir to the South Australian border. Another potential source of water is the Menindee Lakes from which it takes approximately 14 days for water to flow to the South Australian border. The water in the Menindee Lakes is not always available for the purpose of supplying South Australia’s entitlement and the volume of water which can be transferred from that source is significantly less than from Hume Reservoir. The last storage before the South Australian border is Lake Victoria from which it generally takes one day for water to flow to the border. Evaporation rates are materially higher at Lake Victoria than at Hume Reservoir. There is therefore an efficiency cost in transferring bulk water from Hume Reservoir to Lake Victoria for the purpose of having enough water waiting closer to the border to meet South Australia’s entitlements over upcoming months. It follows from the uncertainties and imprecisions in these aspects of the river system that meeting South

Australia’s monthly entitlement involves inescapable and irreducible risks. The evidence refers to two risks. First, there is the risk of system shortfall which is the risk that there will not be enough water in the river and the storages close enough to the border to ensure that South Australia receives next month’s entitlement under cl 88. Secondly, there is the risk of spill which is the risk that there will be too much water in the river and not enough spare capacity in the storages (particularly Lake Victoria) to ensure that water in excess of South Australia’s entitlement for the next month does not flow across the border. The risk of system shortfall and the risk of spill are in direct conflict. Whilst the quantity of water currently stored in Lake Victoria may mean that there is a very low risk that South Australia will not receive its monthly entitlement in the immediately upcoming month or months, the risk of system shortfall increases for months further into the future. Subject to what happens with rainfall across the river system, it may be possible to keep the risk of system shortfall at virtually zero by regularly transferring water from Hume Reservoir to ensure that Lake Victoria is at a constantly high level. However, unforeseen and unforeseeable rainfall may occur after water has left Hume Reservoir but before it arrives at Lake Victoria with the result that

there is not enough capacity to store all the excess water in Lake Victoria before it can be released to South Australia in accordance with future monthly entitlements. Therefore a measure taken to reduce the risk of system shortfall may increase the risk of spill. In view of the fact that the quantity of water South Australia is entitled to receive in any month is not reduced if it has received a greater quantity than it is entitled to receive in a previous month (cl 93), and New South Wales and Victoria are entitled to share the water in the river system after South Australia has received its entitlement (cl 94), the three States have conflicting interests in relation to the balance between the risk of system shortfall and the risk of spill. There may be costs to New South Wales and Victoria from reducing the risk of system shortfall for the benefit of South Australia. Those costs may not be limited to running an increased risk of spill. In particular, transfers of water from Hume Reservoir result in material reductions in the water in the river system available for allocation to New South Wales and Victoria through conveyance losses and increased evaporation. The foregoing description is a simplification. There are other aspects of operating the river system which directly affect the receipt of South Australia’s monthly entitlement. Access to the water in the Menindee Lakes

is subject to minimum storage levels which have been set partly in response to concerns for local areas of human habitation. There are four lakes in the Menindee Lake system and there are different considerations to take into account as between releasing water from each. The storage level at Lake Victoria is subject to some seasonal limits which have been imposed to serve local Indigenous historic and cultural interests in the stability of the lake foreshore. There are channel capacity restraints between Hume Reservoir and the South Australian border which have to be accommodated, sometimes in coordination with holders of environmental water entitlements. Inter-valley trading accounts may provide alternative sources of water with different lead times but they require accounting adjustments, possibly between New South Wales and Victoria. These matters may affect the balance between the risk of system shortfall and the risk of spill. The fundamental challenge which confronted the Defendant each year is apparent from the following high-level description of its work taken from the Affidavit dated 30 June 2022 by Mr Bishop: “162 In my experience, when considering bulk-system operations, members of the River Operations team have regard to balancing the risk of system shortfall with the risk of spilling water from Lake Victoria. 163 There are two categories of shortfall: a delivery

shortfall, and a system shortfall. 164 A delivery shortfall is forecast when short-term demand is forecast to be higher than the available water in the Murray River above the minimum flow rate. For example, if there was a significant spike in demand, usually due to hot weather, and there was insufficient time to release water from Hume Dam or the Goulburn and Murrumbidgee Rivers to meet the high demand. 165 A system shortfall is forecast when there is not enough capacity to meet all demands through the River Murray System and still ensure South Australia’s adjusted entitlement is delivered. In my experience, whether a system shortfall occurs is dependent on the forecast level in Lake Victoria to meet South Australia’s adjusted entitlement. A system shortfall is most likely to occur in Summer and Autumn when demand upstream of Lake Victoria is high. 166 I discuss spill at Lake Victoria at paragraphs 162 to 172 above. When the river is regulated, the River Operations team generally operate the system to avoid water spilling from Lake Victoria because spilled water deprives the system of available water. 167 The risk of system shortfall and the risk of spilling water from Lake Victoria are sought to be balanced: a. By Senior River Operators and the Director of Operations on a monthly time-step (that is, viewing the River Murray System on a month-by-month basis) for the rest of the

Water Year through the AOP; and b. by the Duty Operator in consultation with other members of the River Operations team on a daily time-step for the next two to three months through the Daily Operations Spreadsheets. 168 As system shortfalls are most likely to occur in Summer and Autumn when demand upstream of Lake Victoria is high, a primary focus of the River Operations team when planning bulk-system operations is ensuring that Lake Victoria has sufficient volume to meet South Australia’s adjusted entitlement over Summer and Autumn. 169 To ensure Lake Victoria has sufficient volume to meet South Australia’s adjusted entitlement over Summer and Autumn and to avoid the risk of shortfall, the River Operations team can direct that water be transferred to Lake Victoria from Hume Dam (within channel capacity or overbank), can call on water from the Goulburn and Murrumbidgee IVT accounts, or can direct that water be transferred to Lake Victoria from the Menindee Lakes (when a shared resource). These transfers and calls on IVT would supplement higher demand upstream of Lake Victoria, and would increase the volume of water in Lake Victoria to ensure the lake had sufficient volume to meet South Australia’s adjusted entitlement. The timing of these transfers and calls on IVT must be balanced with the risk of natural inflows downstream of Hume Dam due to rainfall, which can naturally

fill Lake Victoria or significantly decrease the volume of water needed for transfer. 170 If water is transferred too early in the water year and there is sufficient rain (depending on conditions, just one or two rainfall events), Lake Victoria may spill. If transfers start too late in the water year and conditions are dry, because of high demand over Summer and Autumn there may not be sufficient water in Lake Victoria to meet South Australia’s adjusted entitlement during Summer and Autumn, creating a system shortfall.” It is the environment of competing risks and conflict which gives the Defendant’s “independent” status its meaning. There is no dispute that the Defendant has to balance the risk of spill and the risk of system shortfall. In the chapeau to paragraph 378 of his Second Report dated 16 May 2025, Dr Ladson states: “I agree with Mr Harriss, that consistent with the [Defendant’s] operational guidance documents, the [Defendant] aims to balance the risk of spill from Lake Victoria against the risk that there will be insufficient water in Lake Victoria to meet peak season demands…” It is against that practical background that the full terms of the Agreement are to be considered and in particular the statement in cl 88 that South Australia is entitled to receive the quantity of water specified for each month. There is no doubt that the Defendant has a role in South

Australia’s receipt of its entitlements. Although not a party to the Agreement, the Defendant must comply with any requirements of the Agreement when performing its functions and duties and exercising its powers: s 18E(2) of the Commonwealth Statute. As already observed, cl 29(1)(b) of the Agreement specifies that one of the Defendant’s functions is to give effect to high-level decisions of the BOC in relation to river operations. The BOC’s high-level decisions were found in the O&O Document. The O&O Document expressly allowed for the uncertain environment in which the river system is operated. That was apparent in a number of places in the O&O Document. The Defendant’s first general objective in cl 4(2)(a)(i) was to operate the Murray River system “efficiently and effectively” in order to deliver State water entitlements. That objective was internally contradictory to the extent that it applied to South Australia’s entitlement under cl 88 of the Agreement. The requirement “effectively” to deliver South Australia’s water entitlement each and every month may have made it necessary to undertake transfers of water from Hume Reservoir which were not “efficient” compared to continuing to store the water in Hume Reservoir. Such transfers may have increased the risk of spill if, for example, it rained before the water arrived at Lake Victoria. More efficient river operations may have

reduced the risk of spill but been less effective to deliver South Australia’s water entitlement. The transfer of water from Hume Reservoir to Lake Victoria was the subject of specific objectives and outcomes specified in Appendix A to the O&O Document. The relevant specification was as follows: “12.5. Bulk transfers from Hume Reservoir to Lake Victoria (a) Purpose To establish a process for transferring volumes of water between Hume Reservoir and Lake Victoria to ensure Lake Victoria can deliver entitlements and water orders to the Southern Basin States (O&O sub-clause 4(2)) while maximising water availability and minimising undesirable losses in the System (O&O sub-clause 4(2)). (b) Specific Objective Transfers of water from Hume Reservoir to Lake Victoria are conducted in a manner that conserves water resources in the upper storages for as long as reasonably possible, and contributes to the ability of Lake Victoria to deliver Southern Basin State entitlements. (c) Specific Outcome Bulk transfers from the Hume Reservoir to Lake Victoria are made to ensure storage levels in Lake Victoria will allow the Lake to continue to contribute to meeting the water entitlements and water orders of the Southern Basin States while minimising undesirable losses. (d) Interpretation The Committee advises that the timing of commencement and rates of transfer from Hume Reservoir to Lake Victoria

should continue to be guided by the Lake Victoria Operating Strategy, the Monthly Operating Plan and the [WLWG], noting: ● the commencement of transfers should be delayed as long as possible to conserve water, taking into account recent and forecast river and weather conditions; ● the end of season storage reserve of 250GL (active) for Lake Victoria is met (unless temporarily set aside by formal decision); ● transfers to Lake Victoria are made from Menindee Lakes Storage, if it is in control of the [Defendant], in preference to transfers from Hume Reservoir; ● the volume of transfers is sufficient to ensure there is enough water in transit, Lake Victoria and the Menindee Lakes Storage to deliver the entitlements and water orders of the Southern Basin States for the remainder of the year; and ● transfers cease when it becomes clear there is sufficient water available in transit, Lake Victoria and the Menindee Lakes Storage to deliver entitlements and water orders of the Southern Basin States for the remainder of the year.” These provisions provided the Defendant with a more detailed framework within which to perform the task of delivering South Australia’s monthly entitlement by transferring water from Hume Reservoir to Lake Victoria close to the border. Nonetheless the specific objective in cl 12.5(b) and the specific outcome in cl 12.5(c) each required a balance, particularly

between “conserving” and “contributing”. The matters noted in the interpretation clause in cl 12.5(d) included some subjective and imprecise language, such as “maximising water availability”, “minimising undesirable losses”, “as long as reasonably possible”, “enough water in transit”, “continue to contribute” and “when it becomes clear”. This language, together with the subject matter being addressed, reveals an intention that there be an element of judgement exercised by the Defendant when performing its functions. Further, as already observed, the specific objectives and outcomes in cl 12.5 of Annexure A were expressly tempered by reference to the uncertain environment in which the Defendant operated. Clause 6 of the O&O Document is set out above. It referred to “high variability and uncertainty” and provided that the Defendant was to do “only what is reasonably practicable in all the circumstances”. Specific uncertainties were listed of which weather conditions, rainfall and evaporation rates were the first. If, after considering the cl 6 uncertainties, the Defendant concluded that it may be unable to achieve an objective or outcome (cl 7) or it considered that there may be a conflict (cl 8) the Defendant had to refer the matter to the WLWG. If so advised by the WLWG, the Defendant then had to refer the matter to the BOC after consultation with the RMOC. These mechanisms

allowed for the possibility that a matter may not be referred to the BOC but left with the Defendant (and the WLWG) even though the Defendant had concluded that it may be unable to achieve an objective or outcome or that there may be a conflict. It would depend upon the advice received from the WLWG. The O&O Document did not address the circumstances in which the WLWG would or would not advise the Defendant to refer a matter to the BOC. The annual report which the Defendant was required to prepare under cl 12(2) of the O&O Document required it to indicate “the degree to which any general or Specific Objectives and Outcomes specified under cll 4 or 5 were achieved by the [Defendant]” which suggests that a degree of non-achievement was expected. Despite the mandatory language in cl 88 of the Agreement, the O&O Document read as whole did not require the Defendant to ensure that South Australia received its water entitlement each and every month, but only to do that which was reasonably practicable. The O&O Document did not operate to remove all uncertainties from the delivery of South Australia’s water entitlement. This is unsurprising given the nature of the task. The Defendant’s obligation to give effect to the BOC’s high-level decisions in the O&O Document was attended by risks and, with those risks, conflicts between the interests of the States. It was contemplated that there

may be circumstances where conflicts would be left with the Defendant to address with the WLWG. There may be occasions when there would be departures from the objectives and outcomes in the O&O Document. The Defendant submits that the imposition of a duty of care to avoid economic loss to the Plaintiffs and Group Members as a result of inefficient operations of the river would conflict with the Defendant’s objective of operating the Murray River system efficiently and effectively in order to deliver South Australia’s water entitlement. I accept that submission. Such a private duty would introduce into the Defendant’s role of independently balancing the risk of system shortfall and the risk of spill across the South Australian border a concern for the individual holders of water entitlements in some (but not all) parts of New South Wales and Victoria. At the very least, the duty would distort the independent role which the Defendant is intended to perform in executing the provisions of the Agreement concerning sharing water between the States. Indeed, the conflict runs deeper. If, for the reasons given by the Plaintiffs, the Defendant owed a duty of care to the holders of water entitlements in some parts of New South Wales and Victoria, there is no apparent reason why the Defendant would not also have owed a duty of care to the holders of water entitlements in South Australia.

The holders of South Australian water entitlements may have been prejudiced if the Defendant did not effectively deliver one or more of South Australia’s monthly entitlement under cl 88 of the Agreement. The Defendant’s concern for efficiency in New South Wales and Victoria might have been at the expense of effectiveness in South Australia, and vice versa. The conflict arising from the competing risks entailed in delivering South Australia’s monthly entitlement under cl 88 is not theoretical. It is directly relevant to the events which occurred in 2017 and 2018 and which have given rise to the claims in these proceedings. As is apparent from the consideration below of the particular allegations of negligence, at the most fundamental level the decisions made by the Defendant which are now the subject of the Plaintiffs’ complaints were made in the context of the Defendant having to balance the risk of system shortfall in the delivery of South Australia’s entitlements and the risk of spill across the South Australian border. The statutory framework contemplates that the Defendant would make those decisions free of a concern for the private interests of any particular individual or class of individuals. Other conflicts Whilst the Plaintiffs’ case focusses on particular decisions in the course of the Defendant performing its cl 29(1)(b) function, most specifically exercises of the

release power at Yarrawonga Weir in October 2017 and June 2018, regard must be had to all the Defendant’s functions and powers when considering whether the alleged duty of care was owed. [116] If a duty of care was owed, the Defendant would have been required to fulfil it prospectively. There is evidence of the Defendant actually making decisions which addressed the interests of other persons at the expense of the Plaintiffs. As explained in more detail below, on 4 October 2017 the Defendant directed a release of water from the Menindee Lakes so that South Australia’s monthly entitlement would in part be supplied from that source. WaterNSW implemented the release on 7 October 2017. The evidence shows that it would have been possible for the Defendant to direct the release at an earlier date and at a greater rate of increase. Had that happened, the need to transfer water from Hume Reservoir to Lake Victoria may have been reduced with a consequential reduction in losses to the water in the river system ultimately available for allocation to New South Wales and Victoria (and thence to water entitlement holders such as the Plaintiffs). In choosing the commencement date for the release and the rate of increase the Defendant had regard to the interests of irrigators on the lower Darling River (not the Plaintiffs) and other community interests around the Menindee Lakes. The

commencement of the release was delayed to allow lower Darling River irrigators to move pumping equipment to higher ground ahead of the Darling River rising. There may also have been some river crossings which would be cut by the rising waters which would cause problems for the locals unless they were given time to prepare. The rate of release conformed to advice from the WLWG on 26 September 2017 to “balance the requirement to maximise resource availability, local community sensitivities and concerns and environmental needs”. The commencement date of 7 October 2017 and the rate of increase reflected a balance between conflicting interests. Another instance of actual conflict arose not from geography nor from the use to which different entitlement holders put water allocations, but from temporal considerations. The negotiations in 2018 for access to the MIL infrastructure are addressed below. The Plaintiffs submit that the alleged duty of care obliged the Defendant to achieve an outcome from the negotiations which was for the immediate benefit of the holders of water entitlements at the time the negotiations occurred (and on behalf of whom the Plaintiffs now sue). As will be seen, such a duty may have conflicted with the interests of holders of water entitlements in the future in achieving a negotiated outcome which provided long-term benefits for the efficient operation of the

Murray River. Another instance of actual conflict is apparent from the Plaintiffs’ own allegations of breaches of the alleged duty of care. The particular allegation has now been abandoned, but the Plaintiffs originally pleaded that the Defendant breached the alleged duty of care in September 2017 and July/August 2018 when it released water from other sources to “top up” the quantity of water from the Goulburn River which had been ordered by environmental water entitlement holders. The top up was necessary because the quantity ordered by the environmental water holders would not be diminished by conveyance and other losses by the time the water arrived at the South Australian border. [117] The releases from other sources reduced the quantity of water available for allocation to New South Wales (and thence to the Plaintiffs). At the heart of this alleged breach is the contention that the Defendant ought to have preferred the interests of the Plaintiffs to those of the environmental water holders. Whether or not the Plaintiffs ought to have been preferred was a matter for the hierarchy of decision-making established by the statutory framework and not for the imposition of a common law duty of care owed to some water entitlement holders and not to others. The fact that this particular allegation of breach is not pressed does not detract from the fact that, had the Defendant owed

the duty of care for which the Plaintiffs still contend, the Defendant would have had to take the duty into account when making decisions like those made in September 2017 and July/August 2018. Another instance of potential conflict exists by reason of restrictions on trade of water from above the Barmah Choke to below. As explained more fully below, such trade is generally prohibited because of the capacity constraints of the Choke, but the prohibition can be relaxed by the Defendant in exceptional circumstances. Prohibiting trade is intimately connected with exercising the release power because the prohibition is intended to enable the Defendant to release more operational water from Hume Reservoir and Yarrawonga Weir for transfer to Lake Victoria. Relaxation of the trade restriction would likely be in the interests of water entitlement holders located above the Choke because it would permit them to sell to a larger market, and also to those below the Choke looking to buy. On the other hand, it may not be in the interests of water entitlement holders generally if it causes greater losses to the water in the river system for allocation to New South Wales and Victoria making it necessary inefficiently to transfer water through the Choke in excess of channel capacity. In exceptional circumstances a decision about relaxing the restriction lies with the Defendant. Imposing the

duty of care for which the Plaintiffs contend would require the Defendant to take the economic interests of the Plaintiffs into account when making the decision. A further source of potential conflict arises from cl 90 of the Agreement which provides as follows: 90. Variation of South Australia’s Entitlement The Authority may, from time to time at the request of the Committee member for South Australia, vary for a specified sequence of months any of the monthly quantities which the State is otherwise entitled to receive: (a) under clause 88, without increasing the total of those quantities for that sequence; or (b) in order to store or deliver deferred water to South Australia. The clause contemplates that the Defendant may receive a request not from the BOC acting as a whole but from the “member for South Australia”. The request may be either to accelerate or to delay delivery of water to South Australia. The Defendant then has a discretion whether to accede to that request. A change to the quantity of water which South Australia will be entitled to receive in any particular month may affect other parts of the system, including the quantity of water currently stored in Lake Victoria (up or down) and the quantity and timing of water to be delivered to Lake Victoria in the future (up or down, sooner or later). In some circumstances the knock-on effects might be immaterial.

Nonetheless, the Defendant would have to consider the request by having regard to the consequences for the system as a whole, including any future exercise of the release power. The Plaintiffs contend that the Defendant would have to undertake that consideration whilst subject to the alleged duty of care owed to them. In its submissions the Defendant has identified a number of other circumstances in which it says different parties may have conflicting interests in the performance of the Defendant’s functions: water in the Menindee Lakes may be drawn for the benefit of lower Darling irrigators but at the expense of the town water supply to Broken Hill; generally releasing water from the Menindee Lakes instead of Hume Reservoir may benefit Murray River irrigators at the expense of lower Darling irrigators; operating decisions by the Defendant may result in water being reallocated between New South Wales and Victoria under cl 116 of the Agreement – an example of this is where the Defendant decides to call on water from the Goulburn IVT account (100% for Victoria’s account) instead of from Hume Reservoir (shared between each State’s account) for the purposes of filling Lake Victoria, with the result that Victoria’s share of the water in Lake Victoria will be higher and may breach the s 116 threshold for a reallocation to New South Wales (were such a situation to occur there may be

a conflict within the class constituted by the Group Members in these proceedings which includes water entitlement holders in both New South Wales and Victoria) – as recorded in the minutes of the WLWG meeting on 10 October 2017, an instance of this appears to have occurred in October 2017 when the timing of the Defendant calling on the Goulburn IVT account (and hence the quantity and timing of the water being transferred through the Barmah Choke to Lake Victoria) was influenced by the risk of an “internal spill” in the accounts of New South Wales and Victoria (see below); there may be competition for channel capacity in the lower Goulburn River between water called from the Goulburn IVT account for operational purposes by the Defendant and water which environmental water holders wish to release from the Goulburn River – were that to occur the Defendant may have to choose between reducing the quantity of water flowing out of the Goulburn River for environmental purposes and increasing the quantity of water flowing through the Barmah Choke in order to have sufficient water arrive at Lake Victoria in time to ensure that South Australia receives its upcoming monthly entitlement; the Defendant’s operating decisions earlier in the water year may subsequently give rise to seasonal competition for channel capacity between the Defendant’s need to transfer operational water and

environmental water entitlement holders’ desire to use their water at an environmentally optimal time; the different routes by which water may be transferred through the Barmah-Millewa Forest have competing merits, namely ecological benefits on the one hand and efficiency of return flows for further use of the water downstream on the other; and different operating decisions by the Defendant today may have different impacts on the erosion of the Barmah Choke with potential consequences for the Defendant’s options for performing its functions in the future and also for environmental water holders to use water for the benefit of the environment – this is another example of a possible temporal conflict between the interests of the current holders of water entitlements and those who come to hold them in the future. A further conflict arising from the release of water from the Menindee Lakes in October 2017 is addressed below. It is no answer to these potential conflicts to say that the alleged duty of care has been framed in terms of the Defendant failing to undertake its river operations functions “properly” (as pleaded) [118] or “efficiently” (as finally submitted). Some of the potential conflicts listed above demonstrate that river operations which are proper or efficient may nonetheless have winners and losers, including within the ranks of the Group Members on whose behalf the

Plaintiffs sue. It is not necessary (and perhaps not possible) to determine the extent to which these conflicts may actually have arisen in the past or might arise in the future. Nor is it necessary to determine the Defendant’s ability to reconcile the conflicts and, if not, the implications for the interests of the various classes of water users. The potential conflicts highlight the complexity of managing the Murray River system in a dynamic, uncertain and imprecise environment. The imposition of a duty of care to avoid pure economic loss to one class of interested persons would be incongruent with the inherently uncertain nature of the Defendant’s functions. It would distort the focus of the statutory framework in which the Defendant is intended to perform its functions as the independent expert. Provision for accountability of the Defendant within the statutory framework Another aspect of the statutory framework which may be relevant to the imposition of a duty of care is the provision expressly made (or not made) for the accountability of the Defendant. The relevant provisions are set out above. The Commonwealth Statute and the Agreement provide for review of the Basin Plan but do not specifically address accountability by the Defendant for the performance of its functions. Clause 4(6)(a) of the O&O Document specified general objectives in relation to communication and

information management, one of which was that the Defendant be accountable for its actions in accordance with the Agreement. The general outcome which was relevant to that objective was for the Defendant to provide appropriate, timely and accurate information about its river operations. The information was to be provided to the Ministerial Council, the BOC, the RMOC, the WLWG, other relevant committees, other stakeholders with an interest in the Defendant’s river operations and the public. The breadth of those to whom the information was to be provided, including the public, indicates that the kind of accountability contemplated by the O&O Document was not legal accountability. Legal accountability specifically to the Plaintiffs might be said to be incongruous with the objective of accountability “in accordance with the Agreement” because the Agreement is expressed in terms of obligations to the States and not to individual water entitlement holders. The Defendant’s objective in cl 4(4)(a)(ii) was to contribute to the economic activities and values of people using the Murray River system. The related outcome was the maintenance of “productive relationships” with such people, which falls well short of the Defendant having a legal obligation to take reasonable care to protect them from economic loss. To some extent that may be contrasted with the Defendant’s objective in cl

4(4)(a)(i) which was to contribute to the safety of communities along the River Murray and the related outcomes of limiting damage to downstream communities when managing flooding and mitigating events that may adversely affect the quality of water available for urban, irrigation, industrial, environmental, recreational and stock and domestic use. In any event, there was no reference in the O&O Document to recompense or compensation for any person affected by the Defendant’s river operations. The O&O Document provided both for annual self-assessment of the Defendant’s river operations (cl 12(2)) and for annual review by an independent committee, albeit one comprised of experts appointed by the Defendant (cl 12(3)). Whilst the efficacy of the accountability which might be achieved by those two mechanisms might be questioned, the mechanisms were approved by the BOC for whose ultimate benefit the reviews would be undertaken. Clauses 12(2) and (3) were expressed in constructive language. In particular, cl 12(2)(b)(ii) required the Defendant’s report to “indicate the degree to which any general and Specific Objectives and Outcomes specified under clauses 4 or 5 were achieved by the [Defendant]” which indicates that some level of non-achievement was expected. Clauses 12(2) and (3) suggest that the purpose of the reviews was to improve future performance rather than to allocate blame

for past performance. That purpose might have been undermined by a common law duty of care if it discouraged a full and frank assessment of the previous year. On the other hand, it might be said that a duty to act with reasonable care could reinforce the goal of improvement. There are aspects of the express measures for accountability which are in tension with an intention that the Defendant owe a common law duty of care to the Plaintiffs, especially the express focus on accountability to the States. The focus on improvement for the future is reinforced by the imperfect knowledge of the river system upon which the statutory framework was premised (see below). On the other hand, the Defendant was not intended to undertake an inscrutable task behind closed doors. On the whole, the fact that some measures of accountability have been put in place is a largely neutral consideration, but the specified measures do not positively require the imposition of a duty of care. There is imperfect knowledge of the Murray River system One further observation about the statutory framework is that it proceeds from the clear premise that no one, including the Defendant, has complete knowledge of all aspects of the Murray-Darling Basin and the Murray River system. Ongoing research is expected and the Defendant is given a central role in undertaking that research. One of the objects of the

Commonwealth Statute is the collection and analysis of information about Australia’s water resources and the use and management of water in Australia. The functions of the Defendant include conducting research and investigations into the Basin water resources and developing measures for the equitable, efficient and sustainable use of the Basin water resources. Now that it has been prepared, the Defendant has a role in monitoring and evaluating the Basin Plan. Subdivision G of Division 1 of Part 2 of the Commonwealth Statute provides for the regular periodic review of the Basin Plan in the future. Subdivision H provides for an annual review of the Basin Plan’s effectiveness. Part VII of the Agreement provides for the Defendant to carry out surveys, investigations and studies regarding the desirability and practicality of works or measures for the equitable, efficient and sustainable use of the water of the Murray-Darling Basin. The Defendant’s general objective in cl 4(5)(b)(iii) of the O&O Document includes improvement of the knowledge and practices of environmental watering. These are examples of many such provisions which contemplate a continuous process of developing the management of the Murray-Darling Basin. The matters which are expected to be the subject of research by the Defendant include operational matters. Of importance to the present case is the Defendant’s

function “to develop, in consultation with the Basin States, an integrated water model for the Murray-Darling Basin”. [119] The word “develop” suggests an ongoing process. Modelling is critical to the operation of a river like the Murray River. Complicated models are required which, because of the unique attributes of the Murray-Darling Basin, cannot be obtained but must be developed. This observation about the nature of the Murray River is pertinent for three reasons. First, it is another aspect of the dynamic, uncertain and risky environment in which the Defendant was established to function. Secondly, it supports the conclusion that the Defendant is not intended to be accountable in a way which inhibits future learning and improvement. Thirdly, it is independently relevant to the question whether the Commonwealth Parliament and the States intended that the Defendant be subject to a common law duty of care. The fact that the Defendant must perform its functions without perfect knowledge does not mean that there are no aspects of its activities which may be subject to a duty of care. The duty for which the Plaintiffs contend is a duty to take only that care which is reasonable. Many professionals, including medical professionals, are required to give advice and undertake procedures with imperfect knowledge about the condition they are treating. Nonetheless, it is another

feature of the statutory framework which is in tension with the broad duty of care alleged by the Plaintiffs in paragraph 86 of the Statement of Claim. Summary of incongruity The duty of care for which the Plaintiffs contend would, at the very least, distort the focus of the statutory framework in which the Defendant has been established to function, away from the interests of the States and to the economic interests of one particular class of users, relevantly located in one particular part of the Murray-Darling Basin. It would be incongruous with the statutory framework which has established the Defendant and in which it performs its functions. For that reason alone the alleged duty of care cannot be imposed. There was no assumption of responsibility Not sufficient without more The Plaintiffs nevertheless submit that there has been an assumption of responsibility because the Defendant has undertaken to perform its river operations function with due care inter alia to protect the Plaintiffs against the risk of economic harm which arises from inefficient river operations. It is submitted that assumption of responsibility alone is a sufficient basis for the imposition of a duty of care. The submission that the Court ought to find the duty of care without reference to the (other) salient features of the case goes beyond that which was found by the plurality in the Mallonland

case. It is not, however, necessary to address that legal principle further because the analysis of the statutory framework demonstrates that there was no assumption of responsibility to the Plaintiffs. Undertaking alleged by the Plaintiffs not sufficient There is some artificiality about finding an undertaking by an entity which is a creature of the same statutory regime from which the undertaking is said to be implied. It may be said that responsibility is not so much assumed by the statutory entity as thrust upon it. Nonetheless, there may be an assumption of responsibility as an incidence of the statutory office. [120] Albeit in a property damage case, the High Court has referred to a statutory authority entering into the exercise of its statutory powers as the occasion for a duty of care to arise. [121] The difficulty which the Plaintiffs confront with the contention that there has been an assumption of responsibility by the Defendant, and which they have not overcome, is apparent from the formulation of the Defendant’s express or implied undertaking which the Plaintiffs submit the Court ought to find. They contend that there was an undertaking by the Defendant to undertake its river operations functions “with due care inter alia to protect the Plaintiffs and Group Members”. [122] The Plaintiffs have stopped short of contending that the Defendant undertook to conduct river

operations for the Plaintiffs and Group Members. That is understandable. The Defendant is established to operate the Murray River system in the public interest. There are many different interested persons, including the Australian nation as signatory to some international treaties. The statutory framework is centred on the interests of the States. If for anyone, the Defendant has undertaken to conduct river operations for the public or for the States. So much follows from the terms of the statutory framework set out above. The plurality said in the Mallonland case that the best understanding of assumption of responsibility requires the defendant to undertake the relevant task for the plaintiff. [123] Whilst the words of a judgment are not to be construed like a statute, there is a material difference between what the Plaintiffs submit and what the plurality said is required. An undertaking to perform a task for another person impresses the performance of the task with the objective of ensuring that person’s interests rather than merely recognising the other person’s interests as an incident of performing the task for some other objective. It is a defendant’s undertaking to perform the task for the plaintiff which gives rise to the relationship which warrants the imposition of a duty of care. [124] The essential relationship is absent when the defendant does not undertake to

perform the task for the plaintiff, even if an incident of the defendant’s undertaking to perform the task for someone else is that it will do with due care to protect others, including the plaintiff. Matters relied upon by the Plaintiffs There is no support in the statutory framework for the conclusion that the Defendant undertook the performance of its river operations functions for the Plaintiffs and Group Members as a class which is distinct from the world at large. The necessary relationship would have been incongruous with the Defendant performing its functions in the public interest by delivering the water entitlements of the States in accordance with their agreed sharing arrangement. These conclusions are demonstrated by specific reference to the function of the Defendant to which the Plaintiffs contend the duty of care attached, namely the function specified in cl 29(1)(b) of the Agreement. It cannot be said that giving effect to high-level decisions of the BOC in relation to river operations was a function which the Defendant undertook for the Plaintiffs and Group Members. The term “river operations” is defined in cl 2 of the Agreement which is set out at [238] above. Each part of the definition directs attention to the States as the entities which own and operate the works on and adjacent to or connected to the river and the entities to which the Defendant provides

services. In particular, river operations includes the Defendant’s activities relating to “the execution of the provisions of the Agreement concerning sharing water between the [States]”. Contemporaneous communications in which the Defendant described its awareness of and responsibilities to groups which include the Plaintiffs are not capable of contradicting the intention of the statutory framework, objectively ascertained. That is especially so when there is no allegation that any of the Plaintiffs relied on any such communication. The meagre evidence of the Defendant’s two internal documents, one a draft reference manual and the other an email by an employee, and the subjective views of the Defendant’s witnesses in these proceedings do not take the Plaintiffs’ case any further. A description of a process by which a State entity collates water orders from individual entitlement holders and passes them on to the Defendant does not accurately represent the framework established by the Commonwealth Parliament and the States’ Agreement. The fact that irrigators in New South Wales and Victoria paid charges by reference to the Defendant’s operating costs does not support the Plaintiffs’ case when the evidence is examined. On the contrary, it further demonstrates that the relationship erected by the statutory framework is between the Defendant and the States and that there is no

direct relationship between the Defendant and the Plaintiffs and Group Members. The Commonwealth pays the Defendant’s costs under s 174 of the Commonwealth Statute. Under cl 145 of the Agreement the States have agreed effectively to reimburse the Commonwealth. The evidence about the practical payment of the costs is limited, but in New South Wales it appears that the State pays its share to the Commonwealth from consolidated revenue. Since 2014 the New South Wales Treasurer has required WaterNSW to pay a dividend to the State in an amount equal to the amount paid for New South Wales’s share of the Defendant’s costs. The charges subsequently made to individual water entitlement holders were levied by WaterNSW (not the State) for the purpose of funding the dividend. There is no suggestion that the Defendant had any role in recovering its own costs or any say in how charges made by WaterNSW were calculated or described. There is no evidence that the Plaintiffs or Group Members paid any charges directly to the Defendant. The Plaintiffs and Group Members are not in any legal or common sense the Defendant’s customers. Operational and policy functions It is correct to say that the statutory framework establishes a hierarchy of decision-making in which the Defendant is required to give effect to any “high level decision” of the BOC. Relative location within the hierarchy does not

automatically characterise the Defendant’s functions as “operational” and thereby susceptible to the imposition of a duty of care. The more pertinent question is whether the nature of the Defendant’s function is such that there are criteria by reference to which the Court can determine reasonableness of the Defendant’s conduct. For the reasons set out below, difficulties with the Plaintiffs’ formulation of the duty of care shows that that may be doubted. For the Defendant’s specific function of giving effect to the BOC’s decisions in the O&O Document, the specific objectives and outcome in cl 12.5 of Annexure A of the O&O Document which relate to transferring water from Hume Reservoir to Lake Victoria have a degree of specificity which may provide a framework for review of some actions by the Defendant. The use of subjective language may make the review challenging as would the fact that the specific obligations and outcomes are subject to cl 6 of the O&O Document. In any event, the O&O Document has not removed all uncertainties and the performance of the Defendant’s functions is attended by conflicts and risks which are likely to make it unsuitable for review in particular cases. The limited degree of the amenability of the Defendant’s performance to review undermines the conclusion that there has been an assumption of responsibility by the Defendant when performing its

functions. Conclusion on assumption of responsibility The Plaintiffs’ submission that there has been an assumption of responsibility by the Defendant to the Plaintiffs and Group Members is rejected. The salient features of the case do not give rise to a duty of care Reasonable foreseeability and actual foresight Turning then to the other salient features of the case, there is no dispute that pure economic loss to the Plaintiffs and Group Members was reasonably foreseeable if the Defendant did not undertake its river operations functions efficiently. The Defendant also accepts that it had actual knowledge of the pleaded risks of harm, including knowledge of New South Wales and Victoria’s systems of allocation of the water which the Defendant assessed to be available to the States. Whilst these are features of the case which are salient to the question whether the alleged duty of care was owed, they are not, without more, sufficient. The additional features which the Plaintiffs alternatively say are salient and which warrant the imposition of a duty of care are the Defendant’s control over the risks of harm, the Plaintiffs’ vulnerability to those risks and the Defendant’s knowledge that the Plaintiffs and Group Members were reliant upon the Defendant’s performance of the river operations functions in a way which was distinct from the general public. Identifying the risks of harm

with more precision There is a threshold dispute between the parties in this part of the case about the precise identity of the risks of harm. The Plaintiffs plead the risks of harm in paragraphs 77 to 78 of the Statement of Claim which are set out above. The burden of the pleading is that the risks were sourced in a reduced supply of irrigation water from the Murray River. For its part, the Defendant says that the source of the risks was insufficient (or less) water for the conduct of irrigated agricultural production for which rainfall is overwhelmingly the most significant factor. A similar argument was initially advanced by the flood engineers in the Queensland Floods case but (“wisely”) not persisted with. [125] The Defendant’s submissions about the identity of the risks of harm ought to be rejected. They do not sufficiently reflect the nature of irrigated agriculture and the roles respectively played by the parties in that field of human activity. It may be accepted that the availability of water is a fundamental aspect of agricultural production and that rainfall is overwhelmingly the most significant factor. However, the purpose of irrigation is to make available water which would not otherwise be supplied by rainfall. Irrigation is one of the measures available to farmers to manage the risks of having insufficient (or less) water. By these proceedings the Plaintiffs

seek to complain about interference with their interests in being able to use that management measure. They do not complain about the condition which it is the purpose of the measure to manage. In any event, the issue is not to be resolved by the Defendant’s abstract references to agricultural operations. The Plaintiffs have pleaded their case by reference to interference with their interest in the supply of irrigation water from the Murray River. They are entitled to bring that case. If otherwise appropriate, the common law may impose a duty of care to protect the Plaintiffs’ interests in being able to use irrigation from the Murray River to make available water which would not otherwise be supplied by rainfall. The Defendant’s submissions which focus on rainfall as the primary source of water for agriculture are addressed to a case not brought by the Plaintiffs. Once the risks of harm have been identified it is possible to analyse the salient features of the case. [126] The Defendant had control over the source of the risks of harm The Defendant had control over the source of the risks of harm because the release power in cl 98 of the Agreement may affect the supply of irrigation water to the Plaintiffs and Group Members. The release power was given to the Defendant and no other entity. There is no real dispute about control when the risks of harm are properly identified,

although the Defendant points out that the BOC and other committees sometimes had a say in the Defendant’s exercise of the release power. The Plaintiffs were vulnerable As a general principle the plaintiff’s vulnerability is likely to be the corollary of the defendant’s control. [127] It is so in the present case. The Plaintiffs and Group Members were unable to protect themselves from interference with their interest in receiving irrigation water from the Murray River in order to manage the risks of having insufficient (or less) water for their agricultural production. The Defendant adduced a body of evidence about measures which are sometimes available to agricultural enterprises to manage the risks of low rainfall. In the context of considering the duty of care, the fact that there were a number of measures other than irrigation to manage the risk of insufficient (or less) water is no answer to the vulnerability of the Plaintiffs and Group Members to loss of one measure in particular. In one sense the Plaintiffs’ and Group Members’ vulnerability was no different to that of any other user of water from the Murray River system. A reduced allocation to New South Wales and Victoria would result in a reduced allocation to all holders of water entitlements, including environmental water holders. Although it might not be measured in dollars, a reduced water allocation to

environmental water holders had value. However, there is an aspect of the vulnerability of the Plaintiffs and Group Members which distinguished it from the vulnerability of the general public to inefficient exercises of the release power by the Defendant. Unlike environmental water entitlement holders and some other people interested in the waters of the Murray River system, the Plaintiffs and Group Members were vulnerable to a particular type of harm, namely pure economic loss. The Plaintiffs and Group Members were in a similar position to irrigators in South Australia whose agricultural production might also be affected by the way in which the Defendant performed its river operations functions. Were they to be adversely affected, they too would suffer economic loss. However, the positions are not identical. Given cl 88 of the Agreement, South Australia would receive its entitlements unless there was inefficiency of sufficient magnitude to result in a system shortfall. In the language of cl 4(2)(i) of the O&O Document, South Australian irrigators were vulnerable not so much to the Defendant being inefficient as ineffective. South Australian irrigators were vulnerable to a different sort of risk than that to which irrigators in New South Wales and Victoria were exposed. There was no specific reliance There is no evidence of specific reliance on the Defendant by the Plaintiffs

or any Group Members. If there was reliance it was no different to the general reliance on a public authority to perform a public function. General reliance is not supportive of the imposition of a duty of care. Some support for a duty of care in the salient features of the case Thus the overall features of this case include reasonably foreseeable harm, the Defendant’s actual knowledge of the risks of harm, the Defendant’s control over the source of the risks and the vulnerability of the Plaintiffs and Group Members. In other cases those features have been considered salient and supportive of a finding that a duty of care was owed by the Defendant. Indeterminacy Two other issues have been raised in this case which have been addressed in terms of the indeterminacy of the Defendant’s liability although only one is correctly labelled “indeterminacy” as that term is used in the authorities. Liability arising from a duty owed to Plaintiffs and Group Members not indeterminant The first issue is whether the duty of care alleged by the Plaintiffs would give rise to an indeterminate liability on the part of the Defendant. For the reasons correctly submitted by the Plaintiffs, the answer to that question is no. In its terms, the alleged duty would have been owed to the Plaintiffs and Group Members. The definition of Group Members is multifaceted. Not only does it include persons who

directly held water entitlements of specified classes within a specified date range, but also third parties who “held” water entitlements under contractual arrangements plus third parties who “utilised” allocations of water under entitlements held by others. The inclusion of third parties may make the membership of the class unwieldy but it does not make it unascertainable. At any given time during the specified date range the total quantity of water entitlements was fixed and ascertainable. Just by way of example, the evidence shows that in the 2018/2019 water year the total general security water entitlements issued in New South Wales for the lower Murray region entitled the holders to a share of 373 GL, of which 120 GL were held by environmental water holders and 253 GL were held by others. The total quantity of water entitlements operates as a definite limitation on the class just as the geographic location and elevation of the flooded properties did in the Queensland Floods case. In these proceedings the third parties are evidently included as Group Members not to increase or duplicate the members of the class but more accurately to identify the entities which were financially affected by the water allocations which occurred. It is true that the nature and extent of the loss suffered by each Group Member will be difficult to calculate as a whole, but there are likely to be

sufficient parameters to govern the calculations so as to ensure that the quantum of the Defendant’s liability is not unascertainable. The fact that the alleged duty of care does not strictly speaking suffer from indeterminacy does not improve the case for imposing the duty of care. It merely excludes a reason for which a duty of care would generally be rejected. [128] Equivalent duties of care owed to others undermines duty owed to the Plaintiffs The second issue which has been raised in this area is related but different. If the Defendant is held to owe a duty of care to protect the Plaintiffs and Group Members from economic loss, why would it not also owe an equivalent duty of care to others? A decision that a duty of care is owed to some who suffer financial harm as a consequence of negligent conduct but not to others is only just if it is capable of being explained on a rational basis. [129] On the Plaintiffs’ reasoning, there would seem to be no reason why a duty of care to avoid pure economic loss would not also be owed to South Australian irrigators, and also to lower Darling irrigators. Further, the Plaintiffs allege that one consequence of the Group Members receiving lower allocations was that the price of temporary water was higher during the relevant period. They claim to be entitled to compensation for loss caused by higher water prices. If the Group Members are

entitled to compensation for that loss, why not also other farmers who did not hold water entitlements but who were nonetheless affected by higher water prices? And why ought not there be compensation for entities like superannuation funds and private investors who did not undertake agricultural activities but who traded in water and water entitlements if they suffered a financial loss? There is also the question of the Group Members’ customers and other suppliers, and other businesses more broadly affected by the financial fortunes of Murray River irrigated agriculture. The statutory framework within which the Defendant operates has a wide focus, concerned as it is with the public interest and the “net economic returns to the Australian community”. It would not automatically follow from the imposition of the duty of care in favour of the Plaintiffs and the Group Members that the Defendant owed duties of care to other individuals or groups. The claim by each individual or group would have separately to be examined in accordance with the principles set out above. It may be that some other duties are precluded by some of the limiting factors such as reasonable foreseeability. Having said that, there does seem to be an acceptance by the Plaintiffs that the Defendant would have owed duties of care to others. The Plaintiffs submit that there was an assumption of responsibility by

the Defendant because it expressly or impliedly undertook to perform its river operations functions with due care “inter alia” to protect irrigators against the risk of economic harm that arises from inefficient river operations. The prospect of duties of care being widely owed to others is not strictly a question of indeterminacy because the duty alleged to be owed to the Plaintiffs and Group Members will not itself give rise to an unascertainable liability. The duty of care owed to the Plaintiffs and Group Members is not to be rejected simply because duties of care owed to others may in combination give rise to indeterminant liability. [130] The prospect that duties of care would be widely owed to others is nonetheless relevant. The prospect that the Defendant must also have owed duties of care more widely underlines the incongruity between the statutory framework given the conflicted environment in which the Defendant was established to function. A concrete example of this is the conflict which would potentially arise if equivalent duties of care were owed to South Australian irrigators and lower Darling irrigators. There can be no rational basis to explain why the duty of care would be owed to one such group and not others in which case conflicting duties seem inevitable. The prospect that duties of care may be owed more widely also detracts from the Plaintiffs’ contention

that there has been an assumption of responsibility. It is more difficult to find that there has been an undertaking by the Defendant to take on the task of operating the river for the Plaintiffs and Group Members when there is no rational reason then to conclude that there have not been undertakings to take on the same task for other groups, including groups with potentially conflicting interests. The prospect of the Defendant owing duties of care to other groups beside the Plaintiff and Group Members reinforces the conclusion that no duty of care was owed to the Plaintiffs and Group Members. A duty of imprecise and uncertain consent A further difficulty arises because this is a case where the content of the alleged duty of care is difficult to identify. The Plaintiffs submit that the Defendant’s river operations functions are subject to an empirical, hydrological standard which is apt to supervision by the Court but they have not identified a precise or measurable content of the standard. On the contrary, the Plaintiffs’ formulation of the duty of care is imprecise. The pleaded duty is said to be to avoid the risk of loss of water which is greater than would occur if the Defendant discharged its role and functions “properly”. [131] In closing submissions the Plaintiffs said that the duty was to avoid risks from the Defendant’s “inefficient” operation of the Murray River

system. The two words do not naturally mean the same thing but even if equivalence is intended the use of different words suggests a difficulty in formulating the practical content of the duty. In Crimmins Gleeson CJ said at [5]: “In some cases, the difficulty of formulating the practical content of a duty to take reasonable steps to avoid foreseeable risks of harm, for the purpose of measuring the performance of an authority against the duty, may be a reason for denying the duty.” That is especially so when the duty is alleged to have been owed by an authority established to function within a statutory framework. It is unlikely that a statutory authority is intended to owe a duty of uncertain content and, hence, the imposition of such a duty would be another aspect of incongruence with the statutory regime. Other cases An incremental and analogical approach to a novel case The judicial evaluation of the above features of the case calls for close attention to relevant precedents as part of an incremental and analogical approach to the determination of whether the alleged duty of care arises in the novel circumstances of the case. [132] Turning then to specific authorities, it is common ground that there has been no previous case in which the Court has held that the duty alleged by the Plaintiffs was owed in circumstances analogous to this case. The Plaintiffs have identified

seven groups of cases which they contend have an aspect of analogy to the Defendant’s conduct of river operations in 2017 and 2018. The Plaintiffs submit that these cases are supportive of a finding that the Defendant owed the alleged duty of care in the present case. The Queensland Floods case The first case is the Queensland Floods case. The Plaintiffs naturally emphasise the similar factual matrix and the conclusion that the operator of the two Queensland dams owed a duty of care to people downstream to avoid flood damage to their property. The defendant, a statutory authority, had control over the flow of water in the river, which meant that it had significant control over the risk of flooding. The people with property downstream were relevantly vulnerable. To the defendant’s knowledge, the risk of flooding was foreseeable. The class of persons to whom the duty was owed was very large but not indeterminant. The duty of care was found not to be inconsistent with the statutory regime within which the defendant operated the dams. There was no appeal from the trial judge’s finding that a duty of care was owed. [133] I accept the Defendant’s submission that any analogy which might otherwise have been drawn from the Queensland Floods case is undermined by the key fact that the risk of harm which the flood engineers were found to have a duty to avoid was damage to property. As

stated above, the law will prima facie impose a duty of care if damage to property is reasonably foreseeable. The fact that the risk of harm was damage to property was central to the trial judge’s conclusion that a duty of care was owed in Queensland Floods case. It directly affected the analysis of each feature of the case. [134] There are a number of other points of distinction which warrant emphasis. First, the relevant function of the defendant in the Queensland Floods case was flood mitigation, not water supply. The contrast between those two functions reflects the contrast between property damage and economic loss. It is one thing to find that a duty of care is owed to avoid damage to property when engaged in flood mitigation. It is another thing altogether to find that a duty of care is owed to avoid pure economic loss when engaged in the Defendant’s functions of operating the Murray River system efficiently and effectively in order to deliver State water entitlements. Secondly, a prominent feature of the reasoning of the trial judge in the Queensland Floods case was the control which the defendant had over the source of the risk of harm and the vulnerability of the plaintiffs. [135] The prominence makes sense where the risk of harm was damage to property from flooding. When analysing these features of the case the trial judge considered analogies with cases about fire

(Pyrenees Shire Council v Day), a collapsed bridge (Brodie v Singleton Shire Council), asbestos (Crimmins), shipwreck (Ibrahimi v Commonwealth), flooding (UCC v ESB) [136] and food poisoning (Graham Barclay Oysters). In the present case, I have found that the Defendant also had control over the source of the risks of harm and that the Plaintiffs were vulnerable. Those features are salient but they do not have the same prominence because there was no risk of damage to the Plaintiffs’ persons or property. A closer analogy is Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management [137] where an authority conducting a prescribed burn for the purpose of managing the risk of future bushfires was held not to owe a duty of care to protect local grape growers from the risk of smoke damage to the crops. Thirdly, there is no comparison with the relationship erected by the statutory regime between the defendant and the plaintiffs in the Queensland Floods case. [138] The defendant was specifically engaged in flood mitigation and the plaintiffs were the downstream property owners who were at risk from the flooding. The relationship was direct, specific and, it might be said, the focus of the regulatory framework in which the defendant undertook its flood mitigation tasks. By contrast, the statutory framework in which the Defendant

functions is centred on the interests of the States with which the Defendant has a direct relationship. The Plaintiffs and Group Members held water entitlements to be used for only one of several uses, and in one location only. They are not the focus of the statutory framework in the same way as were the plaintiffs in the Queensland Floods case. Fourthly, and following from the previous point, given the plaintiffs’ more focussed and specific place in the regulatory framework, the imposition of a duty of care on the defendant to protect the plaintiffs from property damage was consistent with and not incongruous with the regulatory framework.138 [139] There was not the same potential for a distortion of the focus of the regulatory framework as there is in this case. Fifthly, the location of the relevant property downstream of the dams meant that not only was the membership of the class to which the duty was owed in the Queensland Floods case ascertainable, there was no suggestion of equivalent duties of care being owed to other classes. [140] There was not the same potential for conflicting duties as there is in the present case, nor was there the potential for duties to be owed widely by the defendant. Sixthly, the trial judge recognised in the Queensland Floods case that a duty of care might be owed even if the flood engineers were thereby exposed to some conflicting duties.

Depending on the conflicts, they might be accommodated by informing the question whether the care which the flood engineers had taken was reasonable.. [141] In the Queensland Floods case the duty of care was owed by the flood engineers to all members of the class of downstream property owners, all of whom would benefit from flood mitigation being undertaken with reasonable care even though particular flood mitigation measures might cause damage to some who would not have suffered any damage if the flood mitigation was undertaken otherwise. [142] Some of the conflicts to which the Defendant is exposed in the present case are different. That is especially so for the conflicts which arise from the requirement that the Defendant balance the risk of system shortfall and the risk of spill in order to achieve the objective to operate the Murray River system efficiently and effectively in order to deliver State water entitlements. Another significant point of difference with the Queensland Floods case is that the statutory framework within which the defendant operated was materially different. In particular, there was far greater prescription for the performance of flood mitigation to which the defendant’s duty of care attached, the prescription variously arising from the development consent for the dams, the conditions of the licensing of their operation and the Manual. [143] The

tasks of the defendant more ready answered the description “operational” and was more apt for supervision by the Court. The contrast with the Defendant’s function to “give effect to any high level decision” of the BOC is stark. Given the nature of the damage suffered by the plaintiffs and the different statutory framework, the Queensland Floods case is a poor analogy. The Electricity Networks case The Plaintiffs’ second case is the Electricity Networks case which is referred to above. [144] Apart from the fact that the case was about a statutory authority operating infrastructure, the Plaintiffs do not identify any feature which is analogous to the present case. The defendant was responsible for electricity distribution and caused a pole located on the plaintiff’s land to collapse and start a bushfire. A duty of care was found to be owed to people in the physical vicinity of the electricity distribution system. The case was about fire, safety and property damage. The “operational” function being performed by the defendant when working on the pole is far removed from the conduct of river operations which are in issue in the present case. Sharma and Pabai The Plaintiffs’ third group of cases comprise Sharma [145] and Pabai. [146] The cases arose from criticism of government policy in response to global warming. The government was found not to owe a duty of care. Each Judgment

emphasised the inappropriateness of imposing a duty of care in respect of policy functions of the government. The fact that no duty of care was found to be owed when policy functions were performed in the Sharma and Pabai cases does not mean that a duty of care was owed in the present case just because the Defendant’s functions may be characterised as “operational”. The distinction between policy functions and operational functions is not a matter of definition but of the existence of criteria by reference to which the Court can determine reasonableness of conduct. There is limited assistance for the Plaintiffs’ case from these authorities. Brodie v Singleton Shire Council The Plaintiffs’ fourth case is Brodie v Singleton Shire Council [147] which establishes the proposition that budgetary considerations do not automatically negate the possibility of an obligation to act with reasonable care. Budgetary considerations are but one of a number of factors relevant to the defendant’s conduct which are to be taken into account. The principle may be accepted. The only aspect of the Defendant’s conduct which is criticised and which had a budgetary consideration was the negotiations about access to the MIL infrastructure for which a fee would have to be paid to MIL. The fact that obtaining access to the MIL infrastructure would involve a monetary cost does not for that reason preclude

the imposition of a duty of care when the Defendant negotiated with MIL, although the potential conflict between the interests of the current holders of water entitlements and those who would hold them in the future may. Beyond that there is no useful analogy to be drawn from Brodie v Singleton Shire Council. Cases about local councils and development approval The Plaintiffs’ fifth group are cases where a local council (or their agents) have been held to owe a duty of care to avoid pure economic loss when issuing a development approval or similar. Each case has its own features, including a particular statutory framework, a particular property and circumstances of reliance by a particular developer or purchaser. Other than recognising that a public authority may in theory owe a duty of care to avoid pure economic loss (which the Defendant does not dispute) the Plaintiffs do not draw out from this group of cases any feature sufficiently below a high level of generality to inform the evaluation of the salient features in this case. Cases of liability beyond direct contractual relationships The Plaintiffs’ sixth group of cases are Bryan v Maloney [148] and other cases where a builder, manufacturer or professional adviser was found to owe a duty of care to a someone other than the immediate customer. The Plaintiffs’ seventh group of cases are a variation on the same theme, namely

cases where there was known reliance by a customer on the principal’s expert agent (valuer, pilot) such that a duty of care was held to be owed by the agent personally. The Plaintiffs submit that the cases demonstrate that a duty of care may be owed even where an intermediary is interposed between the defendant and the person who suffered the loss or where the defendant was acting as agent of another. There is no dispute about the principles. They do not directly address the issues in the present case. The present case is concerned with an examination of the statutory framework in order to understand the objects, functions and powers of the Defendant and the relationships created or facilitated by the Commonwealth Statute, the Agreement and the O&O Document. The examination is informed by understanding the roles played by other entities within the statutory framework, such as the BOC, the States, WaterNSW, GMW, the Commonwealth and environmental water holders. There is no dispute that the absence of a direct contractual relationship between the Defendant and the Plaintiffs and Group Members does not preclude a duty of care being owed, if such a duty would otherwise be congruous with the statutory framework. Summary of authorities relied upon by the Plaintiffs The authorities relied upon by the Plaintiffs illustrate the application of principles to the particular circumstances

of those cases. There is limited analogy to be drawn with the circumstances of the present case. Summary of finding that no duty of care was owed It was reasonably foreseeable that the Plaintiffs and Group Members may suffer pure economic loss if the Defendant did not undertake its river operations functions efficiently. That alone does not provide a basis for imposing the alleged duty of care on the Defendant. In addition, the Defendant had actual knowledge of the risks of the economic harm alleged by the Plaintiffs, it relevantly exercised control over the source of the risks and the Plaintiffs were vulnerable because they were unable entirely to protect themselves from the risk of receiving a reduced supply of water from the Murray River with which to manage the risks of having insufficient (or less) water with which to conduct their irrigated agriculture activities. It may also be accepted that the Plaintiffs and Group Members were reliant on the Defendant to undertake river operations efficiently, although no more so than other groups. It should also be accepted that a feature of the case is that the imposition of the alleged duty of care would not strictly speaking expose the Defendant to an indeterminate liability although that is not a reason for imposing the duty of care so much as the exclusion of a particular reason for rejecting it. There have been cases where these

features have been found to support the imposition of a duty of care to avoid pure economic loss to a plaintiff. However, the judicial evaluation of the features of a case is not an exercise in going through a check-list, nor is it an exercise of instinctive synthesis. These features mean that the imposition of a duty of care would not suffer from the problem that it might expose the Defendant to unforeseen and unforeseeable liability, nor to a liability arising from risks which have a source in something that the Defendant cannot control, nor to an indeterminant liability. However, the imposition of the alleged duty of care would nevertheless be incongruous with the statutory framework, at the very least by distorting the performance of the Defendant’s functions. The incongruity would arise not just from the Defendant’s potential liability to the Plaintiffs and Group Members but also from the Defendant’s potential liability to other individuals and groups, some of whom may have conflicting interests. The incongruity further arises from the difficulty in identifying the content of the duty with which the Defendant would be obliged to comply were it to be imposed. Were the duty of care to be imposed, the Defendant would be subject to the duty in circumstances where there has been no assumption of responsibility by the Defendant and where there has been no reliance by the

Plaintiffs and Group Members different to the general reliance on a public entity to perform a public function. A judicial evaluation of all the features of the cases leads to the conclusion that the Defendant did not owe a duty of care to avoid pure economic loss to the Plaintiffs and Group Members. There is nothing in the cases relied upon by the Plaintiffs which warrants a different conclusion. The Plaintiffs’ contention that they were owed the alleged duty of care is to be rejected. It follows that the proceedings are to be dismissed. All other issues to be considered nonetheless Despite that conclusion I will proceed to determine all issues before me to assist the appeal process and obviate recourse to a new trial. [149]

STANDARD OF CARE If the Defendant owed the Plaintiffs a duty of care, the standard of care may be addressed briefly. Section 42 of the ACT Liability Statute provides as follows: 42 Standard of Care For deciding whether a person (the defendant) was negligent, the standard of care required of the defendant is that of a reasonable person in the defendant’s position who was in possession of all the information that the defendant either had, or ought reasonably to have had, at the time of the incident out of which the harm arose. Section 42 raises for consideration the hypothetical person in the Defendant’s position. In the performance of its river operations functions, the Defendant is embarked upon a professional undertaking in the sense that the tasks which it performs call for expertise not commonly found amongst lay people. The content of the profession is not susceptible to the same degree of definition as is possible for some other professions, such as solicitors and doctors. A range of different disciplines may inform decisions which the Defendant may be called on to make, as is apparent from the list of fields in which a person may have expertise in order to be qualified to be a member of the Defendant: water resource management, hydrology, freshwater ecology, resource economics, irrigated agriculture, public sector governance, financial management or Indigenous matters

relevant to the Basin water resources. [150] Not all of these disciplines will be of immediate relevance to river operations. A further aspect of the Defendant’s river operations is that the Murray River system is unique, in the sense that every river system is different by virtue of its scale, location, climate, uses and regulation (amongst other things). Some of the Defendant’s expertise is specific to the Murray River system. The Plaintiffs submit that a person in the Defendant’s position is an authority staffed by expert river operators, hydrologists and modellers “consistent with its status as such”. Drawing on the common law, the standard of reasonable care required of the Defendant is that of the ordinary skilled person exercising and professing to have the special skill of a river operator. [151] The Defendant does not suggest any alternative. Both parties refer in their submissions to the “reasonable river operator”. I too will use that phrase, by which I mean to accept the Plaintiffs’ formulation unless I say otherwise. Section 43 provides as follows: 43 Precautions against risk—general principles (1) A person is not negligent in failing to take precautions against a risk of harm unless— (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known); and (b) the risk was not insignificant; and (c) in the circumstances, a

reasonable person in the person’s position would have taken those precautions. (2) In deciding whether a reasonable person would have taken precautions against a risk of harm, the court must consider the following (among other relevant things): (a) the probability that the harm would happen if precautions were not taken; (b) the likely seriousness of the harm; (c) the burden of taking precautions to avoid the risk of harm; (d) the social utility of the activity creating the risk of harm. The question whether the Defendant breached its duty of care is to be determined having regard to the statutory language of the ACT Liability Statute, which ought not to be paraphrased or substituted with other words. [152] There is no dispute in this case that the relevant risk was foreseeable. Whilst the Defendant submitted that the risk of reduced allocations to the Plaintiffs was only one or two percent, which was equivalent to “a rainfall event”, I do not understand the Defendant to submit that the risk was insignificant. If that is the position of the Defendant, then I do not accept it. The evidence of the Plaintiffs made clear that every megalitre counts. For those undertaking agricultural production, including irrigated agricultural production, every rainfall event is significant. The real issue on breach of duty is whether the Defendant failed to take precautions against the pleaded

risks of harm that a reasonable person in the Defendant’s position would have taken. The Defendant emphasises that s 43(1)(c) requires that the precaution which the Defendant failed to take must be one that a reasonable person “would” have taken. The Defendant correctly submits that it is not sufficient for the Plaintiffs to show that a river operator could reasonably have undertaken different river operations. They have to prove that a reasonable river operator would not have done what the Defendant did. Although the parties’ submissions were in varying degrees expressed in terms of the common law, there is no apparent dispute about these principles. BREACH OF DUTY – 2017/2018 WATER YEAR Introduction Duty of care which the Defendant is assumed to have owed The duty of care pleaded in paragraph 86(a) of the Statement of Claim is a duty to take reasonable care in exercising river operations functions to avoid the risks of harm alleged in paragraphs 77 to 78. The term “river operations functions” is defined in paragraph 15 of the Statement of Claim as the functions of the Defendant under the Agreement and s 18E(1) of the Commonwealth Statute which relate to the operation and maintenance of works connected to the upper River Murray storages. The release power is the power bestowed on the Defendant by cl 98(1) of the Agreement and is set out again as follows: 98 Authority’s Role in

Operation of Storages (1) The Authority may give directions for the release of water from upper River Murray storages and water must be released in accordance with any such directions. … Hence, the other duties alleged in paragraph 86, including the duty relating to the exercise of the release power in paragraph 86(c), are subsets of the paragraph 86(a) duty. For the 2017/2018 water year, breach of duty may be analysed on the assumption that the Defendant owed the paragraph 86(a) duty. The Plaintiffs do not address any submissions to the Defendant’s conduct of river operations other than the exercise of the release power, so the duty alleged in paragraph 86(c) may have been wide enough. I will nonetheless consider the issue on the (wider) basis most favourable to the Plaintiffs. Overbank transfers in the 2017/2018 water year During the 2017/2018 water year the maximum capacity of the Barmah Choke was 10,000 ML/day measured at the rate at which water was released at Yarrawonga Weir. During the day on 3 October 2017, 9,871 ML of water was released at Yarrawonga Weir. At 2:45pm on 3 October 2017, the Defendant gave a direction to increase the release rate at Yarrawonga Weir to 11,000 ML/day. There is no dispute that the Defendant exercised the release power by giving that direction. On 4 October 2017, 10,810 ML of water was released at Yarrawonga Weir. In the following days the

Defendant gave directions for the release of water at Yarrawonga Weir to increase further. The flow increased to a peak of 15,124 ML on 12 October 2017. The Plaintiffs submit that the decision to increase the release rate above 10,000 ML/day was a significant and unusual decision. They allege that when the Defendant made the decision it failed to act with reasonable care and thereby breached the duty which it owed to the Plaintiffs. Precise statement of the Plaintiffs’ case on breach The Plaintiffs’ case about breach in the 2017/2018 water year has changed from time to time, including during the hearing. The Plaintiffs confirmed in closing submissions that some breach allegations were abandoned. They rightly acknowledged the need to formalise their position. On the second last day of the hearing the following occurred: MR PRINCE: “If I can then begin with the alleged breaches of duty in relation to the 2018/19 water year. In opening, there were six topics relating to breach that I addressed upon in relation to that year. Two of those topics, the winter Goulburn pulse in 2018 and what was described as the MIL efficiency case have not been addressed, either in the plaintiffs’ written submissions or orally, or in their reply written document, and so notwithstanding that there has been no formal concession, your Honour must treat those as abandoned. That leaves four topics–” MR

BANNON: “I can confirm that, your Honour, in fact - I’m saying - I’m sorry that I–” HIS HONOUR: “No, you are welcome to abandon or simplify–” MR BANNON: “Yes. No, I think it’s - in fairness to everybody, including your Honour, to make sure your Honour doesn’t start writing about things - or even considering writing about, can we undertake to give your Honour a piece of paper by tomorrow. But, I think, the short answer is what we have said in writing is our target.” HIS HONOUR: “Thank you.” MR BANNON: “But I think I will - I think there should be a bit more formality about it. Thank you.” HIS HONOUR: “Thank you Mr Bannon.” On the last day of the hearing the Plaintiffs handed up a document entitled “Concise Summary of Plaintiffs’ Breach Allegations” which was marked “MFI-38”. It contains a list of alleged failures in each of the 2017/2018 water year and the 2018/2019 water year in numbered and sub-numbered paragraphs. I was told “these are the allegations we press”. Given the magnitude of the material, the intricate interrelationships between the various parts of the Murray-Darling Basin and the complexity of the tasks involved in operating a river, it is important that the Plaintiffs identify their case with particularity. From the point of view of the Defendant it is not fair for the case to be conducted otherwise. From the point of view of the Court it is not practical for the

case to be conducted otherwise. From the point of view of the administration of justice and the finality of litigation, this complicated and time-consuming case could not be conducted otherwise. In accordance with the elementary rule that a party is bound by the conduct of the case I have approached the determination of the case on the basis that the Plaintiffs have abandoned all allegations of breach other than those set out in MFI-38. [153] As set out in MFI-38 the breach in the 2017/2018 water year is alleged to have been constituted by the Defendant’s failure to take seven reasonable precautions. I have rearranged the order as follows: failed correctly to interpret the most recent climate outlook; failed to act in accordance with the 2017/2018 AOP (especially the prevailing “dry” 90% AEP Scenario); failed to adhere to the most recent (mid-September 2017) Fortran modelling; failed to conduct updated Fortran modelling to test the necessity for commencing overbank transfers in early-October 2017; failed appropriately to model the decision using Daily Operations Spreadsheets, given that any such modelling which was done: adopted unexplained loss rates which seem to have ignored the significant rainfall forecast in 4 days as shown in the operator log; did not test more efficient transfers from the Menindee Lakes; and did not test more efficient calls on the Goulburn IVT account

in October; failed to keep the flows at Yarrawonga Weir in-channel and prioritised releases from the Menindee Lakes and calls on the Goulburn IVT account in early-October; and failed to follow proper practice as to decision-making for a significant and unusual decision, including: documented considerations of alternatives; decision-making by delegates; and consultation with the WLWG. Before each of the seven alleged failures can be considered, it is necessary to set out the context and the background for the exercise of the release power on and after 3 October 2017. It is also necessary to consider the processes used by the Defendant’s River Operations Team to make decisions. It is necessary to set out the background in detail. It is also necessary to resolve some factual disputes about aspects of the following: decision-making; Daily Operations Spreadsheets; the climate outlook; and negotiations with environmental water holders about releases from the Menindee Lakes. Background to the exercise of the release power on 3 October 2017 Regulatory framework – Yarrawonga Weir I have referred above to the O&O Document which for the 2017/2018 water year included specific objectives and outcomes for particular aspects of the River Murray. Clause 12.5 of Appendix A addressed bulk transfers of water from Hume Reservoir to Lake Victoria. It is set out above at [355]. The release of water

at Yarrawonga Weir was addressed in cl 3 of Appendix A to the O&O Document. At any given time the Defendant was required to determine whether inundation of the Barmah-Millewa Forest was “desirable”. Some of the documents refer to the Forest as a wetland forest. There is no dispute that “desirable” meant environmentally desirable which had to be determined in consultation with the Southern Connected Basin Environmental Watering Committee (which I will refer to as the “SCBEWC”). When inundation was desirable, the maximum flow at Yarrawonga Weir was limited to 15,000 ML/day or, with the implied consent of the BOC, 18,000 ML/day. When inundation was undesirable, cl 3.1b(d) provided: “At any time when flooding of the Barmah-Millewa Forest is deemed to be undesirable, the [BOC] advises that the maximum regulated flow through the Barmah Choke is that flow which does not require the opening of Barmah-Millewa Forest regulators or lead to the uncontrolled overtopping of levees (this is generally below a height of 2.6 m at the Picnic Point gauge which is equivalent to a flow of ~ 8 500 ML/day, or a release from Yarrawonga Weir of ~10 600 ML/day), or require the opening of regulators on the Edward River downstream of Steven’s Weir.” Whilst cl 3.1b(d) referred to a maximum flow rate of 10,600 ML/day both parties have approached the case on the basis that the figure was outdated. Both

parties proceeded on the basis that during the 2017/2018 water year the applicable maximum was in fact 10,000 ML/day. Whilst a maximum rate of flow was provided for Yarrawonga Weir, cl 3.1b(d) also made provision for a higher flow rate: “The [BOC] advises the [Defendant] may plan to exceed the maximum regulated flow through the Barmah Choke when inundation of the Barmah-Millewa Forest is undesirable, after consultation with the [WLWG] and taking into account advice from forest managers and the SCBEWC, for example, to provide South Australia with either its water order or Entitlement flow.” Regulatory framework – Lake Victoria Located just one day’s flow from the South Australian border, Lake Victoria is critical to the operation of the Murray River system. Quoting the Defendant’s Guidance Document, the Plaintiffs accurately describe Lake Victoria as “the core of overall River Murray System operations” which has a “crucial role in meeting South Australia’s entitlements during periods of high water demand”. Lake Victoria was addressed in cl 9 of Appendix A of the O&O Document. For current purposes the specific objective was that the Defendant operate Lake Victoria in accordance with the Lake Victoria Operating Strategy. The Lake Victoria Operating Strategy is dated 27 May 2002 and was prepared by the Defendant’s predecessor. The purpose of the Lake Victoria Operating Strategy is

to ensure that the water storage function of Lake Victoria is operated in compliance with a permit issued under the National Parks and Wildlife Act 1974 (NSW). Under the permit, the storage levels at Lake Victoria must be managed so that “disturbance of Aboriginal relics will be minimised to the greatest extent possible”. In practical terms, monthly parameters are set for the storage level at Lake Victoria to sustain shoreline vegetation and hence ground stability at sites of historic and cultural importance to Indigenous communities. There is a maximum water level specified for the end of February (26.5m), March (25.6m), April (24.5m) and May (24.5m). From 1 June each year Lake Victoria may be refilled. There are qualifications on the maximum levels, including for periods when water availability would be jeopardised. Whilst the National Parks and Wildlife Act 1974 is a NSW statute, the Defendant is required to operate Lake Victoria in accordance with it by virtue of the BOC’s approval of the O&O Document. There is no dispute about that. Clause 12.2 of Appendix A to the O&O Document provided that Lake Victoria and the Menindee Lakes had to be operated in harmony with each other. Regulatory framework – Menindee Lakes As previously noted, the Menindee Lakes are operated by WaterNSW. The Menindee Lakes are a shared resource, in the sense that there are times when the Defendant has

access to the water stored in the Menindee Lakes for the purposes of delivering State water entitlements and times when it does not. The sharing of the resource comes from cl 99(1) of the Agreement which provides that the Defendant may not direct that water be released from the Menindee Lakes Storage after its volume falls below 480 GL and before it next exceeds 640 GL. Outside those parameters the water belongs to New South Wales. As already observed, cl 12.2 of Appendix A to the O&O Document provided that the Menindee Lakes had to be operated in harmony with Lake Victoria. Specifically, when the Defendant had access to water in the Menindee Lakes, bulk transfers of the water to Lake Victoria “should continue to be triggered” whenever Lake Victoria was below a specified level. The essential reason for that requirement was that evaporation losses from the Menindee Lakes are materially higher than those from Lake Victoria: cl 12.2(b). The Plaintiffs submit that the harmony operations balanced the advantages of reduced system losses from evaporation against the risk of spill from Lake Victoria into South Australia. That accords with the evidence. For present purposes, if the Defendant had access to the Menindee Lakes in the month of October bulk transfers “should continue to be triggered” if Lake Victoria was below 680 GL. In fact, Lake Victoria’s maximum capacity is only 677 GL

which means that in October bulk transfers from the Menindee Lakes were always triggered so long as there was more than 640 GL in the Menindee Lakes. They would continue to be triggered until the Menindee Lakes fell below 480 GL. Another aspect of the river system is that the rate of evaporation from the Menindee Lakes is not only higher than Lake Victoria but also much higher than Hume Reservoir. All other things being equal, system losses can be reduced by transferring water to Lake Victoria from the Menindee Lakes in preference to water from Hume Reservoir. Clause 12.5(d) of the Annexure A to the O&O Document contained the following note: “transfers to Lake Victoria are made from Menindee Lakes Storage, if it is in control of the [Defendant], in preference to transfers from Hume Reservoir.” There is no dispute that there are other reasons why it was preferable to transfer water to Lake Victoria from the Menindee Lakes rather than from Hume Reservoir, including the relative geographical proximity to Lake Victoria which meant that water would reach Lake Victoria in about 14 days (cf 25 days for water from Hume Reservoir). The shorter travel time meant that the risk of spill into South Australia was lower because the time for unforeseen intervening rainfall was less. When transferring water from the Menindee Lakes cl 10.1 of Appendix A to the O&O Document provided for, in

effect, a maximum release rate which is measured at Weir 32 on the lower Darling River. The maximum rate was 9,000 ML/day. Clause 10.2 provided that the target “maximum rate of rise” at which the flow rate may be increased was 500 ML/day up to a flow rate of 1,000 ML/day, and thereafter 1,000 ML/day. There does not appear to be any dispute that it was the practice of WaterNSW to give communities downstream of the Menindee Lakes prior notice of any release of water. They had to move their pumps and stock. The Defendant’s draft manual said that three days’ notice had to be given prior to the commencement of any release. The Defendant’s practice was to liaise with WaterNSW about giving notice. Where a commencement date was anticipated, there is no reason why timely notice could not be given and it was the practice generally to do so. The O&O Document further addressed how the Defendant was to direct the release of water from the Menindee Lakes. The Menindee Lakes are comprised of four main lakes each of which has its own attributes affecting evaporation rates, accessibility, structural integrity and environmental and cultural significance. The Defendant was required to release water in a way which preferentially conserved water in the most efficient and accessible lakes. Clause 10.4(c) provided: “When directing releases from the Menindee Lakes Storage, the [Defendant] must take

into account the impacts of the releases on individual lake volumes and therefore evaporative losses, the accessibility and quality of stored water, and the environment.” Clause 10.4(d) provided that the Defendant must be guided by WaterNSW and the WLWG when taking into account the impact of releases on individual lake volumes. The evidence suggests that in order to address accessibility and relative evaporation it was the practice of the Defendant and its predecessor to release water first from the bottom two lakes (Lakes Menindee and Cawndilla) and then from the top two (Lakes Pamamaroo and Wetherell). There were some exceptions to that practice, including an initial priority release from part of Lake Wetherell to remove water from the Darling River floodplain. For the express purposes of balancing conservation of water and minimisation of losses with contribution to the protection and restoration of priority assets and ecosystem functions, and to provide for riparian amenity and in-stream needs, cl 10.3 of Appendix A to the O&O Document specified a minimum rate of release from the Menindee Lakes. The minimum rate was 200 ML/day in October, 300 ML/day in November and 500 ML/day when the storage was at full supply level. Regulatory framework – inter-valley trade Another function given to the Defendant by the Agreement is to make protocols for maintaining, crediting and

debiting accounts to facilitate the trade of water entitlements and water between valleys. This is called inter-valley trade and is referred to as “IVT”. When water stands to the credit of a valley in the relevant IVT account, the Defendant has the power to direct that the water be released from that valley into the Murray River. The valley relevant to the issues in the case is the valley through which the Goulburn River runs out of Victoria and joins the Murray River. Whilst water entitlements and allocations may be traded both ways, in practice the net trade is generally from the Goulburn Valley into the Murray River. Under the established protocols, trade of water from the Goulburn Valley to the Murray River is permitted until the Goulburn IVT account reaches 200 GL. Further trade from the Goulburn Valley is not then permitted until the IVT account is “called upon” and the water is physically released. The release of water from the Goulburn Valley reduces the IVT account which then permits trade to resume until the IVT account once again reaches 200 GL. The prohibition on trade above 200 GL contains some exceptions, including for related entities. This means that the IVT account can reach a balance which is significantly higher than 200 GL. The Goulburn River joins the Murray River below the Barmah Choke. Water takes approximately 14-15 days to flow from that confluence to

Lake Victoria. Annual Operating Plan – requirements and preparation Provision in the O&O Document for the Annual Operating Plan Clause 10 of the O&O Document addressed the Annual Operating Plan which is central to the Plaintiffs’ case about breach in the 2017/2018 water year. Under cl 10(1)(a) the Defendant had to prepare and adopt an AOP each year. Dictated by the annual weather cycle, particularly historic rainfall patterns, the Defendant’s water year commenced on 1 June each year. For each water year the Defendant was required to have prepared and adopted the AOP by 31 July. [154] In consultation with the WLWG, the Defendant had to review the AOP in October. [155] The timing for review followed the completion of the winter months which are historically the wettest in the water year. Clause 10(1)(b)(iv) set out certain details to be included in the AOP as follows: “(A) the anticipated hydrological circumstances in the River Murray System at the start of the relevant water year; (B) hydrological assumptions made by the [Defendant] for the relevant water year; (C) the [Defendant’s] estimate of the volume of water available to meet the water entitlement of each Southern Basin State at the start of the relevant water year (including any reserves of water not used in the previous water year); (D) the [Defendant’s] estimate of the volume of water required to meet other particular

purposes designated by the Agreement (such as minimum reserves) during the relevant water year; (E) the [Defendant’s] estimate of the volume of water available to meet the purposes referred to in sub-sub-paragraph 10(b)(iv)(d); (F) any risk to the quality or quantity of water available to meet critical human water needs; (G) River operations planned by the [Defendant] to be undertaken during the relevant water year (including river operations for environmental purposes) under several possible scenarios of water availability; and (H) any proposal by the [Defendant] which has previously been approved by the Committee, to affect the water entitlement of any State by departing temporarily from the usual water accounting procedures applied by the [Defendant], during the relevant water year.” The AOP had to be prepared having regard to the plans of environmental water entitlement holders. [156] It had to be prepared in consultation with the WLWG [157] and a copy had to be given to the BOC and the RMOC. [158] It had to be consistent with the Agreement and the O&O Document. [159] Clause 10(1)(b)(iv)(G) required the AOP to include the river operations planned by the Defendant under several possible scenarios. The scenarios had to address “water availability”. Apart from that requirement, the O&O Document did not specify what scenarios had to be used or what role they were to play in the

AOP. Provision was made for ongoing monitoring of the AOP and the regular provision of summaries to the WLWG. [160] Separate provision was made for the amendment of the AOP which the Authority could do after seeking advice from the WLWG. The WLWG could recommend that the Authority also seek advice from the RMOC, which in turn could recommend that the Authority seek advice from the BOC. Clause 10(1)(d) provided as follows: “The [Defendant] will carry out its functions under Parts XII (Distribution of Waters) and XIV (Effect of Snowy Scheme) of the Agreement in accordance with the Annual Operating Plan adopted for the relevant water year, unless this document, the Agreement or the Act requires the [Defendant] to do otherwise.” Apart from the obligation to consider advice from the WLWG, the preparation and adoption of the AOP was a matter for the Defendant. Each year the BOC approved the O&O Document including cl 10(1)(b)(iv). Apart from that, the BOC played no role in the preparation or adoption of the AOP. The BOC was entitled to receive a copy of the AOP and, if previously recommended by the WLWG and the RMOC, to give advice about any proposed amendment. Preparation of the Annual Operating Plan and the Fortran Assessment Model For the purposes of preparing the AOP each year, the Defendant selected six hypothetical scenarios. As described in the 2017/2018 AOP Document, each

scenario assumed a specific quantity of “annual River Murray system inflows”. The assumptions for each scenario were in fact more detailed, including assumptions about inflows for each month for each geographical part of the river system which altogether comprised an annual system inflow assumption. Individual scenarios were (generally) designated by the Defendant by reference to actual inflows recorded for the previous 125 years and a calculation of annual exceedance probability. For example, one scenario was designated “very dry” for which it was assumed that annual inflows would have an annual exceedance probability of 95%. Thus, the “very dry” scenario was based on an assumption that inflows would occur in the current water year which would be less than the inflows that had actually occurred in 118 of the last 125 years. A scenario was designated “dry” which had an annual exceedance probability of 90%. A scenario was designated “moderate” which had an annual exceedance probability of 75%. Designating scenarios by this method meant that there were at least 100 different scenarios available for selection. As each scenario included constituent sub-assumptions about the timing and location of the annual inflows across the entire river system, there were in fact many more different scenarios which could be selected. From that range the Defendant selected six scenarios for the

purposes of preparing the AOP. The Defendant did not select the same six scenarios each year. For each scenario of assumed inflows, the Defendant then made further assumptions about numerous other factors, such as conveyance (or transmission) losses (seepage and evaporation en route), South Australia’s storage rights, use of water for consumptive purposes and use of environmental water (as to quantity, timing, location and method). These are only examples of the assumptions made in the AOP. There are aspects of the Murray River system which are not directly touched by the issues in the present case but which were nonetheless part of modelling and about which assumptions were made and affected the output of the modelling, such as flows in the Murrumbidgee River tributary and water transferred from the Snowy Hydro Scheme. The assumptions for each scenario were then input into the Fortran Assessment Model which is bespoke software developed by the Defendant and its predecessors to model the behaviour of the Murray River system. Rules to simulate the natural behaviour of the river system have been developed and coded within the model. The coding also includes rules designed to simulate decisions about how the river system will be operated, such as minimum release rates from various dams and weirs. In accordance with the coded rules and based on the input assumptions, the Fortran

Assessment Model’s functionality includes identifying optimal river operations (including releases of water from the various storages) in order to meet demands (including delivery of South Australia’s water entitlement). [161] The output of the Fortran Assessment Model is generated at twelve monthly intervals for each scenario, starting with June and ending with next May. Once the Fortran Assessment Model has been run and an output is produced, the output is reviewed by the Defendant’s River Operations Team and subjected to some manual adjustments to reflect certain operational matters which the Fortran Assessment Model does not take into account. Examples of matters which may be the subject of post-processing manual adjustments are environmental water demands and rules relating to releases of water from different parts of the Menindee Lakes. Another matter which may be subject to the post-processing manual adjustments is bulk transfers of operational water, including from Hume Reservoir to Lake Victoria and from the Menindee Lakes to Lake Victoria. Manual adjustments may be made to the rates of release of water at Yarrawonga Weir. Some of these manual adjustments involve an exercise of judgement by the River Operations Team. The judgement may be informed by a process of trial and error with the various assumptions. The product of the entire process is then collated into a

spreadsheet which is sometimes referred to as the “AOP Spreadsheet”. The Defendant then prepares a document which includes text and graphs to communicate the information in the AOP Spreadsheet. The document is sometimes referred to as the “AOP Document”. The terminology is not unimportant. For instance, cl 10(1)(d) of the O&O Document specified that the Defendant would carry out its functions “in accordance with the Annual Operating Plan”. The Defendant submits that cl 10(1)(d) should be construed as referring to the AOP Document alone, not the AOP Spreadsheet. Having regard to the nature of conducting river operations “in accordance with” the AOP (see below) there is no reason to limit cl 10(1)(d) in that way. The more efficacious and plausible meaning is that the Defendant would carry out its functions having regard to all available information including the information in the AOP Spreadsheet. Dr Davis (Senior Director of the River Operations Team) described the entire process of preparing the AOP as “quite cumbersome”. I infer that is an example of Dr Davis’s understated turn of phrase. He said that the River Operations Team has to check all the assumptions and make sure everything is all right each time the process is undertaken. The Defendant’s practice was to undertake the process not only in July and October as required by the O&O Document but to repeat the process at

regular (approximately monthly) intervals. Each time the process was repeated the River Operations Team would substitute such inputs as had been assumed on the previous occasion which were now known from more recently observed data. For example, when originally prepared and adopted in July, each scenario in the AOP included assumptions about inflows for all future months starting with August. At the end of August the Defendant could repeat the AOP process for all scenarios but modified to use the August inflows which had actually occurred in the meantime. According to Mr Bishop (Senior River Operator) the purpose of repeating the process may simply be to update the information available to the Defendant from a more up-to-date AOP. Another purpose may be to use different assumptions and/or make different adjustments to compare outcomes. Repeatedly running the Fortran Assessment Model and comparing outputs could be used to assess risks or test options for future operational decisions. This is the trial and error process referred to above. The parties do not agree on the meaning and effect of the text, numbers and graphs contained in the AOP Document and the AOP Spreadsheet. The issue is addressed below as part of the analysis of the Plaintiffs’ contention that the Defendant failed to act in accordance with the AOP in the 2017/2018 water year. Other aspects of the Defendant’s

operation of the Murray River system The Defendant’s River Operations Team from May 2017 It is convenient at this point to describe the structure of the Defendant’s organisation which is relevant to this case. As set out above, the Defendant has multiple functions, not all of which are relevant to the present case. The conduct of the Defendant which is relevant to the 2017/2018 water year was undertaken by the River Operations Team. The Executive Director of the Division which included the River Operations Team was Alan Dreverman. He was replaced by Mr Reynolds from 31 August 2017. At the relevant time Dr Davis was the Senior Director of the River Operations Team. As Senior Director he had broad oversight of river operations and supervised the River Operations Team. The Senior Director also chaired meetings of the WLWG. From 1 June 2017 the Director of the River Operations Team was Jacqueline Hickey. She was responsible for managing day-to-day river operations. The day-to-day river operations are undertaken by river operators. At all relevant times Andrew Bishop and John Waterworth were Senior River Operators. The other River Operators included Thomas Zouch (who from February 2018 was an Assistant Director), William Lucardie (who was a “less experienced” member of the Team), Kerry Greenwood and Laura McCann (who was also a “less experienced” member of the Team). Each week a

river operator is designated as the Duty Operator. The Duty Operator is responsible for maintaining the Daily Operations Spreadsheet as described below. The Duty Operator is also responsible for communicating the Defendant’s directions to release water to the State water authority which operates the dam or weir in question. Whilst a Duty Operator is designated each week, the evidence makes clear that the River Operations Team is aptly named. It is a “small team”. Ms Hickey said that it is made up of “collective experienced river operators”. The evidence of Dr Davis, Ms Hickey and Mr Bishop, supported by the contemporaneous documents, demonstrates that the work of the River Operations Team is collaborative. Some of the collaboration is structured, such as the weekly Team review meeting (usually on a Tuesday morning), but much of it is informal. Dr Davis saw Ms Hickey pretty much every day. Consultation within the Team is continuous, including when the Fortran Assessment Model is run and AOP Spreadsheets and AOP Documents are prepared, updated and analysed. A river operator may be responsible for preparing a particular document but more senior members of the Team, including Dr Davis and Mr Reynolds (and before him Mr Dreverman), reviewed all the documents which have become central to the present case. They did so multiple times. Where assumptions have to be adopted, statements

have to be published or judgements have to be made, collective consideration is given to the task. Multiple members of the Team attended WLWG meetings and presented information, including all of the meetings which are relevant to this case. The Plaintiffs have sought to paint a picture of the Duty Operator making operational decisions unilaterally and idiosyncratically, almost furtively, without input from or even the knowledge of other members of the River Operations Team let alone senior managers. The Plaintiffs submit that on 29 September 2017 the Duty Operator was “left to [her] own devices” to make decisions which were significant, unusual, risky and dangerous. That picture finds no support in the evidence. Daily Operations Spreadsheet The Fortran Assessment Model and the AOP are not the only tools used by the Defendant to make decisions about operating the Murray River system. The Daily Operations Spreadsheet is another tool. The Daily Operations Spreadsheet is not produced using the Fortran Assessment Model. It is an excel spreadsheet in which formulae have been developed and embedded by the Defendant. It requires the input of observed data about the river system such as inflows, losses and storage levels. It also requires the input of assumptions about future matters, including uses (diversions) and inflows. Using historic data from (approximately) the last three months

and assumed inputs for (approximately) the next three months, the Daily Operations Spreadsheet processes and depicts the behaviour of the river for the upcoming (approximately) three months. As the name suggests, the Daily Operations Spreadsheet is maintained on a daily basis. Maintenance of it is part of the duties of the Duty Operator. It is updated each morning by replacing the assumed inputs from the preceding day with newly received observed data. The Defendant has adduced evidence about the updating process. It is a structured and semi-automated routine. The Defendant automatically receives observed data from the collection infrastructure generally maintained by State water authorities and the Bureau of Meteorology. The Duty Operator extracts certain information from a wider body of data and inputs it into the Daily Operations Spreadsheet. The new data is subjected to two layers of quality assurance by the Duty Operator. Every month or so the Daily Operations Spreadsheet is stepped forward a whole month by deleting the oldest month of observed data and introducing a new future month of assumed inputs. In that sense it is a living document. An input which is important to the functionality of the Daily Operations Spreadsheet is losses through evaporation and seepage. The Daily Operations Spreadsheet includes observed data about evaporation and seepage losses which are

updated each day. The Defendant’s evidence is that assumptions about short-term future losses are based on a calculation using an equation that trends future losses based on observed losses. Assumptions about long-term future losses are trended to seasonal loss behaviour. Those assumptions can be adjusted where, for example, higher temperatures are forecast. Data from Bureau of Meteorology forecasts are used for rainfall and temperatures. The assumptions about inflows are conservative. They allow for any actual or short-term (four days) forecast rainfall but then recede back down to 90% AEP. The Daily Operations Spreadsheet is used on a day-to-day basis by the river operators in the River Operations Team, not just the Duty Operator. Like any spreadsheet, someone can use it to test particular operations such as increasing the flow rate at Yarrawonga Weir or changing the date upon which such an increase might start. For example, assumptions about future release rates can be changed and changed again to see how the change will affect downstream storage levels modelled in the spreadsheet. It is the practice of the River Operations Team to use the Daily Operations Spreadsheet as part of the process of making decisions about changes to release rates. Unlike the Fortran Assessment Model, the Daily Operations Spreadsheet has the functionality to produce outputs at daily intervals. The

practice of the River Operations Team is to “backup” the Daily Operations Spreadsheet each day to a shared location where it can be accessed by all members of the Team. The backup is overwritten the next day. If a particular river operator uses the Daily Operations Spreadsheet to test possible changes, in the ordinary course not all (or any) of the iterations of the spreadsheet generated by that process are saved. The events in the 2017/2018 water year Preparation of the 2017/2018 Annual Operating Plan Turning then to the specific events in the 2017/2018 water year, in accordance with the procedure just described the Defendant prepared an AOP for the 2017/2018 water year. The work commenced with output from the Fortran Assessment Model obtained at the end of May 2017 (which was the end of the preceding water year). Graphs from that output plus key assumptions were discussed by the Defendant and the WLWG at a meeting on 13 June 2017. Mr Bishop circulated within the Defendant a draft AOP on 7 July 2017. Depending on future inflows, the draft assumed that overbank transfers from Hume Reservoir to Lake Victoria would be required “from late spring into early summer…to transfer sufficient water downstream for lower system requirements, including for Lake Victoria”. In an email which Mr Bishop sent to one of his colleagues on 7 July 2017 he stated that “[t]he decision of if/when to

start Lake Vic transfers is quite tricky I think, and looks to be very sensitive to what occurs in the next few weeks”. On 14 July 2017 Dr Davis reported to the WLWG that the Defendant had commenced internal discussions about when to begin transfers to Lake Victoria. On 20 July 2017 the draft AOP was provided to the WLWG. A meeting of the WLWG occurred on 27 July 2017. The topic of bulk transfers from Hume Reservoir to Lake Victoria was discussed. The evidence does not reveal what was said other than that the Defendant would continue to review the situation. At the end of July 2017 the Defendant commenced bulk transfers from Hume Reservoir to Lake Victoria at quantities which did not exceed the channel capacity of the Barmah Choke (and about which there is no complaint). By early-August 2017 the Defendant had finalised the AOP for the 2017/2018 water year. It was published, including to the WLWG. Terms of the 2017/2018 Annual Operating Plan Section 1 of the 2017/2018 AOP Document provided as follows: “The River Murray system Annual Operating Plan for the 2017–18 water year (1 June 2017 to 31 May 2018) provides context and describes how the River Murray system (the system) may be operated under a number of inflow scenarios in the coming year. The scenarios have been prepared by the Murray–Darling Basin Authority ([the Defendant]) with input from the Australian Government and the

states of New South Wales, Victoria and South Australia through [the Defendant]’s Water Liaison Working Group.” It further provided: “The actual conditions that occur in the 2017–18 water year will inevitably be different to the scenarios presented in this plan, and therefore actual river operations will also be different to any projection presented. In particular, the patterns of environmental water delivery and use during 2017–18 are uncertain; and the impacts on the scenarios in this operational plan may be appreciable. Nevertheless, these scenarios provide a useful indication of the breadth of potential river operations in the 2017–18 water year. This document will be formally reviewed by the [Defendant] and the [WLWG] in October 2017. The jurisdictions regularly discuss system planning, through the [WLWG], and account for actual conditions as the season progresses in order to fine-tune system operations. This plan will be updated if there are significant changes. At the opening of each water year the [Defendant] undertakes a formal planning process with the [WLWG] to ensure adequate planning is in place prior to this operating plan being made public. At its meeting on 13 June 2017, the [WLWG] noted that minimum releases from Dartmouth Reservoir were planned for June and July 2017, with some additional releases of environmental water from Hume Reservoir likely in these

months. No intervalley trade (IVT) account water was planned to be called until spring 2017. If there are significant operations being proposed early in the 2017–18 water year, the [Defendant] will make these public.” Section 2 set out a summary of the Defendant’s objectives and outcomes as specified in the O&O Document. The following text is relevant: “The governments of the Commonwealth, NSW, Victoria and South Australia, via the Basin Officials Committee (BOC), have responsibility for the high-level decision-making in relation to river operations. They perform this by setting objectives and outcomes for MDBA to achieve. The document entitled “Objectives and Outcomes for River Operations in the River Murray System” can be found on the MDBA website. … If, on any occasion, the MDBA is unable to achieve one or more of the objectives above, in whole or in part, because of a conflict between those objectives and one or more other objectives, the MDBA shall consult with the jurisdictions. The MDBA will aim to achieve an appropriate balance between conflicting objectives, taking into consideration the prevailing circumstances, in accordance with the advice or decision of the jurisdictions.” Section 2 also set out a description of certain attributes of the Murray River system, including variability of inflows and usage, system constraints and long travel times. Relevant to the

present case are the limited channel capacities at the Barmah Choke and the Menindee Lakes: “System flow constraints and considerations. At various locations in the River Murray system there are flow constraints, which may apply during periods of regulated release and which, if breached, may have significant social and environmental impacts depending on timing. Some of these constraints and considerations include: … ● Yarrawonga Weir to the Barmah Choke: approximately 10,000 ML/day measured immediately downstream of Yarrawonga Weir when watering of the Barmah–Millewa Forest is desirable, and regulated releases of up to 3.3 m gauge height at Tocumwal (~18,000 ML/day) may be targeted subject to a range of conditions, requirements and timing. … ● Lower Darling River downstream of Menindee Lakes: 9,000 ML/day (although rates may be reduced to improve NSW water supply reliability at Menindee Lakes) ● outlet to lower Darling River from Lake Menindee: less than 4,000 ML/day depending on level in Lake Menindee. The constraints and considerations listed above are limits. They are therefore not normally targeted to be exceeded by normal river operations and lower flow rates will often be targeted in accordance with requirements and circumstances at the time.” The most significant figure stated in this extract is the 10,000 ML/day channel capacity immediately at Yarrawonga Weir. The limit

of the channel capacity at that location is called the “Barmah Choke”. Section 3 of the 2017/2018 AOP set out a summary of aspects of the Murray River in the 2016/2017 water year with a focus on inflows, uses and storage levels. The status of the Murray River system as at 1 June 2017 was described in Section 4. As at 1 June 2017 there was 6,151 GL of water in storage, of which 5,477 GL was active storage. Lake Victoria had 396 GL in storage of which 296 GL was active storage. The water required to meet critical human water needs was assumed to be 61 GL for New South Wales, 77 GL for Victoria and 204 GL for South Australia and a conveyance reserve to meet future critical human needs for the following year was assumed to be 225 GL. Section 5 of the AOP addressed the methodology used by the Defendant for planning purposes. It commenced with the following statements: “There are many variables that affect water availability which are inherently difficult to forecast. These variables include rainfall, soil moisture and water user demands. To account for the difficulties in accurately forecasting future water availability, six operational scenarios are provided. The six operational scenarios cover, in broad terms, the likely range of conditions and operations that are most likely in 2017–18. Key assumptions in the scenarios include system inflows, conveyance losses, storage losses,

environmental demand and consumptive demand. System inflows cover releases from the Snowy Scheme, unregulated inflows into Dartmouth and Hume Reservoirs and tributaries inflows (including the Kiewa, Ovens, Goulburn, Murrumbidgee, and lower Darling Rivers). The ‘environment’ is a relatively new and large ‘customer’ in the system. The pattern of environmental water demands is varied and different to consumptive (e.g. irrigation) demands. This inter-annual variability in demand presents a new challenge for annual operations planning. The assumptions on environmental water demands included in each of the scenarios are based on 2017-18 annual watering priorities published by each Environmental Water Holder (EWH). The main EWHs in the Murray and Darling systems are: Commonwealth Environmental Water Holder, the Victorian Environmental Water Holder, the Office of Environment and Heritage and the Living Murray Initiative.” The six operational scenarios were explained as follows: “All scenarios start with the actual system condition as of 1 July 2017 and assume Tier 1 water sharing arrangements (as discussed in Section 4.2). Water availability is calculated in accordance with the water sharing provisions of the Murray–Darling Basin Agreement utilising data available as of 1 June 2017, the annual assessment model and the assumptions for each scenario, all of which have been agreed to by

the jurisdictions. 5.2 River Murray system scenarios for 2017–18 The six scenarios considered in this plan are labelled according to the assumed River Murray system inflows and are as follows: ● Extreme dry scenario assumes annual River Murray system inflows of 860 GL. As shown in Figure 7, this is lower than the lowest inflow on record. ● Dry scenario assumes River Murray system inflows of about 3,000 GL, which is comparable to inflows in 2015–16 ● Near average scenario, assumes River Murray system inflows of about 8,000 GL which is comparable to inflows in 2012–13. ● Wet scenario, assumes River Murray system inflows of about 14,500 GL which is comparable to inflows in 2011–12.” The AOP stated: “5.6 Scenario Updates Whilst the Annual Operating Plan is published annually, the scenarios in this plan are updated throughout the year to assist with operational planning. 5.7 Limitations The scenarios in this plan indicate the water likely to be available to the states under a range of possible climatic conditions. The purpose of this information is to assist water managers and system operators with managing the risks of river operations and water supply. It is important to remember that the actual water available over the season will not follow a scenario but will fluctuate across these scenarios. Therefore the estimates of water availability in this plan are not suitable for, nor

are they used for determination of allocations. Entitlement holders should regularly seek the latest information available from their respective water authority on announced allocations and outlooks for improvement.” The AOP also set out information about the assumptions upon which each scenario was based including inflows, conveyance losses (evaporation and seepage), storage losses (evaporation), South Australia’s storage rights and (after preliminary consultation with the Commonwealth and the States) use of environmental water. The Climate Outlook was described. The AOP included a summary of particular river operations which were planned for the 2017/2018 water year, particularly in relation to delivery of environmental water. In relation to the Goulburn IVT account, the AOP stated: “At the start of July 2017, it is expected that there will be around 200 GL in the Goulburn Valley Account (from net trade out of the valley). The Goulburn Valley Account water will be called by the [Defendant] throughout the water year as required, typically between the months of December and March. The [Defendant] will liaise closely with the Goulburn-Broken CMA and Goulburn-Murray Water during the 2017–18 water year to adaptively manage the [Defendant] requests for the delivery of water from the Goulburn system to meet irrigation and environmental water demands along the River Murray, alleviate

duration of high flows through the Barmah ‘choke’ and also, where possible, to meet the environmental aims along the Goulburn River, Campaspe River and Broken Creek”. In addition to 200 GL of operational water assumed to be called from the Goulburn IVT account, the AOP assumed that between 230 and 350 GL would be ordered from the Goulburn River for environmental purposes. The AOP stated that the co-ordination of operational and environmental flows from the Goulburn River would be undertaken by the Defendant alongside the Victorian operator of the Goulburn River (GMW) and environmental water holders. Section 7.6 of the AOP addressed the Barmah Choke in the following terms: “7.6 Capacity considerations In the ‘very dry’ and ‘dry’ flow scenarios, high overall system demands downstream of the Choke, particularly through the summer period, result in possible above channel flows during late spring and early summer. These would likely be aligned with Barmah Choke environmental requirements as described in Section 8.3. This is in addition to long periods of near channel capacity flows through the Barmah Choke, A need to undertake such operations is driven by a number of factors as described in Section 8.3.1. These factors change over time and underpin the overall risk that insufficient channel capacity will be available at certain times of the year to supply overall downstream

demands. In operating the River Murray system, the [Defendant] assesses channel capacity risks and takes action to mitigate the risks by implementing appropriate actions to ensure demand requirements will be supplied. Such actions include: ● Preparing and reviewing this operating plan ● Reviewing forecast demands ● Reviewing weather and tributary inflow forecasts ● Reviewing minimum flow targets and storage targets in Lake Victoria under a range of scenarios ● Drawing on weir pool or mid-river storages to meet periods of peak demand ● Arranging delivery of IVT water from tributaries downstream of the Choke ● Managing the Barmah Choke trade restriction (see Section 7.7) The [Defendant] is currently working with the partner governments to better understand system capacity risks downstream of the Barmah Choke. From this work the [Defendant] and partner governments will develop and assess some potential longer term risk mitigation measures.” The Barmah Choke trade restrictions are referred to above. Net water trade from above to below the Barmah Choke was prohibited unless the Defendant relaxed the prohibition in exceptional circumstances. Having identified the six chosen scenarios and the assumptions which were applicable to each, the AOP then described how particular features of the Murray River system had been modelled to behave over the twelve months of the 2017/2018 water

year. Pertinent to the present case is the flow of water at Yarrawonga Weir which was addressed in Section 8.3. Channel capacity was said “likely to be an issue”. The AOP stated: “To overcome this reduction in flow capacity, the ‘very dry’ to ‘moderate’ scenarios assume above channel flows up to 15,000 ML/day through this section, occurring from late spring into early summer. The driver for the high flows under these scenarios is to transfer sufficient water downstream for lower system requirements, including for Lake Victoria over summer. To reduce the pressure on the banks of the Barmah Choke during these sustained high flows, opportunities to utilise the major creek lines within the forest to increase the transfer capacity through this section would be explored with the relevant environmental agencies.” The commentary on flow of water at Yarrawonga Weir was illustrated with the following graph: It is to be observed that this graph (and all the other graphs taken from the AOP and outputs from the Fortran Assessment Model) depicted information at monthly intervals. For example, for the “dry” scenario depicted by the yellow line there was a single value for August 2017 which is 8,000 ML/day and a single value for September 2017 which was 10,000 ML/day. Each value was an average figure for the respective month. The AOP and the Fortran Assessment Model did not address the flow at

Yarrawonga Weir on any individual day. The transition from the value for one month to the next was depicted as linear but that was a feature of the graph, not the flow rate at Yarrawonga Weir which the graph depicted. It will be recalled that the channel capacity of the Barmah Choke was 10,000 ML/day when measured by the rate of release of water at Yarrawonga Weir. Section 8.3 concluded with the following statement: “Lower flow rates downstream of Yarrawonga Weir also have the potential to affect recreational users in this reach. The [Defendant] will have regard to the requirements of recreational users and will aim to meet those requirements where they align with meeting other objectives but cannot guarantee river levels for recreational use. Recreational water users are encouraged to check flow forecasts on the [Defendant] website when planning their activities. Further information on recreation is also available on the [Defendant’s] website.” Another relevant feature of the Murray River system which is relevant to the present case is the storage level of water in Lake Victoria. That feature was addressed in Section 8.5 of the 2017/2018 AOP. The commentary on Lake Victoria commenced with the following statement: “A critical consideration that influences the use of Lake Victoria is that it must be operated and managed to minimise disturbance to Aboriginal cultural heritage

material and any burials that may be exposed by erosion of the foreshore must be protected. The [Defendant] will aim to fulfil the intent of the Lake Victoria Operating Strategy (LVOS) (MDBC, 2002) and the Lake Victoria Cultural Landscape Plan of Management (revised 2007) that are required by the Aboriginal Heritage Impact Permit issued by the NSW Office of Environment and Heritage. The LVOS requires the period of time that the water level in Lake Victoria is held high to be minimised. The LVOS aims to minimise erosion at high lake levels and allow for revegetation to protect important cultural heritage. However, in some circumstances such as when the [Defendant] cannot call on water from the Menindee Lakes, water security assumes a higher priority and the levels in Lake Victoria may exceed the storage values recommended in the LVOS. A further consideration relating to Lake Victoria operations is Clause 103 of the [the Agreement], which requires that the first 250 GL of minimum reserve be held in Lake Victoria at the end of each May. This operating plan assumes that the requirement to hold the first 250 GL of minimum reserve in Lake Victoria will be maintained in all scenarios except the ‘extreme dry’. In this scenario it is assumed the conditions are trending drier and because of the overall operational objective to release efficiently, insufficient water has arrived at Lake

Victoria to achieve the target by the end of May.” The following statement was then made: “As of 1 June 2017, Lake Victoria held 396 GL (59% capacity). Lake Victoria is expected to effectively fill (if not by tributary inflows then by bulk transfers from Hume) at some stage during the spring-early summer in all scenarios except ‘extreme dry’ (Figure 11). Due to the LVOS objective of filling Lake Victoria as late as possible, Lake Victoria releases are managed in the wetter scenarios to slow the rate of fill or even temporarily decrease the level in the ‘wet’ scenario during August and September when upstream flow rates are very high. In the ‘extreme dry’ scenario the lake may not quite reach the full supply level during 2017–18. In all scenarios the lake is expected to be gradually drawn down during autumn in a manner that is consistent with the LVOS and to supply flow requirements into South Australia.” The commentary on the storage level at Lake Victoria was illustrated with the following graph: The storage level of Lake Victoria depicted by this graph reflected the Lake Victoria Operating Strategy. The graph contemplated that from 1 June the storage level would (generally) be increased and the lake would (generally) be full by the end of the calendar year (677 GL) and then it would fall below the maximum specified height for the end of February (26.5m), March (25.6m), April

(24.5m) and May (24.5m) as depicted on the graph by the fine dotted line. Section 8.7 of the AOP addressed the flow of water to South Australia. It started with the following statement: “Based on the starting water resources and other assumptions in this operating plan, full Entitlement Flow to South Australia in 2017–18 is assured in all the scenarios”. The 2017/2018 AOP concluded with the following statement: “This Annual Operating Plan will be reissued only if a significant amendment is required due to unforeseen circumstances. The [Defendant] will update a routine monthly operational plan, which contains outlooks of potential storage behaviours and release rates, regularly throughout 2017–18. These updates will be shared with the jurisdictions via [WLWG]. It is important to remember that the outlooks presented in this operating plan are based on modelled scenarios only. Although they give a reasonable overall picture of how the River Murray system may be operated under different climate and inflow conditions, the real world is more complex and actual outcomes will be different. The system will not follow any one scenario and this operating plan should be used for planning purposes only, not to predict what will actually happen as the year unfolds.” Using the Fortran Assessment Model for testing on 20 September 2017 The first months of the 2017/2018 water year (June and

July) had inflows which were exceeded by 94-95% of historic inflows. Conditions turned wetter in August 2017 with inflows which were exceeded by 61% of historic inflows. In combination the total inflows for June to August 2017 were exceeded by 78% of historic inflows. In view of the recent rain and the rain forecast at that time, in early-August 2017 the Defendant stopped making bulk transfers of water from Hume Reservoir to Lake Victoria. On 10 August 2017 the Defendant met with the WLWG. On 28 August 2017 the Defendant again ran the Fortran Assessment Model using observed data for inflows since the 2017/2018 AOP was originally adopted. An updated AOP Spreadsheet and AOP Document were produced. On 30 August 2017 a further meeting with the WLWG occurred to which the Defendant reported that it had not made any decision about future bulk transfers of water from Hume Reservoir to Lake Victoria. The quantity of water stored in Lake Victoria rose during September 2017. By 28 September the Lake was virtually full at 670 GL. The rise was not caused by September rain but by inflows from August rain finally reaching the Lake. September 2017 was a very dry month. The Defendant issued a Weekly Report on 4 October 2017 which stated that September had been the driest September since records commenced 118 years ago. A meeting with the WLWG took place on 11 September 2017 at which bulk

transfers from Hume Reservoir to Lake Victoria were discussed. The Defendant reported that it had made no key decisions. On 20 September 2017 the River Operations Team again ran the Fortran Assessment Model using data about the inflows actually observed since the end of August. Mr Bishop either undertook the task or assisted another river operator, Ms Greenwood, to do so. The process was not undertaken for all six scenarios but only for the “moderate” scenario and the “dry” scenario. In the case of the “dry” scenario, two versions were prepared, one which assumed that all transfers of bulk water from Hume Reservoir to Lake Victoria would be within the channel capacity of the Barmah Choke and one which assumed that some transfers would be made above the capacity of the Barmah Choke. Test results were produced for all three bases. The basis which assumed future inflows in accordance with the “moderate” scenario assumed that there would be overbank transfers and that they would commence in October 2017. The assumption was that 25 GL of water would be transferred overbank in October with further overbank transfers in November and December. On those assumptions, the output from the model showed that there would be 656 GL of water in Lake Victoria as at 31 December 2017 which was expected to be enough to meet South Australia’s entitlements over summer and autumn. One basis of the

test which assumed inflows in accordance with the “dry” scenario assumed that transfers above the capacity of the Barmah Choke would occur in November and December. It was also assumed that the Defendant would draw 210 GL of water from the Goulburn IVT account plus 110 GL from the Murrumbidgee IVT account. On those combined assumptions, the output from the model showed that the quantity of water stored at Lake Victoria would decline through October, November and December to a level of 603 GL as at 31 December 2017. At that modelled storage level, it was expected that there would still be sufficient water in Lake Victoria to meet South Australia’s entitlements over the coming summer and autumn. On the other hand, if inflows were assumed in accordance with the “dry” scenario and no overbank transfers were assumed, and it was assumed that the Defendant would draw 225 GL of water from the Goulburn IVT account plus 80 GL from the Murrumbidgee IVT account, the output from the model showed that there would be only 472 GL in Lake Victoria at the end of the year. That storage level would not be enough to meet South Australia’s entitlements from summer onwards. There would be a system shortfall. The three outputs from Fortran Assessment Model were provided to the WLWG. On 22 September 2017 Dr Davis went on leave until 26 September 2017. On 25 September 2017 Mr Bishop went on leave until

16 October 2017. On 26 September 2017 officers of the Defendant again met with the WLWG. Dr Davis was still on leave so the meeting was chaired by Ms Hickey. Four other river operators from the River Operations Team went to the meeting, including Ms Greenwood, Ms McCann and Mr Waterworth. Nine members of the WLWG attended, including representatives from New South Wales, Victoria and South Australia. The minutes of the meeting record that the River Operations Team was “considering the likelihood of overbank flows commencing around mid-October” and that “overbank flows downstream of Yarrawonga are likely to be required for at least 6 weeks from Oct-Nov”. Another statement recorded in the minutes was that transfer of water from Hume Reservoir to Lake Victoria “will need to commence”. The following “Key Authority operational decision” is recorded: “Hume to Lake Victoria transfers to commence at low rates (up to 10,000 ML/day – channel capacity) this week. Overbank flows downstream of Yarrawonga are likely to be required for at least 6 weeks from Oct-Nov.” The minutes also record: “[The Defendant is] planning to increase flow downstream of Yarrawonga to between 12,000 and 15,000ML.day for the next 6-8 weeks subject to rain events. This is consistent with the AOP, in which over bank flows through the [Barmah-Millewa Forest] are required if sufficient resources are to be transferred

around the choke to meet downstream demands and storage commitments.” In the context of that statement, the minutes record that the WLWG agreed that the 50 GL initial loss for overbank flows in the Barmah-Millewa Forest should not be applied to any environmental water subsequently used overbank because the decision to go overbank would be an operational decision and not for environmental purposes. There is nothing to suggest that any member of the WLWG dissented from the statements made by the Defendant. On the contrary, the WLWG discussed and agreed the accounting for the first 50 GL lost overbank, which is an implicit acceptance that the overbank transfers would occur. On 26 September 2017 Mr Reynolds went on leave until 29 September 2017. Dr Davis was not on leave on 27 September and 28 September 2017. On 28 September 2017 the Bureau of Meteorology issued a Climate Outlook for the period October to December 2017. The Outlook included the following map: In relation to rainfall, the Outlook included the following text: “● The October to December outlook, issued 28 September 2017, shows an equal chance of wetter or drier conditions for most of Australia. ● October is likely to be wetter than average for large parts of eastern and central mainland Australia, but drier for western WA.” and “● Chances of a wetter or drier October to December for Australia are roughly equal. ●

While the overall three-monthly signal is neutral, October is likely to be wetter than average for central and eastern mainland Australia.” In relation to maximum temperatures, the Bureau’s outlook included the following map: In relation to minimum temperatures, the Bureau’s outlook included the following map: The Bureau’s outlook also included the following text: “Historical outlook accuracy for October to December is moderate for most of Australia, but low in parts of the southern mainland, southern Queensland and parts of the tropical north.” Daily Operations Spreadsheet for 28 September 2017 On 28 September 2017 Dr Davis and Ms Hickey were at work. Ms McCann was the Duty Operator. The Daily Operations Spreadsheet was prepared on 28 September 2017 on the assumption that overbank transfers from Hume Reservoir to Lake Victoria would commence on 15 October 2017. For reasons which are not explained, the Defendant still has a backup of the Daily Operations Spreadsheet for that particular day. It included a graph which depicts past observed data and assumed future flows at Yarrawonga Weir as follows: Unlike the graphs generated by the Fortran Assessment Model, this graph depicted flows at daily intervals. Data for the megalitres of water released each day at Yarrawonga Weir were depicted by the dark blue line, with the data before 28 September being “actual” data and the data

after 28 September being “forecast”. The rate of release was forecast to rise above 10,000 ML on 15 October 2017. Based on those assumptions, the Daily Operations Spreadsheet produced on 28 September 2017 showed the quantity of water stored at Lake Victoria falling through October, November and December to be at 397.1 GL on 31 December 2017. That was much lower than the equivalent figure in the output from the Fortran Assessment obtained on 20 September 2017 for the “dry” scenario which assumed overbank transfers in November and December (603 GL). The evidence demonstrates that the difference in the modelled year-end storage level of Lake Victoria was the result of different assumptions about losses from evaporation and seepage, particularly between Yarrawonga Weir and the downstream town of Euston. For that reach of the Murray River, the loss rate assumption used in the Daily Operations Spreadsheet was more than double the assumption used in the Fortran Assessment Model. Daily Operations Spreadsheet for 29 September 2017 On 29 September Dr Davis was again on leave. Ms Hickey was at work. Ms McCann was still the Duty Operator. The Defendant does not have a backup of the Daily Operations Spreadsheet for 29 September 2017. That is to be expected given the “living” nature of the Daily Operations Spreadsheet and the Defendant’s usual practice of backing up and overwriting daily.

There is nothing to suggest that the Daily Operations Spreadsheet was not updated, backed up and subsequently overwritten in accordance with the procedure set out above. The usual procedure was highly structured, semi-automatic and central to the responsibilities of the Duty Operator. It is improbable that it was not followed on any particular day. There is no basis to find that anything unusual occurred and I find that the usual procedure was followed on 29 September 2017. There is in any event documentary evidence that the usual procedure was followed. When the Daily Operations Spreadsheet was updated on 29 September 2017 the assumption about the date for commencement for overbank transfers from Hume Reservoir to Lake Victoria was changed from 15 October 2017 to about 4 October 2017. The change is evidenced by an email sent later on 29 September 2017 by Ms Greenwood to the Barmah-Millewa Operations Advisory Group. In her email, Ms Greenwood said: “Here’s the latest forecast for releases from Yarrawonga. High losses/demands during September, and expected to continue through October, mean that higher flows downstream of Yarrawonga are required to commence sooner than previously forecast.” Attached to the email was a graph which depicts past observed data and assumed future release rates at Yarrawonga Weir. The graph is set out here: The graph corresponds to the graph from the

backup of the Daily Operations Spreadsheet on 28 September 2017 as set out at [573]. They are almost identical. However, as depicted by the dark blue line the releases at Yarrawonga Weir were now assumed to rise above 10,000 ML on a date between 30 September and 7 October, probably about 4 October 2017, not 15 October 2017. The Defendant has not adduced evidence from a witness to address the change to that assumption. Daily Operations Sheet for 29 September 2017 Each day the Duty Operator made entries in a log maintained by the River Operations Team. The entries for a particular day are referred to as the “Daily Operations Sheet”, which is not to be confused with the Daily Operations Spreadsheet, a completely separate document. The log for 29 September 2017 bearing Ms McCann’s name recorded the following: “Issues of note Losses from Yarra to SA border are very high for this time of year, averaging 6,000 ML/day. Without transfers the Lake Vic plot was falling steadily from tomorrow. Planned to gradually commence flows above channel capacity downstream of Yarrawonga next week reaching 14,500 ML/day by next weekend. Delivery of operational water form Weir 32 [which is the location on the Darling River at which releases from the Menindee Lakes are measured] will increase form tomorrow, no change in actual flow at Weir 32, an accounting change only (no e-water delivery from Weir

32) Given the high demands currently experienced below Yarrawonga if the rainfall forecast in the next 8 days results in a rain rejection there should be sufficient air space (50-100 GL) in Lake Vic to capture the rain rejection. Delivery of Goulburn IVT is planned to commence mid-October along with 125 ML/day from Rice’s weir (estimated 44 GL by end December). Rainfall outlook- no rainfall forecast on first 4 days, large areas of up to 25mm in central Victoria in second 4 days.” There is no dispute that the first image from the Bureau of Meteorology depicted no rainfall for the immediately following four days. The second image depicted rainfall for the four days after that. Apart from Mr Bishop’s evidence about the Defendant’s system of receiving, updating and quality assuring observed data, there is no evidence about the source of the information specifically available to the River Operations Team on 29 September 2017 about losses between Yarrawonga Weir and the South Australian border. Apart from what may be inferred from other material, there is no evidence about the “Lake Vic plot” referred to in the first paragraph of the above entry in the log. From 29 September to 3 October 2017 the release of water each day at Yarrawonga Weir was approximately 10,000 ML. The exercise of the release power Monday 2 October 2017 was a public holiday in the Australian Capital Territory. Ms

McCann was still the Duty Operator on Tuesday 3 October 2017. The Daily Operations Sheet records that at 2:45pm a direction was issued to the operator of Yarrawonga Weir to increase the release of water to 11,000 ML/day. For the purposes of cl 98(1) of the Agreement, the giving of that direction was the exercise of the release power which is alleged to have constituted the breach of the Defendant’s duty of care. On 4 October 2017 10,810 ML of water was released at Yarrawonga Weir. On 4 October 2017 the Daily Operations Sheet records that a direction was issued to increase the release to 12,000 ML/day. On 5 October 2017 12,095 ML of water was released at Yarrawonga Weir. The rate of release steadily increased until 15,124 ML was released on 12 October 2017. On 10 October 2017 a further meeting of the WLWG was held. The minutes refer to the flow of water at Yarrawonga Weir being 14,500 ML/day and the current plan to maintain the release rate between 14,500 and 15,000 ML/day until mid-December. There is no suggestion in the minutes of any surprise or complaint. Rain fell from about mid-October 2017 as a result of which the River Operations Team decided that overbank transfers would not after all be required to fill Lake Victoria by 31 December 2017. Thereafter there was a gradual decline in the releases at Yarrawonga Weir. For an extended period after 17 October 2017 more than

10,000 ML of water was still released each day. By that time, however, environmental water holders had ordered water to be delivered overbank into the Barmah-Millewa Forest so the water which was “lost” (cf “used”) was not operational water which might otherwise have been allocated to the States. The Plaintiffs make no complaint about the loss of water after 17 October 2017. Their case is limited to the release of water from 4 October to 16 October 2017, a period of 13 days. Principled approach to breach of duty of care Although Chapter 4 of the ACT Liability Statute governs the Plaintiffs’ claims, the parties agree that there is nothing in the provisions of the Statute which affects the application of the common law principles in this case. As set out above, assuming reasonable foreseeability of the not insignificant harm, there is no dispute that a breach of the duty of care to protect the plaintiff from the risk that the harm will occur if the defendant fails to take a precaution which a reasonable person in his or her position would have taken. [162] If the defendant takes the precautions which a reasonable person would have taken there is no breach, even if the plaintiff nonetheless suffers the foreseeable harm. The duty is one of reasonable care, not a duty to ensure that the harm does not occur. [163] When considering whether a precaution was one which a reasonable

person would have taken, regard must be had to the probability that the harm would happen if precautions were not taken, the likely seriousness of the harm, the burden of taking precautions to avoid the risk of harm and the social utility of the activity creating the risk of harm. [164] Regard may also be had to any conflicting responsibilities the defendant has. [165] The duty of care is not owed at large. It is not owed in the abstract. [166] In order to determine whether a particular precaution was one which a reasonable person would have taken it is necessary to keep in mind the person to whom the duty was owed and the risk of harm from which the defendant had a duty to protect that person. [167] The question of breach must be considered from the perspective of the defendant at the time the breach is alleged to have occurred. Things known to the defendant at the time, or which ought to have been known, may be taken into account. [168] The breach must be considered without the benefit of hindsight. A particular application of the general prohibition on using hindsight to determine breach relates to the relative importance of multiple factors which pertained at the time the defendant failed to take a precaution. The advantages of hindsight include knowing which of many factors have turned out to be important and which have not. [169] In Rosenberg v Percival, Gleeson CJ said

at [16]: “In the way in which litigation proceeds, the conduct of the parties is seen through the prism of hindsight. A foreseeable risk has eventuated, and harm has resulted. The particular risk becomes the focus of attention. But at the time of the allegedly tortious conduct, there may have been no reason to single it out from a number of adverse contingencies, or to attach to it the significance it later assumed. Recent judgments in this Court have drawn attention to the danger of a failure, after the event, to take account of the context, before or at the time of the event, in which a contingency was to be evaluated.” Relevance of statutory framework to the case in negligence The cause of action upon which the Plaintiffs sue is negligence. It is important to bear that in mind because of the statutory and contractual framework in which the Defendant acted. As set out above, a prominent feature of the case is the Murray-Darling Basin Agreement and the documents sequentially contemplated by the Agreement, namely the O&O Document and the 2017/2018 AOP. The Plaintiffs do not, however, sue the Defendant for breach of contract. Nor could they because the Plaintiffs are not a party to the Agreement. Nor is the Defendant. Under s 18E(2) of the Commonwealth Statute the Defendant must in performing its functions and duties and exercising its powers comply with any requirements of the

Agreement. So too, under cl 30(2) of the Agreement, the Defendant must carry out its functions in relation to river operations in accordance with objectives and outcomes specified in the O&O Document but the Defendant is not a party to the O&O Document. Nor are the Plaintiffs. Merely because the Defendant has failed to act in accordance with a particular provision of the Agreement or the O&O Document does not prove breach of the alleged duty of care owed to the Plaintiffs. The principle is true even if breach of the Agreement or the O&O Document is viewed as a breach of a statutory provision by virtue of s 18E(2) of the Commonwealth Statute. Whilst breaching a statutory duty may be a matter to take into account when considering whether a particular duty of care has been breached, the former does not automatically lead to the latter. There is a different cause of action where breach of a statutory duty causes a particular kind of loss to a person within a class for whose benefit the statutory duty was imposed. The touchstone for that cause of action is a legislative intention that the statutory duty protect a particular class of persons’ interests for which a private cause of action will lie. [170] The Plaintiffs bring no such claim in these proceedings. These matters warrant emphasis because a number of the Plaintiffs’ final particulars of negligence are framed as failures by

the Defendant variously to comply with specific provisions of the O&O Document or the 2017/2018 AOP. To some extent the O&O Document and the 2017/2018 AOP identify the task which the Defendant was undertaking, [171] but the question remains throughout whether the Defendant failed to act with reasonable care to protect the Plaintiffs from pure economic loss. [172] Onus of proof As in any other case, the Plaintiffs bear the onus of proving that the Defendant did not act with reasonable care. Although elementary, the principle warrants emphasis in this case because a number of submissions made by the Plaintiffs come close to suggesting that the Defendant has to prove that it acted with reasonable care. For example, the Plaintiffs variously submit that there “is no properly-proven basis for any urgent operational decision at the end of September 2017” [173] and that “there is no evidence of any alternative testing justifying the decision” [174] and no evidence “whether any inputs were reasonable”. [175] As for causation, [176] any fact relevant to breach is to be proved by the Plaintiffs on the balance of probabilities. Proof of breach without expert evidence Apart from the members of the Defendant’s River Operations Team, no witness was called who has experience with river operations. As explained above, the Plaintiffs called Dr Ladson who was a hydrologist with expertise in the

science of the movement, distribution and management of water. Dr Ladson does not have experience as a river operator. He accepted that there are aspects of operating a river about which he is not qualified to express an opinion, such as environmental, political and social considerations. There are some passages in Dr Ladson’s reports which are expressed in conclusory terms. Dr Ladson frankly accepted that he is not qualified to express an opinion about what a river operator acting with reasonable care would have done in any particular situation. Any evidence from Dr Ladson which is directed to reasonableness or a similar concept is limited to the hydrological aspects of the decision or action in question. Whether Dr Ladson’s views are nonetheless relevant to the alleged breaches by the Defendant’s River Operations Team depends on whether or not there are non-hydrological considerations which were relevant to the particular decision or action. The Defendant submits that it is a large step to make a finding of negligence in relation to the operation of a very complex system unsupported by evidence from a person qualified to operate that system about what a reasonable operator would have done. The standard of reasonable care required of the Defendant is that of a reasonable river operator as described above. [177] The role which expert evidence plays in determining whether a

professional defendant has failed to meet the standard of care depends on the nature of the breach, including the nature of the precaution which it is alleged the defendant failed to take. For some breaches, for example where it is rudimentary and obvious, it may be possible to demonstrate a failure to meet the standard of care without evidence from other persons with experience in exercising the relevant special skill. [178] Whilst there are differences, the present case has similarities with cases where there is a complaint about the diagnosis and treatment performed by a medical professional. For both water years, the Plaintiffs contend that the Defendant did not act with reasonable care when identifying the condition of the Murray River system, specifically Lake Victoria, and deciding upon a course of action to address that condition. It has been said that for such a case, evidence from an experienced professional is of very considerable significance, but that the nature of the particular risk and its foreseeability are not exclusively within the province of the relevant profession. They are often matters of common sense. [179] In any event, it remains the Plaintiffs’ onus to demonstrate that the Defendant failed to act with reasonable care in the particular circumstances of this case. Structure of reasons about breach in the 2017/2018 water year The structure of these

reasons is to address in turn each of the seven precautions which the Plaintiffs allege that a reasonable river operator in the Defendant’s position would have taken. For each precaution, I have set out a summary of the Plaintiffs’ and the Defendant’s respective contentions, followed by my reasons for determining the allegation. Before turning to the seven precautions, there are three preliminary points which provide general context to the actions of the Defendant in the 2017/2018 water year. Three preliminary points There is no complaint about the 2017/2018 Annual Operating Plan The position finally arrived at by the Plaintiffs is that they do not make any criticism about the process by which the 2017/2018 AOP was prepared, nor the contents of the AOP Spreadsheet and the AOP Document once finalised and adopted in July. Nor is there any complaint about the testing which was carried out using the Fortran Assessment Model on 20 September 2017. On the contrary, the Plaintiffs contend that the Defendant was negligent by failing to act in accordance with the 2017/2018 AOP and the 20 September 2017 test results. It follows that it is common ground that a river operator acting with reasonable care could have undertaken any of the actions contemplated by the 2017/2018 AOP. This is an important non-negligent reference point against which to consider the breaches of duty which are

alleged. The decision on 3 October 2017 was not a significant or unusual decision The Plaintiffs’ allegations of breach in the 2017/2018 water year commence with the proposition that the Defendant’s decision to release more than 10,000 ML of water at Yarrawonga Weir on 3 October 2017 was a significant and unusual decision. That proposition is important context in which the reasonableness of the decision is to be assessed. Sometimes explicitly and sometimes implicitly, the Plaintiffs contend that care should have been taken commensurate with the gravity of the decision. There is no dispute that transferring operational water through the Barmah Choke results in more water being lost when the transfer is at a magnitude which exceeds the channel capacity which forces some water to go overbank. Not all the water which goes overbank is lost. The process is referred to as an “overbank transfer” of water to the river system below the Choke. From the total amount of water which goes overbank there are return flows into the Murray River below the Choke. There are particular paths (flood runners, or occasionally “creeks”) through which overbank water is directed (by forest regulators) in an attempt to maximise the return flows. Nonetheless, some water does not return to the River and is “lost” due to evaporation, seepage and transpiration. The amount of lost water depends on the

conditions, including the moisture content of the floor of the Forest at the time when the water goes overbank. The Plaintiffs describe the losses from transferring water overbank as “very high” or “very significant”, but context is needed to make those descriptions meaningful. So too the Plaintiffs’ submission that overbank transfers are a “last resort”. In any event, there is no dispute that a river operator acting with reasonable care will avoid a transfer of operational water above the capacity of the Barmah Choke to the extent reasonably possible. In the abstract the Plaintiffs submit that the decision on 3 October 2017 to transfer operational water overbank through the Barmah Choke was “rare”, “largely unprecedented” and “exceptional”. They point out that a decision to transfer water above the channel capacity of the Barmah Choke had happened only three times in the previous 47 years, namely in 1994/1995, 2002/2003 and 2015/2016. The primary facts may be accepted but the characterisation is based on a false comparison. At all relevant times prior to June 2017 the Defendant (and its predecessors) had access to the MIL infrastructure as a means of bypassing the Barmah Choke. Dr Ladson refers to evidence of the MIL infrastructure being used in 1983. The 2017/2018 water year was only the second time that the Defendant was confronted with the task of managing the risks of

system shortfall without the MIL infrastructure. In Section 8.3.1 of the 2017/2018 AOP, the lack of access to the MIL infrastructure was stated to be the reason why overbank transfers were assumed to be necessary later in the year. The decision to conduct the overbank transfers in 2017/2018 did not have the historic significance for which the Plaintiffs contend. Nor was it a decision of particularly great magnitude. Hindsight shows that the quantity of water lost on the floor of the Barmah-Millewa Forest as a result of the overbank transfers between 4 and 16 October 2017 was about 55 GL. [180] Whilst it may be accepted that every drop matters, that figure requires context when examining the decision which led to that outcome, especially for the purpose of considering breach of a duty to exercise care tempered by reasonableness. When preparing the 2017/2018 AOP, the Defendant took the 2006/2007 water year as a relevant reference point because it was a recent year which had been “dry”. In the 2006/2007 water year, 750 GL of water was lost from seepage and evaporation when transferring water from Dartmouth Dam to the South Australian border. For the purposes of 2017/2018, the Defendant decided to assume higher losses to take account of a number of factors, including the assumed need for two months of overbank transfers through the Barmah Choke. Thus the Defendant decided to assume

that in the 2017/2018 water year there would be transfer losses of between 850 GL and 1,050 GL depending on the inflows during the year. [181] As indicated, there is no suggestion that the Defendant acted negligently in making that assumption when preparing the 2017/2018 AOP. Having made that non-negligent assumption, there is no suggestion that it would have been negligent for the Defendant to have operated the river system during the 2017/2018 water year in such a way that between 850 GL and 1,050 GL was lost from transferring water from Dartmouth Dam to the South Australian border. In any event, the loss figures in the AOP were merely assumed figures, adopted at the commencement of the water year for modelling purposes. The Defendant knew that the actual conveyance losses would be different. The 2017/2018 AOP contained the following statement: “While initially set for each scenario, the volume and pattern of water actually set aside for conveyance will be regularly reviewed by the [Defendant] and altered to suit the actual conditions as they develop. It is also important to remember that the pattern of actual losses, in both location and time, can be very different to those assumed in this operational plan.” These facts also show that the loss of water from overbank transfers were losses which in the ordinary course would be (and actually were) expected to happen. There is

no dispute that the way in which water is transferred, including the time of year, makes a difference to how much water is lost en route, but there is no lossless option available to the Defendant once it is decided to transfer water. When considering making overbank transfers at the end of September 2017 the Defendant would not have known exactly how much water would be lost as a result of the decision it was considering. It would have known that it was generally less efficient to transfer water overbank than transferring water in-channel. It would have known that the 2017/2018 AOP had been prepared on the assumption that at least 100 GL of water might be lost above the amount lost in the 2006/2007 water year. As Mr Reynolds said in cross-examination, the Defendant knew that losses occur all the time when conveying water not just when there are overbank transfers. There is nothing to suggest that the Defendant was concerned about incurring dramatically higher losses when deciding to increase the release rate at Yarrawonga Weir above 10,000 ML/day, or that a river operator acting with reasonable care would have seen it any differently. In that objective context, it is necessary to bear in mind the precise nature and content of the decision which the Plaintiffs now criticise. The 2017/2018 AOP was prepared on the assumption that there would be some overbank transfers in the

2017/2018 water year if inflows corresponded to those assumed for the “very dry”, “dry” and “moderate” scenarios. That information is communicated in the graph of the rate of release of water at Yarrawonga Weir which is set out at [543] above. The brown, yellow and grey lines all depicted above 10,000 ML/day for two months. For those three scenarios the AOP was based on the assumption that the overbank transfers would be necessary to meet lower system requirements including filling Lake Victoria over summer. It was assumed that there would be two months of overbank transfers. It was assumed that losses between Dartmouth Dam and the South Australian border would be 100 GL higher than in 2006/2007 mainly because of the need for overbank transfers. As for timing, it was assumed that the overbank transfers would occur in November and December. The Plaintiffs make no criticism of the 2017/2018 AOP or any of these assumptions. In other words, the Plaintiffs accept that the Defendant acted with reasonable care by working on these assumptions about overbank transfers when the AOP was finalised and adopted in early-August 2017. At all times after the 2017/2018 AOP was finalised and adopted the Defendant continued to work on the assumption that overbank transfers might occur. The updates to the AOP on 20 September 2017 were prepared by a process which specifically tested the alternative

assumption that there be no overbank transfers for the “dry” scenario. That test indicated that Lake Victoria would have insufficient water to meet South Australia’s entitlements by around February and March 2018. In other words, having regard to the inflows which had occurred in June, July and August, the Defendant checked whether overbank transfers were still necessary and discovered that they might be. The Plaintiffs make no criticism of that work. Properly understood, the Plaintiffs’ case is not that the Defendant was negligent by deciding whether to make overbank transfers. In substance, the Plaintiffs accept that the Defendant had already made that “decision” in a non-negligent way when the 2017/2018 AOP was prepared and adopted. Instead, the Plaintiffs contend that the Defendant was negligent in deciding when to commence overbank transfers. To be even more precise, the Plaintiffs accept that it was not negligent for the Defendant to decide to commence overbank transfers in October 2017 as that was the basis upon which the testing with the Fortran Assessment Model was undertaken on 20 September 2017 for the “moderate” scenario. The negligence is said to arise from the decision to commence on 4 October rather than, say, 15 October. The precise identification of the decision now criticised relates directly back to the gravity of the decision. As explained above, hindsight

shows that 55 GL of water was lost as a result of the overbank transfers which were actually made. However, there is no evidence that a river operator would have expected that more water would be lost if the overbank transfers commenced on 4 October rather than on 15 October 2017. There is no basis to suggest that the risk of losing more water would have been a relevant factor in the decision about when to commence overbank transfers, at least not as between 4 October and 15 October 2017. This is one of the aspects of the Plaintiffs’ case which demonstrates that it is informed by hindsight. The only reason that the decision as to timing is now said to be significant (and the cause of an unnecessary loss of 55 GL of water) is that it started to rain in mid-October 2017. When that happened, the Defendant formed the view that the overbank transfers were not, after all, required. Subsequent events have revealed that a delay from 4 October to 15 October 2017 would therefore have made a difference to the amount of water lost in the 2017/2018 water year. The River Operations Team did not have the benefit of hindsight when it made its decision to commence on 4 October 2017. A fact made clear by the evidence as a whole is that at all times, both before and after the 2017/2018 AOP was finalised, the River Operations Team gave continuous and active consideration to transfers of bulk

operational water from Hume Reservoir to Lake Victoria, both as to timing and magnitude. Mr Bishop described a continuous process of “steering” Lake Victoria throughout the year, suggestive of constant attention and care. On the evidence as a whole, that suggestion rises to the level of an inference, both plausible and probable. A recurrent theme of the evidence of Mr Bishop, Ms Hickey and Dr Davis was the need to address the never-ending balance between having not enough water in Lake Victoria (the risk of system shortfall) and having too much (the risk of spill). The Plaintiffs have drawn out isolated comments made by the Defendant’s river operators in contemporaneous documents, affidavits and cross-examination and submit that a certain situation or perspective pertained at a particular time. The submissions do not pay sufficient regard to the nature of the work performed by the River Operations Team. To the knowledge of the river operators, the variables within the complex system were inherently uncertain and constantly changing. Whether expressly (as was often the case) or by necessary implication, statements made by the river operators about the future was qualified by a degree of uncertainty. A striking feature of communications by the River Operations Team about future events, including the Team’s own expectations, intentions and plans, is that river operators use

language which is consistently imprecise as to timing. Many documents were referred to during the hearing from which this is apparent. It was also apparent from the five days of oral evidence given by Mr Bishop, Ms Hickey and Dr Davis. Listening to the cross-examination left me with the distinct impression that river operators are open-minded about future matters and are reluctant to be pinned down, whether by training or experience or otherwise. This is not a criticism. Their language testifies to a premium being placed on flexibility. The flexible outlook is exemplified by the River Operations Team’s communications about the commencement of overbank transfers in 2017. At all times prior to October 2017 the Defendant communicated the commencement date in imprecise language. The 2017/2018 AOP used the phrase “from late spring into early summer”. The minutes of the WLWG meeting on 26 September 2017 used phrases such as “around mid-October” and “for at least 6 weeks from Oct-Nov”. As late as 5pm on 29 September 2017 Ms Greenwood’s email referred to commencement “sooner than previously forecast”. She did not specify a date. These are just examples. The significance of these observations is that the decision to release water in excess of the channel capacity of the Barmah Choke on 4 October 2017 was an incremental step in a continuous process by the River Operations Team. The

process had begun as long ago as July 2017 with the adoption of the 2017/2018 AOP, and even before that with the modelling at the end of May from the preceding year. The decision in early-October was not a stand-alone decision. Given what had gone before, it was not unusual or significant, much less rare, risky or dangerous. As I have said, the process leading up to 29 September 2017 is not criticised by the Plaintiffs. The question for decision in the present case is whether the Defendant was negligent when taking the incremental step of fixing the date to commence overbank transfers on 4 October 2017 rather than a date later in October. No concession was made by any of the Defendant’s witnesses which contradicts these findings. The Plaintiffs submit that a passage from Mr Reynolds’s cross-examination shows that the decision to make overbank transfers was an “unusual and risky decision”. The characterisation may fairly be attributed to the words of the question but not Mr Reynolds’s answer. [182] More generally, the importance, rarity and significance of “overbank transfers” was put to the Defendant’s witnesses and generally accepted, but the questioning occurred at a high level of generality which did not grapple with the chronology and context set out above. In the abstract, it may be accepted that a decision to transfer water overbank through the Barmah Choke is an

important, significant and unusual decision, but that fact does not inform the issues in the case when considered in isolation and without context. In their Reply Submissions the Plaintiffs say that the decision to commence overbank transfers on 4 October 2017 was “urgent”. They also refer to the Defendant “immediately…abandon[ing] its plans”. These submissions are contrary to the evidence. At all relevant times the Defendant was engaged in a steady continuation of a process which had been ongoing for months. Who made the decision and when was it made? Relatedly, the Plaintiffs present their case as a complaint about a decision to commence overbank transfers and that the decision was made by Ms McCann who was the Duty Operator during the week at the end of September 2017. The burden of their submissions is that Ms McCann was solely responsible for the decision. The Plaintiffs contend that Ms McCann made her decision on Friday 29 September 2017. The principal relevance of that date is that it supports the contention that Ms McCann made the decision at a time when she was unassisted by senior management of the River Operations Team. On 29 September each of Mr Reynolds, Dr Davis and Mr Bishop were on leave. It is submitted that Ms McCann was “left to [her] own devices” when she made her decision. The implicit proposition is that Dr Davis did not have any discussions about the

commencement date when he was in the office the previous day, nor did Mr Reynolds when he returned the next working day (Tuesday 3 October 2017) even though Ms McCann did not issue the direction to the operator of Yarrawonga Weir until 2:45pm on 3 October 2017. The actual overbank release of water did not commence until 4 October 2017. This is a part of the Plaintiffs’ case which has an air of unreality about it. It follows from the Plaintiffs’ mischaracterisation of the decision to bring forward the overbank transfers by a little over a week as an urgent, risky and dangerous decision. The argument does not make allowance for the work which had already occurred nor the nature of the ongoing work of steering Lake Victoria through the year. It does not make allowance for the collaborative practices of the River Operations Team. Turning to the evidence, the Daily Operations Sheet maintained by the Duty Operator (Ms McCann) contains the record for 29 September 2017 which is set out at [581] above. At 5pm Ms Greenwood sent the email referred to at [578] above. No direction to increase the release of water at Yarrawonga Weir was issued on 29 September 2017, nor over the long weekend on 30 September, 1 October and 2 October when Ms McCann was on duty and, perhaps, really left to her own devices. In the ordinary course, on the morning of Tuesday 3 October 2017 the River Operations Team

would have held its weekly Team meeting, about which Mr Bishop’s unchallenged evidence was as follows: “300 The River Operations [T]eam holds a scheduled team meeting on[e] morning each week (currently Tuesday morning), which is usually attended by the Duty Operator, River Operators, and the Director of Operations. During these meetings, the team goes through the day-to-day operations and will reference information on the Daily Operations Spreadsheets and the latest AOP Spreadsheet where necessary. The team will discuss current and potential day-to-day operations and bulk-system operations, including looking at forecasts, trends and the potential need for bulk-system operation changes.” Whether or not the weekly Team meeting occurred on Tuesday 3 October 2017, Mr Bishop’s unchallenged evidence continued: “301 Throughout the week, Senior River Operators will regularly speak with the Duty Operator regarding operations forecasts in the Daily Operations Spreadsheets. Senior River Operators and the Duty Operator will undertake a detailed review the forecasts and assumptions in the Daily Operations Spreadsheet, referring to the latest AOP Spreadsheet where needed, and assessing how bulk-system operations are translated into day-to-day operations. 302 Through these processes, and the usual daily processes undertaken by the Duty Operator, the forecasts in the Daily Operations

Spreadsheets are regularly updated in order to assist with undertaking day-to-day operations, and to identify any potential need for changes to bulk-system operations.” Appointment diary entries make it probable that Mr Reynolds met with Ms Hickey for a meeting of one hour at 10am on 3 October 2017. There is no evidence about what was discussed other than a diary entry labelled “Menindee Releases”. The meeting occurred on the morning of Mr Reynolds’s first day back in the office and it is improbable that Ms Hickey did not tell him about any plan to commence overbank transfers at Yarrawonga Weir in the coming week. Given the objective of ensuring that Lake Victoria had sufficient water to meet South Australia’s entitlements, a release of water from the Menindee Lakes could not have been discussed in any meaningful way without a full understanding of the plan to commence overbank transfers at Yarrawonga Weir. It may safely be inferred that the overbank transfers were discussed with Mr Reynolds and that he agreed with any decision to commence the transfers the next day. Even if Mr Reynolds did not actually make the decision, he approved it. The instruction to increase the daily flow at Yarrawonga Weir was given after the meeting. Ms McCann was still the Duty Operator on 3 October 2017. In accordance with her responsibilities she made entries in the Daily Operations Sheet for 3

October 2017. One entry records an “instruction” to Yarrawonga Weir at 2:45 pm: “Increase the release to 11,000 ML/day.” The next day Dr Davis returned to work. A diary appointment for 4 October 2017 suggests that he met with Ms Hickey at 2pm to “catch up on events of the past week”. This was the day upon which water started to flow at Yarrawonga Weir above 10,000 ML/day. Another instruction was given further to increase the flow rate to 12,000 ML/day. It may safely be inferred that Dr Davis was informed of what had happened that day and what was planned for the next day. There is no evidence of any disagreement by Dr Davis. On the contrary, on 5 October 2017 another member of the River Operations Team (Mr Lucardie) was the Duty Operator and recorded an instruction further to increase the flow rate to 12,500 ML/day. Mr Lucardie did so again on 6 October and again on 7 October. In these proceedings Dr Davis has expressed the view that the decision to transfer water overbank was appropriate and that he held that view at the time. Apart from an error about the climate outlook, there is no basis not to accept that evidence. Ms Hickey was responsible for the Team and was at work on all relevant days. Her evidence was that she communicated with the Duty Operator and other members of the Team on a daily basis. She “supervised the Duty Operator who made day to day decisions to adjust

or maintain release rates from upper River Murray storages within a release range contemplated by the O&O Document, the AOP or as discussed with the WLWG and the Senior Director of Operations to meet demands within the River Murray System”. Under Ms Hickey’s supervision the Duty Operator communicated with the external operators of infrastructure, like GMW at Yarrawonga Weir. As relates specifically to the events in the 2017/2018 water year, Ms Hickey said that she discussed the commencement of overbank transfers with other members of the Team although she does not specifically recall who. She says that the Duty Operator consulted her about the commencement of overbank transfers on 4 October 2017 and that she agreed that it would be suitable to make those releases. She did not regard herself as “the decision-maker”. Dr Davis said in his Affidavit that he had discussions with members of the River Operations Team, including Ms Hickey, about making overbank transfers. He was not precise about the dates but they appear to include 28 September 2017. Dr Davis did not say what was said in any discussion but he said that as result of them and other considerations he formed the view that overbank transfers would be appropriate. Dr Davis was cross-examined about the identity of “the decision-maker”. Responding to propositions put to him, Dr Davis said that Ms Hickey was probably not the

decision-maker. His offer to expand was not taken up. He said it could have been Mr Reynolds. It was put to him that it wasn’t himself to which he responded: “It’s hard to recall but we could have – you know, this is a small team. There could have been discussions before I went on leave. It’s really hard to recall at this point in time.…I doubt Ms Hickey would have made the decision on her own to do that without formal advice from either [Mr Reynolds] or I.” As for Mr Reynolds, he gave evidence that he formed the view that overbank transfers were appropriate but did not provide any specifics. In cross-examination he did not believe that he “exercise[d] the release power” in cl 98 of the Agreement, by which he meant that he did not “provide the specific direction”. He thought that any decision to release water would have been made with the knowledge of Dr Davis or himself. Having regard to the evidence, on the balance of probabilities the decision to increase the rate of release of water at Yarrawonga Weir above 10,000 ML/day was not made until 3 October 2017 at or shortly before 2:45pm when Ms McCann issued the direction to the operator of Yarrawonga Weir. On the balance of probabilities, the decision was made collectively by Mr Reynolds, Ms Hickey and other members of the River Operations Team. Others involved in the discussions which resulted in the decision include Dr Davis

(on 28 September 2017), Ms Greenwood and Ms McCann. Mr Lucardie’s involvement is demonstrated by the further instructions issued by him after he took over as Duty Operator on 5 October 2017. There may have been others. The Plaintiffs’ focus on the precise identity of “the decision-maker” informs at least three issues in the case: the (lack of) experience brought to bear in the decision-making process, the absence of a sub-delegation of the release power by Mr Reynolds and/or Dr Davis and the Defendant’s failure to call Ms McCann and other members of the River Operations Team. The first issue is not supported by the evidence. The delegation issue is not a matter of substance in a claim for damages for loss caused by alleged negligence. It has negligible relevance to the issue of breach and is rendered sterile by the issue of causation. Delegation is addressed further below. In relation to Jones v Dunkel there is no explanation as to why Ms McCann (nor Ms Greenwood nor Mr Lucardie) was not called by the Defendant to give evidence. The Plaintiffs submit that the Defendant’s failure to explain why these officers were not called engages the principle in Jones v Dunkel. They identify three matters about which evidence might have been given, namely the misreading of the Climate Outlook, the modelling conducted using the Daily Operations Spreadsheet on 29 September 2017 and the dead

storage level at the Menindee Lakes. These issues are addressed as they arise below. In this context, each of the seven precautions which the Defendant failure to take can now be addressed. First alleged failure: misreading the Climate Outlook dated 28 September 2017 Plaintiffs’ submissions The Plaintiffs submit that the River Operations Team misread the Bureau of Meteorology’s Climate Outlook for rainfall and maximum temperature issued on 28 September 2017. Specifically, they submit that: the outlook for October was wetter than average for the centrally relevant part of the River Murray System, namely the Yarrawonga to Euston reach downstream of the Barmah Choke, and parts of the Darling River catchment which supplies the Menindee Lakes; the outlook for warmer or cooler maximum temperatures was roughly equal for most of the Murray-Darling Basin; and Dr Davis and Ms Hickey misread the Climate Outlook and, in the absence of Ms McCann being called to give evidence, it is to be inferred that she also misread the Climate Outlook. The Plaintiffs seek a finding that “a reasonable authority would not have taken the [Climate Outlook dated 28 September 2017] to provide any cause for departure from the” AOP update obtained on 20 September 2017. [183] Defendant’s submissions The Defendant emphasises the distinction between temperature and rainfall. It submits that the evidence of Dr Davis

and Ms Hickey was largely directed towards temperature and does not reveal a misreading of the Climate Outlook. As for rainfall, the Defendant submits that the evidence does not establish the reading of the Climate Outlook for which the Plaintiffs contend. Determination The relevant text and maps from the Bureau of Meteorology Climate Outlook dated 28 September 2017 are set out at [567]-[571] above. Apart from what may be gleaned from looking at the text and the maps, there is very little evidence about the meaning of the Climate Outlook dated 28 September 2017. Dr Ladson addressed the Climate Outlook in his Second Report dated 16 May 2025. [184] Dr Ladson’s evidence was as follows: As for rainfall, the outlook showed that there was a small chance of exceeding median rainfall “over most of the Murray Darling Basin” and that there was nowhere in the Basin where the chance of rainfall was below median. In western New South Wales the rainfall outlook was for a 60% chance of exceeding median rainfall, which Dr Ladson described in cross-examination as “that slightly greener blob”; and As for temperature, median temperatures were expected for “most of the basin” and median temperatures were shown as being exceeded only in “the southeastern corner of the basin”. The implication drawn by Dr Ladson was that temperatures were expected to increase between October and December but not

outside the normal seasonal transition from spring to summer. The effect of Dr Davis’s affidavit evidence was that he actually considered the Climate Outlook around 28 September 2017. In cross-examination Dr Davis accepted that he does not remember doing so but he gave evidence of a practice of being across climate outlooks and sometimes personally going to the Bureau of Meteorology to hear the presentation. [185] The transcript records Dr Davis’s evidence about attendance at the Bureau of Meteorology in the third person plural but to that extent the transcript is erroneous. Dr Davis said that he personally sometimes went. [186] It may be accepted on the balance of probabilities that Dr Davis read the Bureau’s Climate Outlook dated 28 September 2017, and if not on 28 September 2017, then on 4 October 2017 when he returned to work. Dr Davis further gave evidence of his contemporaneous reasoning in around late September 2017 for considering that it was appropriate to commence overbank transfers. [187] In paragraph 599(e) of his First Affidavit, one of his eleven reasons was said to be: “the very dry conditions that had been experienced in September 2017 and the BOM’s dry outlook for October to December 2017 (see paragraph 596).” [188] The cross-reference to paragraph 596 was a reference to Dr Davis’s evidence that the Climate Outlook dated 28 September 2017 “indicated likely

hotter than average conditions”. In other words, paragraph 596 states that Dr Davis had regard to the temperature forecast in the Climate Outlook but says nothing about rainfall. In cross-examination Dr Davis conceded that “that patch of white that comes in there just below the Australian Capital Territory, that’s all the Murray Valley” was an “average” and “not a dry outlook”. Ms Hickey’s evidence is that she reviewed the Climate Outlook dated 28 September 2017 which indicated that “conditions were likely to be warmer”. For a continent which Ms Hickey described as “one of the most variable hydrologies”, each of the maps in the Climate Outlook was depicted in small scale. The features of the Murray-Darling Basin including the rivers, valleys and mountains were not marked, although the border between New South Wales and Victoria is a proxy for the path of much of the upper Murray River. The text addressed future rainfall and temperatures in very general terms. Within those limitations, there was nothing in either the maps or the text which proves that either Dr Davis, Ms Hickey or any other member of the River Operations Team misread the information about temperature in the Climate Outlook dated 28 September 2017. As for future rainfall, Dr Davis was ready to concede that the relevant map in the Climate Outlook did not depict a dry outlook. Given that concession, it is clear

that an error has been made somewhere. The Plaintiffs submit that the error was made in 2017 when Dr Davis read the Climate Outlook, which error he has now faithfully recorded in his Affidavit in these proceedings. By far the more plausible explanation is that the error was made in 2022 when Dr Davis was proofreading page 133 of his 214-page Affidavit and did not notice that it said “dry outlook” when it should have said “hot outlook”. Even with the limitations referred to above, the map of future rainfall depicted most of New South Wales and Victoria as pale green or white which, for the reasons given by Dr Ladson, was not a dry outlook. If Dr Davis read it otherwise in 2017 he made an error which was obvious and inexplicable. On the other hand, an error in paragraph 599(e) of his Affidavit is explicable because the cross-reference to paragraph 596 is a refence to hotter conditions, not drier conditions. If Dr Davis intended to say “hot” rather than “dry”, the inclusion of the cross-reference makes sense. When asked about paragraph 599(e) in cross-examination he said that it should be corrected. The Plaintiffs have not proved that Dr Davis misread the Climate Outlook dated 28 September 2017. Even in her absence, there is no basis for a finding that Ms McCann misread the Climate Outlook. The premise of the contrary contention is that Dr Davis and Ms Hickey misread the Climate

Outlook and Ms McCann has not been called to say that she read it differently to them. The submission collapses given my finding that neither Dr Davis nor Ms Hickey misread the Climate Outlook. The Plaintiffs have not proved that any person from the Defendant misread the Climate Outlook dated 28 September 2017. The first alleged failure is not proved. Second alleged failure: failure to act in accordance with the 2017/2018 AOP Plaintiffs’ submissions By reference to cl 10 of the O&O Document, the Plaintiffs’ submit that the Defendant was obliged to carry out its functions in accordance with the 2017/2018 AOP. The Defendant’s functions included the decision to release more than 10,000 ML of water at Yarrawonga Weir on 4 October 2017. The 2017/2018 depicted the release of water at Yarrawonga Weir not exceeding 10,000 ML/day in October. It is submitted that “it was not open to the Defendant to act inconsistently with the AOP”. With some more particularity the Plaintiffs submit that: the decision was made “in the context of a Dry Outlook”; the “dry” scenario did not “provide for” overbank transfers until November 2017; there was no good reason for the Defendant to “act inconsistently with” the AOP; and if the Defendant had “adhered to those plans” there would not have been any overbank transfers in October 2017. In the Reply Submissions, the Plaintiffs accept that there was some

flexibility in the Defendant’s obligation to act in accordance with the 2017/2018 AOP, “especially to select between different scenarios”. Nonetheless, the Plaintiffs submit that the Defendant was obliged to review the AOP if there was to be a “significant change” to the river operations envisaged by the AOP. The flexibility which the Defendant had to conduct river operations in accordance with the AOP reached its limit where the conduct would constitute a “significant change”. By reference to the formal amendment process in the O&O Document, the Plaintiffs submit that transferring water overbank from 4 October 2017 was a significant change to the river operations envisaged by the AOP and the process of formal amendment ought to have been followed. In any event, the Plaintiffs submit that the Defendant had to involve the WLWG “at all levels”. It may also have been necessary to consult the RMOC and the BOC. Defendant’s submissions The Defendant accepts that it had to carry out its functions in accordance with the 2017/2018 AOP but says that it did so. It submits that the AOP did not operate as a rigid plan for how river operations were to be conducted. The purpose of the AOP was to identify the broad nature of possible river operations to guide the Defendant’s decision-making. The 2017/2018 AOP was prepared on the assumption that overbank transfers would commence in November

2017. However, the Defendant submits that even before the AOP was adopted, specifically when the topic was discussed on 26 July 2017, the Defendant and the WLWG recognised that overbank transfers may in fact commence in October 2017. The decision to commence overbank transfers on 4 October 2017 was not a significant change warranting formal amendment to the AOP. In any event the topic was discussed with the WLWG on 26 September 2017 and no dissent was expressed. Review and amendment of the AOP The Plaintiffs point out that the O&O Document made provision for the AOP to be reviewed and formally amended. Those provisions do not demonstrate that the AOP was intended to have the prescriptive operation for which the Plaintiffs contend. They were capable of applying just as coherently to an AOP which operated as the planning tool for which the Defendant contends. For example, if the Defendant decided that it would use scenarios based on data for the past 30 years rather than the past 125 years it may be necessary to have the AOP formally amended. Determination – no failure to act in accordance with the AOP Two questions which assumed prominence in the case are What is the Annual Operating Plan? and What does it mean to act in accordance with it? The first question requires an inquiry into the nature and effect of the AOP. Only then is it possible to answer the second question. Having

read the 2017/2018 AOP Document and the 2018/2019 AOP Document, having reviewed the AOP Spreadsheets upon which they are based and having listened to the cross-examination of the Defendant’s river operators, the answers to these questions are not simple. The Plaintiffs have not expressly addressed these questions in their closing submissions, written or oral. Their submissions are descriptive of the process by which the AOP was prescribed by the O&O Document and then prepared, and of the document (and spreadsheets) which resulted. The Plaintiffs do not squarely address the meaning and effect of the AOP as it relates to the decision on 4 October 2017 to increase the flow of water at Yarrawonga Weir above 10,000 ML/day. Their case has to be inferred from the conclusions for which they contend, namely that the AOP did not “provide for” overbank transfers until November 2017 and by doing otherwise the Defendant “departed from” and failed to “adhere to” the AOP. The Plaintiffs’ case is therefore to be understood as the contention that, upon the adoption of the AOP, the rates of release of water at Yarrawonga Weir which were depicted in the AOP for each month of the water year were thereafter a prescription of what the Defendant had to do. The obligation was subject to review or formal amendment of the AOP. Whether that contention is to be accepted requires a consideration of the

text of the O&O Document which contained the compliance requirement and to which the AOP Document expressly referred. Regard must also be had to the subject matter of river operations. The text of the AOP Document itself must be reviewed. On this issue, regard may also be had to the expert evidence and the evidence of river operators who prepared and used the AOP. Only then can the nature and effect of the AOP be understood. Text of the O&O Document The provisions of the O&O Document which specified the requirement that each year the Defendant prepare and adopt an AOP are set out above. Clause 10(1)(b)(iv) specified some attributes which the AOP was required to have. The AOP had to address a number of fundamental hydrological matters for the upcoming year which the Defendant was variously required to anticipate, estimate or assume. Clause 10(1)(b)(iv)(G) provided that the AOP had also to include: “River operations planned by the [Defendant] to be undertaken during the relevant water year (including river operations for environmental purposes) under several possible scenarios of water availability”. This passage made clear that the AOP had to identify planned river operations which were responsive to scenarios about water availability. It is clear that the O&O Document (as approved by the BOC) accepted that the river operations thus identified would not be exhaustive of the

river operations for which the Defendant might plan as the year progressed, let alone what the Defendant might ultimately carry out. So much is apparent from the word “scenarios”, especially when qualified by “possible”. It also follows from the inherently uncertain nature of the subject matter of the provision: water availability in an Australian river system. That interpretation of cl 10(1)(b)(iv)(G) is not undermined by the requirement in cl 10(1)(d) that the Defendant carry out its river operations functions in accordance with the AOP. Like all such terms, as a matter of plain language the phrase “in accordance with” takes its meaning from the context in which it is used. There must be a rational relationship between the carrying out of the Defendant’s functions and the AOP, but it does not have to be a relationship of prescriptive obligation if the context indicates otherwise. It may just as naturally require that the functions be carried out having regard to the modelling information recorded in the AOP. Subject matter of the AOP The preparation process actually undertaken by the Defendant is described above, including the initial selection of the six scenarios of assumed inflows, and the further assumptions made for each scenario. The 2017/2018 AOP described each selected scenario by identifying the quantity of gigalitres assumed for “annual River Murray system inflows”.

The scenarios were by definition hypothetical. Even if each selected scenario is viewed as a single quantity of inflows indivisible as to time and location, it was improbable that the actual inflows would conform to any of the selected scenarios. That fact was made plain in the AOP Document itself which included the following graph: The graph shows that the total inflows in some previous years had roughly conformed to the assumed inflows for five of the six selected scenarios (the exception is the extreme dry scenario which assumed lower inflows than had ever occurred in the past) but the inflows in the great majority of past years did not conform to any of the selected scenarios. In all likelihood total inflows for the 2017/2018 water year would not conform to any of the selected scenarios. Even if total inflows for the coming year conformed closely with inflows for one of the six selected scenarios it was unlikely that the timing and location of those inflows would conform to the inflows of the selected scenario given the uncertain nature of rainfall, as to timing, location and quantity. The meaning of the text of the O&O Document (and the AOP) is to be read on the basis that the BOC (and the Defendant) understood that it was unlikely that the inflows which actually occurred would conform to any of the six scenarios. Text of the AOP Document As for the text of the AOP

Document itself, some of the most pertinent provisions and graphs are set out above. The AOP Document must nonetheless be read as a whole. A number of general features are apparent. First, it is clear that the intended audience for the AOP Document was the general public. The AOP Document had the form and content of a document which was prepared to provide information to the public about the topics addressed in the document. It described itself as “published” and commenced with information about contacts and copyright. It concluded with a direction to the Defendant’s website for further information. The substantive parts were presented in a variety of formats, including text, tables and graphs. Most if not all of the information would have already been known to the Defendant and maybe also to the members of the WLWG. Secondly, a prominent aspect of the text is that future matters were generally referred to as assumptions which the Defendant had adopted. The Document did not express expectations, estimates or forecasts other than to expose the reasoning for the adoption of a particular assumption. The AOP Document explicitly stated that future events would be different to those which had been assumed. Thirdly, there were a large number of assumptions, some of which cascaded from others. The document conveyed complexity and interrelationship between the many aspects of the river

system. Fourthly, the document contained express statements about future uncertainty and variability, which statements were unambiguous and repeated. There were multiple disclaimers against reliance on the information in the document. Finally, and following on from the preceding features, the AOP Document addressed planning for the future only in the sense that it described assumptions about future river operations which were expressed to be derivative of other assumptions. Nowhere did the AOP Document set out a “plan” in the sense of a prescription of what the Defendant was going to do. It described a landscape within which the Defendant would make future decisions about what to do. Specifically in relation to the rate at which water would be released at Yarrawonga Weir, the AOP Document included the graph which is set out again here: For each month and for each of the six scenarios, a value was taken from the relevant AOP Spreadsheet and depicted in the graph. With the greater precision made possible by the Spreadsheet, the figure for October 2017 was 10,000 ML for each of the “dry” and “moderate” scenario. For November and December 2017 it was 15,000 ML. Consistent with the language used elsewhere in the AOP Document, these values were said to be the rates of release assumed for the relevant scenarios. The six scenarios between them were described as “the likely range of

conditions and operations that are most likely in 2017–18”. Other statements made in the AOP Document about the uncertainty of future operations are set out above. Nowhere did the text of the AOP Document express the intention of the Defendant to cause water to be released at Yarrawonga Weir at 10,000 ML/day in October and at 15,000 ML/day in November 2017, not even a conditional intention. Nowhere in the AOP Document did the Defendant express a commitment to that course of action. A document which operated in the manner just described was not perhaps aptly described as a “plan”. In 2019 the AOP was renamed. It is now called the “Annual Operating Outlook”. The meaning and operation of a document is not necessarily dictated by the label given to it. Nor does the use of the word “plan” in cl 10 of the O&O Document require the AOP to be given an operation which departs from the specific contents of cl 10(1)(b)(iv). If contrary to the foregoing, the Defendant was required by cl 10 to adopt a prescriptive document which bound the Defendant’s future operations, the Defendant failed to do so. The 2017/2018 AOP is not such a document. The evidence demonstrates that it would not have been reasonably possible to prepare such a document because there were too many variables and too many unknowns. No expert evidence on the meaning of the figures in the AOP Although written for the general

public, there are parts of the AOP Document which are technical in the sense that the meaning and effect of those parts may be assisted by expert explanation. This includes the graph set out at [685]. The horizontal axis of the graph is a monthly timeline. If the graph was consulted in September 2017, what information (if any) would it have conveyed about the actual flow of water at Yarrawonga Weir for October 2017? Would it have been different if the graph was consulted in October 2017? More pertinently, what information would it have conveyed to a river operator acting with reasonable care in the circumstances which pertained in this case? Apart from the Defendant’s river operators, no witness was called to explain the meaning of the graph (or the AOP) based on specialised knowledge based on the witness’s training, study or experience. The Plaintiffs’ expert, Dr Ladson, is a highly qualified and experienced hydrologist, particularly in relation to the management of waterways. As noted above, in 2009/2010 Dr Ladson contributed to the AOP, although it is not known if it was in the same form. Dr Ladson prepared reports in which he reviewed the 2017/2018 AOP and the decision made by the Defendant in early-October 2017 to release more than 10,000 ML/day water at Yarrawonga Weir on 4 October 2017. Dr Ladson made a number of criticisms about that decision. However, nowhere in Dr

Ladson’s evidence does he explain the meaning or the effect of the graph set out at [685], nor any of the other similar graphs in the 2017/2018 AOP or in the 2018/2019 AOP. Dr Ladson said that the AOP “is intended to guide river operations” but nowhere does Dr Ladson say that, having regard to the 2017/2018 AOP, the Defendant was in some way required to release water at Yarrawonga Weir at 10,000 ML/day in October 2017, or that the release of more water would be contrary to the graph (or any other part of the AOP). In his Second Report Dr Ladson accepted that the AOP’s do not determine the actions that must be undertaken by the Defendant. Dr Ladson said that a reason for that was that some operational aspects are not included in the AOP planning documents but are added directly in the Daily Operations Spreadsheets. Evidence of the Defendant’s river operators As a senior river operator, Mr Bishop gave evidence about the role which the AOP plays in river operations. At paragraphs 47 to 50 of his Affidavit dated 8 July 2024 Mr Bishop said: “47 The six AOP scenarios provide a framework for considering the types of operations that River Operators may need to undertake, depending on the extent to which actual and forecast conditions match the assumptions on which those scenarios are based. However, it is the specifics of the volume of available water, the distribution and volumes in

the storages and the vagaries of the weather and its influence on inflows and demands, which will ultimately drive river operations in a particular water year. 48 For those reasons, in my experience, River Operators use the AOPs as a tool that assists with planning river operations as the actual conditions of a water year develop and become known, rather than as an exact or precise pre-set plan that is fixed at the beginning of the water year. The River Operations [T]eam reruns the AOP scenarios throughout the water year, in view of conditions to date, to get a clearer picture of how each scenario projects the storage levels in Lake Victoria over summer and autumn. If those further runs of the AOP scenarios show Lake Victoria trending low in all probable future inflow scenarios, this will raise a “red flag” and inform appropriately responsive river operations. River Operators use their judgment to identify which AOP scenarios are most relevant to operational decisions having regard to actual and anticipated conditions (which may change significantly compared with earlier assumptions). 49 As conditions become known throughout the water year, River Operators will have a clearer understanding of which AOP scenarios are more or less probable. For example, if at the time of preparing an updated AOP run (at around October of each water year), it has been a dry year and there is a dry

outlook, the likelihood of the wetter AOP scenarios falls away. 50 In this way, when I undertake my role as a River Operator, I use the AOPs as a tool that assists with planning river operations, but not as a prescriptive guide or plan for day-to-day operational decisions.” More succinctly, in cross-examination Mr Bishop said that the River Operations Team’s approach was to “plan for a range of scenarios so that you can be as efficient as possible under those changing scenarios as you step forward in time”. Mr Bishop gave similar evidence at other places. He was cross-examined at length, although the passage set out above was not explored, other than to have Mr Bishop confirm that the AOP was a critical tool. In answer to one question, Mr Bishop said: “The plan - the plan has the releases that will give those lake levels under the assumptions in those scenarios. But it’s not requiring you to make those releases. The decision on when you may or may not make a release and to what rate is then based upon the overall risk and objectives in the system, not just what’s in those scenarios.” [189] Ms Hickey’s evidence was to the same effect. She said that the River Operations Team used the AOP as an initial planning outlook for the following three-to-twelve-month horizon. She said that the AOP represents plausible scenarios that may occur under a number of assumptions but is not by any

means exhaustive. Dr Davis said that the AOP “provided an envelope of possible strategies that could be implemented if different conditions eventuate over a given water year”. None of the Defendant’s witnesses saw the AOP as prescribing release rates for future months. None of them saw it as a statement of the Defendant’s intention about release rates for future months. A review of the Defendant’s contemporaneous documents reveals a consistent approach to using the AOP Documents. Rather than referring to the latest AOP output to identify a particular matter and then addressing the actual conditions in relation to that “target”, the members of the River Operations Team generally described the actual conditions and then commented on their relationship to the scenarios. The difference may be subtle, but it sheds light on how they regarded the AOP Documents. An example is a passage from some dot points which the River Operations Team provided to the members of the WLWG on 25 July 2018: “● At this stage, unless there are reasonable improvements to inflows over the coming week, RMO are proposing to commence transfers from Hume to Lake Victoria starting late July or early August to target a storage level in Lake Victoria of ~520 GL by the end of September. ● The AOP shows that under all scenarios except the minimum case, a volume of at least 520 GL is reached by the end of

September.” At that time, the AOP planning documents modelled the storage level of Lake Victoria in September 2018 to be different on the assumptions for each of the six scenarios. For the “very dry” scenario the modelled storage level was approximately 520 GL. It was slightly higher for the “dry” scenario and slightly higher again for the “wet” scenario. It was approximately 600 GL for the “near average” scenario and approximately 650 GL for the “moderate” scenario. The River Operations Team identified the target to be 520 GL. The target was not identified in a vacuum. The modelled storage levels provided perspective for consideration of the target. There are documents in which river operators sometimes referred to a particular modelled storage level as a “target”. Such references are not to be understood as the prescription of a figure which the Defendant was obliged to achieve. Having regard to more than one scenario at any given time Another aspect of the use made of the AOP by the River Operations Team highlights a further problem with the Plaintiffs’ contention that the Defendant was obliged to comply with the rates of release at Yarrawonga Weir depicted in the AOP for each month of the water year. For each future month, the AOP depicted six rates of release, one for each scenario. For some months the rates of release were the same or similar for two or more of the

scenarios. For some months they were all different. The Plaintiffs’ contention that the Defendant was required to comply with a particular rate of release in a particular month presupposes an anterior determination that one of the six scenarios “applies” or dictates the operation of the river at that time. A need to determine and apply a single scenario at any given time demonstrates the gulf between the Plaintiffs’ case and the true nature and effect of the AOP. For the purpose of planning future operations, fixing upon a single scenario to the exclusion of the other five would be antithetical to the way the AOP works. The AOP contemplates multiple scenarios (as expressly required by cl 10(1)(b)(iv)(G) of the O&O Document) which illustrate what might happen to the river system depending on what inflows occur throughout the remainder of the water year. Beyond the next four, possibly eight, days the River Operations Team does not know what the rainfall and inflows will be for the year, nor which of the six hypothetical scenarios will be most closely matched. This is especially so in the early months of the water year. The AOP is intended to depict a range. The Plaintiffs do not submit that the range selected by the Defendant for the purposes of its operational planning was not reasonable, nor is there any evidence upon which such a submission could be made. There is nothing to

say that the Defendant should only have selected four scenarios rather than six. Having selected a range depicted by six scenarios, there is nothing to say that it was not reasonable for the Defendant to consider the whole of the range, especially in the early months of the water year or, pertinently, in September and October. At one extreme, the range was depicted by the “extreme” dry scenario for which it was assumed that inflows would be lower than had ever previously occurred since records commenced 125 years ago. There is no basis to suggest that it was not reasonable for the Defendant to take that possibility into account for the purposes of performing its functions within the statutory framework. At the other extreme was the “wet” scenario. In 2017 the river system had experienced inflows which conformed to or exceeded those assumed for the wet scenario in 37 of the last 125 years. It was reasonable for the Defendant also to have regard to that end of the range when making decisions in September and October. Mr Bishop explained the approach in paragraph 183 of his Affidavit dated 30 June 2022: “In my experience, during a water year, members of the River Operations [T]eam do not operate the River Murray [s]ystem in accordance with a single scenario, because actual conditions are regularly changing between the scenarios. Members of the River Operations [T]eam aim to

optimise running the river without knowing when conditions might change. Members of the River Operations [T]eam operate the system planning to meet the requirements of the Agreement and the O&O Document, and adjust based on the conditions which occur. The analysis undertaken in preparing the AOP Spreadsheet lets members of the River Operations [T]eam plan for and optimise potential river operations for and between the six possible scenarios across the remainder of the water year.” More succinctly, in cross-examination he said: “…it’s an analysis across the scenarios – around the risks of it.” Dr Ladson acknowledged this aspect of the AOP. He said in his First Report that he is aware that the AOP planning scenarios are not predicators of weather conditions and that the Murray River system will not always (or ever) operate to one of the discrete inflow scenarios assumed in the plans. Summary of the nature and effect of the AOP Having regard to the terms of the O&O Document pursuant to which the AOP is prepared, the text of the AOP document and the subject matter it addresses, the 2017/2018 AOP did not operate to prescribe obligations with which the Defendant had to comply. The Defendant submits that the purpose of the AOP was to identify the broad nature of possible river operations to guide the Defendant’s future decision making. That submission accords with the text of the O&O

Document and the AOP Document and it is to be accepted. The requirement that the Defendant carry out its functions in accordance with the AOP means that the Defendant must have regard to the river operations contemplated in the AOP when making future decisions about the river operations to be undertaken. What was the applicable scenario at the start of October 2017? In confirmation of the point just made, even if the Defendant was required to comply with the 2017/2018 AOP in the sense submitted by the Plaintiffs, it is difficult to see how it could have done so without first making a determination about which of the six scenarios “applied” as at 3 October 2017. Without that anterior determination, it would not be possible to say whether or not the Defendant had complied with any particular rate of release at Yarrawonga Weir. This issue is not so important for the 2017/2018 AOP because it specified the same rate of release at Yarrawonga Weir in October and November 2017 for each of the “very dry”, “dry” and “moderate” scenarios (although there was a divergence when the Fortran Assessment Model was rerun on 20 September 2017 – see below). By late September 2017 the actual inflows for June, July, August and early September had occurred. They had been measured and were known to the Defendant: The actual inflows for June 2017 were exceeded by 94% of previous years. The actual

inflows for July 2017 were exceeded by 95% of previous years. The actual inflow for August 2017 were exceeded by 61% of previous years. The total inflows for June to August 2017 were exceeded by 78% of previous years. September 2017 was the driest September on record, a fact which would have been increasingly apparent to the Defendant with the arrival and analysis of each new day’s data. As for October 2017, inflows might be expected to be low at least at the beginning of the month given the dry September. Beyond that was speculation. The evidence about actual inflows is limited to system-wide figures. Apart from isolated snippets, nothing was said in these proceedings about the actual inflows for any particular reach of the river system in any particular month, nor how any such inflows compared with those assumed for the particular reach. In the light of these limited facts, the Defendant’s “very dry” scenario assumed annual inflows for the entire river system which would be exceeded by the annual inflows for 95% of the previous 125 years. The Defendant’s “dry” scenario had an annual exceedance probability of 90%. The Defendant’s “moderate” scenario had an annual exceedance probability of 75%. As at October 2017, it was not possible to determine which scenario would be the one which the actual inflows would most closely match by the end of the water year in May 2018. The

Plaintiffs submit that the Defendant made the relevant decision to release water at Yarrawonga Weir above 10,000 ML/day “in the context of” the “dry” scenario. They do not explain why the “dry” scenario was applicable in October 2017, either generally or for the specific purpose of commencing overbank transfers from Hume Reservoir to Lake Victoria. They do not address how the determination of the applicable scenario was to be made generally. If one were merely to take the annual exceedance probability of the inflows for the entire system to date and match it to the closest scenario, 78% AEP inflows for June to August 2017 most closely matched the “moderate” scenario, not the “dry” scenario. Starting on 1 June, in any given water year the first three months are generally the wettest. However, without further explanation it is not obvious why the inflows which actually occur in the first three or four months will determine the total inflows which will occur for the whole water year. More precisely for current purposes, it is not obvious why the inflows which occurred in June to September 2017 would have been indicative of the inflows which would occur in October, November and December 2017 (which was the time by which it was intended that Lake Victoria be full, as referred to in the Lake Victoria Operating Strategy). Mr Bishop said in his Affidavit that, having regard to the

inflows which had occurred in June to August 2017, the river conditions and river operations “were between the conditions and operations assumed in the moderate and drier end May 2017 AOP Spreadsheet”. [190] As set out above, on 20 September 2017 the River Operations Team undertook some updates to the AOP. They did not run all six scenarios. They only ran the “dry” and “moderate” scenarios. They evidently had made an assessment that updates of these two scenarios would be of the most assistance in making future planning decisions. Dr Davis accepted in cross-examination that the “dry” scenario applied as at the end of September 2017, albeit in general terms. In context, his evidence should be taken as meaning no more than that the annual exceedance probability of the inflows to the relevant date for the entire system most closely matched the inflows assumed for the “dry” scenario. It was not a concession that the Defendant had an obligation to proceed on the basis that annual inflows for the 2017/2018 water year would be less than 90% of historic inflows (but not less than 95%). The need to make a determination about which scenario “applied” further undermines the Plaintiffs’ contention that the Defendant was obliged to comply with the AOP in the sense that it had to release water at Yarrawonga Weir at a rate specified for one of the six scenarios. Nonetheless, the Plaintiffs’

complaint about non-adherence to the AOP can conveniently be considered on the assumption that the “dry” scenario applied at the end of September and the beginning of October 2017. The rate of release specified in the AOP for October 2017 For the “dry” scenario, the 2017/2018 AOP contemplated that 10,000 ML/day would be released at Yarrawonga Weir in October 2017. On each of 1 October and 2 October 9,941 ML was actually released. On 3 October 9,871 ML was released and on 4 October 10,810 ML. Thereafter the rate of release exceeded 10,000 ML each day, all of which was operational water until 13 October. The 2017/2018 AOP contemplated that 15,000 ML/day would be released at Yarrawonga Weir in November 2017. Prepared using the Fortran Assessment Model, the AOP did not have the functionality to specify the release of water for each individual day of the month. The figure for any given month was therefore an average figure. So much was specified as a note to the graph set out at [543] above. There is no dispute that a change in the rate of release from one month to the next cannot be implemented suddenly. It must be implemented gradually with incremental changes made each day leading up to (or down to) the new rate of release. Nor is there any dispute that there may be disadvantages in permitting a river to have a constant rate of flow over a prolonged period, such as erosion of the

banks. It follows that where a monthly rate of release was specified in the AOP it was contemplated that there may be days when the quantity of water which was actually released would exceed the specified rate of release. The Defendant submits that the mere fact that operational water in excess of 10,000 ML was released at Yarrawonga Weir each day between 4 October and 13 October 2017 does not demonstrate that the Defendant did not comply with an obligation that the average rate of release be 10,000 ML/day in October 2017. It submits that some latitude was implicit and, without more, a failure to comply cannot be found. Whilst the submission might be accepted for an isolated day of any given month, it is to be rejected on the facts of the present case. There are two reasons for this. First, the increase in the flow of water on 4 October 2017 was not an increase made by the Defendant pursuant to a plan that the daily release rate for the whole of October would still average out at 10,000 ML. Secondly, I accept the Plaintiffs’ submission that an increase above 10,000 ML at Yarrawonga Weir was not merely a change in quantity. Below Yarrawonga Weir the Barmah Choke imposed a capacity constraint which would be exceeded above 10,000 ML/day. The increase in flow on 4 October 2017 therefore had a qualitative difference to that contemplated by the 2017/2018 AOP. If, contrary to the

foregoing, the 2017/2018 AOP imposed an obligation on the Defendant to release water at Yarrawonga Weir at 10,000 ML/day during October 2017, the Defendant did not comply with that obligation. Summary of conducting river operations “in accordance with the AOP” The meaning and effect of the 2017/2018 AOP was such that it did not prescribe a rate of release of water at Yarrawonga Weir for October 2017. The obligation to carry out river operations in accordance with the AOP did not require the Defendant to comply with any such rate of release. Rather, the AOP identified the broad nature of possible river operations to guide the Defendant’s future decision making. It was intended to be used as a planning tool which contemplated multiple scenarios which variously illustrated what might happen to the river system depending on what inflows occurred throughout the remainder of the water year. The obligation to carry out river operations in accordance with the AOP required the Defendant to have regard to the scenarios depicted in it. There is no suggestion that the Defendant failed to conform to that requirement when deciding to release water at Yarrawonga Weir at more than 10,000 ML/day on 4 October 2017. In any event, no breach of the duty of care owed to the Plaintiffs If contrary to the foregoing I had found that the Defendant failed to act in accordance with the AOP because it

commenced overbank transfers in October 2017 instead of November 2017, I would make the further finding that that failure was not a breach of the duty of care alleged to be owed to the Plaintiffs. In considering this particular of breach, and many of those which follow, sight must not be lost of the principles set out at [599]-[603]. The issue which the Court has to decide is not whether the Defendant has or has not acted in accordance with the 2017/2018 AOP. The Court has to decide whether the Defendant failed to act with reasonable care to protect the Plaintiffs from pure economic loss. The two issues are different. The answer to the first does not determine the answer to the second. The Plaintiffs argue this part of the case as if their claim is for breach of a contract to which they and the Defendant were counterparties. They submit that not acting in accordance with the AOP was a failure to take “appropriate precautions” against the risk that the Plaintiffs would suffer pure economic loss. The submission can be understood as a reference to the requirement that the Defendant take a precaution against the risk of harm (i.e. economic loss to the Plaintiffs) which a reasonable person in the position of the Defendant would have taken for the purposes of s 43(1)(c) of the ACT Liability Statute. Beyond that submission, the Plaintiffs do not address how a failure to act in

accordance with the AOP was a breach of the Defendant’s duty of care to the Plaintiffs. As set out above, the Agreement records the agreement between the States about sharing the water resources of the Murray-Darling Basin between the States. The O&O Document and the AOP are derivative parts of that agreement. Assuming the AOP imposed prescriptive obligations on the Defendant, adherence to some of those obligations may have been to the financial detriment of irrigators in New South Wales and Victoria especially where they relate to taking of measures to minimise the risk of system shortfall so that South Australia received its entitlements under cl 88 of the Agreement. To put it the other way, a failure to adhere to some of the obligations in the AOP may have been to the financial benefit of irrigators in New South Wales and Victoria. The point is demonstrated by the facts in this case. If the Defendant had adhered to a requirement that there be no overbank transfers until November 2017, the advent of the mid-October rainfall meant that there was no need for any overbank transfers in the 2017/2018 water year. Yet at the end of October 2017 total inflows for June, July, August, September and October were less than 84% of historic flows. On the Plaintiffs’ approach, the river system was between the “dry” and “moderate” scenarios and the AOP “required” that overbank transfers

still be made in November and December 2017 (see the graph at [685] above). Given the rainfall in October, adherence to that requirement may have been to the Plaintiffs’ financial detriment. By way of further example, the Plaintiffs alleged that the Defendant’s duty of care required the Defendant to depart from the 2018/2019 AOP because in the circumstances of the 2018/2019 water year adherence to the AOP was to their financial detriment. These are just examples. They do no more than illustrate the modest proposition that a failure to act in accordance with the AOP did not automatically constitute a breach of the Defendant’s alleged duty of care to the Plaintiffs. In each instance it is still necessary for the Plaintiffs to prove that the Defendant failed to act with reasonable care to protect the Plaintiffs against pure economic loss. Third alleged failure: failure to adhere to the Fortran testing in mid-September Plaintiffs’ submissions The Plaintiffs submit that the update of the AOP which was obtained by the River Operations Team on 20 September 2017 required overbank transfers through the Barmah Choke to commence in November 2017. They submit that there was no good reason to depart from that requirement. The Plaintiffs submit that using the Daily Operations Spreadsheet did not provide a good reason because the system-wide loss estimates in the Daily Operations Spreadsheet

were less accurate than those used in the Fortran Assessment Model. They submit that the Daily Operations Spreadsheet was not used by the Defendant to model river operations months in advance but only to determine “critical scenarios and risks to potential bulk-system operations”. It was not the best hydrological modelling tool available to the Defendant and a reasonable river operator would not have relied on it. The Plaintiffs further submit that the Defendant ought to have adhered to the AOP update obtained on 20 September 2017 because it had been approved by the WLWG on 26 September 2017, or at least had been the subject of consultation. The Plaintiffs further submit that no evidence has been adduced by the Defendant to explain the reason why it did not adhere to the AOP update obtained on 20 September 2017. Defendant’s submissions The Defendant disputes that the results of the testing which occurred on 20 September 2017 formed part of the AOP for the purposes of cl 10 of the O&O Document. It was not a formal update or amendment. The Defendant submits that the WLWG did not formally approve the testing which was conducted on 20 September. On the contrary, the WLWG was told that updates to the AOP would be presented in October 2017. The Defendant submits that the testing was undertaken to test ideas and that the Defendant was not obliged to carry out its functions “in

accordance with” the results. In any event, the Defendant submits that the testing on 20 September 2017 showed that overbank transfers would be necessary, either in October (in the “moderate” scenario) or in November (in the “dry” scenario). In neither case did the Fortran testing provide more detail about when overbank transfers should commence because its functionality was limited to monthly intervals. Further and relatedly, the Fortran Assessment Model used average monthly figures for daily flow rates which meant actual flow rates on any particular day might be above or below the average and still be in accordance with the Fortran modelling. Determination – no failure to adhere to the testing conducted on 20 September 2017 The Fortran Assessment Model was run three times to “update and test potential bulk-system operations”. It was an example of the Fortran Assessment Model being used not to prepare an AOP for adoption or for publication to the general public, but to compare alternatives. Mr Bishop described the practice at paragraph 236(c) of his First Affidavit dated 30 June 2022: “From time-to-time, members of the River Operations [T]eam will re-run the Fortran Assessment Model to test ideas, understand the implications of different assumptions and determine critical scenarios and risks to potential bulk-system operations in the Fortran Assessment Model Output

Spreadsheets and where needed in the AOP Spreadsheet. These runs will be kept by the River Operations [T]eam, even when these runs of the Fortran Assessment Model were not used by members of the River Operations [T]eam for bulk-system planning.” Two of the tests which were run on 20 September 2017 assumed inflows which would conform to the “dry” scenario. One assumed inflows which would conform to the “moderate” scenario. For one of the “dry” scenario tests it was further assumed that overbank transfers would occur in November and December 2017. For the “moderate” scenario it was assumed that overbank transfers would occur in October, November and December 2017. In neither case did the tests include an assumption about when the overbank transfers would commence within the relevant month, such detail being beyond the functionality of the Fortran Assessment Model. On the assumptions made, the tests showed that Lake Victoria would have sufficient water to meet South Australia’s entitlements over summer, but not without overbank transfers. Defendant’s obligations in relation to the adherence to the testing The parties’ Written Submissions contain a debate about the terms of cl 10 of the O&O Document and the Defendant’s obligations in relation to the results of the tests. It is not clear whether the Plaintiffs contend that the runs of the Fortran Assessment Model on 20 September

2017 constituted a formal update of the AOP in accordance with which the Defendant was thereafter required to carry out its functions pursuant to cl 10(1)(d) of the O&O Document. They would be right not to. One need merely observe that three different spreadsheets resulted from the testing and that it would not have been possible for the Defendant to adhere to all three. It would not even have been possible for the Defendant to adhere to the testing for the “dry” scenario because there were two results based on inconsistent assumptions about overbank transfers. The O&O Document required a review and update of the AOP in October (after the wettest months of the year). The testing which occurred in September was a different exercise. The output from the testing was given to the members of the WLWG and discussed at the meeting on 26 September 2017. As a separate item of operations planning, the minutes record that a draft updated AOP would be provided in the following weeks. The Plaintiffs submit that pursuant to cl 12.5(d) of Appendix A to the O&O Document the Defendant was obliged to be “guided by” the September testing when making a decision about the timing of commencement and rates of transfer of operational water from Hume Reservoir to Lake Victoria. The obligation in cl 12.5(d) (and also cl 12.1(d)) is directed to the “Monthly Operating Plan”. The Defendant’s witnesses

explained that the “latest run” of the Fortran Assessment Model constituted the Monthly Operating Plan. It is doubtful that the testing which was undertaken in September 2017 answered that description. It did not address all six of the scenarios. For the “dry” scenarios there were two runs based on inconsistent assumptions. They could not both be the latest run. In any event, the obligation in cl 12.5(d) was no more than to be “guided by” the latest run of the Fortran Assessment Model. Clause 12.5(d) required the Defendant to be guided by a number of things of which the latest run of the Fortran Assessment Model was only one. The Defendant was also to be guided by the Lake Victoria Operating Strategy and the WLWG. There was no provision in the O&O Document which obliged the Defendant to “adhere to” the test results obtained on 20 September 2017. Approval by the WLWG on 26 September 2017 The Plaintiffs seek to elevate the status of the test results obtained on 20 September 2017 by submitting that they were “approved” by the WLWG at the meeting on 26 September 2017, or at least were the subject of consultation. The minutes show that the test results were discussed. The minutes do not record any form of “approval”. There was no dissent from the test results but that does not mean that there was some form of approval. It was not in the nature of the test results that they were

something which might be approved or not approved. In any event, the WLWG had before it not just the test results for the “dry” scenario but also for the “moderate” scenario. The minutes record that the Defendant made a number of statements about overbank transfers commencing in October as assumed for the “moderate” scenario. If the WLWG’s approval is to be inferred, it was approval of the test result for the “moderate” scenario which is contrary to the Plaintiffs’ case that overbank transfers were not to commence until November 2017. Either way, the WLWG’s treatment of the test results on 26 September 2017 does not advance the Plaintiffs’ case. The Defendant was not obliged to adhere to or be guided by the test results obtained on 20 September 2017 by virtue of anything which happened at the WLWG meeting on 26 September 2017. No failure to be guided by the testing (or to act in accordance with it) Given the fact that the tests result for the “moderate” scenario assumed that overbank transfers would occur in October 2017, the Plaintiffs’ argument that the Defendant failed to adhere to the mid-September testing depends upon an anterior finding that the “dry” scenario applied. The difference between the “dry” scenario and the “moderate” scenario was not material for the 2017/2018 AOP which was approved in July 2017 but it was important for the testing conducted on 20 September

2017. For the reasons given above, the Plaintiffs have not proved that the inflows which had occurred as at the end of September obliged the Defendant to adhere to the test results for the “dry” scenario as opposed to the “moderate” scenario. The Defendant evidently considered the test results for both scenarios which assisted it to make future decisions. The effect of the Plaintiffs’ submissions is that by the end of September 2017 the Defendant was obliged completely to ignore the test result for the “moderate” scenario, based as it was on the assumption that overbank transfers would commence in October 2017. There is no basis for that suggestion. The Defendant had gone to the trouble of carrying out tests for the “moderate” scenario. Inflows up to the end of August 2017 had hovered between the “dry” scenario and the “moderate” scenario and it was not known which way they would go for the remainder of the year. The Defendant was entitled to have regard to all the test results which it had obtained. The fact that two scenarios were tested also highlights the flaw in the Plaintiffs’ contention that the Defendant was obliged to adhere to the test results obtained on 20 September 2017. How does one “adhere to” a test result, let alone multiple test results? Having regard to the purpose for which the Fortran Assessment Model was run on 20 September 2017, there is no basis to find

that the Defendant failed to be guided by the results, including the result which assumed the “dry” scenario and overbank transfers. The tests were conducted for a proper purpose. The results were evidently considered and discussed with the WLWG on 26 September 2017. The Plaintiffs have not proved that anything further was required of the Defendant acting with reasonable care. Summary The Plaintiffs have not demonstrated that the Defendant failed to comply with any obligation imposed on it by the O&O Document or the 2017/2018 AOP in relation to the results of the runs of the Fortran Assessment Model on 20 September 2017. In any event, no breach of duty to the Plaintiffs For the reasons given above, even if the Defendant is assumed not to have complied with the O&O Document or the 2017/2018 AOP in relation to the results of the runs of the Fortran Assessment Model on 20 September 2017, the Plaintiffs have not proved the Defendant thereby failed to act with reasonable care to protect the Plaintiffs against the risk of pure economic loss. Fourth alleged failure: failure to conduct further testing with the Fortran Assessment Model Plaintiffs’ submissions By reference to the general objective in cl 4(6)(a)(i) of the O&O Document, the Plaintiffs submit that the Defendant was obliged to make decisions supported by effective planning and using “the best available data, tools and

systems”. The Plaintiffs further submit that the Fortran Assessment Model was the best hydrological tool available to the Defendant. Given that the tests conducted on 20 September 2017 using the Fortran Assessment Model required the commencement of overbank transfers in November 2017 in the “dry” scenario, the Plaintiffs submit that the Defendant was required to undertake further testing using the Fortran Assessment Model before deciding to transfer water overbank on 4 October 2017. Defendant’s submissions The Defendant submits that the Plaintiffs’ argument does not reflect the correct nature and functionality of the Fortran Assessment Model and the Daily Operations Spreadsheet. In light of the Fortran testing which occurred on 20 September 2017, the Defendant acted reasonably by thereafter using the Daily Operations Spreadsheet to decide the precise date in October upon which to commence overbank transfers. Determination Premise not made out The rejection of the Plaintiffs’ third alleged failure leads to the rejection of the fourth alleged failure. For the reasons given above, the Defendant’s decision to commence overbank transfers in October 2017 was informed by, and not a departure from, the test results obtained on 20 September 2017. There was no requirement that the Defendant undertake further testing. Fortran Assessment Model not “the best tool” In any event, there are a

number of problems with the Plaintiffs’ contention that the Fortran Assessment Model was the “best hydrologic model” for making the decision to commence overbank transfers on 4 October 2017. The submission tends to suggest that a choice had to be made between the Fortran Assessment Model and the Daily Operations Spreadsheet. The Plaintiffs’ analysis does not usefully address the situation where multiple tests had already been undertaken with the Fortran Assessment Model on 20 September 2017, the results of the testing were considered by the Defendant and discussed at the WLWG meeting and further modelling occurred using the Daily Operations Spreadsheet over the following days. The Plaintiffs have not identified any new information after 20 September 2017 which made the existing Fortran test results in need of update. A second problem with the submission is that it is a bit like a builder peering into the toolbox and announcing that the hammer is the best tool. It depends on the task. The Fortran Assessment Model and the Daily Operations Spreadsheet have different attributes. As Ms Hickey explained in cross-examination, the superiority of one over the other depends on the task at hand. The interrelationship between the two “decision support tools” is summarised in the Defendant’s draft Guidance Document as follows: “Initial planning of bulk water transfers occurs broadly through

the AOP, with reviews taking place as part of monthly operational planning processes. As the water year progresses, it switches to using the daily river operations forecasting and scenario tools which are used for more precise operations and targets. These tools allow the river operators to incorporate current conditions, trends and agreed assumptions, including in relation to rainfall, recessions and river transmission losses so decisions can be adjusted to reflect evolving conditions.” Following on from the second problem, a further problem with the Plaintiffs’ submission is that it does not address the facts. The Plaintiffs submit that the matter being considered at the end of September 2017 was the storage level of Lake Victoria as at 31 December 2017. They say it was a multi-month matter best addressed by the Fortran Assessment Model which had better long-term functionality. The submission is oversimplified and cannot be accepted. As at 28 and 29 September 2017 both the Fortran Assessment Model and the Daily Operations Spreadsheet demonstrated that Lake Victoria would have insufficient water as at 31 December 2017. Both models demonstrated that overbank transfers would be required to reduce the risk of system shortfall and a failure to deliver South Australia’s entitlements over summer. By 29 September 2017 the matter being considered was the precise date upon which to

commence overbank transfers. The Fortran testing had been undertaken on 20 September 2017 using the assumption alternatively that overbank transfers would commence in October (if “moderate” conditions were assumed) or November (if “dry”). That was as far as the Fortran Assessment Model could take it. The Fortran Assessment Model lacked the functionality to provide any more precision. The Plaintiffs say that even if overbank transfers could reasonably have been commenced in October 2017 it should have been in “mid” October and not on 4 October. By 29 September 2017 the Defendant was considering the precise date when the release of water at Yarrawonga Weir would increase above 10,000 ML/day. Although that decision would be informed by the year-end storage level of Lake Victoria, it is too simplistic to say that it was a multi-month decision for which the Fortran Assessment Model was the best tool. The daily interval of the Daily Operations Spreadsheet provided necessary functionality which the Fortran Assessment Model did not have. Mr Bishop said that the Daily Operations Spreadsheet was “effectively a model of the system in and of itself that’s on a daily time-step, with considerably more detail and ability to manipulate things in a short time-scale”. In any event the Plaintiffs’ contention that the Daily Operations Spreadsheet lacks multi-month functionality is not correct. It

is true that the Daily Operations Spreadsheet did not provide forecasts for the whole of a 12-month period, but it did provide forecasts for approximately three months in advance. At the end of September 2017 the Daily Operations Spreadsheet was capable of forecasting the storage level of Lake Victoria as at 31 December 2017. In cross-examination the Defendant’s witnesses readily agreed that the Fortran Assessment Model and the AOPs produced using it were critical tools for the conduct of the Defendant’s river operations functions. It may be accepted that the Fortran Assessment Model was indispensable in the sense that it had functionality which none of the Defendant’s other tools had. However, no Defendant witness made a concession about the superiority of the Fortran Assessment Model in relation to the decision about which day of the month to commence overbank transfers, either generally or specifically in the circumstances which pertained at the end of September 2017. A further problem with this part of the Plaintiffs’ case is that their submissions do not reflect the evidence about the nature, content and operation of the Daily Operations Spreadsheet. The Plaintiffs sought to portray the Daily Operations Spreadsheet as a spreadsheet which is created anew each day, populated each time with both inputs and formulae “adopted” by whoever happened to be the Duty Operator that

day, for whatever reason that person thinks best. It was contrasted with the Fortran Assessment Model which is a bespoke computer model. Ms Hickey accepted that the Fortran Assessment Model is a “computer” model although she resisted the suggestion that the Daily Operations Spreadsheet is not. It is an excel spreadsheet which performs its computations within that format. The evidence establishes that the Daily Operations Spreadsheet is no less bespoke or computerised than the Fortran Assessment Model. The Fortran Assessment Model performs calculations upon inputs using formulae which have been coded into the programme which operates the model. It has been developed over time by programmers at the Defendant (and its predecessors) specifically for the purpose of operating the Murray-Darling Basin. The Daily Operations Spreadsheet is the same, except that the formulae have been set up using excel software. The Defendant’s practice of maintaining the Daily Operations Spreadsheet is described above. The Duty Operator does not make a new spreadsheet each day. Each day the Duty Operator takes the “living document” from the previous day and updates the inputs with actual data received the previous day. Whilst the Duty Operator is responsible for updating the spreadsheet each day, it is a shared resource. The River Operations Team can adjust the loss rates, but there is no basis in the

evidence for the Plaintiffs’ suggestion that that might be done each day in an isolated and idiosyncratic way by the individual Duty Operator. The Plaintiffs seek further to undermine the reasonableness of the Defendant’s use of the Daily Operations Spreadsheet by pointing out that on 26 September 2017 the WLWG was told that information presented to it was “subject to rain events”. It is not clear from the minutes precisely what was said to be subject to rain events. In any event, the statement was no more than the general caveat which would be expected and which, if not express, would have been implicit in any forward-looking statement made by a river operator. Any such statement applied equally to the 2017/2018 AOP and the results of the testing carried out on 20 September 2017. In any event, the Plaintiffs have not proved that there was a rain event, either actual or forecast, which warranted any previous assumptions to be abandoned or any approval from the WLWG to be revisited. To the extent that the Plaintiffs rely on the Climate Outlook which was issued by the Bureau of Meteorology on 28 September 2017 there is no evidence that a river operator acting with reasonable care would have had regard to the rain information in that document given the Bureau’s limited ability to forecast rain beyond eight, or even four, days. Summary Given the use of the Daily Operations

Spreadsheet, and in any event, the Plaintiffs have not demonstrated that the Defendant failed to act with reasonable care because it did not conduct further testing with the Fortran Assessment Model after 20 September 2017. Fifth alleged failure: inappropriate modelling in Daily Operations Spreadsheets Plaintiffs’ submissions Even if the Defendant could otherwise reasonably have relied on modelling carried out with the Daily Operations Spreadsheet, the Plaintiffs submit that the modelling actually undertaken on 28 and 29 September 2017 was defective. Two reasons are given. First, the modelling assumed losses which were much higher than those assumed for the 2017/2018 AOP and for the testing with the Fortran Assessment Model which was carried out on 20 September 2017. The Plaintiffs submit that on the relevant days the modelling with the Daily Operations Spreadsheet was undertaken by Ms McCann who was an inexperienced river operator. They submit that Ms McCann determined the loss rates to be assumed for the modelling on those two days. They submit that there was no justification for assuming loss rates which were higher than those assumed when the Fortran Assessment Model had been run on 20 September 2017. They submit that there was no climate outlook which justified higher loss rates. Secondly, the Plaintiffs contend that the modelling in the Daily Operations Spreadsheet was

not appropriate because it did not test alternative means of filling Lake Victoria, namely more efficient releases from the Menindee Lakes or calls on the Goulburn IVT account. Defendant’s submissions The Defendant submits that on 28 September 2017 the Daily Operations Spreadsheet was updated from the previous day in accordance with the systematic practice explained by Mr Bishop. The same occurred on 29 September 2017. The Defendant submits both the Fortran Assessment Model and the Daily Operations Spreadsheet depend upon input assumptions about future loss rates. They submit that there is no evidence to support a finding that the loss rates used in the Daily Operations Spreadsheet were unreasonable. The Defendant further submits that the evidence does not establish the factual premises for the second complaint. Determination – loss rates There is no dispute that the loss rates assumed for the Daily Operations Spreadsheet on 28 and 29 September 2017 were higher than those assumed when the 2017/2018 AOP was prepared using the Fortran Assessment Model or when the testing was undertaken on 20 September 2017. The mere fact that the loss rates assumed for the Daily Operations Spreadsheet at the end of September 2017 were different to those assumed when using the Fortran Assessment Model does not mean that they were not loss rates which a river operator acting with reasonable care

could have assumed. The Plaintiffs have put forward some reasoning to demonstrate otherwise but none of the reasons are material. The Plaintiffs point out that the Fortran Assessment Model modelled the full year, but they have not demonstrated how that made a difference to the use of assumed loss rates in the modelling which actually occurred on 28 September and 29 September 2017, especially when the period being modelled was only to the end of 31 December 2017. The superiority of the relevant loss formulae or assumptions in the Fortran Assessment Model is not demonstrated merely by the submission that the Fortran Assessment Model is “bespoke hydrologic modelling software”. As explained above, the Daily Operations Spreadsheet is no less “bespoke”, “hydrologic”, “software” or “modelling”. There is no evidence to prove the asserted superiority of one model over the other, either generally or for the specific purpose of undertaking modelling in September 2017 of the storage level of Lake Victoria as at 31 December 2017. The potential for human intervention was the same for each model, having regard to the post-processing manual adjustments performed on the outputs from the Fortran Assessment Model. Both models incorporated a degree of human judgement, in each case made collaboratively by the River Operations Team. The Plaintiffs refer to a passage in Mr Bishops’ First Affidavit

where he says that loss estimates in the Daily Operations Spreadsheet are less accurate than in the Fortran Assessment Model. The relevant passage of Mr Bishop’s Affidavit was directed to a different issue. He was explaining how each model uses different data to calculate losses which have already occurred. Historic losses were not relevantly applicable to the forecast of future losses and the year-end storage level of Lake Victoria in the modelling being undertaken in September 2017. Although this is largely a hydrological issue, there is no evidence from Dr Ladson to support the proposition that the future loss rates which were assumed in the Daily Operations Spreadsheet were unreliable. He identifies the difference between the loss assumptions for each model. He does not say that it was not reasonable for the Defendant to have used the loss assumptions which it did use for the Daily Operations Spreadsheet on 28 September and 29 September 2017. One apparent reason why the loss rates used in the Daily Operations Spreadsheet may have been expected to be more reliable than those used for the 2017/2018 AOP and for the Fortran testing on 20 September 2017 is that they were based on more up-to-date data. The AOP loss rates were assumed in July and the loss rates assumed for the 20 September testing (if different) were assumed in mid-September. Mr Bishop explained that rates for

short-term future losses in the Daily Operations Spreadsheet were in part derived from data about recent actual losses. They were also derived in part from forecast temperatures, about which the Bureau of Meteorology had issued a Climate Outlook on 28 September 2017 and which was to some extent useful information for the Defendant (cf future rain). As referred to above, temperature affects losses through evaporation and through the demand for water by those entitled to take water from the Murray River. As at 28 and 29 September and 3 October 2017, the Daily Operations Spreadsheet was more up to date and, to that extent, may have been a more reliable forecast of year-end Lake Victoria storage levels. The issue addressed in the preceding paragraph does not warrant a finding that the Daily Operations Spreadsheet was a model which was superior to the Fortran Assessment Model either generally or for any particular purpose. The point is that any comparison between the two models is complex and the Plaintiffs’ reliance upon a departure from the loss assumptions used for the Fortran Assessment Model is not a sure foundation for a finding that it was negligent to use the Daily Operations Spreadsheet as the Defendant did. Each party put forward competing figures to demonstrate that the losses which were actually experienced in October, November and December 2017 turned out to be (or not

to be) greater than the higher loss rates assumed in the Daily Operations Spreadsheet at the end of September 2017. Equally informed by hindsight, these figures are not relevant to the question whether the assumption of any particular loss rates was reasonable at the end of September and early-October 2017. They do however show that the actual losses were very large and the difference between the various figures are also very large. In that context, the Plaintiffs’ emphasis on the 273% difference between one particular loss rate assumed for the mid-September Fortran testing compared to what is said to be the equivalent figure in the Daily Operations Spreadsheet on 28 September 2017 is deprived of some of the superficial significance it might otherwise have had. The Plaintiffs’ final submission on this issue is to point out that Ms McCann was the Duty Operator who prepared the Daily Operations Spreadsheet on 28 and 29 September 2017. They submit that Ms McCann has not been called to explain the inputs or other factors affecting Lake Victoria’s storage, including the loss rates which she “apparently manually inputted or configured in the Excell document”. The failure to call Ms McCann is not explained. The Plaintiffs submit that an inference may readily be drawn that the Daily Operations Spreadsheet which was prepared on 28 September and carried through to 29 September 2017 “did

not address the radically higher loss rates” compared to the loss rates assumed for the modelling which was undertaken on 20 September 2017 using the Fortran Assessment Model. They further submit that the inference is available that “the loss rates and inputs in any such testing that may have been done were not reasonable or supportable”. The force of the Jones v Dunkel submission depends upon the Plaintiffs’ view of the Duty Operator preparing each day a new Daily Operations Spreadsheet by idiosyncratically adopting assumptions about numerous inputs, alone and unsupervised. The submission assumes that once prepared, the Daily Operations Spreadsheet is not loaded onto the shared drive where it is available to and used by other members of the River Operations Team, like Ms Greenwood who evidently consulted it and emailed a graph from it to the Barmah-Millewa Operations Advisory Group at 5pm on 29 September 2017. The submission also has in it the unspoken premises that the assumptions about losses in the Daily Operations Spreadsheet had previously conformed to the assumptions about losses used for the testing with the Fortran Assessment Model which was undertaken on 20 September 2017, and that a radical change was made to those assumptions on 28 September 2017. It is that context the Plaintiffs submit Ms McCann should have been called to explain. Mr Bishop’s unchallenged evidence

about the River Operations Team systematically and routinely updating of the Daily Operations Spreadsheet using data newly received, and the role of the Duty Operator in that quotidian process, undermines the Plaintiffs’ Jones v Dunkel submission. Ms McCann did not have the agency in the process for which the Plaintiffs contend, nor was the Daily Operations Spreadsheet susceptible to the degree of interference by the Duty Operator which is implicit in the Plaintiffs’ submission. In particular, apart from that mechanically consequent on the input of data from the previous day, it has not been shown that any change was made to the assumptions about losses in the Daily Operations Spreadsheet on 28 or 29 September 2017 by Ms McCann or anyone else. It is not known when the loss assumptions diverged from those used for the Fortran Assessment Model or indeed whether there was ever a divergence from a previously common position. The Plaintiffs’ submission about preparation of the Daily Operations Spreadsheet on 28 and 29 September 2017 does not rise above speculation. More importantly, the Plaintiffs bear the onus of proof. Whilst a Jones v Dunkel inference may arise against a defendant, in the absence of evidence from Dr Ladson (or anyone else) that the loss assumptions in the Daily Operations Spreadsheet were not such that a river operator acting with reasonable care could have used,

there is no real issue raised in the case which calls for an explanation by the Defendant. Having explained the system for the preparation of the Daily Operations Spreadsheet and the loss assumptions used in it, and there being nothing to suggest a departure from that system on 28 or 29 September 2017, the Defendant’s failure to call the Duty Operator who implemented the system on those days is explicable. The Plaintiffs have sought to discharge their onus of proof on this alleged breach of the Defendant’s duty of care not by calling expert evidence but by arguing the objective facts. They have not demonstrated that there was a defect in the modelling in the Daily Operations Spreadsheet on 28 or 29 September 2017 by reason of the assumed loss rates. They have not proved on the balance of probabilities that the Defendant acting with reasonable care would not for that reason have relied on the Daily Operations Spreadsheet. Modelling more efficient releases from the Menindee Lakes As addressed in more detail below, another topic discussed at the WLWG meeting on 26 September 2017 was the bulk transfer of water from the Menindee Lakes to Lake Victoria as a further measure to achieve an acceptable year-end storage level in Lake Victoria. An approximate commencement date for the bulk transfers was discussed together with a daily rate of flow. The Plaintiffs contend that a river

operator acting with reasonable care would have made bulk transfers from the Menindee Lakes which were sooner, quicker and larger than those discussed with the WLWG. For the reasons given below, that contention is rejected. There does not appear to be any dispute that the modelling in the Daily Operations Spreadsheets on 28 and 29 September 2017 was based on assumptions about bulk transfers from the Menindee Lakes which were in line with those discussed with the WLWG. Consistent with their allegation about the transfers themselves, the Plaintiffs contend that the assumptions used by the Defendant were not appropriate and the Defendant ought to have assumed transfers from the Menindee Lakes which would be sooner, quicker and larger. Consistent with the rejection of the Plaintiffs’ contentions about the transfers themselves, their contention that the anterior modelling was not appropriate must also be rejected. In circumstances where the WLWG had discussed and apparently approved the transfers which actually occurred, the Defendant did not fail to act with reasonable care by undertaking its modelling on that basis. Modelling a call on the Goulburn IVT account For the reasons given below the evidence establishes that the Defendant performed modelling with the Daily Operations Spreadsheet on 29 September 2017 which assumed calls on the Goulburn IVT account in October 2017. The

modelling was sufficiently precise to result in a planned date for the call on the Goulburn IVT account, the flow rate and the total volume called over a period of months. There is no evidence that a river operator acting with reasonable care would have done anything more. Summary The Plaintiffs have not proved that the modelling carried out by the Defendant with the Daily Operations Spreadsheet on 28 and 29 September 2017 departed from that which a river operator acting with reasonable care would have done. Sixth alleged failure: failure to prioritise Menindee Lakes and Goulburn IVT Plaintiffs’ submissions The Plaintiffs submit that any concern which the Defendant had on 29 September 2017 about Lake Victoria not filling by 31 December 2017 could have been addressed by a combination of releasing water from the Menindee Lakes and calling on water from the Goulburn IVT account. The Plaintiffs submit that adopting that approach would have made the overbank transfers from Hume Reservoir unnecessary. Calling on the Menindee Lakes and the Goulburn IVT account instead of making overbank transfers from Hume Reservoir would have accorded with the Defendant’s operating philosophy of prioritising other sources of water. The failure to take the two alternative measures was a breach of the Defendant’s duty of care to the Plaintiffs. As for the Menindee Lakes, the Plaintiffs accept that in

early-October 2017 the Defendant instructed WaterNSW to release water but submit that the water was released later than it could have been, at a rate of acceleration which was slower than it could have been and ultimately at a daily release rate which was lower than it could have been. The overall result was that the Defendant failed to make transfers from the Menindee Lakes in priority to transfers from Hume Reservoir. As for the Goulburn IVT account, the Plaintiffs submit that in October 2017 it was an alternative source of water which the Defendant could have called upon instead of making overbank transfers from Hume Reservoir. Defendant’s submissions The Defendant submits that the Plaintiffs’ case on the operational alternatives which were available at the end of September 2017 is entirely based on hindsight. It is only with the knowledge that rain would fall in mid-October that alternatives to overbank transfers can now be seen as offering a means of managing the risk that there would be insufficient water in Lake Victoria on 31 December 2017. Without foreknowledge of the mid-October rain, the modelled shortfall in Lake Victoria was too large to be addressed merely by larger transfers from the Menindee Lakes and calling on the Goulburn IVT account. A larger measure was required, which was overbank transfers from Hume Reservoir. For various other reasons, the Defendant

submits that neither bulk transfers from the Menindee Lakes nor a call on the Goulburn IVT were available in a way different to that actually implemented and planned by the Defendant in early-October 2017. Preliminary point – something needed to be done in October 2017 In order to understand this part of the Plaintiffs’ case, some further factual context is necessary. Lake Victoria’s storage capacity is 677 GL. The modelling in the Daily Operations Spreadsheet on 28 September 2017 showed that the storage level of Lake Victoria would be just below 400 GL on 31 December 2017. The lake would not be full. In their Reply Submissions the Plaintiffs submit that the Defendant has not explained what was “wrong” with a forecast year-end storage level for Lake Victoria of less than 400 GL. The question is not whether anything was wrong with the forecast storage level but what would have been the view of a river operator acting with reasonable care. On that issue, the evidence is clear. Given the high downstream demand for water over summer and the limited options for transferring water to Lake Victoria during the summer months, the Defendant’s policy was to have Lake Victoria full on 31 December 2017 so as to reduce the risk of system shortfall and not being able to deliver South Australia’s entitlements. The 2017/2018 AOP, which the Plaintiffs do not criticise, contemplated that Lake

Victoria would be full or close to full in December in all scenarios other than the “extreme dry” scenario. That contemplation is depicted in the graph at [549] above. The Guidance Document specified that one aim of the Defendant was to have Lake Victoria full by the end of December. As the Plaintiffs submit for other aspects of their case, a river operator acting with reasonable care would have had regard to each of these documents. The Defendant further points out that Dr Ladson approached his analysis of the circumstances which confronted the Defendant at the end of September 2017 on the basis that a forecast Lake Victoria year-end storage level of 400 GL was deficient. In cross-examination he accepted that it was “unacceptable”. Given the Defendant’s submissions about the widespread unreliability of Dr Ladson’s evidence, the Plaintiffs say that the Defendant’s reliance on Dr Ladson’s evidence on this topic is cherry-picking. That may be right but even so the more important question is whether Dr Ladson’s view on this issue ought to be accepted. It accords with the Defendant’s policy and the documents referred to in the preceding paragraph. It does not suffer from the difficulties with some of Dr Ladson’s other evidence, including infection by hindsight and an inability to address non-hydrological matters. The Plaintiffs do not refer to any substantive reason why Dr Ladson’s

evidence ought not to be accepted on this particular issue. By the end of September 2017 it was open to a river operator acting with reasonable care to consider that water needed to be transferred to Lake Victoria. In the language used by the parties at the hearing, something needed to be done. Determination – this part of Plaintiffs’ breach case is impermissibly based on hindsight To consider the Defendant’s complaint about the Plaintiffs’ use of hindsight for this part of their breach case, it is essential to identify precisely the risk of harm for which the Plaintiffs contend because the identification is necessary to assess what would have been a reasonable response. [191] It is not the Plaintiffs’ case that the Defendant breached its duty of care by delaying unnecessarily the release of water from the Menindee Lakes and thereby causing a loss of water to the overall system and, ultimately, the Plaintiffs. For example, it is not alleged that the system-wide water resources were lower than they would have been because more water was lost to evaporation from the Menindee Lakes than would have occurred had the water been transferred to Lake Victoria as early, as quickly and at as high a rate as possible. Nor do the Plaintiffs put forward a case based on loss caused by the Defendant’s failure to call on the Goulburn IVT account in October 2017. The opportunity to call on the

Goulburn IVT account is said to be a circumstance in which the alleged breach of duty occurred, but the failure to do so is not a freestanding claim of negligence. The Plaintiffs’ case is that the Defendant breached its duty of care when it exercised the release power and commenced overbank transfers at Yarrawonga Weir on 3 October 2017. It says that a river operator acting with reasonable care would not have commenced the overbank transfers on that date because there were two measures which he or she would have taken instead. An essential part of the Plaintiffs’ case, not only for breach but also for causation, is the proposition that a river operator acting with reasonable care would have formed a view at the end of September or in early-October 2017 that the two alternative measures would be sufficient to address the forecast “unacceptable” storage level of Lake Victoria. Absent that view, it was not negligent for a river operator to have commenced the overbank transfers on 3 October 2017 to minimise the risk of system shortfall. For the purposes of his First Report, Dr Ladson was instructed to consider alternative measures which could have been used instead of commencing overbank transfers in early-October. In response, Dr Ladson expressed the opinion that there were alternative measures, namely faster releases from the Menindee Lakes and a call on the Goulburn IVT account

in early-October 2017. Dr Ladson identified specific parameters for each alternative measure as to timing and volume. Had the first measure been taken in accordance with his parameters (faster transfers from the Menindee Lakes), Dr Ladson calculated that the storage level of Lake Victoria would have been increased by up to 37.8 GL. Had the second measure been taken (call on the Goulburn IVT account), Dr Ladson calculated that the storage level of Lake Victoria would have been increased by up to 29 GL. In combination the calculated increase was up to 66.8 GL. The Plaintiffs rely on Dr Ladson’s analysis to prove that a river operator acting with reasonable care would have used the two alternative measures instead of commencing overbank transfers on 3 October 2017. The calculated gains from the alternative measures (66.8 GL) would not have been seen on 28 September 2017 to be sufficient to ensure that Lake Victoria would be filled having regard to the forecast figures taken from the modelling in the Daily Operations Spreadsheet. Even when confined to the immediate period between 1 and 18 October, at that time the modelling showed that the forecast decline in the storage level of Lake Victoria would be 87 GL. Confronted with that analysis in cross-examination, Dr Ladson accepted that his opinion about the sufficiency of the two alternative measures was based on hindsight. To

identify the alternative measures, Dr Ladson had not considered the problem which prospectively confronted the Defendant at the end of September 2017. Instead he used historic records to work out the actual decline in the storage level of Lake Victoria between 2 October and 18 October 2017. It was 43 GL. He then identified the parameters for the alternative measures to supply that deficiency. On the basis of that analysis the Plaintiffs now submit that on 1 October 2017 (or three days before) a river operator acting with reasonable care would have ordered the release of water from the Menindee Lakes at 2,500 ML/day. The 2,500 ML figure has no relevance to the facts in the case other than Dr Ladson’s calculation of how much water would have been required to eliminate the fall in Lake Victoria’s storage level which subsequently occurred. Dr Ladson’s period ends on 18 October 2017 because that is when it started to rain. Even if the two alternative measures were available at the end of September 2017, the Plaintiffs have not proved that a river operator acting with reasonable care would have formed the view that overbank transfers were not required. In the face of a forecast 87 GL decline of Lake Victoria’s storage level by 18 October 2017 and the 260 GL deficiency forecast for the end of the year, the two alternative measures identified by Dr Ladson would not have been viewed as

capable of addressing the reasonably foreseeable risk of Lake Victoria having insufficient water on 31 December 2017. In the language of s 43(1)(c) of the ACT Liability Statute, and as reflected in MFI-38, neither alternative was a precaution which a reasonable person in the position of the Defendant would have taken, either alone or in combination. The Plaintiffs’ argument based on the sixth alleged failure by the Defendant fails at the outset. In fact, for the reasons which follow neither of the two alternative measures was available at the end of September 2017. Determination – Menindee Lakes Salient facts The details about the circumstances in which the Defendant transferred water from the Menindee Lakes to Lake Victoria in October 2017 are as follows. The transfer of water from the Menindee Lakes to Lake Victoria was discussed at the WLWG meeting on 26 September 2017. The minutes state that the Defendant was “currently assessing when and at what flow rates to call water (likely earlier in October)”. As for operational planning, the minutes record: “Modelling suggests transfers from Hume and Menindee to Lake Vic will need to commence in order for Lake Victoria to be a suitable position by the end of the year.” The following operational decisions are recorded in the minutes: “● Based on latest forecasts and modelling, [the Defendant] are planning to commence Menindee to Lake

Victoria transfers from early October. [The Defendant] advised the lakes have been experiencing high evaporation (approx. 1.5 GL/day) due to hot and windy conditions. ● There may be an opportunity to hold-off making Menindee to Lake Victoria transfers this year if environmental water holders are able to agree to underwrite any potential loss of Murray resource. At present the loss to the Murray resource without transfers from Menindee is estimated to be in the order of 30-50 GL. Modelling by WaterNSW indicates the benefit of such a solution would be: ○ 1 month of prolonged flows at 400ML/day ○ Forecasted delay of cease to flow in the Lower Darling of 2-3 months assuming no further inflows to storages. ● WLWG commented the 480 GL volume was originally chosen as an amount sufficient to keep Broken Hill and the Lower Darling in supply based on previous worst case inflow sequence. There is political pressure to increase this volume based on new record low inflow sequence. Under all scenarios following transfers from Menindee to Lake Vic the upper lakes will be left in a better position than any time when the lakes have previously reached 480 GL. All states were open to considering the proposal if implications for system delivery and resource availability to the Murray of any proposal are clear and can be offset (i.e. no impact on state’s shares in the Murray). WLWG reiterated any

approach needs sound communication and messaging and supported the [Defendant] facilitating discussions with EWHs to ascertain their support. [The Defendant] will continue planning for bulk transfers commencing in early October to a maximum of 1,800ML/day. At the same time, the [Defendant] and WaterNSW will engage with EWHs to ascertain their support for the above proposal. WLWG supported this approached and re-iterated that bulk transfers at rates of 1,800ML/day are substantially lower than historically called, however balances the requirement to maximise resource availability, local community sensitivities and concerns and environmental needs. [The Defendant] will commence discussions with e-water holders. [The Defendant] will consider deliverability and system resource availability impacts of the proposal. Action: [The Defendant] in conjunction with WaterNSW to engage with EWHS to ascertain interest in the above proposal.” The proposal referred to in this passage was one where bulk transfers of operational water would not be made from the Menindee Lakes to Lake Victoria, or not as fast as might otherwise occur, so that more water would be held back with which to sustain minimum flows in the lower Darling River for a longer period of time. Whilst the higher evaporation rate would mean that holding water back in the Menindee Lakes would reduce the overall availability of

operational water to the States (estimated to be 30-50 GL) it might be possible to make an agreement with an environmental water holder to offset the reduced water by supplying an equivalent amount elsewhere in the Murray River in exchange for the environmental benefits of prolonged flows in the lower Darling River. On 27 September 2017 an officer of WaterNSW sent an email to an officer of the NSW Environmental Water Holder. Two officers from the Defendant were copied in, Ms Hickey and Ms Greenwood. The emails addressed the proposal. The email attached modelling which suggested that delay of the bulk transfers would extend the period of minimum flows for two months. If the delay was implemented, the overall system was modelled to lose 50 GL of water, which the NSW Environmental Water Holder was requested to make good through the accounting process. The WaterNSW officer said he was keen to discuss further “in the near future, as [the Defendant is] making preparations to call water from Menindee in the next week or so”. There is no evidence that WaterNSW received a reply before 4 October 2017. On 29 September 2017 Ms Hickey sent an email to the members of the WLWG in which she stated that the Defendant was planning to commence transfers of water from the Menindee Lakes to Lake Victoria “within the next fortnight”. She said that the releases would be no greater than 1,800 ML/day

and the rate of increase would be managed to ensure compliance with the maximum rate permitted under cl 10.2 of the O&O Document. The emails stated: “As discussed at the WLWG meeting, limiting the releases to no greater than 1,800 ML/day allows for, as much as practicable, the preservation of water in Lake Wetherell and Pamararoo with unnecessary impacts on the Murray resource. Having a greater proportion of water in the upper lakes, when the 480 GL trigger is reached, provides greater security to local water users. This approach is consistent with section 10.4 of the [Defendant] Specific Outcomes and Objectives document.” and “Please note the above information has been prepared in the absence of NSW securing alternative operating arrangements which would allow for decrease in the release of operational water in exchange for substitution of resource on the Murray in which could be delivered to Lake Victoria within looming channel capacity pressures. If such alternative arrangements are secured, the above information will be amended.” Attached to the email were some media talking points given “sensitivity of the local community regarding flows in the system, especially as summer approaches”. As at 30 September 2017 the storage level in the Menindee Lakes was 658 GL which meant that the Defendant was permitted to transfer water to Lake Victoria under cl 95 of the Agreement.

Approximately 175 GL was available before the 480 GL minimum was reached and the remaining water in the Menindee Lakes would cease to be available to the Defendant. As set out above, on Sunday 1 October 2017 680 GL became the new specified level for Lake Victoria, up from 500 GL on 30 September 2017. Under cl 12.2 of Appendix A to the O&O Document a harmony release of water from the Menindee Lakes was “triggered”. Monday 2 October 2017 was a public holiday. On 3 October 2017 Mr Reynolds returned from leave and had a morning meeting with Ms Hickey about the Menindee Lakes. As at that date no agreement has been reached between WaterNSW and the environmental water holders about a delay in transferring water from the Menindee Lakes to Lake Victoria. As it turned out, an agreement was reached during November 2017. On 3 October 2017 the Defendant and WaterNSW worked on a joint press release about the release of water from the Menindee Lakes. At 3:22pm on 4 October 2017, Adam McLean, who described himself as “Duty Officer”, sent an email to the members of the River Operations Team, including Ms Hickey, in which he stated that he had “placed an order” with WaterNSW to target a flow of 1,800 ML/day at Weir 32, “commencing as soon as practicable (and following the normal rates of rise)”. WaterNSW had responded by telling the Defendant that the releases would commence on 7 October in

order to give the locals time to move their pumps and make other preparations. At 5:45pm on 4 October 2017 Ms Hickey sent an email to the members of the WLWG in which she informed them that an order for bulk transfers from the Menindee Lakes had been placed and that the transfers would commence on 7 October 2017. She stated that “the flows will be ramped up over several days in accordance with the max rates of rise permitted in the lower Darling”. Mr McLean was sent a copy of the email. On 5 October 2017 the Defendant and WaterNSW issued a joint press release. The press release stated that WaterNSW would start releasing water from the Menindee Lakes on 7 October 2017. It also stated that leaving a greater proportion in the top lakes would provide greater security for local water users, including the Broken Hill town supply. As for the flow of water which actually occurred, there are different figures in different places in the evidence but the burden is the same. Using the figures in the Ready Reckoner, [192] up until 6 October 2017 WaterNSW released water from the Menindee Lakes around the minimum daily rate of about 370 ML/day. On 7 October it was increased to 406 ML/day. On 8 October it was increased to 640 ML/day. Each day thereafter it was further increased by approximately 300 ML until 12 October when 1,804 ML was released. From 13 October onwards the daily rate hovered

around 1,800 ML/day. No breach of duty because commencement of transfers was too late The Plaintiffs’ essential complaint is that the Defendant ought to have directed WaterNSW to commence the release of water from the Menindee Lakes from 1 October 2017 (not from 4 October 2017) and that the direction should have been given in a way which ensured that notice was given to the locals three days before 1 October 2017. Had that happened, water would have flowed from the Menindee Lakes on 1 October 2017 (not on 7 October 2017). In the Plaintiffs’ favour it may be assumed that there is always an advantage for the river system as a whole to have as much water transferred from the Menindee Lakes to Lake Victoria as soon as possible, that advantage being the loss of less water to evaporation. However, there are also disadvantages. Leaving aside local political sensitivities, retention of water in the Menindee Lakes provides a larger pool with which to sustain a minimum flow down the lower Darling River for longer (the minimum flow was specified in cl 10.3 of Annexure A to the 2017/2018 O&O Document to be 200 ML/day during October and 300 ML/day in November and December). That is so even though more water will be lost to evaporation whilst it is held back, waiting to be released at the minimum flow rate. It may be inferred from cl 10.3 of the O&O Document and the minutes of the WLWG

meeting on 26 September 2017 that there is a recognised environmental benefit from extending the period of minimum flow in the lower Darling River. Section 8.6.1 of the 2017/2018 AOP referred to benefits for native fish. There is also evidence of an operational benefit for the supply of water to lower Darling River irrigators, especially in Dr Davis’s Second Affidavit. In the three years preceding 2017 there had been a number of occasions when the Darling River had ceased to flow which had caused difficulties for delivering water to irrigators. It is not necessary to know exactly what these benefits are or how they might be evaluated or quantified. Nor is it necessary to weigh them against the advantage of reduced evaporation losses (even if that were possible). The clear inference from the WLWG minutes is that a delay in the transfer of water to Lake Victoria was considered to be an “opportunity”. The Defendant and the WLWG recognised the potential for the benefits and sought to realise them through discussions with the relevant environmental water holders. The Plaintiffs emphasise that no agreement with the environmental water holders was in place on 1 October 2017. That is correct but irrelevant. The discussion at the WLWG meeting contemplated delay in the face of the prospect of an agreement. It is not necessary to know whether the prospect was good or bad, only that the

WLWG considered it worth the wait. The WLWG minutes make clear that the timing for the commencement of bulk transfers to Lake Victoria was intricately connected with the pursuit of discussions with the environmental water holders. There is no evidence to support a finding that it was not reasonable for the Defendant to delay the commencement of bulk transfers, especially when the matter was discussed at the WLWG meeting in the terms recorded in the minutes. Dr Ladson does not say that it was not reasonable for the Defendant to delay. This is one particular circumstance where Dr Ladson accepted that, whilst he was qualified to express a view about increased evaporation from a hydrological perspective, he was not qualified to express a view about environmental issues or the other issues which the WLWG and the Defendant took into account. He could not weigh one against the other. Nor is there a basis to find that it was not reasonable for the Defendant to delay in giving notice of the upcoming transfer of water, so long as there was a prospect of reaching an agreement which might result in the transfers not occurring. The bulk transfers of operational water would raise the level of the lower Darling River. The Defendant’s Reference Manual contemplated that the Defendant would give notice. A purpose of giving notice was to give locals time to move pumps and stock to higher ground.

Expense might be incurred in making preparations. The transfers might also cut some low-lying river crossings. The BOC had set some objectives and outcomes for the Defendant to achieve in relation to communications and information management. [193] It may be accepted that the Defendant’s usual practice was to pre-empt such transfers by giving notice to the locals three days before the earliest commencement date (i.e. 1 October). It is also clear that there were local political sensitivities and it was thought important that communications with the public be handled with care. The Defendant could reasonably have considered that it was appropriate to delay making an announcement which might subsequently turn out to be unnecessary. The Plaintiffs point out that Ms Hickey does not particularly remember the issue of a potential agreement and does not identify it as a contemporaneous reason for deciding the commencement date for the transfers from the Menindee Lakes. Nor does Mr Reynolds. Given the clarity of the minutes and the coherence of the other documentary evidence, including the subsequent email communications, the lack of oral evidence does not warrant a different conclusion to that set out above. The contemporaneous documents are in any event the best guide. There is nothing in the terms of the O&O Document, the 2017/2018 AOP or any other document upon which the Plaintiffs’

rely which required the Defendant to commence bulk transfers from the Menindee Lakes on 1 October 2017 irrespective of any environmental consideration, any off-setting operational benefit hoped to be achieved from an agreement with the environmental water holders and the views of the WLWG evident from the meeting on 26 September 2017. The highwater mark of the Plaintiffs’ case is the statement in cl 12.2(d)(i) of the O&O Document that bulk transfers “should…be triggered” on 1 October 2017. The Plaintiffs submit that the statement is to be construed as an obligation to commence bulk transfers on that date. For its part, the Defendant submits that “triggered” implies something less than a mandatory start date. The Defendant’s construction is to be preferred having regard to the context of the O&O Document as a whole which seemed rarely to intend to constrain the Defendant’s conduct as rigidly as the Plaintiffs contend for cl 12.2(d)(i). In any event, cl 6(2)(g) of the O&O document stated that any obligation in cl 12.2.(d)(i) was qualified by reasonable practicability having regard to uncertainty about the environmental consequences of particular activities. Further, cl 7(1) permitted the Defendant to refer potential non-compliance with cl 12.2 to the WLWG for advice. The issue was discussed at the WLWG meeting on 26 September 2017. The Defendant’s subsequent conduct conformed to

that contemplated by the WLWG’s “advice”. Whether or not there remained a technical breach of cl 12.2 of the O&O Document, there is no basis to say that the Defendant did not act with reasonable care. That is enough to determine this part of the claim against the Defendant. However, there is a more fundamental flaw in the Plaintiffs’ argument. The environmental benefit from maintaining a minimum flow in the lower Darling is demonstrated by the fact that in November 2017 the environmental water holders considered it sufficiently valuable to agree to “pay” for the benefit. The payment was an accounting adjustment by which there would be a reduction in their entitlement to environmental water elsewhere in the river system. The accounting adjustment essentially meant that additional operational water would become available elsewhere in the system. It appears to have been a sort of swap of operational water lost through evaporation in the Menindee Lakes for environmental water elsewhere in the system. The implications from the swap for the conduct of irrigated agricultural production are not known but there is reason to consider that the implications may have depended on the location of the properties of various irrigators. Specifically, prolongation of minimum flows in the lower Darling River would be a benefit to irrigation in that region, but not elsewhere. Additional operational

water in another part of the system may have benefited irrigation elsewhere including by freeing up channel capacity with which to avoid future overbank transfers. This demonstrates the general proposition, described at [599]-[603] above, that the Plaintiffs do not prove a breach of a duty of care to protect the Plaintiffs from pure economic loss simply by demonstrating a failure to adhere to a provision of the 2017/2018 AOP, the O&O Document, the Agreement or even the Commonwealth Statute. In any particular circumstance, the question is whether the Defendant failed to act with reasonable care to protect the Plaintiffs from pure economic loss. On the Plaintiffs’ case they had a potential economic interest in an early transfer of water from the Menindee Lakes to Lake Victoria in October 2017. Given the prospect of an agreement with environmental water holders, they may also have had an economic interest in a delay. Protection of the Plaintiffs’ economic interests was not the same as adherence to any particular document. This particular alleged breach is also a singular demonstration of why the Defendant did not owe the Plaintiffs a duty of care. In the Queensland Floods case the trial judge found that the flood engineers owed a single duty to all the relevant owners of downstream property to exercise reasonable care in the conduct of flood operations to avoid or minimise the

risk of harm to property and the risk of interference with use and enjoyment of property. [194] It was accepted that individual owners of downstream properties might be affected differently by decisions made by the flood engineers, but any conflict between individuals to whom the single duty was owed could be accommodated at the stage when consideration was given to breach of the duty. As Mason J said in Wyong Shire Council v Shirt, a matter to be taken into account when considering whether the defendant acted with reasonable care is any other conflicting responsibility which the defendant may have. [195] The situation confronted by the Defendant when considering whether and how quickly to transfer operational water from the Menindee Lakes to Lake Victoria in September 2017 was different. The Defendant had to make a multifaceted decision which might affect a number of interests. Unlike the flood engineers in the Queensland Floods case, the Defendant had more than one objective. Given the environmental considerations, the interests of irrigators on the lower Darling River (including their economic interests), the interests of South Australia, the position of the WLWG and the prospect of greater operational flexibility which an agreement with environmental water holders might provide, it cannot be said that the Defendant owed to everyone who might be affected a single duty to

take reasonable care in exercising its river operations functions. The conflicts to which the Defendant might be subject could not be accommodated as part of the enquiry into whether the Defendant breached a single duty by failing to act with reasonable care. More particularly, the decision about transferring operational water from the Menindee Lakes to Lake Victoria is a concrete demonstration of the intention of the Commonwealth legislature and the States that the Defendant be free to make the decision without being concerned to ensure that the outcome would produce the best financial outcome for the Plaintiffs. Were it otherwise, the Defendant’s ability to operate the Murray-Darling Basin in accordance with the purposes of the Commonwealth Statute and the Agreement would be distorted. The Plaintiffs do not allege that the Defendant owed a single duty to all those who might be affected by the exercise of its river operations functions. They allege a duty owed only to them and the Group Members. That duty would be incongruous with the statutory framework. There is one further issue raised by this part of the case, namely the uniformity of interest as between those Group Members who held New South Wales water entitlements and those who held Victorian water entitlements. The evidence does not make clear the identity of the environmental water holder (or holders) with which the

WLWG hoped an agreement might be made. Given the environmental interests related to the lower Darling River plus the fact that WaterNSW approached the NSW Environmental Water Holder about the proposed arrangement on 27 September 2017, it is likely that the NSW Environmental Water Holder was the entity which eventually agreed to swap environmental water elsewhere in the Murray River system. If so, the overall economic outcome for holders of New South Wales water entitlements might have been improved by such an arrangement but at the expense of the holders of Victorian water entitlements. Under the proposed arrangement water would be lost from the Menindee Lakes when it was a resource which was shared by New South Wales and Victoria and offset by water received from the NSW Environmental Water Holder. The NSW Water Environmental Water Holder presumably held water entitlements issued by New South Wales, in which case the offset accounting may have increased the water available to New South Wales to allocate to all New South Wales water entitlement holders, including the Plaintiffs and some (but not all) Group Members. The evidence does not address the details of the arrangement proposed on 26 September 2017 and finally agreed in November 2017 in order to make any findings of fact about whether the arrangement benefitted the Plaintiffs and all Group Members uniformly. It is clear,

however, that the Defendant may have been confronted by a further layer of conflict. It is another demonstration of why the Defendant was not intended to owe a duty of care to protect any particular class of water entitlement holder from economic loss. No breach of duty because water not transferred “in preference to” The Plaintiffs make a further argument which is related to the date on which the transfers commenced but has a different emphasis. Clause 12.5(d) of the O&O Document contemplated that transfers from the Menindee Lakes to Lake Victoria would be made “in preference to” transfers from Hume Reservoir. Quite apart from the O&O Document, the Defendant had an operating philosophy which required it to give preference to transferring water from the Menindee Lakes to transfers from Hume Reservoir. To some extent, the operating philosophy found form in the Defendant’s draft internal Guidance Document. The Plaintiffs include a summary of the operating philosophy in their Closing Submissions by way of a hierarchy of sources of water with which to meet demands and fill Lake Victoria (footnotes omitted): “57. First, if possible, only use natural tributary inflows (including “rainfall that has caused run-off in the tributaries having flow into the Murray”) to meet demands and fill Lake Victoria.

58. Second, if that is not possible, and releases are necessary to meet demands, the [Defendant] should prioritise making releases from the storage that is geographically closest to the demands; this is because of travel time and “ease of delivery”.

59. Third, if Lake Victoria cannot be filled using natural tributary inflows and rainfall events, the [Defendant] should prioritise making releases from the Menindee Lakes (“over Hume and Dartmouth”), including “to fill Lake Victoria after May if necessary to meet anticipated demands later in a given water year”. This is consistent with the interpretation to SO&O 12.5, ie that “transfers to Lake Victoria are made from Menindee Lakes Storage, if it is in control of the Authority, in preference to transfers from Hume Reservoir”. A similar statement appears in the Guidance Document … 60. Fourth, if Lake Victoria cannot be filled by the first and third means, the [Defendant] should prioritise calling for the delivery of water into the River Murray System from the IVT accounts (particularly, in Summer) to fill Lake Victoria, due to its “proximity downstream of the Barmah Choke and given that this reduces the need to release water from upper River Murray storages.” As Mr Reynolds put it, “[u]sing IVT helps in system operations” albeit “having IVT available later in the season can also be helpful.” 61. Fifth, if Lake Victoria cannot be filled by the first, third and fourth means, in effect as a last resort the MDBA would fill Lake Victoria by transfers from Hume Dam. That Hume to Lake Victoria transfers are a last resort is reflected in SO&O 12.5, which states the specific objective

of conducting Hume to Lake Victoria transfers “in a manner that conserves water resources in the upper storages for as long as reasonably possible”.” There is no dispute that, all other things being equal, it is hydrologically preferable to use water from the Menindee Lakes instead of water from Hume Reservoir for reasons which include the relative evaporation rates, the relative proximity of the Menindee Lakes to Lake Victoria and channel constraints of the Murray River between Hume Reservoir and Lake Victoria. The Plaintiffs submit that the Defendant’s failure to transfer water from the Menindee Lakes earlier and more quickly was a failure to transfer water from that source “in preference to” the bulk transfers from Hume Reservoir which commenced on 4 October 2017. The difficulty with this contention is that the evidence does not reveal what it means to use one water source in preference to another, either as a general proposition or in the circumstances of the Murray River system in October 2017. The phrase “in preference to” is not a term of art. It is not explained in the BOC’s O&O Document or in the Defendant’s draft Guidance Document. Dr Ladson does not say what is required other than to use the same words that are used in cl 12.5(d) of the O&O Document. Specifically, he does not say what it means to use one source of water in preference to another if it has been decided

that both are required. In his Reply Report Dr Ladson observes that use of water from the Menindee Lakes provided the opportunity to delay the transfer of water from Hume Reservoir to see how conditions developed. If it started to rain (as it did in mid-October) transfers from Hume Reservoir would become unnecessary. That proposition does little more than beg the question about what a river operator acting with reasonable care would have done in early-October 2017. It appears to be implicit in the Plaintiffs’ argument that: there is a temporal relationship between transfers from the Menindee Lakes and transfers from Hume Reservoir; and the requirement of “preference” is that the former will precede the latter. The temporal relationship has not been identified by the Plaintiffs, let alone demonstrated to be applicable for any particular purpose. Doing the best one can, there appear to be five events of potential relevance to a transfer of water from the Menindee Lakes to Lake Victoria: the date on which the Defendant directs the release of the water; the date on which the release physically commences; the date on which the water first arrives at Lake Victoria (which will be 13-14 days after the release commences); the date on which the Menindee Lakes fall below 480 GL such that thereafter the Menindee Lakes cease to be a source of operational water to be transferred to Lake

Victoria; and the date on which the last water arrives in Lake Victoria such that the full contribution from the Menindee Lakes has been received. There may be others, including dates upon which events are forecast to occur rather than actually occur. The Plaintiffs do not specify what events must occur before a river operator acting with reasonable care may transfer water from Hume Reservoir. Do the Plaintiffs say that no water may be released from Hume Reservoir until the Menindee Lakes are exhausted by the departure of the last release? Or do they accept that water may be released from Hume Reservoir so long as it is forecast to arrive at Lake Victoria after all water is released from the Menindee Lakes? If the latter, water may be released from Hume Reservoir many days before water is released from the Menindee Lakes given the longer travel time. The mere fact that water was first released overbank at Yarrawonga Weir on 4 October 2017 and water was not physically released from the Menindee Lakes until 7 October 2017 does not demonstrate that the Defendant did not transfer water from the Menindee Lakes “in preference to” transfers from Hume Reservoir. That simplistic proposition was put to Mr Bishop in cross-examination and he rejected it. Nor can it be said that the Defendant did not give preference to Lake Menindee just because the direction for overbank flows from Hume

Reservoir was given on 3 October 2017 and the order for releases from the Menindee Lakes was given on 4 October 2017. In cross-examination of the Defendant’s witnesses, the proposition was put to them that overbank transfers from Hume Reservoir (via Yarrawonga Weir) commenced on 4 October 2017 whilst bulk transfers from the Menindee Lakes did not commence until 7 October 2017. The Defendant’s witnesses accepted the chronology, but they did not accept a failure thereby to give “preference” to transfers from the Menindee Lakes beyond that which was assumed in the question. The minutes of the WLWG on 26 September 2017 make clear that the Defendant considered, and the WLWG evidently agreed, that it was necessary to raise the storage level of Lake Victoria by transferring water from both sources. Water from the Menindee Lakes alone would not be sufficient. In those circumstances, the Plaintiffs have not proved that there was a failure to give preference to transfers from the Menindee Lakes merely because of the sequence in which the transfers subsequently occurred. No breach of duty because the rate of increase was too slow The Plaintiffs submit that the Defendant breached its duty of care because of the speed with which the release rate was accelerated up to the planned release rate of 1,800 ML/day. Clause 10.2(d) of the O&O Document relevantly specified “target maximum rates of

rise” of 500 ML/day. On 4 October 2017 Ms Hickey wrote in her email to the WLWG that the releases would increase “in accordance with the max rates of rise permitted in the lower Darling”. Despite that, the rate of increase in the release rate which occurred from 7 October 2017 was roughly 300 ML/day. Slower increases in the release rate delayed water being transferred out of the Menindee Lakes with the result that more water was lost to evaporation than would have been lost had the release rate been increased more quickly. Dr Ladson has calculated the loss to be 2 GL. Accepting the general proposition that faster increases in the release rate will reduce evaporation losses, Dr Davis gave evidence that there were three reasons why slower increases in the release rate may nonetheless be preferable in some cases. His reasons are: the need to draw down the bottom lakes within the Menindee Lakes in preference to the top lakes, the need to manage the environmental impacts caused by rapid increases in the release rate and the need to be sensitive to community concerns about releases from the local water source at a time of impending drought. By way of elaboration on the first reasons, in his First Affidavit Dr Davis described the topography of the Menindee Lakes. Gravity dictates that water may only be released from the bottom lakes at a slower rate than from the top lakes because the

bottom lakes have lower elevation relative to the point of entry into the Darling River. The effect of Dr Davis’s evidence is that a release of water from the Menindee Lakes in the first instance has to be at a low rate so that the water from the bottom lakes is used first as contemplated by cl 10.4 of the O&O Document. There is no sufficient basis to find that the Defendant breached its duty of care because the rate of increase was below the “target maximum” in cl 10.2(d). There are a number of reasons for this. First, there is no basis in the evidence for the implicit premise of the Plaintiffs’ contention, namely that the Defendant was obliged to ensure that the rate of increase was the maximum rate. As a matter of construction, cl 10.2(d) did not impose that obligation. By specifying a rate of increase to be the “maximum” there was implicit permission to increase more slowly. Qualification of the maximum by the word “target” did not oblige the Defendant to aim to achieve the maximum. The maximum was still the maximum and rates below it were still permitted. Specifying the maximum to be a target may have meant that rates above the maximum were also permitted (so long as they occurred whilst trying to get down to the maximum) but it did not mean that rates below the maximum were not permitted. There is nothing in Ms Hickey’s email at 5:45pm on 4 October 2017 which demonstrates

otherwise. Secondly, apart from cl 10.2(d) the Plaintiffs have not proved that a river operator acting with reasonable care would have implemented the fastest allowed rate of increase. Minimisation of evaporation losses would be served by a faster increase but at the expense of one or more of the three countervailing considerations identified by Dr Davis. It is not possible on the evidence to weigh the competing considerations and say that a river operator acting with reasonable care would not have done what the Defendant did. Thirdly, cl 10.4 of the O&O Document made clear that a relevant consideration for the rate of increase was the impact of releases on the volume of water in the four individual lakes which make up the Menindee Lakes. On this matter, the O&O Document expressly stated that the Defendant should be guided not just by the WLWG but by WaterNSW. The importance of WaterNSW’s role is not to be overlooked. When storage in the Menindee Lakes falls below 480 GL, control reverts back to WaterNSW and would remain there until the storage again reached 640 GL. The four lakes have different attributes, not only in relation to accessibility but also in relation to evaporation. The condition of the four lakes when storage reached 480 GL would affect their subsequent operation and was presumably an important matter to WaterNSW. A feature of Dr Davis’s evidence about the

operation of the four lakes is the extent to which the Defendant worked with WaterNSW in relation to the details of operational decisions concerning the Menindee Lakes. When asked about the rate of increase of the release, Dr Davis said: “…that’s a matter for WaterNSW. I think we were just basically tempering our releases based on what WaterNSW had requested from us.” Given the requirement in cl 10.4 that the Defendant be guided by WaterNSW, the Plaintiffs have not proved that a river operator acting with reasonable care would have done anything different in relation to the rate of increase of the releases from the Menindee Lakes. Fourthly, and following on from the third reason, the evidence does not demonstrate that the Defendant was responsible for the slow rate of increase in October 2017. Unlike the overbank transfers at Yarrawonga Weir, the Defendant did not control the rate of increase by giving a daily direction to WaterNSW about the flow of water to be released each day from the Menindee Lakes. It gave a single direction on 4 October 2017. The best evidence of the terms of the direction is Mr McLean’s email at 3:22pm. The direction was for “the normal rates of rise”. Dr Davis was asked about the meaning of those words. Although Dr Davis’s subjective understanding is of doubtful probative value, he said variously that there was no difference between “normal” and

“maximum” and that “normal” was “within the maximum”. Consistently, Ms Hickey’s subjective understanding may be inferred from her subsequent email to the members of the WLWG in which she described the rate of rise as “max”. There is no evidence that there was any deficiency in the terms of the Defendant’s direction to WaterNSW. It was WaterNSW which then determined the rate of increase in the release rate. Having properly instructed WaterNSW, the Plaintiffs have not demonstrated that the Defendant is nonetheless responsible for WaterNSW’s response. The Defendant further submits that a breach causing extra evaporation losses of 2 GL is de minimis. To the extent that the submission is directed to the causation of loss, it is not possible to say that a 2 GL loss would have had no material effect on the individual Plaintiffs and the Defendant’s submission cannot be accepted. To the extent that the submission is directed to breach of duty, there is substance in the Defendant’s submission. A saving of an extra 2 GL of available water from a faster acceleration of the increase in the release of water from the Menindee Lakes would have been so small as not to figure prominently in the decision of a reasonable river operator to commence overbank transfers at Yarrawonga Weir. The 2017/2018 AOP had been adopted on the assumption that evaporation losses from the Menindee Lakes would be

between 210 GL and 580 GL for the whole year, depending on the conditions. There is evidence that in October 2017 water was evaporating from the Menindee Lakes at the rate of 1.5 GL each day. The prospect of saving 2 GL by accelerating the rate of release from the Menindee Lakes more quickly has not been shown to cause a river operator acting with reasonable care to take a different approach to the commencement of overbank transfers at Yarrawonga Weir. For these reasons this particular allegation of breach is to be rejected. No breach of duty because rate of release only reached 1,800 ML/day The rate of release from the Menindee Lakes in October 2017 plateaued at approximately 1,800 ML/day. The Plaintiffs submit that a river operator acting with reasonable care would have caused the rate of release to increase further. They contend for a rate of 2,500 ML/day, not because of any prospective consideration of the conditions as at 1 October 2017 but because of a hindsight calculation of the amount of water which would have had to be transferred to make overbank transfers from Hume Reservoir unnecessary. Dr Ladson says that there was no hydrological reason why water could not have been transferred from the Menindee Lakes at 2,500 ML/day. As between the Defendant and WaterNSW it is unclear who was responsible for the rate of release plateauing at 1,800 ML/day. In any event, the

Defendant did not cause water to be released at a higher rate. Apart from hindsight, the fundamental problem with this allegation is that it does not adequately address cl 10.4 of the O&O Document which required the Defendant to be guided by WaterNSW and the WLWG. The relevant extract from the minutes of the meeting of the WLWG on 26 September 2017 is set out above. They record that the Defendant would continue to plan for transfers at the maximum rate of 1,800 ML/day. The minutes record the reason for that maximum, namely a balance between the requirement to maximise water availability (cf evaporation), local community sensitivities and environmental needs. The Plaintiffs have sought to demonstrate that cl 10.4 did not apply at the end of September 2017 because the bottom lakes were almost at dead storage. The water therefore had to come from the top lakes from which it was possible to release water at more than 1,800 ML/day. Dealing first with the factual question about dead storage, the Plaintiffs say that the bottom lakes were at dead storage because the Defendant’s internal manual specified 55.9m AHD as the dead storage level for one of the two bottom lakes, Lake Menindee, and the recorded gauge height dropped below 55.9m AHD on 30 September 2017. There does not appear to be any dispute about the 55.9 AHD specification or the recorded gauge height but the Defendant does

not accept that the two bottom lakes were actually at dead storage. The Defendant points to evidence that water continued to flow from Lake Menindee (albeit slowly) up until 13 November 2017 and that the other bottom lake, Lake Cawndilla, did not fall below its specified gauge height until 2018. Dr Davis’s recollection is that there was still a bit of water to be taken out of the bottom lakes as at the beginning of October 2017. This particular issue was raised later in the case and was not a focus of the evidence. Whether or not it was possible to extract some more water from Lake Menindee and whether that possibility warranted a lower daily release rate than was hydrologically possible from the top lakes is unclear. The Plaintiffs have not adduced sufficient evidence to warrant a finding on the balance of probabilities that Lake Menindee was exhausted at any particular date and that cl 10.4 did not apply. It is, however, beside the point. Even if it is assumed that the two bottom lakes were at dead storage and any water to be transferred out in October 2017 would necessarily come from the top two lakes, it does not follow that the Defendant, or a river operator acting with reasonable care, would not have had regard to the advice received from the WLWG. Clause 10.4(d) of the O&O Document required the Defendant to be guided by WaterNSW and the WLWG about the impact on releases

on individual lake volumes, but it is false reasoning for the Plaintiffs to submit that the Defendant did not then need to have regard to advice from the WLWG on any other aspect. The minutes of the WLWG meeting make clear that the WLWG and the Defendant considered 1,800 ML/day to be the appropriate rate of release. The WLWG and the Defendant permitted community sensitivities and environmental needs to feature in that conclusion and there is nothing to say that it was not reasonable to do so. WaterNSW evidently agreed. Further, there is a clear inference that the 1,800 ML/day rate was in part due to the perceived prospect of an agreement with the environmental water holders to “pay” for the retention of water in the Menindee Lakes. In the text of the minutes of the WLWG meeting on 26 September 2017, the sentence which records the 1,800 ML/day rate is sandwiched between two sentences about engaging the environmental water holders about an agreement. The Defendant was permitted to plan for releases to Lake Victoria at the maximum of 1,800 ML/day “at the same time” as it engaged with environmental water holders. Whilst the Defendant, WaterNSW and the WLWG were trying to realise that opportunity, it made sense to limit the amount of water leaving the Menindee Lakes so that, should an agreement be achieved, there would be more water left in the Lakes with which to prolong minimum

flows in the lower Darling River. The amount of water leaving the lakes might be limited by a delayed commencement date, by a slower rate of increase and by a maximum flow rate of only 1,800 ML/day. For the reasons given above, including the potential benefit for the Plaintiffs themselves of an agreement with the environmental water holders, this is a further reason why the Defendant has not been shown to have breached a duty of care to protect the Plaintiffs from pure economic loss. The Defendant’s role in the rate of release from the Menindee Lakes plateauing at 1,800 ML/day is the final instance where the Plaintiffs seek support for their case from the Defendant’s failure to call Ms McCann. They submit that Dr Davis and Ms Hickey were reliant on others for quantitative details and that the dead storage levels of the two bottom lakes was such a detail. Ms McCann was one of the people they relied on for such details. She has not been called to explain that she correctly understood that the two bottom lakes were at dead storage levels in October 2017. In circumstances where the Plaintiffs have not shown that a river operator acting with reasonable care would have disregarded the advice from the WLWG on 26 September 2017, there was no occasion for Ms McCann to give evidence on this particular issue. Before leaving the release rate of 1,800 ML/day it should be observed that the

2017/2018 AOP was prepared on the assumption that for all six of the scenarios the release rate of water being transferred from the Menindee Lakes to Lake Victoria would not exceed 2,000 ML/day in October 2017. For the reasons given above, the requirement that the Defendant act in accordance with the 2017/2018 AOP did not oblige the Defendant to ensure that the release rate was the same as that assumption for any particular scenario. However, the Plaintiffs’ contention that a river operator acting with reasonable care would have used a release rate of 2,500 ML/day contradicts their case about the Defendant’s alleged failure to “adhere” to the 2017/2018 AOP by directing the release of water at Yarrawonga Weir above 10,000 ML/day in October 2017. It demonstrates a broader artificiality in the Plaintiffs’ case where particular “obligations” have been selected from amongst the multitude of interrelated matters which the Defendant was required to consider when making decisions. Summary of Menindee Lakes The Plaintiffs have not proved that the Defendant breached the alleged duty of care by reason of the way in which water was transferred from the Menindee Lakes to Lake Victoria in October 2017. Determination – Goulburn IVT Internal spill The next alleged breach to consider is the Defendant’s failure to prioritise a call on the Goulburn IVT account over increasing the release rate at

Yarrawonga Weir above 10,000 ML/day on 4 October 2017. An explanation of inter-valley trade is set out above. In order to address the failure to call on the Goulburn IVT account it is necessary to explain one further aspect of the water sharing arrangements which are the subject of the Agreement. The agreed accounting regime by which the water in the Murray River system is shared between the States includes a concept known as an “internal spill”. It is addressed in some detail in cl 116 of the Agreement. For current purposes it is enough to know that an internal spill does not involve a physical spill of water into South Australia. It is an accounting rule by which the allocation of water to Victoria is reduced and the allocation to New South Wales is increased by a corresponding amount, or vice versa. Under the accounting rules, the water located in each major storage of the upper Murray River system, including Lake Victoria, is the subject of an allocation between New South Wales and Victoria. The source from which the water came to the storage is relevant to the allocation. If one State’s allocation of the water in, say, Lake Victoria rises above 50% of the full supply volume of the Lake, the excess is re-allocated to the other State (i.e. “spills”). When an internal spill occurs, the recipient State receives a benefit at the expense of the other. The Goulburn River is in

Victoria. Water which the Defendant calls from the Goulburn IVT account is sourced from Victoria. Upon the water arriving at Lake Victoria it is allocated entirely to Victoria. If Victoria’s allocated share of the water already in Lake Victoria is close to 50% of the full supply volume at the time water arrives from the Goulburn IVT account an internal spill to New South Wales may occur. A mathematical corollary of the accounting rule is that where a water storage is close to full, the risk of an internal spill is higher than when the water storage has significant unused storage volume. All other things being equal, where a water storage is close to full each State’s allocated share will necessarily be close to 50%. The margin with which to avoid an internal spill is therefore lower if newly arrived water is to be allocated unequally between the States. As the storage level falls, each State’s allocated share will in the ordinary course fall further below 50% which will reduce the risk of an internal spill occurring when further water arrives in the future, even if the newly arrived water is to be allocated unequally. Salient facts For the purpose of increasing the storage level in Lake Victoria, there is no dispute that there are advantages from calling on the Goulburn IVT account before making bulk transfers of water from Hume Reservoir, especially if the bulk transfers will

result in overbank transfers through the Barmah-Millewa Forest. The Goulburn River flows into the Murray River below the Barmah Choke. The confluence is geographically closer to Lake Victoria than Hume Reservoir which means that there is a lower risk of a spill from Lake Victoria into South Australia if water is transferred from the Goulburn River. There is less time for intervening rain to occur which may make the transfer of water unnecessary yet beyond the capacity of Lake Victoria to store until needed in the future. As at 2017 various documents of the Defendant recognised a further benefit from calling on the Goulburn IVT account, namely that a call reduces the balance of the account. If the account is reduced below 200 GL, trade becomes available once again which is seen to promote the efficiency of the market allocation of water. It may be accepted that, to the extent possible, it was the Defendant’s practice to make operational use of water from the Goulburn IVT account in preference to bulk transfers from Hume Reservoir. That practice was subject to different seasonal demand patterns for water. The 2017/2018 AOP was prepared on the assumption that around 200 GL would be called from the Goulburn IVT during the water year. It stated that the Goulburn IVT account would be called “throughout the water year as required, typically between the months of December and

March”. According to the minutes of the WLWG meeting on 26 September 2017, a call on the Goulburn IVT account was not specifically discussed. There was, however, discussion about the prospect of an internal spill from Victoria to New South Wales. The following statement is record in the minutes: “There is no improvement in Victoria’s water availability due to forecast internal spills. Internal spills from Victoria to NSW in Lake Victoria are forecast to be 60–160 GL (minimum – 90% scenario) and in Hume Reservoir, there may be ~80 GL internal spill from Victoria to NSW (minimum – 90% scenario).” On 29 September 2017 the following entry was made in the Daily Operations Sheet: “Delivery of Goulburn IVT is planned to commence mid-October along with 125 ML/day from Rice’s weir (estimated 44 GL by end December).” At the end of September 2017 the Goulburn IVT account balance was 238 GL, which meant that trading of water from the Goulburn River into the Murray River was forbidden. At the end of September 2017 the storage level of Lake Victoria was close to full. For accounting purposes the water was allocated equally between New South Wales and Victoria. It was anticipated that the storage level would fall during October. On 10 October 2017 there was another WLWG meeting. The minutes record the following: “Use of IVTs in late Oct – Nov ● Victorian IVTs will be called first followed by

Murrumbidgee IVT. Starting the use of Goulburn IVT from October- November once the risk of internal spill in Lake Victoria is diminished.” In mid-October some rainfall occurred which made measures to raise the year-end storage level of Lake Victoria unnecessary. The Defendant did not call on the Goulburn IVT account in October 2017. Determination – no breach of duty The contention by the Plaintiffs is relatively simple. At the beginning of October 2017 there was water in the Goulburn IVT account upon which the Defendant was entitled to call. Once the Defendant determined that it was necessary to transfer water to Lake Victoria to ensure that its year-end storage level was high enough to meet South Australia’s entitlements over summer and autumn, the Goulburn IVT account was a ready source. A river operator acting with reasonable care would have preferred it to transferring water from Hume Reservoir at a rate in excess of 10,000 ML/day at Yarrawonga Weir. The Plaintiffs submit that a reasonable river operator would have called for 20 GL in October 2017, the reason being that in one prior year the Defendant had made a call of that magnitude in October. There are a number of reasons why the Plaintiffs’ contention is rejected. The real issue was when, not whether The inference to be drawn from the documentary evidence is that the Defendant gave contemporaneous consideration to

calling on the Goulburn IVT account. The consideration was probably given at the WLWG meeting on 26 September 2017 when Victoria’s water “availability” was discussed. The reference in the minutes which is set out above is unclear because it does not explicitly state whether the relevant water was available from Victoria (as would be the case for a call on the Goulburn IVT account) or available to Victoria (in the water accounts). The reference to internal spill could mean either. In any event a call on the Goulburn IVT account was considered by the Defendant on 29 September 2017 as evidenced by the entry in the Daily Operations Spreadsheet. It is probable that the issue was kept under constant consideration by the Defendant as a part of its work to steer Lake Victoria though the year. The Defendant submits that it may be inferred that the River Operations Team used the Daily Operations Spreadsheet on 29 September 2017 to model potential calls on the Goulburn IVT account. I accept that submission. The entry made in the Daily Operations Spreadsheet on 29 September 2017 included precision which is indicative of modelling. The entry did not merely refer to a theoretic possibility but to a developed application of that theory. As at 29 September 2017, the Defendant’s plan was for Goulburn IVT water to be called in “mid-October”. On 10 October 2017 the date was put back for the

reasons given in the minutes of the WLWG meeting, namely the desire to avoid an internal spill as the storage level of Lake Victoria continued to fall during October. The fact that the Defendant planned to make a call on the Goulburn IVT account in mid-October means that the Plaintiffs must demonstrate that a river operator acting with reasonable care would have decided to make a call sooner. As explained above, the analysis of Dr Ladson by which that demonstration is sought to be made is impermissibly informed by hindsight. As with the transfers from the Menindee Lakes, when the Defendant made its decision at the end of September 2017 it did not know about the mid-October rainfall. Looking prospectively at the conditions at the time, the Defendant evidently considered that more than one measure was necessary to ensure the year-end storage level of Lake Victoria was sufficiently high. A call on the Goulburn IVT account was only one part of the solution and overbank transfers from Hume Reservoir were also necessary. It was not a case of prioritising one over the other but of using both. The Plaintiffs do not ultimately rely on Dr Ladson’s evidence in support of this part of the case. The only evidence ultimately relied upon by the Plaintiffs to prove that a river operator acting with reasonable care would have called on the Goulburn IVT account in early-October 2017 is a passage

from the cross-examination of Mr Reynolds. In his First Affidavit, Mr Reynolds said that it is his view, both now and at the time, that the decision to commence overbank transfers at Yarrawonga Weir on 4 October 2017 was appropriate. He set out a list of ten reasons for why he held that view, one of which was that the Defendant had already called on the Goulburn IVT account. In fact the Defendant had not already called on the Goulburn IVT account in the 2017/2018 water year. Mr Reynolds confirmed that that was his belief at the time. He now accepts that he was wrong. That particular reason for his view fell away. It was put to Mr Reynolds that it was reasonable to call on the Goulburn IVT account in early-October 2017 which Mr Reynolds accepted. It was then put to Mr Reynolds that calling on the Goulburn IVT account was preferable to carrying out overbank transfers at Yarrawonga Weir. Mr Reynolds steadfastly refused to accept that proposition. Implicit in his answers was the possibility that it may not be preferable to deplete the balance of the Goulburn IVT account in October because the availability of that source of water could be helpful later in the water year, especially over summer. At its highest, Mr Reynolds’s evidence was that calling on the Goulburn IVT account in early-October 2017 may have been reasonable. It does not follow that it is (or was in 2017) Mr

Reynolds’s view that not calling on the Goulburn IVT account was not reasonable. The Plaintiffs provide a critique of the evidence of Dr Davis, Ms Hickey and Mr Bishop about why it is his or her respective view, both now and at the time, that it was appropriate for the Defendant not to call on the Goulburn IVT account until later in October 2017. They submit that the evidence from these witnesses does not demonstrate that it was reasonable not to call on the Goulburn IVT account earlier. Assuming all such points in the Plaintiffs’ favour, it does not advance their case. The Plaintiffs bear the onus of proof. They have not adduced evidence to establish the breach. They cannot discharge their onus merely be criticising the Defendant’s evidence to the opposite effect. It may be accepted that under the Defendant’s operating philosophy as reflected in the Guidance Document a call on the Goulburn IVT account would be made in preference to bulk transfers of operational water from Hume Dam, especially if the transfers were to be above the channel capacity of the Barmah Choke. However, given all the other considerations which a river operator might take into account, it is not possible to conclude that the decisions made by the Defendant in October 2017 did not conform to the operating philosophy to the extent possible. There is no foundation in the evidence for a finding that a river

operator acting with reasonable care would have called on the Goulburn IVT account sooner than “mid-October”. Risk of internal spill In any event, there was an objective reason why a river operator acting with reasonable care would not have made a call on the Goulburn IVT earlier than 10 October 2017. The consequence of water arriving at Lake Victoria exclusively sourced from Victoria would have given rise to a risk of an internal spill. Even if the minutes of the WLWG meeting on 26 September 2017 referred to a different risk of internal spill, the minutes of the WLWG meeting on 10 October 2017 specifically refer to a risk of internal spill from calling on the Goulburn IVT account. The minutes record that the risk of internal spill would have to diminish before the Goulburn IVT could be used. The Plaintiffs point out that none of the Defendant’s witnesses say in his or her affidavit that he or she considered the risk of internal spill to be a reason why a call on the Goulburn IVT account could not be made in early-October 2017. The Plaintiffs submit that the absence of that evidence supports the conclusion that it was not a relevant consideration. As with the corresponding submissions about other aspects of the Defendant’s evidence, the submission does not advance the Plaintiffs’ case. The question is whether, despite the risk of internal spill, a river operator acting with

reasonable care would have called on the Goulburn IVT account and would not have commenced overbank transfers at Yarrawonga Weir on 4 October 2017. The Plaintiffs do not prove their case on that hypothetical question by showing that the Defendant’s river operators did not actually consider internal spill risk in October 2017 (which in any event was not the case). Dr Ladson disclaimed expertise with which to express an opinion about whether the risk of an internal spill was a “valid” consideration for the decision when to call on the Goulburn IVT account. He thought that it was a river operation issue beyond his hydrological expertise. The Plaintiffs submit that there is difficulty in quantifying the risk of the spill or knowing whether it was material. The 10 October 2017 minutes speak for themselves. As at that date, the risk was sufficient for the WLWG to require it to diminish before the Goulburn IVT account could be used. Given the attitude of the WLWG, it cannot be said that a river operator acting with reasonable care would have nonetheless called on the Goulburn IVT account. A week before the commencement of the hearing in August 2025 the Defendant served a written Outline of Submissions which included the submission that the risk of internal spill was a reason why a river operator acting with reasonable care would not have made a call on the Goulburn IVT account in

early-October 2017. The submission included references to the minutes of the WLWG meeting on 10 October 2017 and to paragraphs 33 to 37 of Mr Bishop’s Second Affidavit dated 8 July 2024 in which Mr Bishop explained his understanding of internal spills by reference to cl 116 of the Agreement. Paragraph 37 commenced with the following sentence: “In my experience working with the States in respect of calls on water from the IVTs, Victoria and/or New South Wales are usually reluctant to release water from the tributaries too early in the season (typically from June to August) given the high spill risk (because climatic conditions over the balance of the water year are then unknown) and the loss that the State would wear in the event of any spill.” Mr Bishop then gave an example of a meeting of the WLWG in August 2018 for which the minutes record a discussion about IVT deliveries. The minutes record that “Victoria also raised concerns about avoiding internal spills in Lake Victoria if possible…”. Mr Bishop did not specifically refer in his Affidavit to the risk of internal spill in October 2017. When Mr Bishop’s Second Affidavit was subsequently read the Plaintiffs objected to paragraphs 32 to 40 on the basis that they were not relevant to an issue in the case. The Plaintiffs have pleaded that the Defendant breached its duty of care in the 2017/2018 water year and gave as a

particular the failure to utilise the Goulburn IVT account. The Defendant responded with a bare denial of the breach. The Plaintiffs submitted that it was incumbent on the Defendant positively to plead that a call could not reasonably have been made on the Goulburn IVT account because of the risk of internal spill. The Plaintiffs submit that the Defendant’s reliance on the point takes them by surprise. They did not, however, seek an adjournment of the hearing. The Plaintiffs do not return to this pleading issue in their Closing Submissions nor in their Reply Submissions, but as I reserved my decision on the objections to paragraph 32 to 40 of Mr Bishop’s Second Affidavit it is appropriate that I give my reasons for overruling the objection. I do not accept the Plaintiffs’ submission that the risk of internal spill is not a relevant circumstance to be considered by the Court when determining the Plaintiffs’ allegation that the Defendant was negligent. The Defendant denied the allegation of breach. It was not required to do more. With a more mature understanding of river operations it is clear that paragraphs 33 to 37 of Mr Bishop’s Second Affidavit fairly raised the issue as one which may need to be addressed in the case. Although the paragraphs address internal spill at a level of generality, the evidence has no apparent purpose other than to respond to the complaint about not

calling on the Goulburn IVT account whether it be in the 2017/2018 water year or in the 2018/2019 water year. Mr Bishop’s Affidavit was served a year before the hearing commenced. The substance the Defendant’s argument is in any event to be found in the contemporaneous minutes of the WLWG. Conflict from risk of internal spill The risk of internal spill also raises an issue about the approach to be taken by the Defendant where there is a conflict. The Plaintiffs’ complaint is that overbank transfers from Hume Reservoir were inefficient and that 55 GL was actually lost because alternative means of transferring water to Lake Victoria were not used. If a call on the Goulburn IVT account would have caused an internal spill, the outcome from that choice might have affected the financial interests of the holders of Victorian water entitlements differently to the holders of New South Wales water entitlements. On the Plaintiffs’ case, a call on the Goulburn IVT account would have eliminated or reduced the need for overbank transfers to the benefit of Victoria and New South Wales alike. Depending on the amount of water lost by Victoria and gained by New South Wales from an internal spill, there may have been a net detriment to Victoria from prioritising a call on the Goulburn IVT account. It may have been in the financial interests of holders of Victorian water entitlements for the

Defendant to instead direct the overbank transfers through the Barmah-Millewa Forest by which the losses would be shared with New South Wales. Clause 7(1)(b) of the O&O Document required the Defendant to refer such a circumstance to the WLWG for advice. The minutes of 26 September and 10 October 2017, whilst concise, demonstrate that there were discussions about the risk of internal spill. It is clear that the WLWG’s advice was that an internal spill was to be avoided if necessary by delaying the call on the Goulburn IVT account. Within the statutory framework, the WLWG was established to address such an issue and to advise the Defendant accordingly. This is a further reason why it cannot be said that a river operator acting with reasonable care would have called on the Goulburn IVT account in early-October 2017. Goulburn River channel constraints The Defendant submits that a further reason why a river operator acting with reasonable care would not have called on the Goulburn IVT account in early-October 2017 is that the Goulburn River had limited channel capacity. Even if a call had been made, a Goulburn Pulse was in motion from 19 September to 12 October 2017 as a result of which there was no channel capacity with which to meet a call on the Goulburn IVT account prior to 7 October 2017. The Plaintiffs again raise a pleading issue. They submit that the Defendant had to plead

the lack of channel capacity for it to be an issue in the case. The submission was made at the trial but the Plaintiffs did not return to it in their closing submissions in chief. They do submit in reply that it is not open to the Defendant to invite the Court to infer that the Goulburn Pulse in October 2017 would have been seen by a reasonable river operator as a barrier to calling on the Goulburn IVT account. That submission appears to be based on a want of evidence and not a failure to plead. The Defendant is not precluded from having the channel constraints of the Goulburn River considered and addressed on its merits. In paragraph 32 of the Statement of Claim the Plaintiffs allege that the Defendant had detailed procedures and manuals to guide staff on the exercise of river operations functions. Particulars are provided which include the Defendant’s Guidance Document entitled “Guidance on Whole of River Murray System Operations”. In paragraph 43(f) it is alleged that the Defendant knew that in conserving water and minimising losses the Defendant should, amongst other things, plan for and call on IVT volumes to assist in meeting demands along the Murray River and conserve water in Hume Reservoir amongst other places. The particulars are generalised but they include a reference to the Guidance Document. In paragraph 135C(b) it is alleged that as at 29 September 2017 the

Defendant “had available to it” use of the Goulburn IVT account as an alternative means of addressing the storage levels of Lake Victoria. With immaterial qualifications, the Defendant denies that allegation. Dr Ladson addressed the use of the Goulburn IVT account in Section 5.5.3 of his First Report dated 22 December 2023. He expressed the view that the Goulburn IVT account was an “available alternative” to be used in preference to overbank transfers from Hume Reservoir. He said that a failure to call on the Goulburn IVT account in early-October was a “deficiency”. At paragraph 771 Dr Ladson observed that the Defendant’s Guidance Document stated that it was generally preferable to retain water in Hume Reservoir rather than in downstream reservoirs or downstream sources of water. The part of the Guidance Document to which Dr Ladson referred was directed to bulk transfers from the Menindee Lakes. Dr Ladson said that the Guidance Document did not address IVT but the principle of preferring downstream sources nonetheless applied to calls on the Goulburn IVT account. Contrary to Dr Ladson’s statements, the Guidance Document did address making calls on the Goulburn IVT account. Amongst other things, it stated: “Planning for the use of IVT water and assessing the competing objectives and trade-offs in its delivery requires a range of considerations in the planning and decision

process including: ● The need to ensure that, as far as practicable, there is sufficient IVT available in January to March, which is normally the period of peak demand in the Murray system RMO by typically taking a ‘conservative’ approach to the volumes of IVT delivered early in the season. ● The need to balance both the Goulburn and Murrumbidgee IVT accounts, along with other risks such as the risk of spill from storages equitably between the states. For example while a 50:50 split between NSW and Victoria of a 100 GL volume IVT delivery may be ‘fairest’ and have equal distribution (50 GL each), this may not be possible, due to such things as the volume in storage and the associated risk of spill or differences in the available volume in the IVT account that can be transferred. [The Defendant] may seek advice from WLWG on such matters and WLWG will provide advice on the referral of potentially competing objectives to RMOC and BOC when necessary. ● The need to deliver IVT water within a total flow rate no greater than the tributaries’ regulated channel capacity (e.g. in the Goulburn, 3,000 ML/day downstream of Goulburn Weir). In addition, where possible, IVT should be delivered directly within the upper flow bounds requested by local environmental advisory groups (e.g. CMAs). However, if RMO deems it is necessary in the interests of water supply security, IVT may be requested

for delivery at higher rates than these upper flow bounds. (Note also that environmental water may be added ‘on-top’ of the IVT to target a desired flow hydrograph.) ● On the Goulburn system, there are also trades between other northern Victorian regulated systems and this can lead to the delivery of IVT through the Goulburn River, lower Broken Creek and the Campaspe River. The split of IVT delivery between these Goulburn effluents is negotiable and guided by the expertise of Goulburn-Murray Water (GMW) and through local Operations Advisory Group (OAG) members. ● In general, IVT deliveries aim to draw down IVT accounts to around 20 GL by the conclusion of each water year. ● The practical needs of balancing both SCA-operated tributary and RMS flows, and that river operations requires flexibility. For example, when a rain rejection event affects tributary flows and results in additional RMS inflow, the [Defendant] will determine the volume of the additional inflow to be: ○ accounted as delivery of IVT water; and/or ○ re-regulated in Lake Victoria or delivered to the SA as unregulated flow”. The third consideration referred to in this passage addressed the channel capacity of the Goulburn River and specified a maximum flow rate of 3,000 ML/day. When Dr Ladson was cross-examined, objection was taken to him being asked about his opinion that a call on the Goulburn IVT account was

available in light of the Goulburn River channel constraints. The objection noted, the questioning continued. Given the Goulburn Pulse which was in motion at the time, Dr Ladson accepted that there was inadequate channel capacity for a call on the Goulburn IVT account up until 7 October 2017. He said that there was channel capacity after 7 October 2017 and that his evidence about availability was directed to the “volume in October”. As such, Dr Ladson’s evidence does not support the contention that a river operator acting with reasonable care would have made a call on the Goulburn IVT account at any particular time in October. Given his concession, Dr Ladson accepted that a call on the Goulburn IVT account could not have been made before 7 October 2017. To the extent it is pressed, I reject the contention that the channel capacity of the Goulburn River is not an issue in the case because the Defendant did not specifically plead it. The Plaintiffs rely on the Guidance Document by virtue of the particularisation of paragraphs 34 and 43(f) of the Statement of Claim. By virtue of the Defendant’s denial of paragraph 135C(b), the Plaintiffs are required to prove that the Goulburn IVT account was available in early-October 2017. Dr Ladson’s evidence addressed the Guidance Document but erroneously. The Defendant did not need specifically to plead that a call on the Goulburn IVT account

was unavailable for want of channel capacity to avoid the Plaintiffs being taken by surprise for the purposes of Uniform Civil Procedure Rules 2005 (NSW) r 14.14(1). The Defendant’s lay witnesses do not address this issue, in the sense that they do not say that in early-October 2017 they gave contemporaneous consideration to the constraints on the Goulburn River’s channel capacity and for that reason decided not to call on the Goulburn IVT account. Again, the failure to address the issue when giving evidence about what actually happened does not preclude the Defendant from making submissions about a different issue, namely what objectively a river operator acting with reasonable care would have done. The best guide to determining that issue is unlikely to be the subjective views subsequently expressed by the Defendant’s witness. It is likely to be the objective facts which pertained at the time. As Dr Ladson says, one such objective fact is the part of the Guidance Document to which he refers in paragraph 771 of his First Report. Another objective fact is the evidence in paragraph 112 of Dr Davis’s Second Affidavit where he says it is his experience that GMW generally requests that the flows of water called from the Goulburn IVT account be limited to around 3,000 ML/day to prevent environmental damage along the Goulburn River. Another objective fact is the Goulburn Pulse which

was in motion in October 2017. Another objective fact is the part of the Guidance Document set out in [903] above. Dr Ladson expressed a view about the availability of a call on the Goulburn IVT account and relied in part on the Guidance Document. For these reasons the Defendant could not fairly be precluded from testing that evidence, nor is the Defendant precluded from relying on the concessions made by Dr Ladson when tested. In any event, the Plaintiffs do not assert that any prejudice would be caused if the Defendant is permitted to address this issue. None is otherwise apparent. In his First Report Dr Ladson addressed the rate of flow of water in the Goulburn River and the operational and environmental composition of that flow on a daily basis in September and October 2017. The objective facts are not in dispute. Turning then to the substance, in September 2017 the Goulburn Pulse commenced and a large quantity of environmental water flowed down the Goulburn River. The rate of flow peaked at 6,613 ML on 28 September 2017. By 1 October 2017 the flow rate had dropped to 5,790 ML. Thereafter it continued to recede so that by 13 October 2017 only 391 ML flowed down the Goulburn River. The Plaintiffs have calculated that on 1 October 2017 the rate of flow on the Goulburn River would have had to increase by 645 ML/day in order to deliver a 20 GL call on the Goulburn IVT by 31

October 2017. Having regard to the 3,000 ML/day environmental limit which is referred to in the Guidance Document, it may be inferred from these figures that a 20 GL Goulburn Pulse called on 1 October 2017 would have been resisted by GMW. The Plaintiffs point out that the Goulburn Pulse was in recession by 1 October 2017 which meant that the daily contribution to a 20 GL call on the IVT account could have been added to the flow from 1 October 2017 and the flow rate would thereafter have remained below the 6,613 ML peak. The maths is correct but it does not demonstrate that GMW would have been content with flows above those which actually occurred. The unspoken premise to the Plaintiffs’ contention is that GMW, having allowed a flow of 6,613 ML on 28 September 2017, would have accepted flows up to that level on subsequent days. The premise is not proved. A premise no less plausible is that GMW, having endured a flow of 6,613 ML on 28 September 2017, would have required the flow to return to 3,000 ML as soon as possible. In any event, Dr Ladson accepted that prior to 7 October 2017 the Goulburn River lacked capacity for a call on the IVT account, although the Plaintiffs are correct to say that the environmental aspect of a Goulburn Pulse means availability of channel capacity is not exclusively hydrological in this instance, so Dr Ladson’s concession is not determinative of this

issue. The Plaintiffs also point to evidence that the Defendant, GMW and environmental water holders have generally been able to accommodate each other’s competing requirements in the past. In early-October 2017 a call on the Goulburn IVT account may have been accommodated after negotiations. For example, agreement might have been reached with the environmental water holders for 645 ML/day of the actual flow to be attributed to a call on the IVT account to be replaced later with 645 ML/day subsequently released as additional environmental flows attributed to the Goulburn Pulse. As the Defendant submits, the opportunity for negotiation is not to the point. At the end of September 2017 the Goulburn River was already flowing above channel capacity. The Pulse would be expected to recede and there would then be capacity for a call on the IVT account later in October. Why wouldn’t a reasonable river operator have simply waited? The only reason in early-October 2017 to insist on an immediate call on the Goulburn IVT account would be to have the water delivered before the mid-October rain for the purpose of Dr Ladson’s hindsight analysis of available alternatives. In view of the channel constraint of the Goulburn River, the Plaintiffs have not demonstrated that, acting with reasonable care, a river operator would have done anything different to what the Defendant did. Replenishment

risk The Defendant puts forward a further reason why a river operator acting with reasonable care would not have called on the Goulburn IVT account in October 2017, namely that a reduction in the account balance may have left insufficient water for use in summer. As set out above, the 2017/2018 AOP stated that the Goulburn IVT account would typically be called upon between December and March. The evidence shows that the Defendant regarded it as important to be able to call on the Goulburn IVT account in summer because that was the time of peak demand for water. The Plaintiffs’ submissions on this issue do not dispute that it was important for the Defendant to be able to call on the Goulburn IVT account in the summer months. The effect of their submissions is that the call on the Goulburn IVT account in October would have been modest and the account balance would have been expected to replenish so that it could be called upon again in, say, December. There is broad support in the evidence for the Plaintiffs’ submissions. It was Mr Bishop’s view that there was a “high likelihood” that the Goulburn IVT account would replenish by additional trades, although not guaranteed. Dr Davis said that the Goulburn IVT account would replenish “quickly”. The Defendant’s water market expert said that opportunity for new trade created by the Defendant calling on the Goulburn IVT account would

“swiftly be taken up” and thereby replenish the account balance. A market review for the 2017/2018 water year stated that trade out of the Goulburn Valley was increasing each year. In the 2016/2017 water year the total net trade out of the Goulburn Valley was just under 200 GL. In the 2017/2018 water year it was just under 150 GL. On the issue of breach, the question is not whether the Goulburn IVT account would have replenished had a call been made in October 2017 but whether a river operator acting with reasonable care would have been confident of replenishment so as to be willing to make a call on the account earlier than usual. Given the evidence of Mr Bishop and Dr Davis in particular, I am satisfied that a concern about replenishment would not have been regarded by a reasonable river operator as a reason not to make the call in October 2017. In any event, in September 2017 the balance of the Goulburn IVT account was over 238 GL. In October 2017 it had risen to 261 GL. In both months it was more than the 200 GL limit which prohibited immediate trade. A call for delivery of 20 GL would not have reduced the balance below the 200 GL threshold, so further trade could not have occurred immediately in any event. In these circumstances the Defendant’s submission that a call on the Goulburn IVT account would not have been made by a reasonable river operator because of a concern

about subsequent replenishment cannot be accepted. Summary of sixth alleged failure Having regard to the circumstances of the Menindee Lakes and the Goulburn IVT account as at the end of September 2017, the Plaintiffs have not proved that there were alternative measures available which would have caused a river operator acting with reasonable care not to commence overbank transfers at Yarrawonga Weir on 4 October 2017. The sixth alleged failure is not made out. Seventh alleged failure: failures of process Plaintiffs’ submissions Finally, the Plaintiffs make a number of contentions about the process followed by the Defendant in arriving at the decision to release water at Yarrawonga Weir on 4 October 2017 at rates in excess of 10,000 ML/day. Three allegations are made: the decision had to be made either by Mr Reynolds or Dr Davis because they were the only two persons who were delegated to exercise the release power under cl 98, yet neither made the decision; the decision was not properly documented; and the Defendant did not consult with the WLWG. The Plaintiffs submit that the evidence establishes that neither Mr Reynolds nor Dr Davis made the decision to exercise the release power on 4 October 2017. The Plaintiffs submit that adequate documentation of the decision to exercise the release power required a record of who made the decision, why it was made, the details of any

testing on which it was based and the alternatives considered including why the alternatives were not preferred. No such record exists which the Plaintiffs submit was a “grave” failure. The Plaintiffs submit that a reasonable authority would have discussed the proposed decision to commence overbank transfers with the WLWG and provided “full and frank” information as to the rationale and alternatives. The last consultation with the WLWG occurred on 26 September 2017 at which time the WLWG was told that there was a likelihood of overbank transfers commencing around mid-October. The Plaintiffs further submit that the Defendant ought to have escalated the issue to the BOC because of the obvious potential for overbank transfers adversely to impact upon State water entitlements. Defendant’s submissions The Defendant submits that any process failures are of no direct significance to the questions before the Court. Determination Delegation There is no dispute that the formal delegates of the Defendant’s power to direct a release of water under cl 98 of the Agreement were Mr Reynolds, Dr Davis and no other person. The Plaintiffs’ submission that neither delegate made the decision to commence overbank transfers on 4 October 2017 proceeds from the proposition that Ms McCann made the decision on 29 September 2017 in isolation from the rest of the River Operations Team and separately from

all that had gone before and all that was to follow over the following week. For the reasons given above the proposition has not been made good on the facts. In any event the Plaintiffs’ argument fails at a legal level. As the Plaintiffs plead, and as the Instrument of Delegation specifies, the release power is in cl 98 of the Agreement. Under cl 98 the release power is the Defendant’s power to “give directions” to the relevant State authority. The anterior adoption of a plan or even the making of a “decision” to commence overbank transfers is not an exercise of the release power. As at the beginning of 3 October 2017 the Defendant had not given a direction to the operator of Yarrawonga Weir. It had not exercised the release power. Nothing Ms McCann did on 29 September 2017 was an exercise of the release power. At 10am on 3 October 2017 Ms Hickey had a meeting with Mr Reynolds on his return from leave. They discussed transfers from the Menindee Lakes which was a topic entwined with the commencement of overbank transfers at Yarrawonga Weir. At 2:45pm Ms McCann performed one of the functions of the Duty Operator when she communicated the instruction to the State Authority which operated Yarrawonga Weir. It was at that moment that the release power was exercised. There is no basis to suggest that Mr Reynolds did not authorise the exercise of power in accordance with his

delegation. This complaint by the Plaintiffs further highlights the artificiality of its characterisation of the events which constituted the Defendant’s planning, consultation and decision making at the end of September and the beginning of October 2017. The direction given by the Defendant at 2:45pm on 3 October 2017 was only to increase the release of water at Yarrawonga Weir to 11,000 ML/day. A further exercise of the power occurred on 4 October 2017 when the Defendant gave a direction further to increase the flow to 12,000 ML/day. There was a further exercise of the release power on each of 7 October (increase to 14,500 ML/day) and 10 October 2017 (increase to 15,000 ML/day). Throughout that period not only Mr Reynolds but also Dr Davis was at his post and working with the small River Operations Team. In the ordinary course at least one of them would have been involved in the decision making and there is nothing to suggest otherwise in this case. The Plaintiffs’ attempts to avoid that reality by fixing on an unrealistic version of Ms McCann’s involvement on 29 September 2017 is a contrivance. The Plaintiffs’ first process complaint fails at both the factual and legal level. Record keeping At a factual level Ms McCann performed another of the functions of the Duty Operator when she made the entry in the Daily Operations Sheet for 29 September 2017. That entry, plus the

entry on 3 October 2017, comprise the Defendant’s records, as do the minutes of the meeting of the WLWG on 26 September and 10 October 2017. Those records go some way to answering the Plaintiffs’ complaint. Beyond that the Plaintiffs’ submissions are a counsel of perfection. The quality of record keeping for which the Plaintiffs contend proceeds from the proposition that the Defendant was making a decision which was significant, unusual, risky and dangerous. The proposition does not accord with reality. The Defendant was not required to keep perfect records. It was required to act with reasonable care to protect the Plaintiffs from pure economic loss. Assuming without deciding that that obligation touched the keeping of the Defendant’s internal records, the Plaintiffs do not identify any objective standard against which the Defendant’s records may be compared. Arguing from objective facts, the Plaintiffs say that record keeping is not expensive, it is not inconvenient and it does not conflict with any other responsibility. They say that good record keeping encourages the efficient operation of the river. The only evidence relied upon by the Plaintiffs for this part of the case is a passage from the cross-examination of Dr Davis. It was put to Dr Davis that particular record keeping was “good practice” and the Defendant’s decision on 3 October 2017 needed to be “properly

document[ed]”. Dr Davis readily accepted the propositions put to him. Dr Davis’s concept of good and proper record keeping is not known. His acceptance of those propositions does not prove that the Defendant did not meet the standard of a river operator acting with reasonable care. For a decision which was not significant, unusual, risky or dangerous, and in any event, the Plaintiffs have not proved that a river operator acting with reasonable care would have done any more than what the Defendant did in the way of record keeping. Consultation with the WLWG Clause 12.5(d) of the Appendix A to the O&O Document required the Defendant to be “guided by” the WLWG about the timing of commencement and rates of transfer from Hume Reservoir to Lake Victoria. Overbank transfers were discussed at the WLWG meeting on 26 September 2017. The pertinent parts of the minutes are set out above. As recorded in the minutes, the WLWG was told that the Defendant was considering the likelihood of overbank flows “commencing around mid-October”. It was also told that the Defendant was planning to increase flow downstream of Yarrawonga to between 12,000 and 15,000 ML/day “for the next 6-8 weeks”. That discussion having been had, I am not persuaded that the subsequent actions by the Defendant were without the guidance of the WLWG. Even if there was a breach of cl 12.5(d), this third process complaint is

another demonstration of the propositions addressed at [599]-[603] above. There is no free-standing issue in these proceedings about whether the Defendant complied with the O&O Document or any process of consultation or authorisation. The Defendant is not being sued by the WLWG or by any of the States. The issue which has to be determined is whether the Defendant breached its duty of care to protect the Plaintiffs from pure economic loss. The Plaintiffs submit that a reasonable precaution against that risk was to consult with the WLWG. No reasoning is put forward to support that submission. It is asserted as a truism. The WLWG was not a quality assurance body. As set out above, the WLWG was comprised of representatives of the States which had the role of protecting the interests of the States. It was no part of the WLWG’s function to protect the financial interests of irrigators in New South Wales or Victoria. Under s 43(1) of the ACT Liability Statute the precautions which it may be negligent not to take are only those which are precautions “against a risk of harm”. Consultation with the WLWG was not a precaution against the risk of harm which is alleged in this case. In any event, the Plaintiffs have not proved that a river operator acting with reasonable care would have consulted the WLWG beyond that which actually occurred. The WLWG was generally convened once a fortnight.

It may be inferred that the WLWG considered that frequency to be sufficient for the purposes of its task. Given the discussion on 26 September 2017, including the Defendant’s plan to increase flows to between 12,000 and 15,000 ML/day “for the next 6-8 weeks”, there is no basis to find that a river operator acting with reasonable care would have considered it necessary (or even desirable) to reconvene the WLWG for the purposes of consulting about the increases in flow directed on 4 October 2017 and the following days. Summary on process failures The Defendant has not been showed to have breached its duty of care to the Plaintiffs by reasons of the alleged failures of process leading up to the commencement of overbank transfers on 4 October 2017. Summary – no breach of duty The Plaintiffs have not proved that the Defendant breached the alleged duty of care in the 2017/2018 water year. For that additional reason the claim arising from the overbank transfers in the 2017/2018 water year is to be dismissed. CAUSATION OF LOSS – 2017/2018 WATER YEAR If, contrary to the foregoing, the Defendant breached a duty of care owed to the Plaintiffs in the 2017/2018 water year, the next issue is whether the breach caused loss. Plaintiffs’ submissions The Plaintiffs submit that causation requires a comparison between the position which occurred with that which would have occurred had the

Defendant acted with reasonable care. Their submissions about what the Defendant would have done had it acted with reasonable care in the 2017/2018 water year have two elements. The first element is that the Defendant would not have given the direction to increase the release rate at Yarrawonga Weir to 11,000 ML/day on 4 October 2017, nor would it have given the directions for the subsequent incremental increases over the following days. Although not expressed, the inference from the Plaintiffs’ submissions is that the Defendant would have maintained the release rate at just below 10,000 ML/day throughout October 2017. The second element of the Plaintiffs’ counterfactual is more complicated. As set out in their Closing Submissions the Plaintiffs contend that: “(b) if and to the extent that the relevant decision-maker at the [Defendant] acting reasonably considered that some further release was required in early October 2017, then they could and should have done the following: (i) prioritised releases from the Menindee Lakes over commencing operational overbank transfers… ; (ii) prioritised releases from the Goulburn IVT account over commencing operational overbank transfers …” The Plaintiffs submit that the following five sequential steps follow from their counterfactual: there would have been more water in the storages of the Murray River system in the 2017/2018 water

year; under the terms of the Agreement more water in the storages would have resulted in a greater allocation to each of New South Wales and Victoria; more water allocated to New South Wales and Victoria would have resulted in a greater allocation to each water entitlement holder in those states, including the Plaintiffs in New South Wales (in relation to Victoria, see below); non-receipt of the additional water was either a loss in itself, or the cause of greater production costs or lower revenue, all of which is compensable loss; and in addition, more water allocated to water entitlement holders in New South Wales and Victoria would have increased supply in the market for temporary water which would have resulted in a lower price and hence lower production costs or higher revenue for the Plaintiffs. The third step warrants emphasis. As addressed in more detail below, the Third, Fourth and Fifth Plaintiffs each held access licences under the NSW Statute. The Second Plaintiff relevantly held or leased water entitlements issued by MIL. All the Plaintiffs carried on a business of irrigated agricultural production using water obtained under these water entitlements or, in the case of the First Plaintiff, using water obtained under the water entitlements held or leased by others. The Plaintiffs allege that in the 2017/2018 water year they received a lower allocation of water than

they would have received had the Defendant acted with reasonable care. Thus, the harm of which the Plaintiffs complain can be seen to be the receipt of less water than would otherwise have been the case. That observation accords with the type of loss which the Plaintiffs plead in paragraph 205 of the Statement of Claim. The loss is alleged to include the market value of the water which the Plaintiffs did not receive, increased costs of business, lost profits and the increased costs of water on the temporary market. The loss which is the subject of the proposition in the fifth step is different. The harm addressed by that proposition is that which might be suffered by a business of irrigated agricultural production when it has had to operate in a market supplied with less water than would otherwise have been the case, whether or not the particular business itself received less water under its own water entitlements. The significance of the distinction is addressed below, including by reference to the fact that the Group Members on behalf of whom the Plaintiffs sue are all alleged to have received less water under their own water entitlements. Apart from the first step in their chain of causation the Plaintiffs submit that each of the steps are made good by the common ground achieved by the various expert witnesses from whom evidence was adduced. In any event, there is no dispute

about the chain of causation for the first three steps. Both parties submitted that the quantity of water in the storages of the Murray River system is deterministic of the quantity allocated first to the States, and then to individual water entitlement holders. There are disputes about the application of the processes of allocation which are addressed below. In the event that the Plaintiffs are not able to prove on the balance of probabilities that they would have received a greater allocation of water in the 2017/2018 water year then they advance an alternative case based on loss of a commercial opportunity to receive a greater allocation. Defendant’s submissions The Defendant concedes that the Plaintiffs have proved that the allocation to New South Wales general security entitlement holders would have been +3% higher “if the plaintiffs prove that a reasonable river operator in the [Defendant’s] position would not have made the overbank transfers in the 2017/18 water year and would have operated the river system as the plaintiffs contend”. Subject to proof of the specified matters, the concession is to be understood as accepting the propositions at [943(a)], [943(b)] and [943(c)] above. The Defendant points out that Victorian holders of water entitlements received 100% of their water allocations in the 2017/2018 water year. Given that circumstance, it has not been

demonstrated that the additional allocation of water to Victoria in the 2017/2018 water year caused loss to Victorian water entitlement holders. The Defendant’s concession makes it unnecessary to consider the alternative loss of opportunity case for the 2017/2018 water year. That issue can await consideration of loss in the 2018/2019 water year. Principled approach General principles Loss is the gist of an action in negligence. Unless the breach of the duty of care caused loss there is no cause of action. [196] Section 45(1) of the ACT Liability Statute provides as follows: 45 General principles (1) A decision that negligence caused particular harm comprises the following elements: (a) that the negligence was a necessary condition of the happening of the harm (‘factual causation’); (b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (the scope of liability). The plaintiff must prove that the breach caused loss: s 46. It must be proved on the balance of probabilities, which means that according to the course of common experience the more probable inference appearing from the evidence is that the defendant’s breach caused the loss. [197] Where loss is proved to have been caused on the balance of probabilities, it is taken to be the certain fact and the other issues in the case are determined on that basis. [198] What the

defendant would have done acting with reasonable care The Plaintiffs correctly submit that the inquiry into causation calls for a comparison between the position of the plaintiff and what the position would have been if the defendant’s breach had not occurred. [199] The comparison requires a clear understanding of what the defendant would have done had he or she acted with reasonable care. The question is what the defendant would have done, not what the defendant might have done. [200] If all that is shown is that the defendant might reasonably have done something else, it cannot be concluded that he or she might not also have reasonably done what actually occurred. In some cases the answer to the question may be obvious, such as where a solicitor permits the husband of a beneficiary to witness the execution of a will [201] or where the solicitor drafts a document giving 13 days’ notice when the contract requires 14 days. [202] There will be other cases where the counterfactual will be more complicated, such as where a solicitor fails to give advice to an injured worker about an alternative common law claim [203] or where a flood engineer has to respond to rainfall of biblical proportions in the catchment of a complex river system. [204] If the counterfactual is not obvious, it will be necessary for the circumstances to be considered in more detail and findings made. [205] In

some cases the question about what the defendant would have done had he or she acted with reasonable care will have already been answered as part of the anterior inquiry into whether there was a breach of the duty of care. It is likely to be necessary to know what the defendant should have done in order to determine whether the defendant’s conduct departed from the standard of reasonableness and, if so, in what way and to what extent. There may be other cases where a breach can be established (supermarket has no system of inspection for spills) without making a sufficiently detailed inquiry into the counterfactual to determine whether the breach caused any loss (there would have been an inspection every 15 minutes). [206] In such a case further findings will need to be made. Where further counterfactual findings are required for the purposes of causation they must conform to the breaches of duty which have been found and which gave rise to the question of causation. [207] The counterfactual about what the defendant would have done had he or she acted with reasonable care may be thought to be a hypothetical question in the sense that it is something which did not happen. On the other hand, it will be a conclusion about the objective standard which applied at the time the breach occurred and in that sense it is not hypothetical. Either way, the question is most likely to be

answered by drawing an inference from the objective facts which are proved to have pertained at the time of the alleged breach. Whether it is considered for the purposes of breach or causation, the question what the defendant would have done had he or she acted with reasonable care is part of the case which the plaintiff must prove on the balance of probabilities. [208] Unless the plaintiff proves both breach of duty and causation of some loss, the defendant is not liable. There will be no want of fairness for the outcome of such a case to be decided without regard to the possibilities and probabilities. A pertinent example of these principles being applied is the Queensland Floods case. Using the language of the civil liability statutes, the trial judge held that for the purposes of causation it was necessary for the plaintiff to demonstrate the reasonable precautions that a reasonably competent flood engineer would, not just could, have taken when operating the Queensland dams. [209] There was no departure from that approach in the Court of Appeal. [210] Tabet v Mansour is an example of a case where the counterfactual had some complexity. [211] Had a CT scan been ordered when it would have been ordered by a paediatrician acting with reasonable care, the need immediately to relieve the intracranial pressure on the plaintiff’s brain would have become known. With that knowledge,

there were two possible treatments available: the administration of corticosteroids or the insertion of an intraventricular drain. The two treatments had different potential benefits and different risks. The trial judge made a finding on the balance of probabilities that corticosteroids would have been administered. Causation and quantification of the plaintiff’s loss were considered on that basis. [212] The trial judge’s decision was overturned on appeal but on a different point. Determination – counterfactual river operations The quest for a clear understanding of what a river operator acting with reasonable care would have done in September and October 2017 begins by considering the breaches of duty for which the Plaintiffs contend. I have found that none of the alleged breaches occurred but I will address the counterfactual for each breach as if it had occurred. First alleged breach: misreading the Climate Outlook dated 28 September 2017 The Plaintiffs have not made any submissions about what would have happened had the Defendant not misread the Climate Outlook issued by the Bureau of Meteorology on 28 September 2017. The primary facts are set out above including the relevant text and charts. Having regard to the facts, including the evidence of Dr Davis and Ms Hickey about the use they make of climate outlooks issued by the Bureau it may be inferred that a river operator

acting with reasonable care would have read the Climate Outlook on 28 September 2017 or shortly thereafter. Upon reading it, a reasonable river operator would have concluded that there was a small chance of rainfall exceeding the median for October. The Plaintiffs submit that that information gave no reason to depart from the 2017/2018 AOP or the modelling from the Fortran Assessment Model which was undertaken on 20 September 2017. Specifically, a correct reading of the Climate Outlook gave no reason to release water at Yarrawonga Weir at more than 10,000 ML/day in October 2017. The Plaintiffs have not adduced any evidence about how a river operator acting with reasonable care would have regarded the information in the Climate Outlook dated 28 September 2017 for the purposes of making the decisions which confronted the Defendant. Dr Davis said that it is his view and was at the time (evidently on 27 September and from 5 October 2017 when he returned from leave) that the overbank transfers were appropriate and he gives a list of reasons for holding that view. The reasons encapsulate many facets of the competition between the risk of system shortfall and the risk of spill in the circumstances which pertained at the end of September 2017. Amongst Dr Davis’s reasons was his understanding that “no rain was forecast for the River Murray System or its surrounding catchment areas”.

Assuming for the purposes of causation that Dr Davis instead understood that there was a climate outlook which showed that there was a small chance of exceeding median rainfall for October 2017 I am not persuaded that Dr Davis would have held any different view about the commencement of overbank transfers. There were many other considerations which informed Dr Davis’s view and a climate outlook based on probability is not a rain forecast. A reasonable river operator generally disregards climate outlooks to the extent that they address rainfall (as opposed to temperature). In any event, the Climate Outlook dated 28 September 2017 described the chance of rainfall exceeding the median as “small”. Ms Hickey has also expressed the view that the overbank transfers were necessary in early-October 2017. She gives her reasons which include the Bureau of Meteorology’s Climate Outlook dated 28 September 2017 but only to the extent that it addressed future temperature, not future rainfall. Mr Reynolds has expressed the same view about commencing overbank transfers. His reasons do not include the Climate Outlook. Mr Bishop was on leave from 25 September 2017 until 16 October 2017 and did not have any direct involvement in the decision to commence overbank transfers on 4 October 2017. He nonetheless has expressed his opinion that the decision was appropriate and lists a number of matters as

the basis for his view. His view is not based on the Climate Outlook dated 28 September 2017 nor any other climate outlook. None of the matters listed by Mr Bishop are of the sort which would have been influenced by the information in the Climate Outlook. As Mr Bishop has said elsewhere, day-to-day river operations are not conducted on the basis of seasonal climate outlooks. The inference to be drawn from these facts is that had Dr Davis, Ms Hickey and anyone else in the River Operations Team accurately read the Climate Outlook dated 28 September 2017 no different decision would have been made. There is no basis to find that a river operator acting with reasonable care would have done any differently. The alleged misreading of the Climate Outlook was not a necessary condition of the happening of the harm alleged by the Plaintiffs. There was no factual causation. Second alleged breach: failure to act in accordance with the 2017/2018 AOP Given the Plaintiffs’ contention about the nature and effect of the 2017/2018 AOP, it may be inferred that the counterfactual for which they contend is that a river operator acting with reasonable care would have acted in accordance with the 2017/2018 AOP by directing water be released at Yarrawonga Weir at the rate specified for each of the six scenarios for October 2017. Those rates are depicted in the graph at paragraph [542]. In other

circumstances it would have been necessary for the Plaintiffs to prove the anterior question about which of the six scenarios would have been considered by a reasonable river operator to have applied, but in October 2017 the same rate of release was specified for all scenarios which were “moderate” or drier. Whilst regard would also have been had to the “near average” and “wet” scenarios, there is no suggestion that a river operator acting with reasonable care would have given those two scenarios particular weight. Therefore, the counterfactual for the second alleged breach is that water would have been released at Yarrawonga Weir at 10,000 ML/day on 4 October 2017 and on each subsequent day until it started to rain. Third alleged breach: failure to adhere to the Fortran testing in mid-September The question what would a river operator acting with reasonable care have done in order to adhere to outputs from the Fortran Assessment Model which was obtained on 20 September 2017 is more complicated. Three inconsistent outputs were obtained. The modelling which was based on the assumption that there would be no overbank transfers showed that there would be an unacceptable risk of a system shortfall during the coming summer. The clear inference is that a river operator acting with reasonable care would not have made decisions which conformed to the assumptions for that output. The

Plaintiffs do not submit otherwise. The other two outputs both assumed that the release rate at Yarrawonga Weir would be increased above 10,000 ML/day. The overbank transfers would commence in either October or November 2017 depending upon whether future inflows were assumed to conform to the “moderate” scenario or the “dry” scenario. Unlike the second alleged breach, for this part of the Plaintiffs’ case the anterior choice of scenario makes a difference. The Court must therefore be satisfied on the balance of probabilities that a river operator acting with reasonable care would have adhered to the assumptions for a single scenario, and that the “dry” scenario is the one which would have been selected. The necessary finding is that a river operator acting with reasonable care would have disregarded the output which was obtained assuming the assumption that future inflows would conform to the “moderate” scenario. For as long as a river operator might reasonably have taken that output into account, an aggregated view of the outputs would have been that overbank transfers would commence in either October or November. The Fortran Assessment Model did not have the functionality to be more precise within that time period. The total inflows for June to August 2017 were exceeded by 78% of historic inflows. In terms of rainfall, September was the driest on record although total inflows

for September were only exceeded by 82% of historic inflows due to inflows still arriving from the August rain. The total inflows for June to September were exceeded by 82% of historic inflows. The Defendant would have been aware of this information as it developed on a daily basis throughout September. The Defendant’s “dry” scenario assumed inflows which had an annual exceedance probability of 90%. The “moderate” scenario assumed inflows which had an annual exceedance probability of 75%. The inflows actually experienced by the end of September 2017 conformed marginally more closely to the “moderate” scenario than to the “dry” scenario. There is therefore no basis for a finding that a river operator acting with reasonable care would have disregarded the output which was obtained assuming that future inflows would conform to the “moderate” scenario. If, as the Plaintiffs must necessarily contend, one of the two outputs would have been disregarded by a reasonable river operator, then in all probability it would have been the output which assumed that future inflows would conform to the “dry” scenario. Having regard to the output for the test using the assumptions for the “moderate” scenario, it would have been open to a river operator acting with reasonable care to adhere to the testing with the Fortran Assessment Model on 20 September 2017 by directing that water be released at

Yarrawonga Weir above 10,000 ML/day during October 2017. It may be argued that, given the conditions at the end of September 2017 were at the margin between the “moderate” and the “dry” scenarios, a river operator acting with reasonable care would have sought a compromise by commencing overbank transfers in late October rather than early-October. Whilst there is an abstract logic in that proposition, given the complexity of the river system it is not one which can be drawn without specific evidence. Whilst a river operator acting with reasonable care might have decided to commence overbank transfers in November 2017 in order to adhere to the outputs from the Fortran Assessment Model which was obtained on 20 September 2017, the Plaintiffs have not demonstrated that he or she would have made that decision. It has not been shown that a failure to adhere to testing on 20 September 2017 was a necessary condition of the occurrence of the loss alleged by the Plaintiffs. There was no factual causation for this alleged breach. Fourth alleged breach: failure to conduct further Fortran testing The Plaintiffs have not made any submissions about what would have happened had the Defendant conducted testing with the Fortran Assessment Model after the outputs were obtained on 20 September and before 3 October 2017 when the direction was given to commence overbank transfers. The Fortran

Assessment Model operates on a monthly interval and uses assumptions about future inflows, amongst other things. The evidence does not provide a basis to find that the output from further testing would have revealed anything not already revealed by the testing conducted on 20 September 2017. It has not been shown that a failure to conduct further tests after 20 September 2017 was a necessary condition of the occurrence of the loss alleged by the Plaintiffs. There was no factual causation for this alleged breach. Fifth alleged breach: inappropriate modelling in Daily Operations Spreadsheets Nor have the Plaintiffs made any submissions about what would have happened had the Defendant undertaken modelling with the Daily Operations Spreadsheet in a way which the Plaintiffs contend would have been undertaken by a river operator acting with reasonable care. Assuming the correctness of all the Plaintiffs’ allegations about this particular breach, the Defendant would firstly have used lower assumptions for system losses so as to conform to the assumptions used for the Fortran Assessment Model. The Defendant would nextly have assumed releases from the Menindee Lakes in accordance with Dr Ladson’s alternative calculations. The Defendant would finally have undertaken the modelling on the assumption that there would be a call on the Goulburn IVT account in October 2017. The evidence does

not enable a finding to be made about what the Daily Operations Spreadsheets on 28 or 29 September 2017 would have shown for the release rate at Yarrawonga Weir had the first of these changes been made. Dr Ladson’s evidence is that the difference in the loss assumptions was the primary cause of disparity between the two models as to the storage level at Lake Victoria at the end of December. It may be inferred that the storage level at Lake Victoria at the end of December 2017 would have been shown to be higher in the Daily Operations Spreadsheet had lower loss assumptions been made, but beyond that the Court is being asked to speculate. In particular, it is not known what the Daily Operations Spreadsheet would have shown for the commencement date of overbank transfers at Yarrawonga Weir. In this regard, the output from the Fortran Assessment Model which was obtained on 20 September 2017 using lower loss assumptions still contemplated that overbank transfers would commence in October in the “moderate” scenario. The Plaintiffs have not demonstrated that use of similar loss assumptions for the Daily Operations Spreadsheet on 28 or 29 September 2017 would of itself have caused the Defendant to decide to commence overbank transfers later than 4 October. The modelling with the Daily Operations Spreadsheet which the Defendant undertook at the end of September 2017 was based on

assumptions about the transfer of water from the Menindee Lakes which conformed to the releases discussed at the meeting of the WLWG on 26 September 2017. For the purposes of considering causation, it may be assumed that at the end of September 2017 a river operator acting with reasonable care would have produced the Daily Operations Spreadsheet with assumptions that the transfer of water from the Menindee Lakes would commence on 1 October 2017, that the releases would be accelerated at the maximum rate specified in cl 10.2(d) of Annexure A to the O&O Document (500 ML/day) and that they would be maintained at 1,800 ML/day from 4 October 2017 until the storage level of the Menindee Lakes dropped below 480 GL. These different assumptions for each of the three matters would each have had a different effect on the modelling. It may be inferred from Dr Ladson’s evidence that a more rapid acceleration of the release rate would have made a 2 GL difference to the storage level of Lake Victoria. Given Dr Ladson’s analysis, it may also be accepted that the changes to all three of the Menindee Lakes assumptions would have shown future storage levels at Lake Victoria which were higher than were in fact shown. Beyond that, no further finding is open on the evidence. There is no evidence about what effect on the Daily Operations Spreadsheet would have resulted had it been prepared on 28 or

29 September 2017 on the assumption that there would be a call on the Goulburn IVT account in October 2017, and that that call would be 20 GL. It may be accepted that the storage level of Lake Victoria would have shown to be higher after water arrived from the Goulburn River but the quantity of the increase is not known. In the ordinary course there would have been conveyance losses and loss to evaporation in the 14 days it took for the water to flow down. Overall it may be accepted that the storage levels for Lake Victoria would have been shown to be higher in the Daily Operations Spreadsheet on 28 and 29 September 2017 if the Defendant had used the assumptions which the Plaintiffs allege that a river operator acting with reasonable care would have used. Beyond that the effects on the Daily Operations Spreadsheet are unknown, including as to the date upon which overbank transfers would commence at Yarrawonga Weir. The Plaintiffs have not demonstrated that, had the Defendant not committed the fifth breach of duty, the Daily Operations Spreadsheet would have caused a river operator acting with reasonable care to decide to commence overbank transfers later than 4 October 2017. There was no factual causation for this alleged breach. Sixth alleged breach: failure to prioritise Menindee Lakes and Goulburn IVT. The Plaintiffs’ submissions about what a river operator acting with

reasonable care would have done in relation to releasing water from the Menindee Lakes and making a call on the Goulburn IVT account in October 2017 are qualified by the words “if and to the extent that the relevant decision-maker at the [Defendant] acting reasonably considered that some further release was required in early October 2017”. The qualification admits the possibility that it was open to the Defendant to consider that no “further release” was required. This suggests that it could not then be said that the Defendant was negligent for failing to release water from the Menindee Lakes or to make a call on the Goulburn IVT account any more than it in fact did. There appears to be a tension between the Plaintiffs’ case on breach and its case on causation. Nonetheless I have found that as at the end of September 2017 a river operator acting with reasonable care would have considered that something needed to be done. In those circumstances, I understand the Plaintiffs to contend for a causation counterfactual that a reasonable river operator would have released water from the Menindee Lakes and made a call on the Goulburn IVT account in the quantities and at the time addressed above. Although the Plaintiffs describe the relationship between the two measures as “and/or”, I assume they mean both. It follows from the analysis of the fifth alleged breach that, if a river

operator acting with reasonable care would have directed releases from the Menindee Lakes and made a call on the Goulburn IVT account as alleged by the Plaintiffs, it has not been demonstrated that a river operator acting with reasonable care would not still have commenced overbank transfers on 4 October 2017. Nonetheless, if both aspects of the sixth alleged breach had not occurred then releases from the Menindee Lakes would have been directed more quickly and at higher release rates and a 20 GL call on the Goulburn IVT account would have been made in October 2017. It follows that, if it is assumed that the second alleged breach occurred (failure to act in accordance with the 2017/2018 AOP), the loss caused by that sixth breach is to be assessed based on those hypothetical circumstances. Seventh alleged breach: failures of process The only submission made by the Plaintiffs about loss caused by the Defendant’s alleged process failures is that the Court can be satisfied that there was a valuable commercial opportunity that the Defendant would have prioritised releases from the Menindee Lakes or the Goulburn IVT account had it followed the proper processes and procedures in making the decision. No submissions are made about how that might be so having regard to the process failures which are alleged to have occurred. The first alleged process failure is that the decision to

commence overbank transfers on 4 October 2017 was made by someone other than Mr Reynolds or Dr Davis, the only two persons delegated to exercise the release power under cl 98 of the Agreement. Assuming that neither was involved in the decision, there can be no doubt that both would have agreed with the decision had they been involved. Both have made Affidavits in these proceedings in which they have expressed the view that the decision to commence overbank transfers was appropriate. They both say that they held the view at the time. Whilst a relatively minor element of the exposed reasoning was challenged in cross-examination for each witness, it was not suggested that either of them do not in fact hold the expressed view or, more pertinently, did not hold the view in October 2017. Even though their evidence is given in the context of proceedings in which the Defendant is alleged to have been negligent, their evidence is to be accepted. Their views are based on comprehensive reasoning which was not materially undermined (or even challenged) in cross-examination. In any event, Mr Reynolds was in the office when the direction was given to increase the release of water at Yarrawonga Wier above 10,000 ML/day and Dr Davis was in the office the following day where further directions were given to increase the rate of release higher. There is no suggestion of discord or objection. The

objective facts demonstrate that both Mr Reynolds and Dr Davis were aware of what was happening and agreed. The alternative is implausible beyond acceptability. The first alleged process failure is irrelevant in the context of the inquiry into causation of loss. The second alleged process failure is the failure to make a documentary record which recorded who made the decision to commence overbank transfers on 4 October 2017, why it was made, the details of any testing on which it was based, what alternatives were considered and why those alternatives were not preferred. Nothing has been said as to how the making of such a record would have resulted in a different decision. The second process failure is also irrelevant in the context of the inquiry into causation of loss. So too the third alleged process failure, which is the failure to consult with the WLWG between the meeting on 26 September 2017 and 10 October 2017. The facts about the consultation which did occur on those dates are set out above. There is no basis to infer that any further consultation would have resulted in advice from the WLWG which would support a finding that a river operator acting with reasonable care would have made any different decision. The Plaintiffs are not able to overcome the failure to prove that a different outcome would have occurred if the alleged process failures had not occurred by

seeking to characterise adherence to proper processes and procedures as a valuable commercial opportunity. It was not. And even if it was, the couching of the submission in passive language reveals a further problem, namely that in no way can it be said that the loss of the valuable commercial opportunity was one for which the Plaintiffs ought personally to be compensated. And even if it was it has not been shown that the chance of a more favourable outcome from following proper processes and procedures was more than speculative. Summary of the counterfactual river operations Assuming that the Defendant breached its duty of care in the 2017/2018 water year as alleged for all parts of the second breach and the sixth breach, then the counterfactual river operations proved by the Plaintiffs are that the overbank transfers would not have commenced on 4 October (second breach), releases from the Menindee Lakes would have commenced on 1 October increasing by 500 ML each day until they reached 1,800 ML/day (sixth breach) and a 20 GL call would have been made on the Goulburn IVT account in October (sixth breach). For the purposes of the expert evidence about modelling the quantum of loss suffered by the Plaintiffs, this finding conforms to the counterfactual river operations which are assumed for hypothetical Scenario P2. Whether alone or in combination, the Plaintiffs have not proved

that any different river operations would have resulted from any of the other alleged breaches of duty in the 2017/2018 water year. Counterfactual environmental water use A further part of the causation inquiry arises from the interrelationship between the transfer and use of operational water in the Murray River system and the use of environmental water. For a number of reasons, decisions made about the transfer and use of operational water may affect decisions made by environmental water holders with potential implications for losses, storage levels and other matters relevant to allocations to water entitlement holders. The concession that the Plaintiffs would have received +3% in the water allocated to them in the 2017/2018 water year is made by the Defendant irrespective of what choices the environmental water holders would have made. It is not therefore necessary to consider the hypothetical response of the environmental water holders in the 2017/2018 water year. Position of the Plaintiffs had Scenario P2 occurred As addressed in more detail below, each party retained an expert on modelling the behaviour of rivers, Mr Podger in the case of the Plaintiffs and Mr Barma in the case of the Defendant. They have agreed a model by which the allocations of water to the Plaintiffs’ water entitlements may be calculated depending on the assumptions made about counterfactual river

operations in the 2017/2018 water year. In their Second Joint Report, subsequently corrected and dated 29 September 2025, they have calculated that for the counterfactual river operations contemplated by Scenario P2 the Murray River storages would have had an extra 75 GL in the 2017/2018 water year. With that extra water in storage, the holders of general security water entitlements in New South Wales would have been allocated 54% of their entitlements rather than the 51% they were actually allocated. On that basis the Defendant accepts that the Plaintiffs have proved on the balance of probabilities that the Plaintiffs would have received an additional +3% in water allocations in the 2017/2018 water year. Scope of liability – 2017/2018 water year In addition to factual causation, s 45(1)(b) of the ACT Liability Statute provides that an element of causation is whether it is appropriate for the scope of the Defendant’s liability to extend to the harm suffered by the Plaintiffs. In paragraph 207(b) of the Defence to the Fourth Further Amended Statement of Claim dated 8 August 2025 the Defendant positively denies that it is appropriate for the scope of its liability to extend to the harm alleged by Plaintiffs. In their Closing Submissions dated 25 October 2025 the Plaintiffs submitted that the Defendant’s original allegation was directed to an aspect of the case which is no longer

pressed. They reserved their position on making submissions if the Defendant nonetheless relies on the issue. No submissions have been made by the Defendant on scope of liability. In those circumstances it is not necessary to address the issue further in relation to the 2017/2018 water year. Summary of causation in the 2017/2018 water year New South Wales holders of water entitlements Had the counterfactual river operations occurred as set out at [998] above, the Defendant accepts that the allocation of water to the New South Wales water entitlement holders would have been +3% higher by the end of the 2017/2018 water year. On that basis, and assuming a duty of care was owed and that it was breached as alleged, the Plaintiffs have established each of the propositions at [943(a)], [943(b)] and [943(c)] above for the Plaintiffs and for those Group Members who were New South Wales water entitlement holders in the 2017/2018 water year. Victorian holders of water entitlements The Victorian holders of water entitlements were in fact allocated 100% of the water to which they were entitled in the 2017/2018 water year. In those circumstances the Victorian holders of water entitlements did not suffer any loss in the 2017/2018 water year. The Plaintiffs do not suggest that breaches by the Defendant in the 2017/2018 water year caused loss to the Victorian holders of water entitlements in

later water years. QUANTUM for the 2017/2018 WATER YEAR to be ADRESSED LATER In view of the way the case was conducted, including the way in which the expert evidence addressed quantum, it is convenient to address breach and causation in the 2018/2019 water year and the discrete claim about access to the MIL infrastructure before addressing the quantum of the Plaintiffs’ loss for all breaches as a single topic. BREACH OF DUTY – 2018/2019 WATER YEAR Introduction The Plaintiffs’ case about breaches of the Defendant’s duty of care in the 2018/2019 water year is to be analysed on the assumption that the Defendant owed the duty alleged in paragraph 86(a) of the Statement of Claim, namely a duty to take reasonable care in exercising the river operations functions to avoid the risks of harm alleged in paragraphs 77 and 78 of the Statement of Claim. The complaint in the 2018/2019 water year is a failure to release water at Yarrawonga Weir earlier than was in fact done, and also a failure to call on the Goulburn IVT account. Assuming the duty of care was owed and assuming the breaches occurred, the Defendant accepts that the alleged breaches fall within the pleaded duty. In broad introductory terms, by the commencement of the 2018/2019 water year silt had caused the channel capacity of the Barmah Choke to be reduced to 9,500 ML/day. In June 2018 the River Operations Team was releasing

water at Yarrawonga Weir at approximately 5,000 ML/day. The releases were slightly higher in July but the additional water was largely environmental water used to water the Barmah-Millewa Forest through in-channel regulators (see further below). In August 2018 the environmental watering stopped and the River Operations Team increased the release of operational water to approximately 9,500 ML/day. A graph from the Plaintiffs’ Closing Submissions which depicts these facts is as follows: Throughout this period the storage level of Lake Victoria was low. At the end of August 2018 the Defendant sought to address that circumstance by commencing overbank transfers from Hume Reservoir. The flow rate at Yarrawonga Weir ultimately reached 15,000 ML/day in early-October and continued until late December 2018. Because the transfers were above the (reduced) channel capacity of the Barmah-Choke a significant amount of water was “lost” in the Barmah-Millewa Forest. A number of figures have been put forward but at one stage the Plaintiffs estimated that overbank transfers caused about 422 GL to be lost to the system in the 2018/2019 water year. That figure has now been shown to be too high, but at this stage it is sufficient to observe that the claim in respect of the 2018/2019 water year alleges a significantly greater loss of water than for the 2017/2018 water year. Despite that greater loss

of water to the system, the modelling evidence has shown that the effect on the allocation to New South Wales water entitlement holders in the 2018/2019 water year was less than for the 2017/2018 water year. The Plaintiffs submit that by mid-June 2018 a river operator acting with reasonable care would have realised that the low storage level of Lake Victoria necessitated the transfer of more water to the Lake. By late June 2018 a reasonable river operator would have taken steps to address the problem. Had that happened, by August 2018 the storage level of Lake Victoria would have improved. Less overbank transfers would then have been necessary. It is alleged that the Defendant’s failure so to act in late June was a breach of the duty of care owed to the Plaintiffs. The particulars of the allegation are contained in MFI-38. As stated above, I have approached the determination of the case on the basis that the Plaintiffs have abandoned all allegations of breach other than those set out in MFI-38. As set out in MFI-38, the breach in the 2018/2019 water year is alleged to have been constituted by the Defendant’s failure to take two reasonable precautions, namely: to direct earlier and greater in-channel transfers commencing “late June”; and to make additional calls on the Goulburn IVT account in June, July and August 2018. The Plaintiffs’ complaint about the Defendant’s operation

of the river in the 2018/2019 water year is the opposite of their complaint about the 2017/2018 water year. In the 2017/2018 water year the Plaintiffs’ say that the Defendant released water at Yarrawonga Weir too early such that water was lost when it subsequently rained. In the 2018/2019 water year the Plaintiffs’ say that the Defendant released water at Yarrawonga Weir too late such that water was lost when hopes for rain did not eventuate and it became necessary to address the low storage levels in Lake Victoria by large overbank transfers around the Barmah Choke. For the 2017/2018 water year the Plaintiffs complain that the Defendant did not act in accordance with the 2017/2018 AOP. For the 2018/2019 water year they criticise the Defendant for failing to depart from the 2018/2019 AOP. The juxtaposition of the two complaints may be thought to emphasise that river operations, not unlike batting, [213] involve questions of timing and judgement. The Plaintiffs nonetheless say the perception of internal tension in their case is superficial. They rightly point out that the conditions in each year were different. Given the particular conditions which pertained in the 2018/2019 water year, they argue that the Defendant breached its duty of care by failing to release more water earlier. So that that contention may be considered, it is necessary to set out in detail the events

relevant to the 2018/2019 water year. Temporal framework of the Plaintiffs’ case Before doing so, and so that it may be done in a manageable way, it is necessary to identify the temporal framework of the Plaintiffs’ case. The case being one of omissions, it is necessary for the Plaintiffs to anchor their allegations at a point of time at which they contend a river operator acting with reasonable care would have taken the alleged precautions. Whether or not that is so for all cases of omissions, it is for this case. There are two primary reasons why. First, the river operations functions performed by the River Operations Team are complex. They are heavily informed by information about historic events, present circumstances and modelled forecasts. The last two at least are in constant evolution. The River Operations Team receives a regular flow of information. The state of its knowledge changes day by day. The Defendant’s actions and inactions depend on its knowledge on any particular day. Secondly, the thing being operated by the River Operations Team is dynamic. An important aspect of the Murray River is the flow times between one location and another. A decision to release water today may have to be made having regard to the conditions of the river at a future date when the water is expected to arrive at the intended destination. The time when a particular decision to release

water (or not to release water) was made will determine what historic facts were known, what was forecast and what remained speculation. It is not possible to determine the reasonableness of the Plaintiffs’ alleged precautions in the abstract. The time when the omissions are alleged to have occurred are an integral part of the allegation. The standard of care which the Defendant had a duty to take depends upon what the Defendant knew or ought reasonably to have known: s 42 of the ACT Liability Statute. The terms of MFI-38 show that the Plaintiffs accept the necessity of a temporal anchor. As it relates to the 2018/2019 water year, MFI-38 specifies the following: “Around mid-June 2018, the reasonable precaution that a competent Authority would have decided to take was to direct earlier and greater in-channel transfers commencing late June 2018, and make (additional) calls on the Goulburn IVT Account in June, July and August 2018. That precaution was reasonable at that time because of: (a) the risks of which the [Defendant] was aware requiring vigilance of Lake Victoria; (b) WLWG’s preference to avoid overbank transfers in a Dry scenario; (c) the observed under-performance of Lake Victoria by mid-June 2018; (d) the forecast on 25 June 2018 that Lake Victoria would fall; and (e) the in-channel watering planned to commence in July, which would reduce flows to Lake Victoria.” The

allegation draws a distinction between taking the precautions and making the decision to take the precautions. Different dates are specified for each, with the latter naturally preceding the former. It is alleged that a river operator acting with reasonable care would have made the decision “around mid-June 2018”. The other dates which are specified (“late June” and “June, July and August”) are the dates when the decision would have been implemented. The decision is said to have been reasonable “at that time” because of the five specified circumstances. The specified circumstances provide more precision as to the time when the decision would have allegedly been made. The preference of the WLWG in circumstance (b) is said to have been expressed following a meeting on 2 May 2018. The forecast which is referred to in circumstance (d) is said to have been made on 25 June 2018. It follows from that last date that the Plaintiffs intend the reference to “mid-June” to be read liberally. It may be accepted that it includes 25 June. In the Plaintiffs’ favour, it may be accepted that it includes all of June 2018. Despite the terms of MFI-38 which, as I have said, was handed up on the last day of the hearing, many of the Plaintiffs’ submissions are directed to the Defendant’s conduct in a subsequent time period. In particular, submissions are made about information which the Defendant did

not receive until July or even mid-August 2018 when the rate of release at Yarrawonga Weir had already risen to 9,500 ML/day. The Plaintiffs refer to modelling which was not undertaken until July. Other than by impermissible recourse to hindsight, the receipt of such information is not relevant to a decision which the Plaintiffs allege would have been made by a reasonable river operator in June 2018. In light of MFI-38, I have considered whether the Plaintiffs may fairly rely on an alternative case to the effect that, the decision not having been made in June, it should have been made in July 2018. Such a case is not open for that part of the Plaintiffs’ case based on earlier and greater in-channel transfers. The Plaintiffs have not only specified when the decision would have been made but also when the releases would have commenced: late June 2018. The position with the additional calls on the Goulburn IVT account is more complicated because the Plaintiffs allege that the additional calls would have been made “in June, July and August”. As a precaution which a reasonable river operator would have taken, “additional calls” on the Goulburn IVT account does not appear to be an indivisible whole but rather a precaution of three separate parts. Nonetheless, I have decided that the Plaintiffs’ case is restricted to a decision to call on the Goulburn IVT account which would have been

made in June 2018. An allegation about a decision in July would be at large. The Plaintiffs do not specify the circumstances which pertained at any particular time in July. Both in their terms (“at that time”) and by their content, the five circumstances specified in MFI-38 are directed to June and not to July or August. That includes circumstance (e) which is not so much the in-channel watering which commenced on 16 July but the planning which occurred in May and June. Circumstances (b), (c) and (d) had ceased to apply by July. They had each been replaced by different circumstances. The WLWG met fortnightly. By July 2017, there had been further WLWG meetings. Any preference expressed by the WLWG on 2 May 2018 would have to be viewed in the context of what was said at the subsequent meetings in order to determine what a reasonable response would have been (if any). The further removed from 2 May, the more subsequent meetings had occurred. Absent some particularity, the adjudication of an allegation about a decision which should have been made in July would involve an unfair element of speculation. With that necessary temporal focus, the following is a narrative of the background facts. Background to the (non) exercise of the release power in June 2018 In-channel watering The description of the events in 2018 will benefit from an explanation of a particular river operation

called “in-channel watering”. Environmental water holders may decide to use some of their allocated water by undertaking in-channel watering of land adjacent to the Murray River, such as the Barmah-Millewa Forest. In-channel watering involves opening gates at the side of the River which allows water to leave the River and flow onto the surrounding land. The gates are called “regulators”. When in-channel watering is being undertaken in the Forest, and subject to any return flows which occur (there may not be any), the quantity of water which flows out when the Murray River leaves the Forest is less than when the River flows in. Dr Ladson has estimated that approximately 8.4% of water entering the Barmah-Millewa Forest is lost when in-channel watering is in progress, which loss is in addition to water which would be lost in transit even when the regulators are closed. The figure is only indicative because the losses depend on multiple factors including the release rate at Yarrawonga Weir, the number of regulators which are opened, the existing moisture content of the Forest floor, the temperature and the return flows. Nonetheless, the loss of water from in-channel watering may be material. In-channel watering affects modelling using the Fortran Assessment Model. If it is not taken into account, the Model may forecast more water arriving downstream, e.g. at Lake Victoria, than

will actually be the case. It may also affect operational decisions. Specifically, the regulators in the Barmah-Millewa Forest are located upstream from the Barmah Choke, so if the regulators are open it may be possible to release water at Yarrawonga Weir at a higher rate than would otherwise be possible and still keep the flow within the channel capacity of the Choke. In some of the documents, references are made to “translucent flows”. At least on some occasions, there does not appear to be a relevant difference between translucent flows and in-channel watering. In-channel watering is not the same as watering which is undertaken by releasing environmental water down the river at such a rate that it exceeds the channel capacity of the river and flows overbank onto the surrounding land. Dr Davis said environmental watering of the Barmah-Millewa Forest by that method is called a “Barmah-Millewa event”. Events leading up to the commencement of the 2018/2019 water year As set out above, cl 31 of the Agreement required the BOC each year to approve an O&O Document. The O&O Document for the 2018/2019 water year took the form of the previous O&O Document to which minor revisions were made. It described itself as “updated June 2018”. Apart from one matter, neither party said that there was any material change from the previous year. It is convenient to continue to refer to it as the

“O&O Document”. The material change was that cl 3.1 of Appendix A specified a lower maximum flow rate at Yarrawonga Weir for the purposes of avoiding undesirable inundation of the Barmah-Millewa Forest. During the 2018/2019 water year the specified channel capacity of the Barmah Choke was 9,500 ML/day. The concluding months of the 2017/2018 water year saw the following inflows: the inflows for January 2018 were exceeded by 66% of previous years; the inflows for February 2018 were exceeded by 91% of previous years; the inflows for March 2018 were exceeded by 95% of previous years; the inflows for April 2018 were exceeded by 96% of previous years; and the inflows for May 2018 were exceeded by 92% of previous years. On 12 April 2018 members of the River Operations Team attended an annual planning workshop with SCBEWC. A number of topics were discussed including “a shift in demands downstream in the summer months which is creating capacity and delivery issues” and the “resource availability…assessment shows a drying trend”. The difficulty presented by the unavailability of the MIL infrastructure was also discussed. Following the process described at [497]-[503] above, on 16 April 2018 the River Operations Team began preparing the 2018/2019 AOP. The same six scenarios were used as for the preceding year. The Fortran Assessment Model was run with observed data up to the end of March

2018. The model was run on the assumption that were the Murray River system to receive inflows which conformed to those assumed for the “dry” scenario, there would be no bulk transfers of water from Hume Reservoir to Lake Victoria in June. It was assumed that 69 GL would be transferred in July and more subsequently. Initially the water would be transferred within the channel capacity of the Barmah Choke. It was assumed that no calls would be made on the Goulburn IVT account until November. Based on those and all the other assumptions, in order to raise Lake Victoria to an acceptable level at the end of December 2018 there would be a need for transfers to increase above the channel capacity of the Choke in October 2018. The output from the testing for the “dry” scenario modelled that Lake Victoria would have 362 GL of stored water at the end of June, 426 GL at the end of July and 661 GL at the end of December 2018. It will be recalled that the storage capacity of Lake Victoria is approximately 677 GL. One piece of information which the Defendant did not have when it ran the Fortran Assessment Model on 16 April 2018 was the watering plans of the environmental water holders. The Defendant did not therefore make post processing manual adjustments to include environmental water. For the “dry” scenario, it was assumed that no environmental water would flow from the Goulburn River. By

the end of April indicative information about plans for environmental watering had been received by the Defendant. Incorporating that additional information, at the end of April the Fortran Assessment Model was run again. This time, for the assumption that the river system received inflows which conformed to the “dry” scenario, it was assumed that there would be no bulk transfers of water from Hume Reservoir to Lake Victoria in June, and 91 GL in July. It was still assumed that no calls would be made on the Goulburn IVT account until November. There would be brief overbank transfers in September, none in October and some more in November and December. This time the output from the testing for the “dry” scenario modelled that Lake Victoria would have 383 GL of stored water at the end of June, 486 GL at the end of July and 673 GL at the end of December 2018. The testing on 16 April 2018 also assumed that there would be overbank transfers in the “very dry” and “moderate” scenarios. On 2 May 2018 the WLWG held a meeting at Mildura which was attended by a number of officers from the River Operations Team. There is a dispute about what was said at the meeting which is addressed below. For current purposes, it is sufficient to say that the outputs which were obtained from the Fortran Assessment Model on 16 April 2018 were discussed. The Defendant’s representatives referred to “the

need to go overbank through the forest to get Lake Victoria full if dry conditions prevail”. Calls on the Goulburn IVT account were discussed. Another topic which was discussed was “shifts” in demand along the Murray River. The South Australian representatives were still to provide information about South Australia’s entitlement because the newly elected South Australian government might take a different approach to its predecessor. Another topic discussed at the meeting on 2 May 2018 was the decreasing channel capacity of the Barmah Choke. The minutes record: “[The Defendant] will target flows of 9 300 ML/d this coming water year 2018-19, which will need to be discussed with environmental water managers and reflected in environmental water accounting estimates.” The WLWG also discussed watering the Barmah-Millewa Forest when flows were below channel capacity. The minutes record: “WLWG also discussed the proposal from e-water managers to open the Barmah- Millewa regulators when flows are below channel capacity in winter/spring. [The Defendant] advised that the loss estimates are based on modelled flows, and that the model appears to be overestimating losses. The [Defendant] also discussed the need to consider if the loss should be reduced/waivered if followed by a natural overbank event that effectively meets the loss.” On 8 May 2018 the Defendant ran the Fortran Assessment

Model again. It assumed that there would be no deferrals by South Australia. It also assumed that there would be no overbank transfers in the “dry” scenario. The model was run so that the Defendant would have a base case with which to compare a further run of the model after South Australia’s deferral figures were received. Mr Bishop said in paragraph 609 of his First Affidavit that the test results obtained on 8 May 2018 showed that it might be possible to operate the river in the “dry” scenario without overbank transfers. He thought, however, that it would be a “high-risk strategy that might not be achievable”. He gave four reasons for that view. First, the strategy would require bulk transfers early in the water year which might give rise to a risk of spill from Lake Victoria into South Australia if it then rained. Mr Bishop gave evidence that he thought that the risk of spill was “moderate”. When that evidence is read in context, it is clear that Mr Bishop thought that the risk was “moderate” if there were no early season bulk transfers to Lake Victoria but “high” if there were. Secondly, the modelling showed that to run the river without overbank transfers would require large calls on the Goulburn IVT account from October. However, in May 2018 the balance of the IVT account was about 180 GL and future increases in the balance depended upon inter-valley trade between

private individuals who were beyond the control of the Defendant. With the account balance so low, Mr Bishop thought that calls on the Goulburn IVT account may be undeliverable. Thirdly, the strategy might even then result in lower Lake Victoria storage levels from December 2018 to March 2019 which would increase the risk of system shortfall. Fourthly, if the Defendant started down the path and it became apparent that more water was needed in Lake Victoria, overbank transfers would still then be needed, but they would have to occur later in the year than would otherwise be the case. Mr Bishop thought that it would be undesirable to commence overbank transfers later in the year because it would mean that there would be competition for limited channel capacity when demand is highest in summer. Soon afterwards, South Australia told the Defendant to assume that South Australia would defer 140 GL of its entitlement in the 2018/2019 water year. On 11 May 2018 the Defendant ran the Fortran Assessment Model again to incorporate the new assumptions about reduced demand by South Australia. Other assumptions were adjusted, including some to reflect further information which had been received from environmental water holders which increased their expected demand by 100 GL. On this occasion it was assumed that in the “dry” scenario bulk transfers would be made from Hume Reservoir to Lake

Victoria starting in July (70 GL) and would thereafter be sustained at close to the channel capacity of the Barmah Choke. The channel capacity of the Barmah Choke was assumed to be 9,300 ML/day. It was assumed that there would be no overbank transfers. It was assumed that calls on the Goulburn IVT account would be made in October (45 GL) and the following months. Calls for a total of 350 GL of Goulburn IVT water was assumed for the entire water year which Mr Bishop described as “very high”. This run of the Fortran Assessment Model was undertaken on the assumption that Lake Victoria would have a storage level of 300 GL at the end of May 2018. Whilst cl 103(4) of the Agreement specifies that Lake Victoria must have, in effect, a minimum storage level of 350 GL, the Defendant had asked the Ministerial Council to exercise its power to approve a minimum storage level of 300 GL as at the end of May 2018. The Ministerial Council had acceded to the request. The Defendant made the request because it was known that in June extra water would flow into Lake Victoria from Lake Mulwala. Lake Mulwala lies immediately behind Yarrawonga Weir. In 2018 Lake Mulwala was afflicted with an invasive waterweed. To address that environmental problem the Defendant planned to lower the level of Lake Mulwala, thereby depriving the weed of water and exposing it to frost. The lowering of the Lake would be

achieved by releasing approximately 100 GL of water downstream during May 2018. To address that movement of water the Fortran Assessment Model was run on the assumption that 60 GL of extra water would be in transit below Lake Mulwala during June 2018. It is unclear on the evidence why the quantity of water assumed to be in transit was less than the quantity to be released from Lake Mulwala. In the ordinary course there would be conveyance losses and evaporation losses over the 20 days it takes for water to flow from Yarrawonga Weir to Lake Victoria, but 40% seems high. It may be that the amount to be released would be less than 100 GL or it may be that some of the released water would have already arrived at Lake Victoria by the end of May. It does not ultimately matter. The key point is that at this point in time the Defendant’s modelling assumed that 60 GL would arrive in Lake Victoria in June. The output from the Fortran Assessment Model on 11 May 2018 modelled that Lake Victoria would have a storage level of 381 GL by the end of June. It would generally rise from that level to be 609 GL by the end of December 2018. The plan to tackle the invasive waterweed would mean that Lake Mulwala would remain low from the start of June until the middle of July, a period of six weeks. The Defendant would then refill the Lake with natural inflows from the upstream tributaries. Those

inflows, which would otherwise have passed through Lake Mulwala and flowed down the Murray River, would instead be held in Lake Mulwala. To address the refilling of Lake Mulwala, the Defendant’s modelling in May was undertaken on the assumption that 90 GL of water (subsequently increased to 100 GL) from the upstream tributaries would be held in Lake Mulwala in July and August 2018 rather than allowed to flow through. The Lake in fact regained its normal operating level on 15 August 2018, although the Defendant did not know this in May and June 2018. On 11 May 2018 or shortly after, the River Operations Team prepared a document which is referred to as the “Key Assumptions Document”. It is a three-page document which sets out a list of “assumptions and points of interpretation for the latest draft AOP plots for the 2018-2019 water year”. One of the listed assumptions was that the channel capacity of the Barmah Choke was 9,300 ML/day. It is unclear from the Key Assumptions Document what assumptions had been made about in-channel watering. The following two assumptions were included under the heading “E-water”: “* Hume ‘translucent’ releases in winter-spring (starting July) in minimum to 75% cases. Volumes range from 75 to 160 GL . … * No B-M regulator extraction assumed in any scenario.” As noted above, the term in the first assumption (“translucent” releases) may have been a

reference to in-channel watering, which inference is supported by the fact that the specified date (“starting July”) accords with what subsequently happened. There does not appear to be any dispute that the effect of the first assumption was that the modelling was being undertaken on the basis that there would be in-channel watering. On the other hand, in-channel water is undertaken by opening the regulators through which water flows from the river into the adjacent Forest so the second assumption may suggest that no in-channel watering was being assumed. On 22 May 2018 the Defendant sent an email to the members of the WLWG and attached graphs from the most recent output from the Fortran Assessment Model. In his covering email, Mr Bishop said that he had prepared the updated output “following feedback during our recent Mildura meeting”. One of the attached graphs depicted the assumed flow rate at Yarrawonga Weir as follows: The assumptions made for the “dry” scenario are depicted by the yellow line. As shown in the graph, at that point in time the transfer of water from Hume Reservoir to Lake Victoria was shown always to be at a daily release rate below the channel capacity of the Barmah Choke for the “dry” scenario. On 21 May 2018 Dr Davis approved a call on the Goulburn IVT account for 45 GL of water to be delivered in May 2018. On 30 May 2018 Dr Davis approved another call

for 20 GL of water to be delivered in June 2018. There is a lack of clarity about the purpose of these calls, but contemporaneous records show that it is most probable that they were to address a shortage of water arriving at the South Australia border under a specific environmental programme called the “River Murray Increased Flows” or “RMIF”. The details of the programme are not important other than to say that the programme involved the flow of significant quantities of water which originated in the Snowy Hydro Scheme to South Australia. The water from the programme had to be supplemented at the South Australian border due to losses which naturally occurred along the way. Had the supplemental water not been called from the Goulburn River under the IVT system it would have had to be drawn from Lake Victoria. Not all water called on 21 May 2018 had joined the Murray River by the end of May, with a total of 10.4 GL arriving between 1 and 10 June 2018. On 23 May 2018 there was a meeting of SCBEWC which was chaired by Mr Reynolds and attended by others from the Defendant including Ms Hickey. The Defendant gave a river operations update. It included a statement that there may need to be transfers at channel capacity or overbank transfers, which would happen later in the season but could be influenced by any agreement with environmental water holders jointly to deliver water

through the Barmah-Millewa Forest in spring/early summer. The minutes also record that “translucent regulator watering action” was planned to start in July and continue to the end of November. The regulators were to be closed from December. Options were discussed for overbank environmental watering and in-channel watering. On 31 May 2018 the Bureau of Meteorology issued a Climate Outlook for the next three months. In its following Weekly Report, the Defendant described the information in the Climate Outlook as “indicating a higher likelihood of drier than normal conditions over winter” and that it forecast “seasonal streamflow up to July is more likely to be lower than normal along upper Murray tributaries”. The Bureau issued another Climate Outlook on 14 June 2018 which was to a similar effect. The report of the Defendant’s Chief Executive dated 19 June 2018 said that the Climate Outlook showed “a greater than 80% chance of drier than above conditions” for northern Victoria and southern and western New South Wales, although it also included a qualification by reason of the Bureau’s self-described low skill in the winter forecast. As noted above, system inflows for May 2018 were exceeded by 92% of previous years. June 2018 The new water year commenced on 1 June 2018. At that time, the storage level of Lake Victoria was 298 GL. Although less than the 350 GL minimum specified in

the Agreement, the Ministerial Council had approved the lower storage level in the circumstances referred to above. The Defendant continued the preparation of the 2018/2019 AOP. On around 5 June 2018 the Fortran Assessment Model was run with observed data up to the end of May 2018. For the assumption that the river system received inflows which conformed to the “dry” scenario, it was assumed that there would be bulk transfers of 25 GL of water from Hume Reservoir to Lake Victoria in June. The bulk transfers would flow within the channel capacity of the Barmah Choke. At that point of time, the Defendant was assuming a channel capacity at the Choke of 9,500 ML/day as set out in another version of the Key Assumptions Document prepared by the Defendant on about 5 June 2018. For the months after June the bulk transfers were assumed to continue at increasing volumes, rising to flow rates in late August at or just below the channel capacity but not materially exceeding it. The flows were then assumed to continue at the capacity of the channel until mid-April 2019. At that point of time the graph which depicted the flow at Yarrawonga Weir was as follows: It was assumed that in the “dry” scenario there would be no call on the Goulburn IVT account until October, from which time the Defendant would call for 30 GL of water per month, rising to 60 GL in January 2019. The total water to be

called from the Goulburn IVT account in the 2018/2019 year was assumed to be 350 GL. The output showed that for the assumption that the river system received inflows which conformed to the “dry” scenario, Lake Victoria would have 393 GL of stored water at the end of June, 450 GL at the end of July, 609 GL at the end of November and 521 GL at the end of December 2018. The graph which depicted the forecast level of Lake Victoria was as follows: At that time the Key Assumptions Document included the following assumption under the hearing “E-water”: “Hume ‘translucent’ releases in winter-spring (starting July) in minimum to 75% cases.” The further assumption which had been made in the previous version of the Key Assumptions Document (No B-M regulator extraction) was omitted. The output from the Fortran Assessment Model run carried out on 5 June 2018 was provided to the members of the WLWG on 22 June 2018, together with the latest version of the Key Assumptions Document. They were discussed at the WLWG meeting on 25 June 2018 which Dr Davis chaired. Eleven other officers of the Defendant attended including Ms Hickey and Mr Bishop. A total of eleven representatives attended from New South Wales, Victoria, South Australia and the Commonwealth. An update on conditions was given which stated that there was some rainfall in the upper Murray and the catchment for Ovens River throughout

early to mid-June with over 40-60mm in some areas, although the last week had remained dry with almost no rainfall in the upper Murray catchments. Increased tributary responses from the rain earlier in June were also reported. The minutes of the meeting on 25 June 2018 include the following reference to the storage level of Lake Victoria: “Lake Vic – The storage volume at Lake Victoria has increased to 362 GL forecast to fall away to over the coming week.” The minutes record that the balance of the Goulburn IVT account was assumed to be 152 GL. The actual balance apparently fluctuated on a frequent basis. There is evidence that the balance was 166 GL at the end of June. It is unclear how either figure accommodates the 20 GL call made by the Defendant on 30 May 2018, the 10.4 GL delivered in June for the earlier call on 21 May 2018 or the difference between the quantity called and the quantity delivered. The minutes also record that the Defendant was reviewing seasonal diversion pattern data from recent years and might rerun the Fortran Assessment Model, but no significant impact was expected. The Defendant was to prepare a draft of the 2018/2019 AOP and provide it to the members of the WLWG the following week. The minutes also record that the WLWG approved the “AOP for June and July 2018”. A special meeting of the WLWG was held on 26 June 2018 to discuss the accounting

arrangements for in-channel watering of the Barmah-Millewa Forest. Six officers of the Defendant attended, including Ms Hickey. The meeting was told that it was the intention of environmental water holders to commence in-channel watering on 2 July 2018. That intention was underscored by the need to hold the special WLWG meeting before in-channel watering commenced. The outcome of the meeting is addressed in an earlier interlocutory Judgment in these proceedings: Doyle’s Farm Produce Pty Ltd v Murray Darling Basin Authority [2025] NSWSC 1070. For the purposes of accounting for in-channel watering in the 2018/2019 water year, it was agreed that the channel capacity of the Barmah Choke would be 9,500 ML/day. The Defendant subsequently accounted for water in the river system on that basis without objection from the States or the environmental water holders. A meeting of SCBEWC was held on 27 June 2018 which was chaired by Mr Reynolds. Eight officers of the Defendant attended including Ms Hickey. Ms Hickey gave a report on river operations in which she said that the tributaries and Ovens and Kiewa Rivers had been receding after recent rain. She also said that the channel capacity of the Barmah Choke was being formally changed in the accounting sheets “to 9,500 ML/day, down from 10,000 ML/day”. The Defendant presented a document which referred to translucent flows with open forest

regulators between July and December and a demand from environmental water holders of 50 GL. On 28 June 2018 the Bureau of Meteorology issued a Climate Outlook for the next three months. In terms of rain, it was essentially the same as the Climate Outlooks issued on 31 May and 14 June 2018: dry. System inflows in June 2018 were exceeded by 90% of historic flows. Throughout June water had been released at Yarrawonga Weir at a rate which fluctuated between 4,000 and 5,000 ML/day. From 28 June 2018 the Defendant progressively received orders from the NSW and Victorian Environmental Water Holders for in-channel watering of the Barmah-Millewa Forest to commence on 16 July 2018. On 29 June 2018 the Defendant circulated a draft of the 2018/2019 AOP. After June 2018 As at 1 July 2018 the storage level of Lake Victoria was 364 GL. Throughout July 2018 the Defendant released operational water at Yarrawonga Weir at gradually increasing rates which fluctuated between approximately 3,000 ML/day and 5,000 ML/day. From late June until 10 July 2018 there was work on the Gulpa Creek regulator which inhibited the flow of the Murray River just above the Barmah Choke. The works may have been relevant to the date when in-channel watering commenced through the forest regulators (16 July) but there is no suggestion that the works impeded the Defendant’s operation of the River. On 2 July 2018 the

Fortran Assessment Model was run again with minor modifications to the previous run. For the assumption that the river system received inflows which conformed to the “dry” scenario, this run assumed that bulk transfers of water to Lake Victoria would gradually increase and from August they would run at or just below the channel capacity of the Barmah Choke. There would be no overbank transfers. There is a dispute about whether an allowance was made in the modelling for water lost through in-channel watering (see below). The next meeting of the WLWG was on 10 July 2018. Dr Davis chaired the meeting and nine other officers of the Defendant attended, including Ms Hickey and Mr Bishop. The minutes record that 25-50mm of rain had fallen in the previous week and that the Bureau of Meteorology was forecasting up to 50mm in the next eight days, mostly in the last four days. As recorded in the minutes, the Defendant referred to Yarrawonga Weir and said: “We will increase the release in the coming week to deliver translucent releases – we have been waiting for works on Gulpa Creek to be completed in mid July. Once these works are completed we can increase the release d/s Yarrawonga above 4,000 ML/day and the forest regulators will be opened.” The minutes also recorded that Lake Victoria was at 365 GL and steady. On 12 July and again on 26 July 2018 the Bureau issued a further three-month

Climate Outlook which continued to forecast dry conditions. On 16 July 2018 regulators were opened in the Barmah-Millewa Forest and in-channel watering commenced. The environmental water holders ordered that it continue until 31 December 2018 unless the 50 GL order limit was exhausted before then. The evidence shows that the Defendant did not expect there to be any return flows from the in-channel watering. All the environmental water would be used in the Forest. On about 24 July 2018 the River Operations Team prepared a briefing document for the WLWG which was referred to as “dot points”. The document stated that analysis of current and forecast conditions and demands suggested that bulk transfers to Lake Victoria will be required in the coming weeks if the current dry conditions persist. The document contemplated an increase in the flow rate at Yarrawonga Weir, reaching the capacity of the channel by August. The document then set out an overview of various matters touching on the future flow rate. The list of considerations included the risk of spill, capacity constraints, the availability of water from the Goulburn IVT account and environmental water delivery implications. One aspect of the environmental considerations addressed in the document was the current translucent releases. In relation to the Goulburn IVT account the document stated: ● “Given the current large

balance in the Goulburn IVT account (~230 GL) RMO considers there is also a good opportunity to draw on IVT early while still maintaining significant IVT resource for use in meeting peak summer demands. At this stage, RMO are considering bringing forward delivery of IVT to August or September — which would be earlier than indicated in the draft AOP. This approach will allow flexibility in responding to conditions and risks over the coming months and seek to make appropriate use of both Hume and Goulburn IVT resources. ● [The Defendant] will apply a cautious approach to the use of IVT, noting that early season use must be balanced against the need to have sufficient IVT water available for delivery to meet peak summer demands. Any use in August or September would initially only be to the extent to bring the balance down to ~180 GL so that trends on trade can be observed before drawing further on the account. To give effect to this, up to 50 GL of IVT would be called upon.” The document addressed the risk of spill in the following terms: ● “Risk of Spill: ○ Given the relatively early timing of these bulk transfers, storage spill — particularly at Lake Victoria — remains a possibility if conditions trend significantly wetter. As always, if a physical spill at Lake Victoria did occur, any SA deferred water in Lake Victoria at that time would be affected, however with the transfers

from Hume and Dartmouth, it is likely that this volume would be low and limited to the current month deferral. However, even though sufficient time remains through winter-spring for conditions to wet up, analysis of historic inflow trends suggests that the likelihood that rainfall and inflow will be enough to track the system towards a significantly wetter year becomes less and less as dry conditions persist over winter. (Dry catchments and prevailing climatic drivers generally limit this possibility in years when reasonable wetting up has not occurred through May-July.) ○ Given these factors along with current and target storage levels, RMO now considers the risk of spill to be quite low.” On 25 July 2018 the WLWG approved the bulk transfers contemplated in the dot points document. The minutes of the meeting also record: “Downstream of Yarrawonga weir the release is 5,000 ML/day which will increase in the coming week as we deliver translucent releases. The forest regulators opened on 16th July and are using RMIF.” On 31 July 2018 the Defendant published the 2018/2019 AOP. It took the same form as the 2017/2018 AOP which is addressed above. The introduction contained the following text: “It is important to note that the actual conditions that occur in the 2018–19 water year will not be confined to a single scenario. This is in-part driven by our highly variable climate where

one month can be wet followed by a month of dry. Other variables include the patterns of environmental water delivery and use. However it is expected the scenarios in this plan indicate the likely breadth of potential river operations in the 2018–19 water year.” The 2018/2019 AOP specified that the channel capacity of the Barmah Choke was around 9,500 ML/day. No overbank transfers of operational water were contemplated for the “dry” scenario. In relation to bulk transfers of water to Lake Victoria, the following passage was included: “As demonstrated by the ‘dry’ scenario in this plan, the system could be operated without the requirement for operational flows above the Barmah Choke channel capacity however flows at or near channel capacity rates for extended periods would be necessary (i.e. from around August 2018 to April 2019). To meet downstream requirements in this scenario, a record volume of Goulburn IVT water (similar to or possibly more than the volume delivered in 2017-18) is likely to be required and the opportunity to deliver environmental water to South Australia is reduced. This is based on the assumptions that: ● Delivering operational transfers at channel capacity through the Choke during late winter and spring 2018 limit the need to release environmental water from Hume to maintain minimum flows and provide ‘translucent’ releases within channel downstream of

Yarrawonga; ● There is no natural cue trigger to deliver water overbank into the Barmah-Millewa forest; and ● Environmental water holders are unlikely to order water for delivery at the South Australian border when this is likely to increase the risk of system shortfalls. Whilst this approach minimises system losses, there are increased erosive pressures on the Barmah Choke and lower Goulburn River channel, possible challenges in filling Lake Victoria and increased risks of shortfalls. It would be more preferable, as shown in the ‘very dry’ and ‘moderate’ flow scenarios to have operational flows above channel capacity for a month or more. This approach would reduce pressure on the Barmah Choke and lower Goulburn River channel, provide more assurance of meeting operational targets for Lake Victoria and assist in mitigating shortfall risks. The timing of these operationally driven overbank flows would likely be aligned with Barmah-Millewa environmental requirements as described in Section 8.3 and provide favourable conditions for follow-up environmental watering actions in the forest if they are desired.” The following is the graph which depicted the flow rate at Yarrawonga Weir: The 2018/2019 AOP addressed in-channel watering of the Barmah-Millewa Forest as follows: “The capacity of the Choke varies over time and is influenced by both normal river flows and larger overbank

flows. … Running the Choke at, or close to channel capacity, for extended periods increases erosive pressures on the channel banks through the Choke. Where erosion leads to bank slumping or erosion of the natural levee, channel capacity may be reduced.” The 2018/2019 AOP contemplated that the Defendant would make a 15 GL call on the Goulburn IVT account in August and September and a 30 GL call in each subsequent month. System inflows in July 2018 were exceeded by 95% of historic flows. At the end of July 2018 the storage level of Lake Victoria was 372 GL. On 1 August 2018 the Defendant began to increase the release rate at Yarrawonga Weir. On 8 August 2018 the Defendant directed an increase in the release rate to the maximum capacity of the Barmah Choke, namely 9,500 ML/day. The flows reached the channel capacity of 9,500 ML/day on 11 August where they remained until 31 August 2018. On 10 August 2018 members of the River Operations Team received an email from a former employee of the Defendant’s predecessor, who was then working for the Commonwealth Environmental Water Holder. The former employee stated that “the standard demand profile curves” of irrigators are not relevant in “a drought year” because demand is driven by winter crops so peak demand shifts forward to August-September. By 13 August 2018 the view of Dr Davis, Ms Hickey and Mr Bishop had reached the point where

they considered that it would be necessary to increase the transfer of water to Lake Victoria above the channel capacity of the Bamah Choke if it did not rain. Their view was discussed with the WLWG on 13 August 2018. The Plaintiffs accept that overbank transfers had become necessary by mid-late August 2018. On 15 August 2018 there was an email exchange between a number of officers of the Defendant, including with Mr McLean, and some environmental water holders in which Mr McLean referred to the “new ‘channel capacity’”. He amplified the reference by stating that in 2018/2019 the new channel capacity was 9,500 ML/day at Yarrawonga Weir which would deliver a flow at Picnic Point of around 2.6m if all forest regulators are closed. That was a higher figure than that which Mr McLean had presented to the WLWG on 2 May 2018 (cf 9,300 ML/day). The purpose of Mr McLean’s email was to seek the approval of environmental water holders for the application of accounting rules for in-channel watering which had been occurring for 30 days as at 15 August 2018. The accounting rules applied up to a maximum release rate of 9,500 ML/day but the Defendant wanted to increase the release rate to 9,800 ML/day for which consent was sought. On 15 August 2018 the Defendant made a 40 GL call on the Goulburn IVT account. The first water from the order reached McCloy’s Bridge on 18 August 2018 at the rate

of 932 ML/day. McCloy’s Bridge is just short of the confluence of the Murray and Goulburn Rivers. The flow rate increased up to 2,669 ML/day on 31 August. Twenty-seven gigalitres of Goulburn IVT water had been delivered by the end of August 2018. A meeting of the WLWG was held on 28 August 2018 at which bulk transfers of 12,000-13,000 ML/day at Yarrawonga Weir were approved. On 31 August 2018 the storage level of Lake Victoria was 333 GL. That was the lowest level for that time of year for the past five years and lower than the level during the millennium drought year of 2002/2003. On 31 August 2018 the Defendant directed the release of water at 12,000 ML/day at Yarrawonga Weir. The release rate continued to increase until 11 October 2018 when the rate reached 15,000 ML/day. Overbank transfers of operational water continued until 13 December 2018. By way of interim agreement, on 10 September 2018 the Defendant gained access to the MIL infrastructure. From September 2018 until February 2019 184 GL of water was transferred through the MIL infrastructure around the Barmah Choke. Access to the MIL infrastructure is addressed in more detail below. Plaintiffs’ submissions In the 2018/2019 water year the Plaintiffs allege that there was a precaution which a river operator acting with reasonable care would have taken but which the Defendant did not take. The precaution is comprised of

two parts, namely to commence earlier and greater in-channel transfers and to call on the Goulburn IVT account. The Plaintiffs allege that a river operator acting with reasonable care would have decided to take the precaution “around mid-June 2018”. As explained above, that formulation may be taken to extend to the end of June 2018. The Plaintiffs have specified five circumstances which pertained at that point of time which they say would have caused a river operator acting with reasonable care to decide to take the precaution. The Plaintiffs submit that instead of taking the precaution the Defendant did nothing in the “vague hope of rain”. The five circumstances relied upon by the Plaintiffs for this part of the case are set out at [1020] above. The Plaintiffs submit that there are four documents prepared by the Defendant after the event which contain acknowledgments of failings by the Defendant. Defendant’s submissions The Defendant generally disputes the Plaintiffs’ characterisation of the five circumstances. Once they are more correctly understood, the Defendant submits that the risk of spill and other considerations were such that a river operator acting with reasonable care could have decided to wait before either making greater releases at Yarrawonga Weir or calling on the Goulburn IVT account. There is no dispute that by mid-August 2018 it had become necessary to act

and the Defendant did. The Defendant submits that it was not merely “hoping for rain” and that none of the four documents contain a relevant acknowledgement of a failure by the River Operations Team. Circumstances in June 2018 Each of the five circumstances relied upon by the Plaintiffs needs to be considered, following which the claim about the omitted decision to implement the two parts of the precaution can be determined. Vigilance about the storage level at Lake Victoria References are made above to the central role which Lake Victoria plays in the operation of the Murray River system, situated as it is as the last major storage before the South Australian border. There is no dispute that the storage level of Lake Victoria is vital to the operation of the Murray River system. In terms of gigalitres, the Lake Victoria Operating Strategy requires Lake Victoria to be drawn down to a minimum of 350 GL by the end of May after which it is to be refilled by the end of December to assist with meeting South Australia’s entitlements over summer and autumn. The Defendant’s witnesses readily accepted that the storage level of Lake Victoria needed to be closely monitored “daily or close to daily”. Mr Bishop’s reference to “steering” Lake Victoria through the water year is apposite. The Plaintiffs submit that from May 2018 the Defendant knew that there were risks facing river operations

in the 2018/2019 water year which called for vigilance with respect to the storage level at Lake Victoria. The following risks are listed: at the end of May 2018 the storage level of Lake Victoria was 298 GL, which was well below the usual minimum of 350 GL; 100 GL of water which would normally flow down the Murray River in July and August would instead be held to refill Lake Mulwala; the Menindee Lakes would not be available to the Defendant in the 2018/2019 water year; the MIL infrastructure was not available to the Defendant to assist with transferring water around the Barmah Choke; the channel capacity of the Barmah Choke was 9,500 ML/day which was 500 ML/day lower than the previous year; the inflows in January, February, March, April and May 2018 had been less than 90% of previous years, which corresponded with the “dry” scenario; and on 31 May 2018 the Bureau of Meteorology issued a Climate Outlook which forecast dry conditions over the three-month period from June to August. Each of these matters may be accepted as a fact, although the inflows for January 2018 were exceeded by 66% of previous years which did not correspond to the “dry” scenario. There were other facts which in three respects qualify the significance of those emphasised by the Plaintiffs. First, in relation to the storage level of Lake Victoria at the end of May, the Ministerial Council had approved the

drawdown below the 350 GL required by cl 103(4) of the Agreement because in June 2018 additional water was in transit from Lake Mulwala. The Defendant assumed 60 GL would be in transit which, when added to the water already stored in Lake Victoria, gave a total of more than 350 GL. The Plaintiffs’ focus on the 298 GL end-May figure is illusory. More pertinent is the fact that the need to refill Lake Mulwala in July and August would reduce flows from the upstream tributaries compared to that which would otherwise occur. The Defendant was aware of the issue. It had assumed that there would be a 90 GL reduction in flows in July and August which it incorporated in its modelling. The Defendant subsequently increased that assumption to 100 GL. Nonetheless, the Plaintiffs are correct to say that refilling Lake Mulwala was an unusual event which complicated further the already complicated system which the Defendant was operating. Secondly, in relation to the low inflows in the first months of 2018, the Defendant operates with a water year which commences on 1 June. The water year has been adopted to reflect the historic pattern of annual rainfall across the four seasons of the year. In any given year, the observed data from January to May are relevant to the starting point for the next water year, but they do not foretell whether the next water year will correspond to the assumed

conditions for the “dry” scenario or any other scenario. Rain during June, July, August and September, which are historically the wettest months of the year, is much more important when considering what historic inflows the new water year will resemble. Thirdly, in the usual way the Bureau of Meteorology Climate Outlook issued on 31 May 2018 addressed rain for the next three-month period. As explained above, rain may be forecast with some reliability for the next four days, and with some interest for the following four days, but beyond that it is speculation. The position was no different in June 2018. If anything, the Bureau’s ability to make accurate long-term forecasts was lower than usual in June 2018. The Defendant’s Weekly Report on 6 June 2018 recorded advice from the Bureau that, compared to other years, the “predictive skill of seasonal outlooks” was reduced for 2018. The Report of the Chief Executive for a meeting of the Defendant on 19 June 2018 referred to the Bureau’s Climate Outlook for June to August 2018 and stated: “As both the Pacific Ocean and Indian Ocean climate drivers are forecast to remain near neutral preventing the formation of a strong weather pattern, the skill in the winter forecast remains low.” In his First Report, Dr Ladson says that the Bureau provides a historical forecast accuracy of its climate outlooks. The Climate Outlook issued on 31 May

2018 was “moderate” over eastern New South Wales and “low” to “very low” everywhere else. The Climate Outlook issued on 14 June and 28 June 2018 were “moderate” everywhere. The definitions of “low” and “moderate” were not specified. It is not known whether they were intended to apply to the entire three-month period covered by each climate outlook or the early part of that period. The demarcation or overlap between “eastern NSW” and the Murray-Darling Basin was not stated. In her Affidavit, Ms Hickey said that as a result of reviewing the climate outlooks and other forecasting material from the Bureau of Meteorology she thought that dry conditions were expected to continue over the Murray River system and the surrounding catchment. For the purposes of considering the storage level of Lake Victoria in the following months, the evidence does not reveal a rational basis for significant regard to be had to the rain forecast in the Bureau’s Climate Outlook issued on 31 May 2018 or at any other time. Even with those three qualifications, the Plaintiffs are correct to submit that the conditions at the commencement of the 2018/2019 water year called for vigilance with respect to the storage level at Lake Victoria. The Defendant’s witnesses accepted the proposition and, as the Plaintiffs submit, did so without hesitation. It is not surprising given the central role Lake Victoria plays

in delivering South Australia’s entitlements. The only room for dispute is whether the vigilance required in the 2018/2019 water year was anything more than that required in every other year. The Plaintiffs submit that especial vigilance was required. In support of that submission two evidentiary references are given to matters said to have been accepted by the Defendant’s witnesses in cross-examination. Neither reference supports the submission. One reference is to the opposite effect. After being taken through the risks listed above, Mr Bishop gave the following evidence: Q “And in those circumstances river operators for that coming year, 18/19 needed to be more vigilant?” A. “I mean, those risk factors can always emerge so we always need to be vigilant.” Further support for the Plaintiffs’ position might have come from Dr Ladson’s First Report where he said that the Murray River system was “unusually vulnerable” at the beginning of the 2018/2019 water year. Dr Ladson gave some reasons for that view, some of which are the same as those now relied upon by the Plaintiffs and some of which are not. The point is not so much the usualness or otherwise of the vulnerability of the river system, but the vigilance required for the storage level of Lake Victoria. Although not of significant probative value to the historic fact, it is Dr Ladson’s view that the Defendant recognised the

vulnerability of the system in early 2018 and incorporated that vulnerability into its planning. It does not then matter whether the vigilance which was called for was especial. Dr Ladson appears to accept that there was vigilance. Other than by reference to hindsight, the Plaintiffs have not demonstrated that the 2018/2019 water year was materially different to any other year from a river operations perspective. As the Defendant’s witnesses explained, every year presents risks necessitating that the storage level of Lake Victoria be constantly monitored as the Defendant tries to steer the Lake through the water year. The presence of additional risks in some years, including the 2018/2019 water year does not alter that circumstance. WLWG’s preference to avoid overbank transfers in the “dry” scenario The Plaintiffs submit that a decision was made at the WLWG meeting on 2 May 2018 “not to plan for overbank in the Dry Scenario”. They also submit that the Defendant was advised that overbank transfers “were to be avoided” in the “dry” scenario. Perhaps more tentatively, they submit that the WLWG “endorsed and encouraged the use of Goulburn IVT as a way of avoiding the need for operational overbank transfers”. The submissions call for a finding of fact based on a more detailed review of the evidence about the WLWG meeting on 2 May 2018. As set out above, at the end of April 2018 the

Defendant ran the Fortran Assessment Model based on the assumption that there would be some overbank transfers if the river system received inflows which conformed to those assumed for the “dry” scenario. On 2 May 2018 the output was considered at the WLWG meeting at Mildura. The minutes include the following passage: “5. Draft Annual Operating Plan 2018-19 ● [The Defendant] presented the plots for the draft 2018-19 AOP and the key assumptions for each AOP scenario. WLWG noted the plots in particular the various possible release strategies for Dartmouth and the need to go overbank through the forest to get Lake Victoria full if dry conditions prevail. ● WLWG discussed the key assumptions and scenarios, noting: ○ Maintaining the Murrumbidgee IVT assumption as 0 GL is sensible given the current growth in cotton in the Murrumbidgee supported by high cotton prices. ○ SA will provide an update at a later meeting on its deferred water plan, as some indication that the new SA Cabinet might have a different approach to the previous SA government. ○ Discussed assumptions regarding the timing of use of the Goulburn IVT and available volumes. WLWG agreed further discussion is required around the best way to balance potential early call outs against having water available in the IVT to use when additional resources downstream of the Barham Choke are needed. ○ NSW indicated that the

evaporation loss assumptions for the Menindee Lakes System looked too low and WaterNSW will share with [the Defendant] information on loss rates for inclusion into the AOP. ○ NSW advised tocontinue to assume no access to Murray Irrigation Limited infrastructure for planning purposes. ○ WLWG agreed that a review of the demands (temporal and spatial) would be worthwhile given the recent shifts observed along the Murray. [The Defendant] to look at the recent 5 years of data and compare to the AOP scenarios and provide this information back to WLWG. Action: - [The Defendant] review recent demands and compare to AOP demands assumptions and report back to WLWG - WaterNSW to advise [the Defendant] of loss assumptions for Menindee - SA to advice [the Defendant] and WLWG on SA deferred water plan approach.” Dr Davis, who chaired the meeting, was cross-examined about this passage. It was put to him that the discussion of the need to go overbank led to a discussion of “other options” and that the discussion about the greater use of the Goulburn IVT account was part of those discussions. Dr Davis agreed. He agreed that there had been some exploration of the ways to avoid making overbank transfers. Mr Bishop was also at the meeting. It was put to him in cross-examination that the WLWG wanted “to see a greater and earlier call out of Goulburn IVT with a view to avoiding overbank transfers”.

Mr Bishop did not think that was what the minutes said but he made clear that he does not now remember the discussion at the meeting on 2 May 2018. At another time during his cross-examination Mr Bishop was asked about detrimental channel erosion caused by prolonged in-channel flows. By way of introductory context to that topic, it was put to Mr Bishop that the WLWG had said “let’s avoid overbank and let’s use Goulburn IVT”, to which Mr Bishop said “yes”. Given Mr Bishop’s clear evidence that he does not actually recall what was said on 2 May 2018 and the objective plausibility of that evidence, Mr Bishop’s “yes” is not to be understood as evidence that someone in the WLWG said what was put to Mr Bishop. Mr Bishop’s response was an acceptance of the premise upon which the following questions would precede. That understanding of Mr Bishop’s “yes” is also consistent with the text of the contemporaneous minutes (both the record of the discussion and the action items) which do not record a decision about overbank transfers in the definitive terms for which the Plaintiffs contend (see below). Ms Hickey was also at the meeting on 2 May 2018 but does not give evidence about what was discussed other than by reference to the topic of overbank transfers. Another Defendant witness who was present at the meeting was Mr Foreman. He agreed that calls on the Goulburn IVT account were

discussed, as was the case at all meetings of the WLWG. Returning then to the contemporaneous document, the minutes record that a number of other aspects of the output from the Fortran Assessment Model were discussed, including: the assumption for the evaporation rates at the Menindee Lakes, which a representative from New South Wales said were too low, and about which further information would be provided to the Defendant; demands for water (temporal and spatial), about which the WLWG said a review would be worthwhile; and an update of South Australia’s deferral plans which were to be provided to the Defendant. The minutes record action items which relate to the output from the Fortran Assessment Model and the preparation of the AOP for the 2018/2019 water year. There was an action item for each of the matters referred to in the preceding paragraph. There was no action item in relation to bulk transfers to Lake Victoria in the “dry” scenario, nor in relation to calls on the Goulburn IVT account. As set out above, on 8 May 2018 the Defendant was informed by South Australia that the Defendant should assume that South Australia would defer 140 GL of its entitlement in the 2018/2019 water year, to be modelled at a pro-rata rate during the months of September to April. The news was a significant relief for the demands on the system in the forthcoming water year. In paragraph 612 of

his First Affidavit, Mr Bishop said that the 140 GL deferral by South Australia eased the pressure on overbank transfers in the “dry” and “extreme dry” scenarios but did not negate the need to plan for overbank transfers. On 11 May 2018 the Defendant ran the Fortran Assessment Model again and incorporated the new information from South Australia. It also incorporated further information about the watering plans of environmental water holders, adjustments to the assumptions about inflow from the Snowy River and updated assumptions about consumptive demand. On this occasion it was assumed that there would be no overbank transfers if the river system received inflows which conformed to those assumed for the “dry” scenario. It was also assumed that there would be “very high calls” on Goulburn IVT quantified as 390 GL, which was “assumed to be deliverable”. The Defendant also prepared a Key Assumptions Document which stated that it “incorporate[d] feedback from WLWG at the Midura meeting”. The Document recorded the assumptions that the channel capacity of the Barmah Choke was assumed to be 9,300 ML/day and Mr Reynolds gave evidence that there would be no in-channel watering of the Forest. On 22 May 2018 the Defendant sent an email to the members of the WLWG which attached graphs from the most recent output from the Fortran Assessment Model together with the Key Assumptions Document.

In his covering email, Mr Bishop said that he had prepared the updated output “following feedback during our recent Mildura meeting”. Mr Bishop also stated in his email: “I’m sure you’re all aware, but just a reminder that the plots are derived from model outputs. They are on a monthly time step and represent planning scenarios only, not what will actually take place. The plots of flow show monthly volumes or average flows only and therefore do not show the actual range of daily flow rates that could occur. The aim of these scenarios is to show the range of how the system could be operated from very dry to very wet conditions. Finally, given their draft status, could I ask that you do not further circulate this email or the information on Govdex.” The graph which has been extracted at [1049] above was one of the graphs attached to the email. Dr Davis was cross-examined about the graph. It was put to him that the graph showed bulk transfers of water from Hume Reservoir to Lake Victoria commencing in June 2018 in the “dry” scenario. Dr Davis did not agree. He said it was hard to tell whether the level of flow in June resulted from bulk transfers of operational water or whether it was simply the flow which was required to meet demand. It was in any event evident that Dr Davis had no independent recollection of the graph and he was doing no more than interpreting it in the witness

box. From this evidence the Plaintiffs submit that inferences should be drawn that at the WLWG meeting on 2 May 2018 the Defendant was advised not to plan for overbank transfers, that overbank transfers were to be avoided in the “dry” scenario, and that the Defendant was endorsed and encouraged to use Goulburn IVT as a way of avoiding the need for overbank transfers. Apart from the evidence given by Dr Davis and Mr Bishop, the Plaintiffs say that the inferences are supported by the fact that after the meeting the assumptions about overbank transfers were changed for the next run of the Fortran Assessment Model. They emphasise that Mr Bishop’s email on 22 May 2018 and the Key Assumptions Document stated that the output from the next run followed “feedback” from the meeting in Mildura. The Plaintiffs submit that the feedback to which Mr Bishop was referring was the discussion about overbank transfers in the “dry” scenario and potential early calls on the Goulburn IVT account. The meagre evidentiary basis for the Plaintiffs’ submissions is overwhelmed by the evidence to the contrary. The documents are the best guide to what happened at the meeting on 2 May 2018. There is no doubt that the topics discussed included overbank transfers if dry conditions prevailed and the timing of calls on the Goulburn IVT account. Other than what is to be inferred from the interrelated nature of

those two topics, together with all the other topics relevant to operating the Murray River, the Plaintiffs have not proved that anything was said, much less any decision was made, which obliged the Defendant to avoid overbank transfers in the “dry” scenario. The words of the minutes do not record any such decision. That is not surprising because it is implausible that such a decision would have been made in May 2018 about a system as complex and unpredictable as the Murray River. On the contrary, the minutes record that the WLWG wanted further work to be done and further consultations to be had about multiple topics, one of which was the timing of calls on the Goulburn IVT account. The third pale bullet point quoted at [1114] above records that further discussions were necessary because there needed to be a balance between (1) calling on the IVT account early and (2) not calling on the IVT account early so that it would be preserved as a source of additional water when needed. That was evidently a reference to summer and autumn when consumptive demand is high and the Goulburn IVT account is usually called upon. If, as the Plaintiffs contend, the WLWG made a definite decision on 2 May 2018 to have no overbank transfers and instead make early calls on the Goulburn IVT account, there would have been no need for the further discussion contemplated in the minutes. Nor would the

calls have been aptly described as “potential”. The person who took the minutes evidently understood that the calls may or may not be made. The implausibility of any form of decision on 2 May 2018 is compounded by the objective fact that it is unlikely that the WLWG would make a decision without seeing output from a further run of the Fortran Assessment Model which would provide information about the potential implications which might arise from operating the Murray River in the forthcoming year without overbank transfers. Output from a further run would provide information about all the other things which were outstanding as at 2 May 2018, including South Australia’s entitlement to defer water. There was a lot more work to be done before any form of decision could be made. The decision which the Plaintiffs contend was made would have required changes to the assumptions upon which the Fortran Assessment Model was last run. The minutes do not record an action item for that task. Further, the Plaintiffs contend that the decision to avoid overbank transfers was confined to the “dry” scenario. On balance, the minutes do not reflect that limitation. The minutes refer to a discussion about the need to go overbank “if dry conditions prevail”. There are three reasons why it is unlikely that that reference is evidence of a discussion about the “dry” scenario to the exclusion of other

scenarios such as the “very dry” scenario. First, the term used was “dry conditions” not “the dry scenario”. Where reference to the Defendant’s modelling scenarios was intended elsewhere in the minutes, the word “scenario” was used as can be seen in the preceding and following sentences in the minutes. It was common in documents generated by the Defendant for there to be a reference to dry conditions, or drier conditions, which clearly did not specifically mean the 90% AEP modelling scenario. Secondly, the minutes contemplated that the dry conditions might “prevail” in the future which would not aptly describe a modelling scenario at the commencement of a water year. It would have more aptly described the dryness of the weather which had actually been experienced in the preceding months. Thirdly, there is no apparent reason why the WLWG would have been averse to overbank transfers in the “dry” scenario and not in other scenarios, although given the complexity of the system there may have been such a reason. A discussion about avoiding overbank transfers which was not limited to the “dry” scenario was evidently not understood by the Defendant as constituting any form of decision or directive. The next run of the Fortran Assessment Model was based on assumptions that there would be overbank transfers in some of the other scenarios including the “very dry” scenario and the

“moderate” scenario. Output from the next run was subsequently provided to the WLWG without any relevant comment or reaction. For the reasons given above Mr Bishop’s acceptance of the premise for further questioning about channel erosion does not support the Plaintiffs’ case. Dr Davis’s acceptance that the WLWG suggested there be further exploration of the topic contradicts the Plaintiffs’ contention that a decision was made on 2 May 2018. Mr Bishop’s reference to feedback from the meeting in his email on 22 May 2018 may have been a reference to the discussion about overbank transfers and earlier calls on the Goulburn IVT account. It may also have been a reference to other matters upon which feedback had been given and which were subsequently addressed in the next run of the Fortran Assessment Model including the matters listed above at [1118]-[1119]. The Defendant also points out that the 2018/2019 AOP which was approved by the WLWG in late July 2018 stated the opposite of what the Plaintiffs now contend was the preference of the WLWG. In the passage from the 2018/2019 AOP quoted at [1081] above, the Defendant said that it was “more preferable” to have overbank transfers in the “dry” scenario. The modelling depicted in the 2018/2019 AOP was based on the assumption that there would be no overbank transfers in the “dry” scenario. The Plaintiffs submit that the preference for

overbank transfers stated in the text of the AOP did not reflect the “actual plan” and was instead a reflection of the fact that by the end of July when the AOP was finalised there was little if any prospect that the plan would be achieved. The submission is based on the erroneous proposition that the 2018/2019 AOP contained prescriptive plans. It also contradicts the Plaintiffs’ case that it was not until mid-August 2018 that the Defendant realised that overbank transfers would be necessary. The text in the 2018/2019 AOP ought to be taken at face value. The WLWG’s approval of the 2018/2019 AOP is inconsistent with the WLWG giving the advice for which the Plaintiffs contend on 2 May 2018. In any event, the terms of the decision which the Plaintiffs contend was made on 2 May 2018 are so vague as to be meaningless. A decision “not to plan” for something says nothing about whether it might nonetheless be permitted to happen. This is especially so in the context of the preparation of the 2018/2019 AOP which would not contain prescriptive plans. A decision that overbank transfers were to be avoided in the “dry” scenario means little more than the undisputed principle that overbank transfers are to be avoided if possible. It would not foreclose subsequent consideration of whether avoidance was possible and, if not, an acceptance of that outcome. Nor does the evidence warrant a

finding that the WLWG endorsed and encouraged the use of Goulburn IVT as a way of avoiding the need for operational overbank transfers. In summary, nothing which was said at the WLWG meeting on 2 May 2018 restricted the Defendant’s planning for overbank transfers if the river system received inflows which conformed to those assumed for the “dry” scenario. There is no evidence that a river operator acting with reasonable care would not have understood otherwise. It should also be observed, as with the alleged breaches of duty in the 2017/2018 water year, that the WLWG was comprised of representatives of the States and had the role of protecting the interests of the States. It was not part of the WLWG’s function to protect the financial interests of irrigators in New South Wales and Victoria. Even if the WLWG had expressed the contrary preference, it does not follow that the Defendant breached the duty alleged to be owed to the Plaintiffs because it nonetheless conducted overbank transfers in the dry scenario. Observed underperformance of Lake Victoria by mid-June The Plaintiffs submit that the Defendant was aware from May 2018 that: Lake Victoria was “at historically low levels”; and Lake Victoria was “not performing relative to [the Defendant’s] plans”. Historically low levels The Plaintiffs do not say what they mean by “historically low levels”. If taken literally, it is a

claim which ought to be susceptible to objective particularisation but the Plaintiffs do not provide any. The only evidence relied upon for the submission is an answer given by Dr Davis in cross-examination about the storage level of Lake Victoria at the end of May 2018 when he accepted the proposition that the starting point “was lower than in other water years”. There is insufficient specificity in the accepted proposition to prove a low level which is accurately described as “historic”. The “other years” were not identified, either when the proposition was accepted by Dr Davis or in the Plaintiffs’ Closing Submissions. Neither in its terms nor in the context in which Dr Davis accepted it did the proposition exclude the possibility that the starting point was also higher than in other years. Elsewhere Dr Davis did not accept that the conditions at Lake Victoria were different to what had been seen in past years saying they were “not necessarily that were different. I think we’ve lived through a number of those years at Lake Victoria”. The Plaintiffs also point to the fact that the storage level of Lake Victoria was 298 GL at the end of May 2018 which was below the 350 GL minimum required by cl 103(4) of the Agreement. The circumstances in which the storage level came to be at that level are set out above, including the 60 GL of water in transit from Lake Mulwala in June 2018.

The Plaintiffs’ submissions on the storage level at the end of May do not grapple with the additional 60 GL. By reference to the hard numbers in its bulk accounts, the Defendant demonstrates that the storage levels of Lake Victoria were not historically low at any time relevant to the case. Even at 298 GL, the storage level at the end of May 2018 was higher than it had been in six of the preceding 29 years. The Plaintiffs submit that many of those years were years when water from the Menindee Lakes was available and other years were in the course of famous droughts. Given the number of variables in the operation of the Murray River system, those points of distinction are not material. In any event, the submission does not assist the Plaintiffs in circumstances where 60 GL was in transit from Lake Mulwala. The Plaintiffs further submit that the storage level of Lake Victoria would have been even lower had the Defendant not made the 45 GL call on the Goulburn IVT account on 21 May 2018. It appears that the call was made in response to the environmental water flowing to South Australia under the RMIF programme. The water called from the Goulburn River did not go to Lake Victoria. It went to South Australia as a supplement to the water from Hume Reservoir which constituted the RMIF water. The supplementary water from the Goulburn River meant that the water already in Lake Victoria

could remain there rather than be used to supplement the RMIF water. The Plaintiffs’ contention that the storage level of Lake Victoria would have been lower at the end of May had the call on the Goulburn IVT account not been made is logically correct but it does not say anything about the performance of Lake Victoria at end-May 2018. By the same logic, it may equally be said that the storage level of Lake Victoria would have been higher had the environmental flows from the RMIF programme not been released at that time. By reference to its bulk accounts, the Defendant submits that at the end of June 2018 the storage level of Lake Victoria was higher than it had been in twelve of the preceding 29 years. At the end of July the storage level was higher than it had been in six or seven of the preceding 29 years. At the end of August 2018 the storage level was higher than it had been in five of the preceding 29 years. Based on these figures the Defendant submits that the storage level of Lake Victoria was in the “normal” range until August. The Defendant accepts that by the end of August the storage level was below the normal range, but even then it was not unprecedented. It needs also to be remembered that a river operator acting with reasonable care was dealing with a dynamic situation. Ms Hickey said that the minimum storage level necessary to meet demands was 400 GL at the end

of August 2018. The Plaintiffs refer to that figure in contrast to the low storage level in August (333 GL). There is no dispute that by August 2018 the storage level was seen to be low and, because it was falling further, action needed to be taken. The position looked different in mid-June. As at 24 June 2018, the storage level of Lake Victoria was 362 GL and rising. If 400 GL was required by the end of August, the storage level was low but not dramatically so. As a matter of fact, prior to August 2018 the storage level of Lake Victoria was not at historic lows. It did not have, and would not have been seen by a river operator acting with reasonable care as having, the historic significance for which the Plaintiffs contend. Not performing relative to plans The Plaintiffs submit that the storage level for Lake Victoria was not performing relative to the plans. The output from the run of the Fortran Assessment Model which was carried out on 11 May 2018 modelled that in the “dry” scenario Lake Victoria would have a storage level of 381 GL at the end of June and 481 GL at the end of July 2018. For the run of the Fortran Assessment Model which was carried out on 5 June 2018 it was modelled to be 393 GL at the end of June and 450 GL at the end of July 2018. For the run of the Fortran Assessment Model which was carried out on 2 July 2018 it was modelled to be 397 GL at the end of

July 2018. The Plaintiffs say that these figures are to be compared with the actual storage level of Lake Victoria, namely 362 GL as recorded in the minutes of the WLWG meeting on 25 June 2018. Other records show that the actual storage level at the end of June was 364 GL. The actual storage level at the end of July was 372 GL. For each corresponding date these figures are lower than the “targets” obtained from the Fortran Assessment Model. The Plaintiffs point out that Dr Davis said in cross-examination that on about 22 May 2018 he was aware that Lake Victoria was “not performing”. Mr Bishop said that by no later than 25 May 2018 he knew that Lake Victoria was “not filling as expected”. The Plaintiffs also rely upon the following passage in the cross-examination of Mr Bishop: Q. “Fifthly, the [Defendant], as far as you are concerned, failed to sufficiently monitor Lake Victoria storage levels, particularly trending through June and realised that, as early as May, late May and June that the forecasts weren’t being achieved, at least by 25 May; do you agree?” A. “What - we could only observe what the level was going to be then and then the short-term forecasts - I - yeah, I agree that - it’s not as clear as seeing where it would be - the level that would have resulted that we were going to be by what you’re observing at that time. But I agree it was trending lower as we

progressed through than what we were forecasting.” The question put to Mr Bishop contained two propositions which are difficult to reconcile with each other. The first proposition was that the Defendant failed sufficiently to monitor Lake Victoria’s storage levels. The second proposition was that the Defendant recognised from at least 25 May 2018 that forecasts of Lake Victoria’s storage levels were not being achieved, which presupposes that the Defendant monitored Lake Victoria’s storage level with sufficient attention to be able to recognise that forecasts weren’t being achieved. Although not clear, the second proposition appeared to require knowledge of two elements, namely a storage level and a forecast. The preamble to Mr Bishop’s answer suggests a lack of clarity about whether the question was directed to a previous forecast which might be compared to the current storage level or to a current forecast which might be compared to an unknown future storage level. He was asked about storage levels and forecasts, in each case in the plural, which might have indicated a mixture of both options. It is difficult to know what if anything Mr Bishop intended to agree, other than that the trend was down. As further support for the submission that Lake Victoria was seen by the Defendant as not performing in May 2018, the Plaintiffs rely on the fact that the Defendant called on the

Goulburn IVT account in May 2018. It seems clear, however, that the calls were made for the RMIF environmental reasons described above and not because of any perceived need to increase the storage level of Lake Victoria. The Plaintiffs’ submissions on this issue are undermined by their mischaracterisation of the output of the Fortran Assessment Model. As set out above, it is not the nature and effect of the AOP to prescribe obligations. It is to identify the broad nature of possible river operations to guide the Defendant’s future decisions. It is not correct to view the storage levels depicted for Lake Victoria as future targets or levels which were necessary to achieve. As Mr Bishop explained, they showed the forecast storage level based on all the assumptions which underlay each of the six scenarios. The Plaintiffs’ submissions on this issue are further undermined by their steadfast insistence that in May and June 2018 the Murray River system was being operated in the “dry” scenario. The Fortran Assessment Model operates on the basis of a water year commencing on 1 June and the outputs provide information within that temporal framework. For the purposes of modelling Lake Victoria’s storage level in the 2018/2019 water year the conditions up to 31 May 2018 were irrelevant other than by setting the starting conditions for the new water year. The inflows which had occurred

during June 2018 were relevant, but that was only one month. A recurring comment which the Defendant’s witnesses made in cross-examination was that the wettest months of the year were still to come, namely July, August and September. The Defendant had to take into account the modelled forecasts which assumed future inflows in accordance with the “dry” scenario. The Defendant also had to take into account the modelled forecasts which assumed future inflows in accordance with the other scenarios, including the “moderate”, “average” and even the “wet” scenario. As Mr Bishop explained, it also had to consider the possibility that future inflows might be somewhere in between, or they might change from one to another. The Plaintiffs have not addressed the performance of Lake Victoria in the broader context in which it was considered by the Defendant and, more pertinently, in which it would have been considered by a river operator acting with reasonable care. The difficulty arising from the Plaintiffs’ monoscenario approach is illustrated by the circumstances in July 2018. The inflows which actually occurred in July were exceeded by 95% of those recorded for previous years. Those inflows better corresponded to the inflows assumed for the “very dry” scenario, not the “dry” scenario. In July 2018, a river operator acting with reasonable care would not have disregarded the modelling for

the “very dry” scenario. A lower storage level was modelled for Lake Victoria in the “very dry” scenario, with the result that the actual storage level of Lake Victoria was much closer to the model. Nonetheless, the evidence establishes that on any given day in June 2018 the storage level of Lake Victoria was lower than the Defendant was expecting. The Defendant accepts that actual storage levels were below those modelled by the Fortran Assessment Model for the “dry” and “very dry” scenarios but says that the differences did not become substantial until August 2018. For the “very dry” scenario the difference was about 10 GL and for the “dry” scenario about 25 GL. The evidence does not permit a finding about materiality. Forecast on 25 June 2018 that Lake Victoria would fall The minutes of the WLWG meeting on 25 June 2018 record that Lake Victoria’s storage level was 362 GL and forecast to “fall away to over the coming week”. The evidence does not reveal what forecast was referred to. This particular contention does not add to the Plaintiffs’ contentions in relation to Lake Victoria not performing. If such a forecast existed on 25 June 2018 it immediately turned out to be incorrect. The storage level of Lake Victoria rose on all but one (cf 30 June 2018) of the following eleven days. Whilst the Defendant would not have known that the supposed forecast was incorrect on 25 June

2018, it would have received data on the actual storage level on each successive day. With the passing of each successive day the Defendant would have known that Lake Victoria was not falling away. The evidence suggests that by 27 June 2018 the Defendant realised that the storage level of Lake Victoria was not falling. On that day the Defendant issued a Weekly Report in which it stated that Lake Victoria was “expected to remain steady over the coming week”. The Defendant’s witnesses were cross-examined about the statement in the minutes of the WLWG meeting on 25 June 2018 that Lake Victoria was forecast to “fall away”. No admissions were made which detract from the probative documented facts referred to above. In-channel watering There is no dispute that the Defendant was aware from at least 23 May 2018 that environmental water holders planned to order in-channel watering of the Barmah-Millewa Forest to commence in July 2018. From late-June 2018 environmental water holders placed orders with the Defendant. In accordance with the orders, on 16 July 2018 the Defendant directed that the regulators be opened. There is evidence that the Defendant did not expect there would be any return flows to the river. The Plaintiffs submit that until 15 August 2018 the Defendant failed to “plan and adjust” for in-channel watering. More specifically, it is submitted that the Defendant did not

“adjust planned flow rates downstream of Yarrawonga Weir to account for the obvious reduction in-channel watering would and did cause to flow rates through to Lake Victoria”. The 15 August date is taken from the email sent by Mr McLean to environmental water holders on 15 August 2018 in which he sought their consent to the application of certain accounting rules to release rates at Yarrawonga Weir above 9,500 ML/day. The central issue raised by this allegation is whether the Defendant’s modelling with the Fortran Assessment Model took into account the extra water lost through the in-channel watering which commenced on 16 July 2018. If it did not, then the modelling would have shown more water arriving at Lake Victoria than was in fact the case. The Defendant would have had to make earlier and greater transfers than those contemplated by the AOP modelling documents in order to achieve the storage levels forecast for Lake Victoria. On the other hand, if the extra loss from in-channel watering was already taken into account in the modelling then transfers in accordance with those contemplated by the AOP would have been regarded by a river operator acting with reasonable care as sufficient to conform to the forecast storage levels for Lake Victoria, all other things being equal. The Plaintiffs submit that the Defendant did not adjust the modelling to allow for the water lost by

in-channel watering, at least not until after 15 August 2018. They submit that there are three contemporaneous documents which support that conclusion. The first document is the Key Assumptions Document which set out the assumptions upon which the Fortran Assessment Model was run on 8 May 2018 (see [1046] above). It included the assumption: “No B-M regulator extraction assumed in any scenario”. The Plaintiffs submit that the assumption referred to in-channel watering in which case it shows that the Defendant undertook its modelling on the assumption that there would be none. Dr Davis was cross-examined about the assumption. He said that he was not familiar with the term and that it was a poor choice of wording if it was intended to refer to in-channel watering, but he was prepared to assume that it did. In the face of Dr Davis’s express uncertainty, no weight can be given to his evidence about the first document because his attention was not drawn to the other assumption which may be relevant to this issue: “Hume ‘translucent’ releases in winter-spring (starting July) in minimum to 75% cases”. In any event, the document does not assist the Plaintiffs’ case because on 5 June 2018 the May Key Assumptions Document was superseded. The second document relied upon by the Plaintiffs is the Key Assumptions Document for the Fortran Assessment Model run on 5 June 2018 which superseded

the document referred to in the preceding paragraph (see [1058]- [1059] above). It contained the same assumption about Hume translucent releases but the assumption about “No B-M regulator extraction” had been deleted. The Plaintiffs accept that the assumption about translucent releases referred to in-channel watering but say that it did not apply to the “dry” and the “very dry” scenarios. No reason is given for that assertion. Like many of the Defendant’s documents, the Key Assumptions Document referred to the six modelling scenarios along a spectrum of annual exceedance probability: “minimum”, 95%, 90%, 75%, 50% and 25%. The words “minimum to 75% cases” were plainly intended to include the 95% scenario (“very dry”) and the 90% scenario (“dry”). The inference to be drawn from the document is that the Defendant understood in-channel watering, it understood that it needed to be incorporated in the modelling of several scenarios, including the “dry” scenario, and that the run of the Fortran Assessment Model on 5 June 2018 incorporated an assumption that in-channel watering would start in July. The Key Assumptions Document does not reveal exactly how in-channel watering was addressed in the modelling but it may be inferred that it was given sufficient attention to qualify as a key assumption. That inference is supported by the deletion of the prior assumption about “No B-M

regulator extraction”. The Key Assumptions Document for 5 June 2018 does not support the Plaintiffs case but contradicts it. The third document relied upon by the Plaintiffs is Mr McLean’s email dated 15 August 2018. The email makes clear that prior to 15 August 2018 the Defendant targeted a release rate of 9,500 ML/day at Yarrawonga Weir which was the maximum possible in the 2017/2018 water year if forest regulators were closed. The Plaintiffs contend that the email shows that the Defendant belatedly realised that a higher release rate was possible whilst the regulators were open for in-channel watering and Mr McLean’s email was a step towards making that happen. Mr McLean’s email does not support the Plaintiffs’ argument. It was sent for an altogether different purpose. Mr McLean specified the reason why the Defendant wanted to increase the release rate, namely to vary the release rate rather than holding it steady. A constant release rate at the capacity of the riverbanks may exacerbate harmful riverbank erosion so variation is desirable for environmental (and future operational) purposes. The Defendant could vary the release rate below 9,500 ML/day but its preference was to vary the release rate above 9,500 ML/day “to maximise our transfers to Lake Victoria”. The Defendant was not seeking to increase the release rate in order to take account of in-channel watering. Mr

McLean referred to in-channel watering in his email simply to explain that an increase in the release rate above 9,500 ML/day would not result in overbank flows, which he thought was a matter relevant to the accounting rules to be applied when in-channel watering is being undertaken. Pertinently, there is nothing in the email which shows that the Defendant was not already taking into account in-channel watering when modelling the future storage levels of Lake Victoria. A document which undermines the contention that the Defendant did not plan and adjust its modelling to allow for in-channel watering is the minutes of the meeting of the WLWG on 10 July 2018. The meeting was held in the week before the in-channel watering was scheduled to commence. The WLWG received an update on river operations which included the following: “Downstream of Yarrawonga weir the release is 3,000 ML/day (our estimated flow requirement to meet minimum target at Swan Hill (without e-water from Goulburn)). We will increase the release in the coming week to deliver translucent releases – we have been waiting for works on Gulpa Creek to be completed in mid July. Once these works are completed we can increase the release d/s Yarrawonga above 4, 000 ML/day and the forest regulators will be opened.” The inference to be drawn from the minutes is that the Defendant understood that water would be lost through

in-channel watering and was planning to adjust the flow rate at Yarrawonga Weir in response to that understanding. As I understand the Plaintiffs’ case on this issue, that is what a river operator acting with reasonable care would have done. Another document which undermines the Plaintiffs’ contention is the 2018/2019 AOP. Although it was not finalised until the end of July 2018, it was based on the modelling which was performed on 5 June 2018. The topic of in-channel watering was addressed in the following terms: “In the drier scenarios, ‘translucent’ releases of environmental water from Hume Reservoir are more likely to only contribute to flows within channel through the Barmah Choke (i.e. not exceeding 9,500 ML/day downstream release from Yarrawonga Weir). In all scenarios, during winter and spring while the flow is within channel, a portion of the ‘translucent’ releases is supplied through the Barmah-Millewa Forest regulators to facilitate watering of the major creek network within the forest.” None of the contemporaneous documents support the Plaintiffs’ case on this issue. There is documentary support for the Defendant’s case. Nor is there any support for the Plaintiffs’ case in the expert evidence. In Section 6.5.3 of his First Report Dr Ladson examined the spreadsheet outputs from the Fortran Assessment Model which were successively obtained by the Defendant in 2018 to

see if an allowance had been made for the in-channel watering which was scheduled to commence in July 2018. Dr Ladson was not able to work out how the spreadsheets allowed for in-channel watering. He expressly declined to express the opinion that they did not. Dr Ladson came back to the topic of in-channel watering in his Second Report but did not revisit the question whether it had been taken into account in the operation of the Fortran Assessment Model in 2018. In their written Closing Submissions, the Plaintiffs also rely on passages from the cross-examination of each of Dr Davis and Mr Bishop in which the witnesses accepted that, when in-channel watering was taking place, the flow rate at Yarrawonga Weir had to be increased in order to have the same quantity of water arrive at Lake Victoria as would be the case if in-channel watering was not taking place. That proposition is not controversial. Generalised as it was, the evidence does not prove the further proposition that the particular release rates planned by the Defendant in mid-June 2018 needed to be increased so that the forecast storage levels of Lake Victoria could be “achieved”. The general propositions put to Dr Davis and Mr Bishop begged that question. As previously mentioned, Dr Davis was asked some questions about the assumption in the May Key Assumptions Document about “No B-M regulator extraction”. For the

reasons already given, no weight can be given to Dr Davis’s evidence about that assumption when the assumption was omitted from the June Key Assumptions Document. The June Key Assumptions Document was the one which was current when the Defendant is alleged to have breached its duty of care. Dr Davis was not asked about the June Key Assumptions Document. Neither Mr Bishop nor Ms Hickey was asked about the June Key Assumptions Document. Stepping aside from the documented assumptions, Mr Bishop was asked directly about the modelling with the Fortran Assessment Model which was undertaken on 2 July 2018. The answers given by Mr Bishop are the high-water mark of the evidence in support of this part of the Plaintiffs’ case. Presented with the spreadsheets which Mr Bishop said were necessary for him to address the questions, he was asked about the allowance made for the in-channel watering in the Barmah-Millewa Forest which the Defendant knew would commence on 16 July. Mr Bishop identified a cell in Row 116 which specified the losses for the reach of the river where the in-channel watering would occur (Yarrawonga to Euston). The cell showed that no loss was assumed for June, but 20 GL was assumed for July and more for the following months. To find out more about the 20 GL figure, Mr Bishop directed the spreadsheet to another cell which had been embedded with the following comment by an

unknown user: “Unknown: Note, net Gunbower use added from column U across is added here as part of loss. It should be removed from any total system loss calculation” “Gunbower” was a reference to the Gunbower Forest which is located downstream of the Barmah-Millewa Forest. It is a separate Forest and losses at that location are irrelevant to the issue currently being considered. Mr Bishop was asked about the comment and the following evidence was given: A. “If you just hover over it, it will give you the information. In - sorry column U, Gunbower e-water. So yeah, it represents e-water, so it’s adding to the loss.” … Q. “It represents e-water use in Gunbower Creek and forest.” A. “Yeah.” Q. “But that’s not an open regulator, is it?” A. “It is a regulator that’s opening, putting water through in to the Gunbower Forest but it’s not the Barmah-Milewa one, so it’s not specifically for the Barmah-Milewa Forest.” Q. “Right?” A. “It’s adding additional loss.” Q. “So coming back to the question I was asking you, it was - the loss - sorry, the flow rates in this document, in the AOP spreadsheet, were on the basis that the regulators through the forest were closed?” A. “Yes.” Q. “And does it accord with your recollection that at a time when the [Defendant] was aware that there was in-channel watering, that the flow rates and its plans did not adjust for the loss through the forest with

the regulators open?” A. “Not - like, my exact recollection, I don’t have a specific recollection, but based on this - for this sheet at this time, it’s not - it’s not factoring in that additional loss.” Q. “And by this stage, you’re aware that there was a proposed in-forest watering?” A. “Yes.” Q. “And the effect of the flow rates not taking account of the regulators being open during the periods covered by this plan, would mean that, in fact, less water would end up in Lake Victoria?” A. “Yes.” Q. “Do you agree that’s something that should have been noticed by you or somebody in the operation and amended - and corrected?” A. “Yes.” Mr Bishop gave his answers clearly but there are nonetheless eight reasons to treat them with caution. First, Mr Bishop made clear that he had no independent recollection of the issue and it was apparent from watching him give his evidence that he was interpreting the spreadsheets as he sat in the witness box. That includes the Gunbower comment. Mr Bishop was not the author of the comment. There are other comments in spreadsheets which are labelled “Andrew Bishop” which makes it probable that the Gunbower comment was made by a different person (“Unknown”). There was no observable sign that Mr Bishop recognised the Gunbower comment when he read it in the witness box (although he was looking at it a long time after the event so he may have seen it

before but since forgotten). Secondly, there is no doubt that the 20 GL figure in the cell identified by Mr Bishop had a relationship with environmental water which was assumed would be lost in the Gunbower Forest. Beyond that Mr Bishop’s answers were inconsistent. He said that the item was “adding”, the thing which was been added was “additional loss” and that the 20 GL figure was not “specifically” for the Barmah-Millewa Forest. From these answers it may be inferred that Mr Bishop interpreted the “Unknown” comment as referring to the addition of Gunbower loss to loss caused by in-channel watering in the Barmah-Millewa Forest to give a total of 20 GL. If so, the modelling did take account of the planned in-channel watering in July. On the other hand, Mr Bishop next accepted the proposition that the flow rates in the spreadsheet were on the basis that there was no in-channel watering in the Barmah-Millewa Forest (regulators “closed”). The inconsistency suggests there may have been some confusion in Mr Bishop’s mind. Thirdly, if Mr Bishop intended to say that the 20 GL figure was entirely Gunbower loss and did not include loss from some other source, it is difficult to reconcile that interpretation with the words in the comment. Whilst Mr Bishop was the witness who was most familiar with the Fortran Assessment Model, the most probable reading of the comment is that the 20 GL

figure had not been added as a new item but had been added to some pre-existing item so that thereafter the Gunbower loss (“net Gunbower use”) was “part of loss”. Given Mr Bishop’s direction to the cell in search of loss caused by in-channel watering in the Barmah-Millewa Forest, there is every reason to think that another “part” of the 20 GL was that loss. Such an interpretation is consistent with the first answers given by Mr Bishop as set out above. Fourthly, Mr Bishop was taken to only one scenario in the spreadsheet, namely the “very dry” scenario. He was not asked about the “dry” scenario. There is nothing to indicate that his evidence about the “very dry” scenario holds true beyond that scenario. Fifthly, the spreadsheets which were shown to Mr Bishop were for the run of the Fortran Assessment Model which was conducted on 2 July 2018. The spreadsheets which the Defendant would have been using in mid-June (when the Plaintiffs say the breach occurred) were obtained on 5 June 2018. Those spreadsheets were not shown to Mr Bishop on this issue. The Defendant’s modelling was an iterative process and there was substantial overlap between the spreadsheets which were obtained on 5 June and those obtained on 2 July 2018. There were also differences. Given the assumption in the June Key Assumptions Document that there would be in-channel watering commencing in July (evidently

in-channel watering in the Barmah-Millewa Forest), Mr Bishop’s evidence about the July spreadsheets is not applicable at the time the alleged breach of duty occurred. Sixthly, Mr Bishop was not shown the Key Assumptions Document for the run on 5 June, nor an equivalent document for the run on 2 July 2018. The purpose of the Key Assumptions Document was to assist with understanding the spreadsheets which is apparent from the fact that the Defendant sent the Key Assumptions Document to members of the WLWG. Mr Bishop’s answers would have been more persuasive if he had had the benefit of seeing the Key Assumptions Document which included the assumption that there would be Hume ‘translucent’ releases in winter-spring (starting July) in minimum to 75% cases. Seventhly, Mr Bishop’s subsequent answers about whether an allowance had been made for in-channel watering were qualified by him saying “for this sheet at this time”. As they appear in the printed transcript, it is not clear what Mr Bishop meant by those words. He may have been making some of the points above, namely that his evidence was limited to the “very dry” scenario (“this sheet”) from 2 July 2019 (“at this time”). However, at the time Mr Bishop uttered these words I understood him to be emphasising that his evidence was the result of reviewing the spreadsheets shown to him (“this sheet”) whilst sitting in the witness box

(“at this time”). Throughout his cross-examination Mr Bishop was asked to interpret aspects of a number of complicated documents, including spreadsheets. On more than one occasion Mr Bishop made it clear that his response to a question was limited to the review which he was able to undertake whilst sitting in the witness box. His answers about in-channel watering conformed to that approach. Either way, the qualification is material. During the hearing the spreadsheets were displayed on monitors in the courtroom. Watching Mr Bishop work through the different rows, columns and tabs, including hidden comments left in the spreadsheets by other people, made it clear that there was complexity, even for someone who was familiar with the Fortran Assessment Model. It is true that Mr Bishop’s evidence about the (non) allowance for in-channel watering was preceded by a self-directed and unimpeded navigation of the spreadsheets for the “very dry” scenario obtained on 2 July 2018. That is to be taken into account, especially as Mr Bishop was the witness who the Defendant put forward as the primary explainer of the Fortran Assessment Model. Nonetheless, having undertaken the examination in the witness box, Mr Bishop considered it necessary to qualify his evidence by saying “for this sheet at this time”. The effect of the qualification was that Mr Bishop wanted it to be understood that

further examination of the spreadsheets would be required for a definite answer. Eighthly, a related reason for treating Mr Bishop’s evidence with caution is that in subsequent questioning Mr Bishop appears to have identified another location in the same spreadsheets where an allowance for in-channel watering of the Barmah-Millewa Forest may have been made. That evidence is unclear, but it underscores the need for a considered examination of the spreadsheets to be confident about how they operated. There have been other instances where not only Dr Ladson (an outsider) but also Mr Bishop himself has misunderstood the information in outputs of the Fortran Assessment Model. An important example of shared misunderstanding is the bulk transfers assumed for June, July and August in the “dry” scenario modelled on 5 June 2018. It may be asked why, if Mr Bishop required separate time to examine and explain how the Fortran Assessment Model allowed for in-channel watering in the “very dry” scenario, that task was not undertaken before the hearing. Mr Bishop did not address the issue in any of his three Affidavits, the last of which was affirmed on 25 June 2025. An apparent answer to that question is that Dr Ladson expressly declined to express an opinion about the issue and, prior to Mr Bishop’s cross-examination, there was no other evidence which supported the Plaintiffs’ contention. On

the whole, I do not feel an actual persuasion from hearing Mr Bishop’s evidence that the Defendant’s modelling with the Fortran Assessment Model failed to take into account the extra water lost through the in-channel watering which commenced on 16 July 2018. Despite not having a witness on the issue, in closing submissions the Defendant endeavoured to demonstrate from the line items in a spreadsheet from the modelling which was undertaken on 5 June 2018 that an allowance was made for in-channel watering in the Barmah-Millewa Forest. By reference to line items and subsequent water accounting records, the Defendant says that 30 GL of the water which was assumed to be released in July was environmental water which was modelled not to flow to Lake Victoria but to South Australia. There is evidence that some of that water was regarded by the river operators as losses from in-channel watering. If that is right, the modelling on 5 June correctly assumed that water would be diverted into the Barmah-Millewa Forest and not flow into Lake Victoria. The forecast storage levels of Lake Victoria were not calculated on an incorrect basis (although the water arriving at the South Australian border may have been). In cross-examination Dr Ladson was not able to agree or disagree with the analysis. He said that he wished to consider the spreadsheets in more detail than he presumably thought was

appropriate sitting in the witness box. From his demeanour when considering the propositions put to him, I observed that Dr Ladson was dubious. In reply the Plaintiffs make some criticisms of the Defendant’s analysis. In particular they point out that the 30 GL directed release may have been environmental water, but it was intended for South Australia, not the Barmah-Millewa Forest. There seems to be merit in the criticisms. It is not necessary to decide whether the analysis put forward by the Defendant is correct. The Defendant is not required to disprove the Plaintiffs’ case. The Plaintiffs allege that in mid-June 2018 the Defendant failed to plan and adjust its modelling to allow for the water which would be lost by the in-channel watering which was planned to commence on 16 July 2018. The only evidence which supports the Plaintiffs’ criticisms is Mr Bishop’s cross-examination which was directed to a single scenario in a later time period and which, in any event, must be treated with caution. There is evidence to the contrary, especially the Key Assumptions Document for the modelling conducted on 5 June 2018. The Key Assumptions Document is unequivocal. The Plaintiffs have not demonstrated on the balance of probabilities that the Defendant failed to plan and adjust its modelling to allow for the water lost by in-channel watering. Summary of the circumstances in June 2018 In

summary, the circumstances in which the Defendant was operating the Murray River system in June 2018 were such that it was confronted with risk factors which called for vigilance as to the storage level of Lake Victoria, but not so as to be different to any other year. The storage level of Lake Victoria was lower than the Defendant had been expecting. Environmental water holders were planning to undertake in-channel watering from mid-July 2018 which would reduce the quantity of water which would reach Lake Victoria from releases from Hume Reservoir. The Defendant was aware of the in-channel watering and had adjusted its modelling to allow for the lost water. Determination: not deciding to make earlier and greater in-channel transfers Plaintiffs’ submissions In the circumstances which pertained in June 2018, the Plaintiffs submit that the first part of the reasonable precaution which a river operator acting with reasonable care would have decided to implement was to direct bulk transfers of water from Hume Reservoir to Lake Victoria. As set out in MFI-38, the bulk transfers are described as: “earlier and greater in-channel transfers commencing late June 2018” As for “earlier”, in the Plaintiffs’ written Closing Submissions dated 25 October 2025 they submitted that in-channel transfers would have commenced “from May 2018 or at the latest June 2018”. That formulation has been

overtaken by MFI-38 which was handed up on the last day of addresses on 14 November 2025. The Plaintiffs ultimate contention is that the decision would have been made around mid-June 2018 and that greater in-channel transfers would have commenced late June. I have addressed the temporal framework above. As for “greater”, the Plaintiffs submit that a river operator acting with reasonable care would have done that which was necessary to bring Lake Victoria to the storage levels which were “forecast” in the output from the run of the Fortran Assessment Model on 5 June 2018. The Plaintiffs’ submissions are directed to the “dry” scenario. Based on the assumptions for the “dry” scenario, on 5 June 2018 the output from the Fortran Assessment Model modelled the storage level for Lake Victoria to be 393 GL at the end of June and 450 GL at the end of July 2018. The Plaintiffs’ submissions identify the objectives to be achieved by greater in-channel transfers. They do not identify the quantity of water which would have been required to achieve the objectives, nor the rate of release from Hume Reservoir or Yarrawonga Weir nor the rate of increase of the rate of release. The Plaintiffs do not say what a river operator acting with reasonable care would have prospectively decided about those matters. The quantity, the flow rates and the rates of increase are not easy matters to determine.

They cannot be determined in the abstract. A change to the storage level of Lake Victoria resulting from a release of more water from Hume Reservoir depends upon channel capacity, other water in the system, consumptive diversions, return flows, temperature, wind, demands, conveyance losses and evaporation losses for the water already in Lake Victoria whilst it waits the (approximately) 25 days for the new water to arrive. These matters may be material. The Plaintiffs implicitly accept the materiality not only of the amount of water transferred but also the rate of release and the rate of increase of the rate of release by virtue of the Plaintiffs’ allegations about the Defendant’s breach in the 2017/2018 water year when transferring water from the Menindee Lakes to Lake Victoria. The Plaintiffs’ allegations of breach in the 2018/2019 water year do not specify a position on these aspects of the case. Their allegation has no more specificity than is to be discerned from the word “greater”. The Plaintiffs specifically submit that in June 2018 the risk of spill from Lake Victoria was low which removed that as a reason why greater transfers ought not to be made at that time. They also submit that any risk of erosion to the banks of the Murray River which might be caused by prolonged in-channel transfers was insufficiently significant to dissuade a river operator acting with

reasonable care from commencing greater releases in late June 2018. More particulars of the Plaintiffs’ submissions are set out below. Defendant’s submissions As a threshold matter, the Defendant submits that the Plaintiffs’ argument about earlier and greater transfers is a new allegation which is not pleaded. The Defendant objects to it being raised at the end of the case. As for the merits of the allegation, the Defendant submits that multiple successive variations to the Plaintiffs’ allegations of breach speak of a weak case. It submits that in the circumstances which existed in mid-June 2018 the approach taken by the Defendant was a reasonable balance between, on the one hand, the need to raise the storage level of Lake Victoria in an endeavour to minimise the risk of a system shortfall and, on the other hand, the risk of a spill occurring from Lake Victoria into South Australia if rain occurred in June, July or August. It further submits that commencing bulk transfers earlier would have resulted in prolonged releases at the maximum channel capacity which could have caused further detrimental erosion to the Barmah Choke. As with the Plaintiffs’ submissions, further particulars of the Defendant’s submissions are set out below. Pleading issue Introduction It is necessary to address the pleading issue first. The Plaintiffs describe the pleading point as arid, but that is not

so. The allegation of breach of the Defendant’s duty of care calls for a determination of how a river operator acting with reasonable care would have operated the Murray River system at a particular point of time and confronted with the particular circumstances which pertained at that time. A finding of breach will necessarily require specificity because that finding will define the parameters of the next issue: causation. The Murray River is unique. Its operation is complex. An allegation of breach by the Defendant cannot be heard and determined unless it is made with notice, precision and clarity. The Plaintiffs’ case has shifted over the course of the litigation. There is substance in the Defendant’s complaint. The essential point with the pleading issue is that the Plaintiffs’ original case for the 2018/2019 water year was that the Defendant made transfers which were later and lesser than those specified in the 2018/2019 AOP. Consistent with the case for the 2017/2018 water year, that was said to be negligent because the Defendant should have adhered to the AOP. The Plaintiffs’ case changed so that, ultimately, they contend that the Defendant should have made transfers which were earlier and greater than those specified in the 2018/2019 AOP even though it would have been a departure from the AOP. Like the pleading issues which were resolved by the interlocutory Judgment in

September 2025, this latest pleading issue is complicated. Resolution of it calls for a consideration of the pleading, the expert evidence, the opening submissions and the cross-examination of the Defendant’s witnesses. Fifth Further Amended Statement of Claim Paragraph 195 of the Statement of Claim contains the following allegation: “In the circumstances pleaded at Part H ([148A]-[185]) above, the [Defendant] breached the [Defendant’s] Duty of Care by: a. conducting the 2018 / 2019 Overbank Transfers; further or alternatively b. failing to operate the River Murray System so as to avoid making the 2018 / 2019 Overbank Transfers. Particulars … Particulars are given in Annexure B to this Fifth Further Amended Statement of Claim.” The Plaintiffs submit that their case about earlier and greater transfers falls within Annexure B. They rely on paragraph (a)(x)(1) and paragraph (d). Particular (a)(x)(1) of Annexure B Paragraph (a)(x)(1) provides as follows: “In the circumstances pleaded at Part H ([148A]-[185]) of this Fifth Further Amended Statement of Claim, the [Defendant] failed to do some or all of the following: a. ensure that it considered and had regard to … (x) the 2018-2019 AOP (as required by cl 10(1)(d) of the O&O Document), which: 1. contemplated adherence to the Lake Victoria Operating Strategy; …” The reference to adhering to the Lake Victoria Operating Strategy is at

large. It cannot assist the Plaintiffs’ case against the Defendant. By reason of the protection in Part 6 of the National Parks and Wildlife Act 1974, Lake Victoria is not available for unrestricted use as a water storage. The Defendant may use as such only to the extent permitted by the permit issued under s 90. The Lake Victoria Operating Strategy specifies conditions of use, the purpose of which are to protect Indigenous cultural places, especially burial grounds, located on the lake shore. For that purpose the Lake Victoria Operating Strategy prohibits certain matters, principally relating to storing water above maximum levels in late summer and early spring. The Lake Victoria Operating Strategy permits water to be stored in the Lake, but it does not require it. The submission that the Defendant failed to adhere to the Lake Victoria Operating Strategy by failing to store more water in the Lake is incongruous with the purpose of the Lake Victoria Operating Strategy. Another way of looking at this aspect of the case is to say that adherence to the Lake Victoria Operating Strategy was not part of the Defendant’s alleged duty to protect the Plaintiffs from economic loss. The allegation of negligence by failing to make earlier and greater transfers does not fall within particular (a)(x)(1) of Annexure B. Particulars in paragraph (d) of Annexure B Paragraph (d) of Annexure B

provides as follows: “In the circumstances pleaded at Part H ([148A]-[185]) of this Fifth Further Amended Statement of Claim, the [Defendant] failed to do some or all of the following: … d. in planning to deliver South Australia’s entitlement adjusted to reflect the trade in entitlement or allocation associated with the July/August 2018 Goulburn Pulse: i. give priority to refilling Lake Victoria using larger and earlier in-channel transfers in autumn, winter and spring in line with transfers planned in the AOPs for the Dry scenario (Ladson Report, Chapters 6.4.4 and 6.6.1); iA. during the period that forest regulators remained open for in-channel environmental watering, increase releases at Yarrawonga Weir up to 9,800 ML/day, or alternatively, up to 10,000 ML/day, to the extent necessary to achieve the transfers planned in the AOPs; ii. decline to drawdown on Lake Victoria so as to cause the need for refilling Lake Victoria in circumstances where it had not planned to do so (Ladson Report, Chapter 6.5.2.1) and / or did not know the causes of, and did not have accurate forecasts for, Lake Victoria losses (Ladson Report, Chapter 7.5); iii. adhere to the actions and plans which its 2018-2019 AOP forecasts assumed for the Dry scenario (Ladson Report, Chapters 6.4.4 to 6.5.5); iv. keep flows through the Barmah Choke at or below channel capacity during Summer and Autumn; v. purchase

access to MIL Infrastructure to deliver the relevant orders and meet South Australia’s adjusted entitlement prior to 10 September 2018 (Ladson Report, Chapter 6.6.3); vi. make greater use of MIL Infrastructure when it became available for use by the [Defendant] in order to reduce any or all of the required rate of overbank flow (Ladson Report, Chapters 6.5.5 and Chapter 6.6.2); vii. utilise Goulburn IVT account to deliver the relevant orders and meet South Australia’s adjusted entitlement (see Ladson Report, Chapter 6.6.4);” The particular in paragraph (d)(iA) was added by an amendment made in the fourth week of the hearing. It is not relied upon by the Plaintiffs for current purposes. The Plaintiffs submit that negligence by the Defendant’s failure to use earlier and greater transfers falls within particulars (d)(i), (iii) and (iv). Particular (d)(i) Particular (d)(i) refers to a failure to use “larger and earlier in-channel transfers” during a time period which includes June 2018. The purpose of the larger and earlier in-channel transfers is specified in the particular as giving priority to refilling Lake Victoria. Particular (d)(i) is not addressed to earlier and greater in-channel transfers at large. It only covers in-channel transfers “in line with transfers planned in the AOPs for the Dry scenario”. Unlike the pleading argument in September 2025, it does not now matter

whether the “planned” aspect of the transfers was denominated in GL/month or ML/day. The particular notifies a case about a failure to adhere to the 2018/2019 AOP. The 2018/2019 AOP was not finalised until late July 2018. It would not have been chronologically possible for the Defendant to decide in mid-June to make the transfers referred to in the 2018/2019 AOP. The 2018/2019 AOP was based on earlier work, including the output from the run of the Fortran Assessment Model on 5 June 2018. The Plaintiffs’ submissions about earlier and greater transfers have generally focussed on that earlier output. There is support for the applicability of the modelling not being limited to the final AOP and including the output from earlier runs of the Fortran Assessment Model. Clause 12.5(d) of the O&O Document provided that the commencement and rates of transfer were to be guided by the “Monthly Operating Plan”, which evidently meant the output from the Defendant’s regular runs of the Fortran Assessment Model. In the Plaintiffs’ favour, it may be accepted that particular (d)(i) (and particular (d)(iii)) includes the transfers, actions and plans assumed in the earlier output from the Fortran Assessment Model not just the final AOP. The submission by the Defendant to the contrary is faint. Unless more specificity is required, I will refer to the monthly outputs as “AOP modelling

documents”. Even so, particular (d)(i) is to be read as confined to a failure to make the transfers assumed in the AOP modelling documents (whatever they may be as at June 2018). That reading is confirmed by the two cross-references to Dr Ladson’s evidence. In Section 6.4.4 of his First Report, Dr Ladson examined the outputs from the Fortran Assessment Model which were variously obtained by the Defendant on 16 April, 11 May, 5 June, 2 July, 7 August and 12 August 2018. He identified the gigalitres of water which on each date had been assumed would be transferred from Hume Reservoir to Lake Victoria in June, July and August 2018. Dr Ladson compared the assumed transfer quantities with the gigalitres actually transferred and concluded that the Defendant had transferred less than the assumed amount in each month. He said that the departure from the plan was the “more basic and significant reason” for the storage level of Lake Victoria being lower than that modelled in the AOP modelling documents. Dr Ladson concluded that the departure from the AOP modelling documents was a deficiency. The only reason given by Dr Ladson for why the amounts specified in the AOP modelling documents should have been transferred is that they were the amounts specified in the AOP modelling documents. He did not provide any analysis as to why a river operator acting with reasonable care would have

independently or otherwise decided that the assumed amounts ought to be transferred. In particular, Dr Ladson did not undertake any analysis of the quantity of water which needed to be transferred to achieve any particular storage level in Lake Victoria. The Plaintiffs point out that Dr Ladson cross-referenced Section 6.4.3 of his First Report where he had analysed the divergence between the assumed storage levels of Lake Victoria and the actual storage levels. The divergence in storage levels provided the context for Dr Ladson’s quest in Section 6.4.4 to identify the reason for the divergence. The context does not change the fact that Dr Ladson did not identify any reason for the storage levels of Lake Victoria being below the assumed levels other than the departure from the quantities of the transfers assumed in the AOP modelling documents. Section 6.6.1 of Dr Ladson’s First Report was worded in more general terms but it does not have a meaning independent of the deficiency identified in Section 6.4.4. In Section 6.6 Dr Ladson expressed his view as to alternative measures which the Defendant could have taken in the 2018/2019 water year instead of making overbank transfers. The alternative identified in Section 6.6.1 was “to call on additional Hume to Lake Victoria transfers earlier in the water year”. No details of the additional transfers were given other than by reference

to the Section 6.4.4 analysis. Reduced to its essence, the alternative specified in Section 6.6.1 is simply to make the transfers assumed in the AOP modelling documents. The Plaintiffs seek to give Section 6.6.1 a larger meaning beyond adherence to the AOP modelling documents. They point out that Dr Ladson gave figures for the quantity of the additional water which should have been transferred, of which 170 GL is the one most often referred to. The 170 GL figure is an approximation of Dr Ladson’s calculation of the quantity by which the transfers actually made fell short of those assumed in the AOP modelling documents for the “very dry” scenario. The other figure given by Dr Ladson (150 GL) is his approximation for the same quantity in the “dry” scenario. Neither figure is an independent calculation of the quantity of additional transfers which a reasonable river operator would have directed to achieve any particular storage level of Lake Victoria. So too, Dr Ladson’s estimation that there was capacity for an additional 300 GL to be transferred through the Barmah Choke between 1 June and 11 August 2018 does not assist the Plaintiffs. The availability of channel capacity demonstrates what could have been done but it does not demonstrate that a river operator acting with reasonable care would have done it. The case particularised in paragraph (d)(i) is confined to an alleged

failure to adhere to the AOP modelling documents. It presupposes the reasonableness of the work undertaken in the AOP modelling documents and adherence to the outputs from that work. As it turned out, the particularised case did not survive Dr Ladson’s cross-examination. Dr Ladson accepted that he had misunderstood the outputs from the AOP modelling documents such that the figures which he thought were the assumed gigalitres of water to be transferred each month from Hume Reservoir to Lake Victoria were in fact that quantity plus some additional water which was to be released from Hume Reservoir for unrelated environmental purposes. The additional releases were never intended for Lake Victoria. Once the correct figures were identified, Dr Ladson accepted, and it is the fact, that the quantity of water which the Defendant actually transferred to Lake Victoria in June and July 2018 was the same as had been assumed for the “dry” scenario in the 5 June 2018 run of the Fortran Assessment Model. There was no “failure to adhere” to the AOP modelling documents in June or July 2018. In the language of particular (d)(i), the Defendant had used larger and earlier in-channel transfers in June and July 2018 “in line with” transfers planned in the AOP modelling documents. On the correct figures, the quantity actually transferred in August 2018 (87 GL) was significantly less than that which

had been assumed in the run of the Fortran Assessment Model on 5 June 2018 (198 GL). By 1 August 2018 the Defendant had commenced ramping up transfers from Hume Reservoir and by about 11 August 2018 water was being transferred at the limit of the channel capacity of the Barmah Choke. The Defendant continued to transfer water at the limit of the channel capacity for the rest of the August. The Defendant’s ability to make greater in-channel transfers in August was therefore restricted by channel capacity. Given Dr Ladson’s concessions in cross-examination, the Plaintiffs no longer submit that the Defendant was negligent by failing to make the transfers assumed in the AOP modelling documents (although they still put forward the 170 GL figure for the purposes of causation – see below). Instead the Plaintiffs put forward a different case. They allege that the Defendant ought to have made “earlier and greater” transfers from late June 2018. MFI-38 contains a statement of the timing (late June) but not the quantum. MFI-38 also contains a statement of the reason for the transfers (the five circumstances). The earlier and greater transfers are not confined by an obligation to adhere to the AOP. As such the new allegation is not a variation on the previous theme in particular (d)(i). It is the opposite. Particular (d)(i) was negligence by failing to adhere to the AOP. The new allegation

is negligence by failing to depart from the AOP. Whilst not immediately relevant to the pleading issue, the re-examination of Dr Ladson did not succeed in introducing evidence of a new analysis of why the Defendant ought to have made transfers which were earlier and greater than those contemplated by the AOP modelling documents. Dr Ladson said that it was still his opinion that earlier and greater transfers were an alternative available to the Defendant, not because the timing and quantum of the transfers were specified in the AOP but because they were “intended” to meet the target for the storage levels of Lake Victoria which were specified in the AOP. The evidence does not contain any analysis about the timing or quantum of the transfers. It does not provide an evidential basis for a finding that a river operator acting with reasonable care would have made those transfers, especially when the modelling in the AOP modelling documents showed that later and lesser transfers would achieve an appropriate storage level of Lake Victoria (with reduced risk of spill). In re-examination Dr Ladson also adhered to his figures for the greater transfers (150 GL and 170 GL) but did not give a reason, other than to say that transfers of that magnitude “were intended…for the Lake Victoria target as specified in the AOP to be met” (which Dr Ladson had just admitted was not correct) and were

“sufficient”. Absent Dr Ladson’s (incorrect) reading of the AOP modelling documents, the 150 GL and 170 GL figures are arbitrary. Particular (d)(iii) Particular (d)(iii) is a failure to adhere to the actions and plans in the 2018/2019 AOP forecasts assumed for the “dry” scenario. The previous pleading dispute which was argued and resolved in September 2025 was conducted on the basis that “actions and plans” meant the transfer of water from Hume Reservoir to Lake Victoria. On that reading, particular (d)(iii) does not add anything to particular (d)(i) for the purposes of the Plaintiffs’ new case. The Plaintiffs now contend that particular (d)(iii) should be read more broadly. The “actions and plans” in the AOP modelling documents were not the bulk transfers of water from Hume Reservoir to Lake Victoria (the means) but the storage level of Lake Victoria which was “planned” for the end of each month (the ends). Support for the argument comes from the wording of the particular which suggests that “plans” are not the same things as “actions” in which case the storage level of Lake Victoria may be viewed as a “plan” which is distinct to the “action” necessary to achieve the plan. There are, however, difficulties with reading particular (d)(iii) that way. It does not sit harmoniously (and may contradict) particular (d)(i). It does not reflect the nature and effect of the AOP, which is

addressed above. In the face of ambiguity, the meaning of particular (d)(iii) may be ascertained by looking at the parts of Dr Ladson’s First Report to which it refers. The only part which is relevant to this issue is Section 6.5.3. In that part Dr Ladson raised the question whether the Defendant made adequate allowance in the AOP modelling documents for the reduction in the water flowing out of the Barmah-Millewa Forest on its way to Lake Victoria, because in-channel watering would be undertaken from mid-July 2018. Dr Ladson asked (but did not answer) whether there was a defect in the Defendant’s planning which resulted in lower quantities of water being transferred than would have occurred if properly planned. If so, the storage level of Lake Victoria was lower than “planned” from July onwards. I have addressed this issue above and found that there was no such defect. There is in any event a disconnect between the wording of particular (d)(iii) and the topic addressed in Section 6.5.3 of Dr Ladson’s First Report. The former is directed to adherence to the AOP modelling documents whereas the latter is directed to a defect in the process by which the AOP documents were prepared. Nonetheless, the cross-reference to Section 6.5.3 has served to put the Defendant on notice that proper planning for in-channel watering is an issue in the case. The Defendant does not suggest

otherwise. Whether particular (d)(iii) may be read as foreshadowing wider issues is ultimately to be determined having regard to the purpose for which particulars are provided. The role of particulars is to expose the plaintiff’s case so that the defendant may fairly prepare for the hearing and the Court may efficiently determine the real issues. Neither the wording of particular (d)(iii) nor the parts of Dr Ladson’s First Report to which it refers reveal a criticism about the bulk transfers actually directed by the Defendant, other than that they did not adhere to that which was assumed in the AOP modelling documents. Beyond in-channel watering, particular (d)(iii) does not adequately forewarn the Defendant of an allegation that the Defendant failed to direct earlier and greater in-channel transfers beyond those planned in the AOP modelling documents. Particular (d)(iv) Neither does the new allegation come within particular (d)(iv). The new allegation is the antithesis of particular (d)(iv). The conduct complained of in particular (d)(iv) is the failure to avoid the overbank transfers which were actually made from September 2018, not the failure to make earlier transfers at the limit of the channel capacity of the Barmah Choke. The particular refers to a failure to “keep” flows through the Barmah Choke “at or below channel capacity”. It turns on a permitted maximum, not a

required minimum. Summary of pleading As pleaded, the Plaintiffs’ case about the Defendant failing to direct earlier and greater in-channel transfers in the 2018/2019 water year is confined to departures from the transfers assumed in the AOP modelling documents. That case was based on evidence from Dr Ladson which has been shown to be incorrect. The Plaintiffs have not made submissions in support of the pleaded allegation. The pleaded allegation is not within the terms of MFI-38 and has been abandoned. The allegation of breach by failing to direct “earlier and greater” in-channel transfers to achieve a particular storage level at Lake Victoria, but contrary to the transfers contemplated by the AOP modelling documents, is a new case. It is not pleaded. The Plaintiffs are precluded from relying on the new allegation The fact that a particular allegation is not pleaded does not necessarily preclude a party from relying on the allegation. Whilst not accepting that the new allegation is not already pleaded, the Plaintiffs make a number of submissions about why they ought nonetheless be permitted to rely on it. Whilst the Plaintiffs did not refer to the new allegation in their opening submissions, written or oral, they draw attention to the following passage in oral opening by counsel for the Defendant. The passage was part of the Defendant’s submissions about Dr Ladson’s (incorrect)

evidence about the failure to make the bulk transfers assumed in the AOP modelling documents: HIS HONOUR: “As you see it, and obviously all the evidence will come out, but one of the complaints made by the plaintiff is that the defendant departed from the AOPs.” MR PRINCE: “Yes.” HIS HONOUR: “And if you’re right, then the plaintiff would be saying it would have been negligent for you not to have done what you did.” MR PRINCE: “Well, I think to be charitable to them–” HIS HONOUR: “Yes.” MR PRINCE: “–I think they made two cases. One is a departure from the AOP and one is an allegation that it was negligent - yes, that - so non-negligent operations required additional releases between June and August of additional releases from Yarrawonga Weir between 150 and 170 GL of water.” The Plaintiffs submit that this statement is the Defendant’s acceptance that there is a second case based on the 170 GL and 150 GL figures which case is independent of a failure to adhere to the AOP modelling documents. As explained above, the 170 GL and 150 GL figures do not have a rational basis independent of an obligation to adhere to the AOP modelling documents. The calculation of the 150 GL figure is based on Dr Ladson’s incorrect figures for the quantity of the bulk transfers assumed in the AOP modelling documents for the “dry” scenario. Were the correct figures to be used, the results would be lower

than 150 GL. The evidence does not address the correctness of the 170 GL figure which was directed to the “very dry” scenario. The Defendant nonetheless appeared to accept in opening that there is a second case which is separate from the first, and not merely two parts of a single case. The Plaintiffs see further reason why they ought to be permitted to rely upon the new allegation in the way the parties have prepared the evidence from the expert modellers. For the purposes of addressing causation of loss, each party has qualified a witness who has specialised knowledge of computer models that simulate the behaviour of river systems. For the purposes of modelling some counterfactuals, the modelling experts have been asked to assume that an additional 170 GL of bulk transfers would have occurred in the 2018/2019 water year. The Plaintiffs submit that the instructions to the experts demonstrates that the Defendant understands that the new allegation is part of their case. The Plaintiffs’ arguments do not change the fact that the new allegation has important elements which were not properly notified for the purposes of a fair hearing. Even if the second case which counsel for the Defendant recognised in opening is different to that particularised in paragraph (d)(i), it is still based on an alleged departure from the transfer quantities assumed in the AOP modelling documents. The

same applies to the assumption upon which the modelling experts proceeded. The case based on a failure to make earlier and greater transfers relates to something altogether different, namely the quantum and timing of the transfers which a river operator acting with reasonable care would have made having regard to assumed storage levels of Lake Victoria. The transfers would have been contrary to the transfers assumed in the AOP modelling documents. In substance, the first time the new allegation was raised was after the cross-examination and re-examination of Dr Ladson. The Defendant submits that its witnesses were not cross-examined about the new allegation. Mr Bishop had primary responsibility for preparation of the AOP modelling documents in the 2018/2019 water year although, as I have found, the task was a collaborative effort by the River Operations Team. Mr Bishop was asked some questions about a failure to adhere to the transfers assumed in the AOP modelling documents but not about the quantum or timing of transfers which should have been made independent of the AOP modelling documents. The Plaintiffs submit that Mr Bishop was cross-examined extensively about “it” and refer to his cross-examination about the retrospective Losses Report. The evidence given by Mr Bishop on that topic is ambiguous, but even if Mr Bishop was referring to a view he held in June or July 2018

the questions were not directed to the new allegation (more on this below). In particular the questions did not address the storage levels of Lake Victoria and they did not address the departure from the AOP modelling documents. There is no suggestion that Ms Hickey was asked about the new allegation. Dr Davis was cross-examined about particular storage levels of Lake Victoria in May and June 2018. He was asked about the transfers assumed in the AOP modelling documents at that time and their adequacy for the purpose of raising Lake Victoria. The line of questioning broadly correlated with the new allegation. The Defendant submits that Dr Davis was questioned on an erroneous premise and attacks the probative value of his answers, but that is not pertinent to the question whether the Plaintiffs may fairly rely on the new allegation. Were it to be fair for the Plaintiffs otherwise to be permitted to rely on the new allegation, I do not think they ought to be precluded for want of questions asked of the Defendant’s witnesses. It ought to be remembered that the new allegation is about what a river operator acting with reasonable care would have done. Although not irrelevant to that objective inquiry, evidence about the subjective views of the Defendant’s witnesses is likely to be of less probative value on the issue. The real problem with permitting the Plaintiffs now to raise the

new allegation is the lack of essential specificity. The Plaintiffs’ case about when the transfers should have been made is not as certain as one would expect after all the evidence has been adduced. Even now the quantum of water which should have been transferred in addition to that which was transferred is not stated. There is no longer a rational basis for Dr Ladson’s figures of 150 GL and 170 GL. Identifying the objective to be achieved (raising the storage levels of Lake Victoria) says nothing about how that objective was to be achieved by a river operator acting with reasonable care. Nothing is identified about how a river operator acting with reasonable care would have decided in mid-June 2018 the quantum of water to be transferred. Merely referring to the channel capacity which was available does not expose a rational basis for any particular quantum within that channel capacity. Were the Plaintiffs to apply for leave to amend the Statement of Claim to add a new claim in terms of MFI-38, that leave would be refused for want of the particulars which are necessary fairly to reveal the case to the Defendant and the Court. For these reasons, it is not open to the Plaintiffs to contend that the Defendant breached the alleged duty of care by failing to decide in mid-June 2018 to direct earlier and greater in-channel transfers commencing in late-June 2018. That conclusion does

not affect the Plaintiffs’ entitlement to contend that the Defendant breached the alleged duty of care by not adequately planning for the in-channel watering which was scheduled from mid-July 2018. However, for the reasons explained above, the Plaintiffs have not proved that any such failure occurred. Merits of the new allegation Introduction Notwithstanding the pleading objection, the Defendant submits that the newly alleged breach of duty lacks merit and ought in any event to be rejected. The issue having been fully debated, I will determine it. Plaintiffs have not proved that a river operator acting with reasonable care would have increased the release rate at Yarrawonga Weir in June 2018 Like the 2017/2018 water year, the fundamental challenge which confronted the Defendant in the 2018/2019 water year was the management of the competing risk of system shortfall and the risk of spill from Lake Victoria into South Australia. The competing risks of system shortfall and spill were reflected in cl 12.5 of Appendix A to the O&O Document which is set out at [355] above. The purpose of cl 12.5 was to establish a process to ensure that Lake Victoria could deliver entitlements and water orders including to South Australia while minimising undesirable losses to the system. The established process was for the timing of commencement and rates of transfers from Hume Reservoir to Lake

Victoria to be guided by the Lake Victoria Operating Strategy, the output from regular runs of the Fortran Assessment Model and the WLWG. Recognising the risk of system shortfall, cl 12.5(d) contained a note that the volume of transfers be sufficient to ensure that there was enough water in transit plus Lake Victoria to deliver South Australia’s entitlements. Recognising the risk of spill, cl 12.5(d) contained a note that the commencement of transfers “should be delayed as long as possible”. Clause 12.5 noted the two risks and reflected the tension between them. Implicit in the clause was a requirement to determine that which was “possible”. Measured in ML/day at Yarrawonga Weir, the releases which the Defendant actually made from Hume Reservoir in the relevant period are depicted in the graph which is set out from the Plaintiffs’ Closing Submissions above and repeated here for convenience: Bearing in mind that the channel capacity was 9,500 ML/day in the 2018/2019 water year, the graph shows that on about 1 August 2018 the Defendant began to increase the rate of release up to the limit of the channel capacity which was reached on about 10 August. On about 1 September 2018 the Defendant increased the rate of release above the channel capacity. The numerous considerations which led the Defendant to release water at those rates may be understood by considering the following

passage of evidence from Mr Bishop: Q. “And what I’m suggesting is notwithstanding that - I am not saying it was only you, but there was a failure within the [Defendant] to adjust the release rate from Yarrawonga Weir, to make sure that this problem did not continue, namely, Lake Victoria not reaching the hoped for levels of fill?” A. “We’re observing it as it’s going. So when you’re in June and July the difference from what was shown in scenarios to where it went into July and August is - is small and it’s gradually getting larger. And as that’s happening, we’re responding in terms of - “Well, if it stays dry we know we have to do overbank transfers.” So then how is it best to do those? Do we bring them forward? Do we delay them? If we started making just higher transfers, which I believe we did at some point, it’s how long do you hold those before you need to do overbank. Because the volume that you need to transfer overbank in a “dry” scenario is very significant. It won’t be - you won’t negate the need to do that by making smaller releases from upstream sources, be it IVT or from Hume, if it stays dry. So you’re covering a range of scenarios, knowing that different outcomes are possible. But what you may need to do under certain outcomes is limited. But you won’t get benefit from it, for example, by making very high within-channel or IVT releases earlier. It won’t negate

the need under ongoing under “dry” that you need to do the higher releases through Barmah-Millewa anyway. But there’s still a chance that you won’t need to, so you don’t go too high too early, otherwise that’s incurring a risk of spill, and it’s lowering resource because you’re already incurring higher releases by moving that water from Hume to Lake Victoria.” The staggered increase evident from the graph accorded with the Defendant’s approach to balancing the competing risk of system shortfall and spill. Mr Bishop explained the approach in paragraph 651 of his First Affidavit: “During drier years, the River Operations team takes a staged approach to steering the River Murray System to meet demand. The first stage ordinarily involves planning on increasing releases to channel capacity. The second stage ordinarily involves planning on increasing releases to overbank transfers, if the Daily Operations Spreadsheets and AOP Spreadsheet indicates overbank transfers are needed. The staged approach allows the River Operations team the opportunity to reduce the release rate if conditions change from dry to wet.” Apart from the allegation that the Defendant ought to have used a channel capacity of 9,800 ML/day, which is no longer pressed, the Plaintiffs make no complaint about the Defendant’s conduct after, say, 10 August 2018 when the flow of the river reached channel capacity. Their

case lacks sufficient specificity to know whether the Defendant is criticised for its conduct between 1 August and 10 August. It seems unlikely. As explained above, a change to the rate of release from the Menindee Lakes needs to be incrementally implemented across a number of days. There is nothing to suggest that the Murray River is different below Yarrawonga Weir. The Plaintiffs’ essential case can in any event be seen as one of timing. They contend that a river operator acting with reasonable care would have made the decision to increase the release rate up to, presumably, the limit of the channel capacity not on 1 August but from late-June 2018. Again, the Plaintiffs have not adduced evidence from an expert river operator to prove that a reasonable river operator would have made that decision in June 2018. Dr Ladson’s evidence is explained above. At its highest, Dr Ladson says that earlier and greater transfers were an alternative which was available to the Defendant. His evidence does not support a finding that a river operator acting with reasonable care would have implemented that alternative. None of the Defendant’s witnesses made a relevant concession. The difficulty faced by the Plaintiffs is that the decisions which the Defendant made were subject to numerous considerations which all interacted with and affected each other. A concession by a witness about a discrete

matter artificially emphasised amongst, or even completely detached from, all the other considerations sheds little light on what a river operator acting with reasonable care would have done in response to the whole. The Plaintiffs place reliance on the following evidence from Dr Davis when questioned about the low level of Lake Victoria on 22 May 2018: Q. “And really that called for some other plan to be put forward, which at least could have involved earlier in-channel transfers at a higher amount?” A. “Yeah, I think in hindsight you could say that definitely.” Dr Davis was not admitting to a perception which ought to have been held on 22 May 2018 but to a view which might be taken now that it is known that it did not rain in the second-half of 2018. The “hindsight” qualification deprives Dr Davis’s answer of any probative value to the issue now being considered. Each of Dr Davis, Ms Hickey and Mr Bishop gave evidence about the totality of situation in his or her respective Affidavit. Each said that he or she considered at the time (and still does) that it was reasonable not to release more water from Hume Reservoir until the beginning of August 2018. Their evidence is of limited probative value other than to the extent that it reveals the objective facts which were relevant at the time a reasonable river operator would have (on the Plaintiffs’ case) acted. In any event, the

affidavit evidence from the Defendant’s witnesses does not assist the Plaintiffs. The Plaintiffs are left to reason from the objective facts. By reference to the five circumstances addressed above the Plaintiffs submit that the conditions which confronted the Defendant in June 2018 presented a risk to the storage level of Lake Victoria of historic proportions. An examination of the facts reveals that it was not so. The storage level of Lake Victoria was lower than the Defendant had been expecting and the Defendant had to be vigilant, just as it always had to be vigilant, about the storage level of Lake Victoria. Objectively viewed, however, the circumstances were not so dire as the Plaintiffs would have it. A particular deficit in the Plaintiffs’ reasoning is their insistence that the Murray River system was being operated “in” the “dry” scenario. Questions were asked of the Defendant’s witnesses and submissions are made which have the unspoken premise that the remainder of 2018 would necessarily be dry. An example of the cross-examination is the questions asked of Dr Davis about the graph for the storage level of Lake Victoria which was part of the output from the run of the Fortran Assessment Model on 5 June 2018. It was reviewed by the WLWG on 25 June 2018 and depicted the following: Dr Davis was directed to the “dry” and “very dry” scenarios. He accepted that the graph

depicted an assumption that the storage level would “commence” at 380 GL, yet the storage level was known to be only 362 GL on 25 June 2018. Based on those two data points and the future release rates assumed for Yarrawonga Weir, it was put to Dr Davis that “the plan as set out there was not going to work” and “something needed to be done”. In the understated manner typical of much of his evidence, Dr Davis gave the following answers: Q. “So it was known, wasn’t it, to the [Defendant]’s knowledge that the plan wouldn’t work in circumstances where Lake Victoria was falling as at this meeting, such that the release rates wouldn’t be sufficient to get Lake Victoria to the level it needed to be at?” A. “My recollection was they were still hoping for a bit of a follow-up rain in July or August local. That’s what we were thinking of, I think, at this point in time but I would - in terms of the face value of this, yes.” Q. “You accept that the plan, as set out there, was not going to work?” A. “It’s a big call to say it’s not going to work, but yes, I would say based on that plan if we are not at a different starting point then, that plan is set, then we’re outside the plan.” Q. “And if that’s right, something needed to be done; correct?” A. “Yeah. Potentially. It just depends on what the forecast were and things, yeah.” Q. “But it was forecasting dry conditions?” A. “Sure.” Even in

those qualified terms, the evidence does not address the whole picture which a river operator acting with reasonable care would have had to consider. Once the graph is reviewed as a whole, and not just by reference to the “dry” and “very dry” scenarios, a different picture is apparent. As at 25 June 2018 there had been some recent rain in the upper Murray and Ovens River catchments, over 40-60mm in some places. Inflows in the future, including at the end of June, might have made the “moderate” scenario depicted by the grey line more pertinent to a consideration of the future storage levels of Lake Victoria, in which case the Lake might be expected to rise relatively rapidly. In the conditions described as “near average” and depicted by the green line, the Lake would rise higher even if it was only 362 GL in June 2018. The Plaintiffs nonetheless rely on the passage from Dr Davis’s evidence as an admission that the storage level of Lake Victoria on 25 June 2018 was such that action was required which involved transfers from Hume Reservoir at the limit of the channel capacity and/or calls on the Goulburn IVT account. No such admission was made. As he was asked to do, Dr Davis’s answers only addressed the “dry” and “very dry” scenarios. In June (the first month of the water year) a river operator acting with reasonable care would have had regard to all the scenarios. Clause

10(1)(b)(iv)(G) of the O&O Document required it. A river operator acting with reasonable care would not have regarded the outputs from the Fortran Assessment Model as a “plan” which might not be “going to work”. It does not follow from being “outside” the “dry” scenario that immediate action was necessary. It is also relevant that the questions were asked of Dr Davis on the premise that Lake Victoria “was falling” (or “was dropping”). For the reasons given above, the premise was not correct as at 25 June 2018. In any event, Dr Davis’s ultimate evidence was that alternatives to going overbank were “open” to the Defendant. The evidence is far from sufficient for a finding that a river operator acting with reasonable care would have immediately commenced overbank transfers in June 2018. The Plaintiffs submit that “once it [was] realised that a plan is not going to be achieved, or not likely to be achieved, the plan needed to be amended by increasing releases – in combination with Goulburn IVT if necessary”. Dr Davis’s evidence does not provide a basis for making the findings necessary to accept that submission. No other evidence is identified. At all times relevant to the case, it was not possible for the Defendant to know that any “plan” about the future storage levels of Lake Victoria was not going to be achieved or even that it was not likely to be achieved. Amongst other

things, at all times the answer to that question depended upon whether it rained beyond the four, possibly eight, day limit of reliable rain forecasting. Looking at it prospectively in June 2018, a river operator acting with reasonable care would have recognised that it was possible that the rest of the year would be dry. Another possibility was that it would rain in the next six months and that it might do so as soon as next week. Based on historic records, the wettest months of the year all lay ahead. The Plaintiffs have not proved that a river operator acting with reasonable care would have disregarded the possibility of rain. In that context, there is evidence that conditions may change relatively quickly between those assumed for each of the Defendant’s six modelling scenarios. Ms Hickey said that we live on a continent with one of “the most variable hydrologies” and it can flick from “very dry” to “very wet” between two months. Mr Bishop said that actual conditions could move between wetter and drier scenarios month-to-month. Both statements accorded with the 2018/2019 AOP Document which stated: “There is extreme variability in the weather of the Murray-Darling Basin, and consequently the inflows to the River Murray system are amongst the most variable in the world.” There is no suggestion that the River Operations Team did not pay constant attention to the storage level

at Lake Victoria, rain forecasting and all the other information needed properly to assess the risks of system shortfall and spill. Apart from the (non) allowance for in-channel watering, the Plaintiffs make no criticism of the modelling used by the Defendant and the regularity with which it was conducted in the 2018/2019 water year. The Defendant consulted regularly with the WLWG. The Plaintiffs submit that the Defendant did not pay sufficient attention to the WLWG’s advice on 2 May 2018 but that is factually incorrect. The WLWG subsequently approved the 2018/2019 AOP which included the text which is set out at [1081] above. Reading through the chronological sequence in each of the Affidavits of Dr Davis, Ms Hickey and Mr Bishop there is evidence of a methodical and careful assessment of the risks once the 2018/2019 water year commenced and as it progressed. The Defendant’s evidence about its processes for the 2018/2019 water year was not challenged. Analysis conducted after the event suggests that a significant cause of the low storage levels of Lake Victoria in the winter of 2018 was higher than expected diversions by irrigators in Victoria and New South Wales. The Plaintiffs submit that there were diversion trends which the Defendant failed to identify but this part of the case rises no higher than assertion. It lacks specificity. High (or higher) diversions is not one of

the relevant circumstances specified in MFI-38. In any event, the Defendant’s system was to rely on the States for the assumptions to be made about diversions. Diversions were made by the States’ customers. There is no basis for a finding that a river operator acting with reasonable care would not have relied on information from the States about diversions. The Plaintiffs specifically submit that the Defendant was informed about higher diversions in the email from the former employee which the Defendant received on 10 August 2018. It is submitted that the email addressed “matters” and made “points” to which the Defendant should have had regard. The Plaintiffs also submit that the former employee’s knowledge should be viewed as knowledge of the Defendant to the effect that there would be unusual irrigation demand patterns in dry years. It is submitted that it should not have taken the email to remind the Defendant of “what competent practice was in this scenario”. Amongst the problems with these submissions is that no “points” or “matters” or “competent practice” were referred to in the email. The email stated the importance of access to the MIL infrastructure which is universally accepted, both then and now. Apart from that, the email referred to peak demand from irrigators shifting forward in “drought years”. The implications of the shift were not identified. The writer of the

email appears to say that demand for water will be higher in August-September but if that be the result of a “shift”, presumably demand would be lower in summer. The Plaintiffs do not say that the shift ought to have changed the timing or quantum of bulk transfers to Lake Victoria. There is no basis to suggest that the Defendant ought to have relied upon the email rather than advice from the States about demand patterns. In any event, the email did not arrive until 22 August 2018 by which time water was already being released at Yarrawonga Weir at the limit of the channel capacity of the Barmah Choke. There was a risk of spill As explained by Mr Bishop, one of the circumstances which always confronted the Defendant was the risk that water would spill from Lake Victoria into South Australia. Dr Ladson accepted that risk from a hydrological perspective. The Plaintiffs nonetheless sought to diminish the importance of spill risk in the 2018/2019 water year. This is an aspect of the case where the time when the alleged breach of duty occurred is important. Mr Bishop’s evidence was that the risk of spill was “high” at the start of June, “moderate” at the end of June and “quite low” on 19 July 2018. He said that the risk “becomes lower very quickly” as the water year progresses. The time relevant to the Plaintiffs’ case is June 2018, including late June. Each of the Defendant’s

witnesses emphasised the risk of spill as a reason for not making greater in-channel transfers in June and July 2018. The Plaintiffs challenged the Defendant’s witnesses about the professed contemporaneous concern but no meaningful admission was made. The Defendant’s contemporaneous documents make clear that the competing risks of spill and system shortfall provided the ever-present backdrop to the decisions made by the River Operations Team. A typical example is the dot points which Mr Bishop circulated in mid-July 2018 in preparation for an upcoming consultation with the WLWG about bulk transfers to Lake Victoria. It commenced: “[The Defendant] is considering requirements to commence storage bulk transfers under a dry scenario in the coming weeks. As always, any decision to undertake bulk transfers is being considered in relation to the risk of ensuring supply under an on-going dry scenario versus the potential for future spill at Hume and/or Lake Victoria if conditions turn wetter.” The dot points then preceded to address the risk of spill: “● Given the relatively early timing of these bulk transfers, storage spill — particularly at Lake Victoria — remains a possibility if conditions trend significantly wetter. As always, if a physical spill at Lake Victoria did occur, any SA deferred water in Lake Victoria at that time would be affected, however with the transfers from Hume

and Dartmouth, it is likely that this volume would be low and limited to the current month deferral. However, even though sufficient time remains through winter–spring for conditions to wet up, analysis of historic inflow trends suggests that the likelihood that rainfall and inflow will be enough to track the system towards a significantly wetter year becomes less and less as dry conditions persist over winter. (Dry catchments and prevailing climatic drivers generally limit this possibility in years when reasonable wetting up has not occurred through May-July.) ● Given these factors along with current and target storage levels, RMO now considers the risk of spill to be quite low.” The Plaintiffs criticise the approach taken in June 2018 because there is no evidence that the River Operations Team undertook a “formal” or “scientific” assessment of the risk of spill. It may be accepted that the River Operations Team did not actually quantify the risk in June 2018. Mr Bishop said that there was no need to conduct a formal assessment because it was “understood”. He said that a high risk of spill in June was “inherent”. There is no evidence that on an annual or more frequent basis a river operator acting with reasonable care would undertake some form of quantitative analysis of the probability of a spill occurring at any particular time. When Dr Ladson conducted his quantitative

assessment of the risk of spill (see the following paragraph) he used a statistical analysis based on data from the last 127 years. An officer in another part of the Defendant, Mr Foreman, took a similar statistical approach when he looked at the issue in July 2018 and again in February 2019. Assuming the statistical approach to be appropriate (and none other is suggested), and given the breadth of the data set, there would not be a material change to the risk from year to year. In Mr Bishop’s language, the risk of spill was something which was readily understood without the need regularly to re-calculate. In any event, the reason for the Plaintiffs’ criticism of the River Operations Team’s failure to undertake a scientific assessment of the spill risk is not apparent. Statistically, in June 2018 there was a significant risk of spill. In his Second Report dated 16 May 2025 Dr Ladson used a logistic regression to analyse the risk of spill using data from the preceding 127 years. Dr Ladson’s analysis was focussed on an assessment of risk based on the storage level of Lake Victoria at the end of June and at the end of July. The former date may be relevant to a decision made in June (but not mid-June). The storage level at the end of July would not have been known in June 2018 so the statistical probability based on that storage level is not relevant. Nonetheless Dr Ladson’s

analysis shows that when the storage level of Lake Victoria is 364 GL at the end of June the risk that there will be a spill before April the next year is 44.2%. When the storage level is 372 GL at the end of July, the risk of spill is 4.5%. Dr Ladson did not undertake an analysis of the risk of spill in mid-June but it may be inferred that it was higher than 44.2% for each day earlier in the month. Dr Ladson observed that the spill risk declines “significantly” between the end of June and the end of July which makes sense because in July there is a proportionately shorter period before 31 December (when the Defendant aims to have Lake Victoria full) during which rain may yet fall. Logically the significant decline from 30 June must be a continuation of a decline from before 30 June. The rate of decline prior to 30 June would likely to be even more significant than after 30 June. There is evidence that as at the beginning of May the risk of spill before May the following year was 90% (see below). Even if for the sake of simplicity it is assumed in the Plaintiffs’ favour that the risk declined at a constant rate through May, June and July, the risk of spill in mid-June would have been well in excess of Dr Ladson’s figure of 44.2%. Had a river operator acting with reasonable care undertaken a formal or scientific assessment in mid-June 2018, Dr Ladson’s statistical analysis shows

that that would have been the result. In his Third Report, Dr Ladson undertakes a sort of self-critique of his own statistical analysis which appears to be directed to demonstrating that his 44.2% figure is too high. He observes a difference between the analysed full storage limit of Lake Victoria (670 GL) and the actual limit (677 GL) although the implications of that difference appear to be negligible. He further states that climate change may mean that the data set populated by 127 values since 1891 “may not provide a good characterisation of current climate”. That may well be the case but there is no evidence about what if any implications a smaller data set would have for Dr Ladson’s 44.2% figure. Dr Ladson accepted in cross-examination that there would be no material difference. In any event, as at 2018 the Defendant was modelling the River Murray system using data from the previous 127 years. A topic discussed at least within the Defendant and the WLWG was whether it ought to continue with that framework or make some adjustment to take account of climate change. The issue was under consideration but no change had yet been made. The Plaintiffs have not proved that it was not reasonable for the Defendant to be operating as it was in 2018 or that a river operator acting with reasonable care would have operated differently. In his Third Report dated 8 September 2025, Dr

Ladson does not claim to have relevant expertise about the impact of climate change on the statistical analysis which he undertook, or on the reasonable perception of that impact in 2018. In his self-critique Dr Ladson also says that his statistical analysis assumed that the inflows which occurred in each of the previous 127 years were equally likely to occur in the 2018/2019 water year. He says that a more accurate analysis would be to limit the data set to “dry” years. Dr Ladson does not himself undertake a further analysis to address this issue. The Plaintiffs nonetheless submit that, were the data set to be limited to the driest 25% of previous years, the probability of spill as at 30 June 2018 was not 44% but 27%. They expose their calculations in their written closing submissions. The Defendant makes a number of criticisms of the method by which the 27% figure has been calculated. It submits that the limited data set chosen by the Plaintiffs’ lawyers is arbitrary, too small and does not accurately reflect Dr Ladson’s reasoning. By changing the parameters of the Plaintiffs’ data set slightly, the Defendant can demonstrate that statistically the same method produces results variously of 56% and 36%. They further submit that the Plaintiffs ought not to be permitted to rely on the 27% figure in circumstances where it is based on a sub-set of data used by Mr Foreman in July

2018, yet Mr Foreman was not cross-examined about the efficacy of the limitation. More fundamentally, the Defendant submits that confining a statistical analysis to the driest 25% of previous years would not make sufficient allowance for the speed with which conditions might change from dry to wet. As at June 2018 it was not known whether the inflows in the 2018/2019 water year would be “dry” or “very wet” or somewhere in between. Thus, the Plaintiffs’ contention that an analysis of spill risk in June 2018 would have been confined to previous “dry” years is informed by hindsight. The Plaintiffs do not cure that flaw by reference to the Bureau of Meteorology’s dry climate outlooks which do not reliably forecast future rain. That is especially so in June 2018 when the Bureau self-assessed its winter forecast as “low” skill. Dr Ladson has also expressed the opinion that in the 2018/2019 water year the risk of spill would have been lower than 44.2% because 100 GL of water from the upstream tributaries were earmarked to fill Lake Mulwala. That was a circumstance which presumably distinguished the 2018/2019 water year from each of the previous 127 water years, or most of them (the frequency of the invasive waterweed and other occasions when Lake Mulwala might have been lowered in May is not known). From June 2018 the first 100 GL of inflows upstream of Lake Mulwala would not flow

through to Lake Victoria. Inflows downstream of Lake Mulwala would still flow uninterrupted to Lake Victoria, although the Plaintiffs rightly point out that a significant proportion of system inflows (over 50%) come from the Ovens and Kiewa Rivers above Lake Mulwala. It may be accepted that in June 2018 there was some reduction in the statistical risk of spill on account of the Lake Mulwala circumstance. The extent of the reduction is not known. Dr Ladson has not sought to quantify it. Not content even with a risk of spill measured as high as 44.2%, the Defendant has developed two points in an endeavour to undermine the reliability of Dr Ladson’s analysis. First, it points out that the data used by Dr Ladson did not include actual historic storage levels of Lake Victoria at the end of June and at the end of July but rather simulated values derived from actual storage levels at the end of April. The Defendant submits that it makes no sense to draw conclusions about the probability of a future spill for actual storage levels from a statistical analysis of a spill occurring for simulated storage levels. Whether or not sense may be made of such a conclusion appears to depend on the attributes of the simulation which is not a matter addressed in either the evidence or the Defendant’s submissions. It may be inferred that Dr Ladson was satisfied that his simulation gave meaningful

results. Secondly, the Defendant submits that Dr Ladson’s results are unreliable for violation of a key assumption of statistical validity of a logistic regression, namely that the values for the storage levels at the end of June must all be independent of each other (as must the values at the end of July). This is said not to be the case for Dr Ladson’s analysis by virtue of the simulation from the common actual storage level at the end of April. Dr Ladson accepted the want of independence but was more sceptical about the consequential unreliability. Perhaps reconciling itself to a risk of spill of only 44.2%, the Defendant’s more pertinent submission in relation to these statistical matters is that the reliability of Dr Ladson’s analysis does not greatly matter. There is nothing in Dr Ladson’s analysis which supports the Plaintiffs’ contention that a river operator acting with reasonable care would not have been concerned about the risk of spill in June 2018. A 44.2% probability would have been seen to be significant. It accords with Mr Bishop’s description of “moderate”. The risk of spill was even higher in mid-June. That submission is supported by evidence that on 9 July 2018 Mr Foreman undertook a statistical analysis of the risk of spill based on the actual storage level of Lake Victoria at the end of June 2018. Mr Foreman was not in the River Operations Team. It seems

likely that he undertook his analysis for reasons unrelated to the immediate operation of the Murray River system. There is no evidence that anyone in the River Operations Team saw the results at the time. Mr Foreman calculated that the risk of spill was 85% as at the end of June 2018. Mr Foreman’s statistical analysis did not take into account the factors raised by Dr Ladson in his Third Report, namely the 677 GL storage level of Lake Victoria, a truncated data set to reflect climate change, limiting the data set to the driest 25% of previous years and the 100 GL to be used to refill Lake Mulwala. In cross-examination Dr Ladson said that these factors would reduce Mr Foreman’s 85% figure. He was not able to quantify the reduction but agreed the result would certainly not be to a figure lower than 44%. In re-examination he was asked whether the factors would reduce the figure below 44%. He said it was hard to say and that you would need to do the analysis. The evidence provides a framework in which the risk of a spill occurring based on the storage level of Lake Victoria at the end of June 2018 may be considered but it does not permit a finding about a particular probability. Had a finding which is more specific than “significant” or “moderate” been necessary, that finding ought to be based on Mr Foreman’s contemporaneous work in July 2018. There is no criticism of the

statistical efficacy of Mr Foreman’s analysis whereas the want of independence between the simulated values in Dr Ladson’s logistic regression detracts from its reliability for the purposes of deciding an issue on the balance of probabilities. On the evidence, at the end of June 2018 the risk of spill was less than 85%, a reduction being necessary to accommodate the use of 100 GL to fill Lake Mulwala and possibly climate change. Beyond that it is not possible to say. The risk of spill was higher in the middle of June 2018 than at the end of June. A more specific finding is not necessary. The submissions about the quantification of the probability seek to achieve a precision which is not relevant. Even if the probability at the end of June was 27% and the same in mid-June 2018, there was a present risk of spill at those dates. Tolerance of the risk of spill was not inbuilt in the modelling The Plaintiffs make further submissions directed not so much to the statistical probability of a spill occurring as to the lack of relevance of spill risk relative to the forecasting in the AOP modelling documents. They submit that specifically in June 2018 the risk of spill was irrelevant because “the planned release rates were forecast to be insufficient to achieve the Lake Victoria [storage] levels which the [Defendant] was trying to achieve”. The submission follows the Plaintiffs’ focus on

the “dry” scenario and misses the point. Given the storage level of Lake Victoria in June 2018, it may be accepted that it was unlikely that a spill would occur if inflows in June, July, August and September conformed to those assumed for the “dry” scenario. If, however, it rained and greater inflows occurred there might be a spill even though the storage level of Lake Victoria was low in June. That would occur irrespective of what had been assumed for the six scenarios in the AOP modelling documents. The contemporaneous modelling did not provide a basis for a river operator acting with reasonable care to ignore the risk of spill. The Plaintiffs put forward another argument which is a variation on the same theme. They submit that concern about the risk of spill would have been non-sensical whenever the storage level of Lake Victoria was below that “planned” in the AOP modelling documents. They submit that inbuilt into the assumptions in the AOP modelling documents was a tolerance for the risk of spill inherent in the storage level forecast by the assumptions. They say that in June 2018 the risk of spill was “plainly acceptable” by virtue of the WLWG’s approval of the AOP. There are three reasons why this argument cannot be accepted. First, the AOP modelling documents did not specify target storage levels to be achieved for Lake Victoria. They modelled the behaviour of Lake

Victoria based on the assumptions about inflows for each scenario. There were instances where the modelled storage level was high. For example, if the Murray River system experienced inflows consistent with the “near average” scenario, the modelled storage level for Lake Victoria in June 2018 was more than 450 GL. From that starting point, and having regard to Dr Ladson’s statistical analysis in his Third Report, the risk of spill would then have been higher than 85%. If in fact the actual storage level at the end of June was below 450 GL, the Defendant was not required nonetheless to commence bulk transfers from Hume Reservoir in order to “achieve” the high “target” of 450 GL for the “near average” scenario. The storage level modelled for each scenario did not obviate the need to consider the acceptability of the risk of spill when considering making bulk transfers from Hume Reservoir. Secondly, and relatedly, the acceptability of a modelled storage level in the way that the Plaintiffs contend must have been subject to the assumption that inflows would necessarily continue to conform to the relevant scenario for the remainder of the year. When allowance was made for the possibility that future inflows may in fact move from those assumed for one scenario to another (as a reasonable river operator would have done), the modelled storage level may have given rise to an

unacceptable risk of spill. Thirdly, if a particular storage level can be said to have had an acceptable risk of spill, it must be on the further assumption that water would thereafter be transferred from Hume Reservoir in accordance with the assumed flow rate at Yarrawonga Weir. In particular, the Plaintiffs say that by virtue of the output from the Fortran Assessment Model which was obtained on 5 June 2018 there was an acceptable risk of spill if Lake Victoria’s storage level was 393 GL at the end of June 2018. That storage level was based on the assumption that transfers from Hume Reservoir would remain at approximately 5,000 ML/day at Yarrawonga Weir throughout July. The output obtained on 5 June 2018 did not establish that a storage level of 393 GL (or 364 GL as hindsight shows was the fact) was acceptable if transfers were to be made at higher release rates during July. A reasonable river operator was therefore obliged to consider the risk of spill if he or she decided to transfer water at release rates higher than those assumed in the AOP (as the Plaintiffs allege the Defendant was required to do). For this and the preceding two reasons, the Plaintiffs have not demonstrated that a river operator acting with reasonable care would have disregarded the risk of spill whenever the storage level of Lake Victoria was below that modelled in the AOP modelling

documents. Consequences if a spill occurred In their Closing Submissions the Plaintiffs develop a distinction between the probability of a spill occurring and the “risk of spill”, where the latter takes into account both the probability of occurrence and the consequences if a spill does occur. The purpose of these submissions is to ground an argument that even if there was a significant probability of a spill occurring in June 2018 the consequences would not have been viewed as significant. Focussing on terminology, Dr Ladson said in his Third Report that a consideration of the consequences of a spill was relevant to an assessment of the “risk”. He listed a number of factors which, hydrologically, might be relevant to the consequences of a spill in this case. He did not, however, undertake an analysis of what the consequences might have been in the 2018/2019 water year. He accepted in cross-examination that probability was more important than consequences. Consistent with that prioritisation, when Dr Ladson undertook an assessment of the risk of spill in his Second Report he limited his assessment to a consideration of the probability that a spill would occur. Ms Hickey was asked in cross-examination about whether the amount of water which would be lost by a spill ought to have been assessed. The effect of her evidence was that an assessment of the risk of spill just focusses

on the probability, not the quantum of the consequential lost water. She was next asked about assessing the quantum of lost water caused by overbank transfers and asked whether she would undertake “the sort of exercise we’ve just gone through”, to which she said “yes”. This is not evidence that a river operator acting with reasonable care would have undertaken an assessment of the relative quantum of water which would be lost when considering making immediate transfers and running an increased risk of a spill compared to delaying transfers and running an increased risk that overbank transfers will be required at a subsequent date. Ms Hickey made clear that she herself would not assess the amount of water which would be lost by a spill. Her acceptance of the “sort of exercise we’ve just gone through” needs to be understood in that context. Ms Hickey’s approach was the same as that taken by Dr Ladson in his Second Report. In any event, the distinction between probability and risk makes no difference in this case. There is no evidence about the consequences of a spill if one had occurred in the 2018/2019 water year (or at any other time). There is no evidence about how much water would have been lost or the circumstances in which it would have been lost so as to permit some conception of the consequences. Before leaving the topic, the process of legal reasoning by which the case

is to be decided makes it appropriate to observe that there is an irony in the position which the Plaintiffs have taken on the risk of spill. The Plaintiffs do not submit that there was no risk of spill. They accept that there was a risk, but say that the Defendant should have run that risk. In taking that position the Plaintiffs appear to have lost sight of their contention that the Defendant owed them a duty of care to protect them from economic loss. Were a spill to have occurred, water would have been lost to New South Wales and Victoria which may have reduced the water allocated to the Plaintiffs themselves. The Defendant’s concern for the risk of spill was concern for the interests of New South Wales and Victoria. The irony runs further because the Plaintiffs positively submit that if a reasonable river operator had regard to the probability of a spill occurring, he or she would also have had regard to the consequences of a spill. Implicit in the submission is the unspoken proposition that the consequences of a spill in 2018 would not have been material, such that even if the probability of occurrence was high a reasonable river operator would still have run the risk. There is a tension between that position and the Plaintiffs’ anterior allegation that the Defendant owed them a duty of care. It may have been more in conformity to the alleged duty for the Defendant not to

be willing to run the risk of a spill which would cause water to be lost to NSW and Victoria. For this reason alone, the Plaintiffs’ submission that the Defendant has not proved that there would have been material consequences from a spill cannot be accepted. The materiality of the consequences is inherent in the identity of the Plaintiffs. The irony also highlights difficulty with the anterior contention that the Defendant owed the Plaintiffs the alleged duty of care. It is an example of a reason why it is unlikely that the Defendant was intended to make decisions about the operation of the Murray River system having regard to the economic interests of the Plaintiffs. Summary of risk of spill Neither by logic nor by evidence have the Plaintiffs demonstrated that a river operator acting with reasonable care in mid-June 2018 would not have regarded the risk of spill as a sound reason not to commence transfers to Lake Victoria from the end of June. The same conclusion applies to the position of a reasonable river operator making the decision at the end of June. Bank erosion in the Barmah Choke The Defendant submits that a further consideration which a river operator acting with reasonable care would have taken into account when considering whether to increase the release rate at Yarrawonga Weir at the end of June 2018 was the erosion damage which sustained flows at the channel

capacity of the Barmah Choke may cause to the banks of the river. Commencement of bulk transfers in June 2018 may have prolonged the period water would be released at the capacity of the channel at the Barmah Choak and thereby increased the damage to the banks. The Defendant submits that a concern for bank erosion would have been a further reason why earlier and greater releases would not have been made. There is no dispute that long periods of flows at channel capacity increase natural erosive pressures on the banks of a river. The problem was described in the 2018/2019 AOP as follows: “Running the Choke at, or close to channel capacity, for extended periods increases erosive pressures on the channel banks through the Choke. Where erosion leads to bank slumping or erosion of the natural levee, channel capacity may be reduced. Erosion of the natural levee on the river bank leads to breakouts into the forest in isolated locations increasing the risk of unseasonal overbank flooding into the Barmah-Millewa Forest.” The Plaintiffs submit that channel erosion was not as important as the Defendant would have it. They seek to undermine the credibility of the passage from the 2018/2019 AOP by submitting that the Defendant was seeking artfully to assuage the concerns of “stakeholders”. There is no basis to accept that submission. Neither the stakeholders nor the concerns are identified.

If the irrigators are assumed to be the stakeholders with concerns about water lost overbank in Barmah-Millewa Forest, there were no such concerns when the 2018/2019 AOP was finalised in late July 2018. No overbank transfers had been undertaken at that point of time. There is no reason to consider that the Defendant did not genuinely describe the problem of bank erosion in the 2018/2019 AOP. There is no reason to consider that the WLWG did not genuinely approve the description. The Plaintiffs further submit that bank erosion would not have arisen specifically for consideration in June 2018 because the Defendant was not required to run the river at the channel capacity of the Barmah Choke. The argument is that a reasonable river operator would have released water from late June at rates up to 9,500 ML/day and no higher. At those rates, the river would have been below channel capacity. Whilst 9,500 ML/day was specified as the channel capacity for the 2018/2019 water year, the specification was based on the assumption that the regulators would be closed and no in-channel watering would be occurring. In fact environmental water holders planned to place orders for in-channel watering to be undertaken from 16 July 2018. The evidence shows that when the Defendant subsequently increased the flow of the river to 9,500 ML/day at Yarrawonga Weir, the level of the river only reached a

height of 2.2m at Picnic Point which was well below the 2.6m height at which damage to the banks would occur. The Plaintiffs build on this argument to say that bank erosion is also caused by overbank transfers. Ms Hickey volunteered that evidence in her cross-examination. If the Defendant could avoid or reduce the need for later overbank transfers by making earlier in-channel transfers then any damage caused by the in-channel transfers would be offset by damage subsequently avoided by overbank transfers. The Plaintiffs go so far as to submit that the avoidance of damage to the riverbanks from overbank transfers was a positive reason to commence earlier and greater bulk transfers. The Plaintiffs make a number of further submissions about running the river at a height where damage to the banks might occur (which they appear to accept would have happened in the period up to 16 July 2018). They submit that the damage would not have been significant. The evidence referred to for that proposition is a number of answers given by Ms Hickey in cross-examination. The particular answers relied upon do not support the submission. Ms Hickey said that there was no material difference between erosive pressure caused by running the river at channel capacity and conducting overbank transfers. She did not say that the damage caused by bank erosion was not significant in either case. By reference

to an omission from an email, she accepted that she would have brought bank erosion to the attention of the WLWG if it was significant, but that evidence needs to be considered in the context of the draft AOP Document which was provided to the WLWG at the same time period. The significance of bank erosion was addressed in the draft. The Plaintiffs also point out that the Defendant had previously released water at Yarrawonga Weir for prolonged periods at the limit of the channel capacity. The past practice is said to demonstrate that there was no real concern for bank erosion in the future. The comparability between previous occasions and the conditions which pertained in June 2018 is not known. Nor can it be inferred from the fact that the river had previously been run at the limit of the channel capacity that it might reasonably be done so again. If damage from bank erosion is cumulative (the evidence does not say) the opposite inference may be true, especially when the channel capacity had already declined from 10,000 to 9,500 by 2018. The Plaintiffs point out that there are other causes of bank erosion, such as boat wash. That does not mean that a river operator acting with reasonable care would disregard bank erosion caused by the operation of the river. The Plaintiffs submit that there is limited evidence of the Defendant’s contemporaneous concern for bank erosion in June

2018 which is said to indicate that it was not as significant as now claimed. The Plaintiffs’ submissions overstate the lack of evidence of contemporaneous concern. As set out above, the concern was addressed in the 2018/2019 AOP, which was reviewed without relevant comment by the WLWG in late June 2018. The concern was reflected in Mr McLean’s email to environmental water holders on 15 August 2018 by which he sought to implement arrangements to vary the rate of flow “rather than holding it steady” in order to manage bank erosion. In any event, the actual concern of the Defendant in 2018 does not shed significant light on how a river operator acting with reasonable care would have viewed the issue. Overall I accept the Plaintiffs’ submission that after a river operator acting with reasonable care became aware of the environmental water holders’ plans for in-channel watering (May 2018), he or she would not have regarded bank erosion as a significant reason not to make bulk transfers after 16 July 2018, so long as the bulk transfers were conducted at less than 9,500 ML/day at Yarrawonga Weir. Otherwise, I accept the Defendant’s submission that a reasonable river operator would have had regard to bank erosion for any such transfers to be conducted before 16 July 2018. He or she would also have had regard to bank erosion for any transfers to be conducted at more than 9,500 ML/day

after 16 July 2018. Dr Ladson accepted that bank erosion would have been taken into account, although he emphasised that there were other considerations too. Hoping for rain The Plaintiffs place reliance, which the Defendant fairly describes as heavy, on evidence that in June 2018 the Defendant was “hoping for rain”. The Plaintiffs refer to evidence which includes an email sent shortly after the relevant events to a local politician (see below) and evidence given in cross-examination by Dr Davis. The passage from Dr Davis’s cross-examination which is set out at [1256] above includes the statement that “they were still hoping for a bit of a follow-up rain in July or August”. He used similar language on other occasions. The Plaintiffs say that implicit in a hope for a future event is an understanding that there will be a problem if it does not occur, plus an admission that something needs to be done against that possibility. They submit that the fact that in June 2018 the Defendant found it necessary to hope for rain proves that the Defendant understood that action needed to be taken. As the Defendant submits, the Plaintiffs are asking too much of the word “hope”. They are also giving it a forlorn connotation which is not warranted. According to the Macquarie Dictionary, the meaning of the verb “hope” is to look forward to with desire and, to a certain extent, confidence. Hope

may be forlorn or even desperate, but it might also be reasonable. Like most if not all words, there is nuance. To recognise that there are two future possibilities one of which would be preferable to the other may not be perfectly described as “hoping” for the preferred possibility, but it is within the limits of the meaning. In any event, a passive response is not inherent in the word. One may hope and at the same time prepare, both against the possibility that the hope is realised and against the possibility that it is not. Even if the Plaintiffs are right when they say that hoping for rain recognised that there would be a problem if it did not occur, they are wrong to take the next step and say that it is an admission that something needed immediately to be done. Even in the face of the risk of system shortfall if it did not rain, it was still necessary to balance that risk against the competing risk of spill which would be exacerbated by immediately making bulk transfers from Hume Reservoir. The advantage of rain, and a reason why river operators might hope for it, is that it may enable a system shortfall to be avoided without exacerbating the risk of spilling water which would otherwise remain safely behind Hume Dam. In any event, the Defendant rightly submits that the submissions about hoping for rain in June 2018 are irrelevant. The issue to be determined is what would

have been done by a river operator acting with reasonable care. The subjective attitude of the Defendant’s river operators in June 2018 does not inform that determination. There is no dispute that since 1989 the long-term average monthly system inflows have been highest in July, August, September and October. Dr Ladson sets out the relevant data in Section 6 of his First Report. A river operator acting with reasonable care would have been aware of that information in June 2018. The river operator may not have described the position as “hoping for rain”, but the question of breach is not concerned with the description which a reasonable river operator would have used. A river operator acting with reasonable care would have known that rain would reduce the risk of system shortfall, that there were no reliable rain forecasts beyond four (perhaps eight) days, that July and August were historically the wettest months of each year and that the river had to be operated in a way which took into account all reasonable possibilities including future rain. I have found that the Defendant’s conduct conformed to that approach. It does not matter if Mr Reynolds or Dr Davis subsequently described it as “hoping for rain”. Departure from the AOP planning documents The Defendant emphasises that the earlier and greater releases for which the Plaintiffs now contend find little support in the AOP

modelling documents which contemplated that bulk transfers from Hume Reservoir would not be increased to the limit of channel capacity of the Barmah Choke until about September 2018. Consistent with its case on the 2017/2018 water year, the Defendant does not say that in June 2018 a river operator acting with reasonable care would necessarily have adhered to the release rates assumed in the AOP modelling documents, but it does say that he or she would have taken them into account. The Defendant uses this reasoning to try to elevate the bar which the Plaintiffs must overcome in order to procure a finding of negligence: the Plaintiffs must prove that a reasonable river operator would have decided to make earlier and greater releases despite them being a departure from the modelling in the AOP modelling documents. If the Plaintiffs had otherwise proved that a river operator acting with reasonable care would have decided to make the releases for which the Plaintiffs contend, the fact that those releases would have been earlier and greater than those assumed for the run of the Fortran Assessment Model on 5 June 2018 (or on any other date) would not prevent a finding of breach by the Defendant. The releases at Yarrawonga Weir had to that point been conducted in accordance with the assumptions in the AOP modelling documents for the “dry” scenario, yet Lake Victoria did not have the

storage level which was being modelled on those assumptions. In those circumstances a reasonable river operator would not have been obliged to continue to make releases at the rates assumed in the AOP, even on the Plaintiffs’ stricter view of the Defendant’s obligation to act in accordance with the AOP. Documents subsequently prepared by the Defendant which acknowledged failings The Plaintiffs seek support for their case in four Defendant documents which were created relatively shortly after the overbank transfers commenced in August 2018 which are said to demonstrate an earlier failure by the Defendant to take reasonable care. First, on about 15 November 2018 Ms Hickey had a meeting with members of the River Operations Team. She said in her Affidavit: “I arranged this meeting as an opportunity for team building and as a debrief session after a challenging first half of the 2018/2019 water year where the River Operations team had observed continued low inflows, early season State demands and recalcitrant levels in Lake Victoria within the River Murray System.” The “thoughts and feelings” expressed by the river operators at the meeting were subsequently set out in a document which was entitled “Reflections”. The events of 2018 which were discussed at the meeting ranged beyond June 2018 and much of the reflections document is irrelevant to the allegations which the Plaintiffs now

make. Indeed, it is unclear whether the circumstances confronted by the River Operations Team in June 2018 were discussed at all. The performance of Lake Victoria was discussed but the focus appears to have been the decision which was made in August 2018 to commence overbank transfers. The Reflections document contained the following text and graph: “What happened? By mid-August, the water level in Lake Victoria was lower than expected, outside the forecast envelope of the Annual Operating Plan with no indication of increasing. Rainfall forecasts remained promising, especially for the Ovens catchment, normally a significant contributor to Lake Victoria during winter and spring. Southern cold fronts arrived intermittently hitting the Victoria Alps as snow. Despite the good snow levels, these cold fronts nor did the resulting snow translate to unregulated flow events normally expected in the Ovens. What did RMO think / feel? Thoughts and feelings of the team during this time were mixed. Initial thoughts ranged from ‘not too concerned provided we turn on the taps hard’, to ‘very concerned’ as we were yet to fully understand why levels in Lake Victoria has failed to rise. Some felt overly responsible for the low levels due to their previous role in the environmental water deliveries to the Lower Lakes last summer. Others were unsure if we just had to hold our nerve a bit longer

given the promising weather forecasts. Some felt earlier indicators of the poor performance of Lake Victoria were in the Ops Sheets however felt they did not have enough experience to detect or know how to act on them. The team recognised that environmental water holders did not fully understand the purpose of the AOP and how the RMO team use the AOP to inform operational decisions. Overall, the whole team felt exposed given the disparity between the water level in Lake Victoria, the AOP and Operations Sheets.” There is nothing in the Reflections document which supports the Plaintiffs’ allegation that the Defendant was negligent by failing to decide in June to make earlier and greater in-channel transfers from late June. The words expressly and the graph by implication show that the meeting discussed the performance of Lake Victoria in August when the storage level of Lake Victoria fell below the “dry”, “very dry” and “extreme dry” scenarios depicted in the graph. Some (but not all) of the attendees expressed a lack of understanding of the levels in Lake Victoria “during this time”. The “responsibility” for the low levels which some felt arose from their previous role in “environmental water deliveries to the Lower Lakes last summer”, not from the failure to make earlier and larger in-channel transfers in June. Some felt that indicators of the poor performance of Lake Victoria

were in the “Ops” sheets (which presumably were the Daily Operations Spreadsheets) but that is irrelevant when there is no dispute that the River Operations Team understood that Lake Victoria was low in June 2018. The whole team felt “exposed” but for a reason which was different to the failure to make earlier and larger in-channel transfers in June 2018. The Plaintiffs’ submissions about the Reflections document follow from their contention that the storage levels of Lake Victoria were historically low in mid-June 2018. The Reflections document is at odds with that contention, focussed as it was on the environmental watering in the previous summer causing low storage levels in August 2018. In June the River Operations Team was not confronted with the dire situation for which the Plaintiffs contend. The second document relied upon by the Plaintiffs can be described as follows. In late November 2018 Mr Reynolds received an email from a local politician with some enquiries about the overbank transfers which were then in progress. He responded on 3 December 2018. His response included the following: “At the same time as meeting demands we have needed to transfer water from Hume Dam to Lake Victoria to be able to meet demands in the mid-Murray and into South Australia later in the year. Without water in Lake Victoria we would have to meet all demand from Hume and the Goulburn

system and to do so in summer would mean higher flows through the forest during the hotter months with even higher losses and a higher risk of black water. Early in the season we delayed transfers to Lake Victoria in the hope of receiving some tributary inflows downstream of Hume which we could have then captured and boosted the overall volume of water available to all entitlement holders. Unfortunately we didn’t get much by way of winter/spring inflow and so we now need to transfer water from Dartmouth to Hume and on to Lake Victoria. With no water available to the Murray from the Murrumbidgee IVT or Menindee we have had to run both the Barmah Choke and Goulburn IVT pretty hard all season.” In cross-examination Mr Reynolds said that the passage was accurate as to the view of the Defendant at the time. He subsequently volunteered a slightly different description of the Defendant’s view, namely “we were still waiting to see whether or not rainfall events would occur. It was early in the season, there was still significant time for that to occur”. Ms Hickey was also cross-examined on Mr Reynolds’s email and said that she did not think that the email misdescribed the circumstances. Mr Bishop was less accepting. All of the Defendant’s witnesses accepted the proposition that the Murray River system should not be operated on the basis of a hope of rain. The statement in Mr Reynolds’s

email that the Defendant acted “in the hope of receiving some tributary inflows” is the centrepiece of the Plaintiffs’ submission that the Defendant did nothing in June 2018 because it passively hoped for rain. For the reasons given above, the reference to “hope” is not relevant to the alleged breach of the Defendant’s duty of care. Some of the Defendant’s witnesses who were cross-examined about the email were also asked about the word “delayed”. As a proposition of logic, it was put that the River Operations Team must have previously decided to make bulk transfers early in the season for those transfers then to be “delayed”. The narrative of events which is set out above accords with Mr Bishop’s evidence that the River Operations Team was constantly looking at the option of whether it may or may not need to make transfers, and at what time, under a whole range of scenarios and that the assessment was constantly evolving. Mr Reynold’s use of the word “delayed” in his email on 3 December 2018 does not detract from the fact. Thirdly, in March 2019 the Defendant published a document entitled “Losses in the River Murray System 2018-19”. I will refer to it as the “Losses Report”. The Losses Report was prepared in response to “stakeholder concerns” about the operation of the Murray River system in the 2018/2019 water year. It was intended to inform the public about “the main

components of and factors that influence river losses in the River Murray System, including how losses vary year to year and how 2018-19 operations and the climate have affected losses [in the 2018/2019] water year”. The Losses Report contained a detailed description and analysis of matters relevant to the operation of the Murray River system in 2018, including temperatures, rainfall, inflows, historic data, demand and use of environmental water. As the title suggested, particular explanation was given about the conveyance losses from the system, which were said to be about 620 GL in the water year to date. The Plaintiffs emphasise statements in the Losses Report to the effect that the overbank transfers could have been avoided had in-channel transfers commenced in May 2018. The statements were made by the Defendant with the benefit of hindsight. They are not relevant to the question of breach in June 2018. The Losses Report also contained the following statement: “For example, if transfers at rates above channel capacity were to be avoided this year, they would have had to commence as early as May 2018. While this option may have reduced the losses, it would have increased the risk of a spill. For 201819, the risk of spill at Lake Victoria during June and July was assessed to be about 90%. Commencing transfers earlier would have increased this risk. Based on this relatively

high risk of spill, the judgement at the time was to delay commencing transfers” The Plaintiffs are correct to submit that the natural meaning of this passage is that an assessment of the risk of spill was carried out contemporaneously with the decision not to commence transfers in May 2018. None of the Defendant’s witnesses were able to identify an assessment of the risk of spill in May or June 2018. On the other hand, there is evidence that in February 2019 officers of the Defendant undertook a calculation of the probability in May 2018 that Lake Victoria would spill before the end of the year, having regard to historical data. The 90% figure evidently came from that subsequent work. The Losses Report described the assessment of the risk of spill in a contemporaneous way which was not correct. There is no dispute about the reasonableness of the 90% figure, such as it. In fact, the figure calculated in February 2019 was over 92%, although the Plaintiffs correctly point out that it was based on the assumption that the maximum storage level of Lake Victoria was 670 GL when in fact it is 677 GL. Ultimately the precise figure does not matter. The Plaintiffs submit that the incorrect description of the 90% figure shows that the Defendant recognised the need to give the impression of a formal assessment of risk which should have in fact been undertaken at the time but was not. The

description of the 90% figure in the Losses Report may not have been the Defendant’s finest hour, but the Defendant correctly submits that it is irrelevant to the issues in the case. There is no allegation that the Plaintiffs relied upon the Losses Report or that they were misled. The importance of the risk of spill and the reasonableness of the Defendant’s assessment of it in June 2018 is addressed above. The Losses Report does not take the Plaintiffs’ case any further. Fourthly, on 31 July 2019 the Defendant published the Summary of River Operations for the 2018/2019 water year. The Plaintiffs point out that it contained a statement to the effect that Lake Victoria struggled to rise to the storage levels forecast in the AOP modelling documents because of a number of matters, one of which was the “lower within channel system transfers through the Choke due to the interplay with in-channel forest watering activities”. The Plaintiffs submit that the statement is evidence of the Defendant’s hindsight appreciation that it had failed to account for in-channel watering in July and August 2018. There is no dispute that the in-channel watering which commenced on 16 July 2018 reduced the quantity of water which flowed through to Lake Victoria. The Summary of River Operations does not appear to take the Plaintiffs’ case further than that. The four documents of the Defendant identified

by the Plaintiffs do not individually or in combination provide a basis for concluding that the Defendant did not act with reasonable care when it did not direct earlier and greater in-channel transfers commencing late June 2018. Particular (d)(iA) and the failure to allow for in-channel watering The foregoing analysis of the breach alleged by the Plaintiffs includes a number of references to the channel capacity of the Barmah Choke which was 9,500 ML/day in the 2018/2019 water year when measured by the release rate at Yarrawonga Weir. An issue which received some focus during the hearing was whether a different channel capacity was applicable for certain purposes. Part way through the hearing the Plaintiffs amended their particulars of negligence to add particular (d)(iA). It contains an allegation that the Defendant was negligent by failing to increase releases at Yarrawonga Weir up to 9,800 ML/day (or 10,000 ML/day) after in-channel watering commenced on 16 July 2018. The Plaintiffs have included in their Closing Submissions a chronological statement of facts which includes some events which touch upon that allegation. Their Closing Submissions do not otherwise address the issue. The allegation in particular (d)(iA) is inconsistent with the Plaintiffs’ contention that a river operator acting with reasonable care would not have regarded bank erosion as a significant issue for

bulk transfers to be conducted after 16 July 2018. That contention, which I accept, is based on the proposition that the bulk transfers would have been made at rates less than 9,500 ML/day at Yarrawonga Weir. Apart from what may be inherent in “greater in-channel transfers”, the subject matter of particular (d)(iA) is not referred to in MFI-38. As already observed, the Plaintiffs do not rely on particular (d)(iA) for their contention that the case about “earlier and greater” in-channel transfers is already pleaded. In these circumstances the Plaintiffs are to be taken to have abandoned particular (d)(iA) as a particular of breach of the Defendant’s duty of care. Summary – no breach of duty The Plaintiffs have not proved on the balance of probabilities that a river operator acting with reasonable care would have made in-channel transfers which were earlier and greater than those in fact made by the Defendant in the 2018/2019 water year. Determination: not calling on the Goulburn IVT account in June, July and August Pleading The Defendant takes no pleading objection to this part of the Plaintiffs’ case. Particular (d)(vii) of Annexure B to the Statement of Claim is repeated here: “In the circumstances pleaded at Part H ([148A]-[185]) of this Fifth Further Amended Statement of Claim, the [Defendant] failed to do some or all of the following: … (d) in planning to deliver South

Australia’s entitlement adjusted to reflect the trade in entitlement or allocation associated with the July/August 2018 Goulburn pulse: … (vii) utilise Goulburn IVT account to deliver the relevant orders and meet South Australia’s adjusted entitlement (see Ladson Report, Chapter 6.6.4);” As set out above, MFI-38 contains an allegation that a river operator acting with reasonable care would have made a decision in June 2018 to make (additional) calls on the Goulburn IVT account in June, July and August 2018. MFI-38 does not say what the quantum would have been for any of the calls. Facts The following facts are pertinent to this part of the Plaintiffs’ case. As at 31 May 2018 the balance of the Goulburn IVT account was 152 GL. That meant that the Defendant was able to call for the release of 152 GL of water from the Goulburn River into the Murray River. As at 30 June the balance had risen to 166 GL. As at 31 July the balance had risen to 235 GL. As at 31 August the balance was back down to 222 GL. As had been stated in the AOP for the previous water year, the 2018/2019 AOP stated that the Defendant planned to call on the Goulburn IVT account throughout the water year as required, “typically” between December and March. Unlike the 2017/2018 AOP, the 2018/2019 AOP also stated that calls may be made earlier than December if conditions were dry early in 2018/2019. According to the

Key Assumptions Document, in June 2018 the Defendant’s modelling assumed that in the “dry” and “very dry” scenarios the Goulburn IVT account would first be called on in October and then again in the following months. It assumed that a total of 350 GL would be called in the water year if inflows conformed to the “dry” scenario which would be an increase on the previous record of 305 GL in the 2017/2018 water year. If inflows conformed to the “very dry” scenario than it was assumed that a total of 230 GL would be called in the water year. In the “moderate” scenario it was assumed that 250 GL would be called starting in December. Apart from the call for 20 GL which was made in June 2018 for the purposes of the RMIF programme the Defendant did not in fact make any calls on the Goulburn IVT account in June or July 2018. On 15 August 2018 the Defendant placed an order for 40 GL. The majority of that water was delivered by the end of August. The Defendant ordered a further 25 GL in September and 50 GL in October. Further calls were made in each of the remaining months of the 2018/2019 water year. Plaintiffs’ submissions As articulated in their Closing Submissions, the Plaintiffs submit that a river operator acting with reasonable care would have made calls on the Goulburn IVT account: “if and to the extent that the relevant decision-maker at the [Defendant] acting reasonably

considered that some further release needed to be made at some other point in time…” The Plaintiffs submit that calling on the Goulburn IVT account in June, July and August would have accorded with the feedback the Defendant received from the WLWG on 2 May 2018 which is addressed above. The Plaintiffs submit that there was no reason for the Defendant to be concerned that calling on the account in June, July and August would jeopardise the ability to call on the account over summer because the account would replenish by trading in the meantime. The Plaintiffs submit that the fact that the Defendant had called on the account on 21 and 30 May 2018 demonstrates that the Defendant was willing to make calls early in the water year. Defendant’s submissions The Defendant makes the same submissions for this part of the Plaintiffs’ case as for the case about earlier and greater bulk transfers from Hume Reservoir. It submits that the circumstances which pertained in June were not such that a river operator acting with reasonable care would have immediately called on the Goulburn IVT account in order to raise the storage level of Lake Victoria. Even if that was an option which was available to the Defendant, the risk of spill presented a reasonable reason not to. The Defendant further submits that there were two additional reasons not to call on the Goulburn IVT account in June 2018.

First, the Defendant usually calls on the Goulburn IVT account during the peak demand of summer. Calls early in the water year would deplete the account balance and might compromise the Defendant’s ability to make calls in summer. Secondly, a Pulse of environmental water was in progress during June and July 2018 with the result that there was insufficient channel capacity in the Goulburn River for additional water to be released to answer a call on the Goulburn IVT account. The Defendant further submits that the case for calling on the IVT account in June depends entirely upon hindsight because it is framed by reference to Dr Ladson’s subsequent analysis of the quantity of additional water which would have been required to make the overbank transfers unnecessary and not the prospective view of a river operator acting reasonably in June 2018. Plaintiffs have not proved that a river operator acting with reasonable care would have called on the Goulburn IVT account Reasonably perceived need for action not proved The reasoning which leads to the rejection of the Plaintiffs’ case about earlier and greater transfers from Hume Reservoir leads to the same result for the case about additional calls on the Goulburn IVT account. The premise for both parts of the case is the same, namely that in June 2018 the five specified circumstances were such that the storage level of Lake Victoria

was at an historic low and immediate action was required. For the reasons given above, the Plaintiffs have not made good the premise. The Plaintiffs have not proved that a river operator acting with reasonable care would have perceived a need to make additional calls on the Goulburn IVT account any more than he or she would have perceived a need to direct earlier and greater releases from Hume Reservoir. Risk of spill still needed to be taken into account As a source of water, there is no aspect of the Goulburn IVT account which would have materially changed the fundamental situation which confronted the Defendant in June 2018, namely the need to balance the risk of system shortfall with the risk of spill. One point of difference was that water transferred from Hume Reservoir would have to pass through the Barmah Choke whereas the Goulburn River flows into the Murray River below the Choke. Neither party submitted that that aspect of the geography was a relevant point of distinction for this issue. The Goulburn River is closer to Lake Victoria than Hume Reservoir. The approximate flow times are 16 days and 25 days respectively. Relative to the time when the water would arrive at Lake Victoria, a decision to call on the Goulburn IVT account could have been made later than a decision to make earlier and greater transfers from Hume Reservoir. Nonetheless the advantage from relative

proximity was not such that it eliminated the risk of spill. Calling water from the Goulburn IVT account was not immune from the risk of spill even as late in the water year as October. In paragraph 642 of his First Affidavit, Mr Bishop said: “…The benefit of commencing IVT delivery in October 2018 was to reduce the need for overbank transfers in Spring as much as possible. The main risks of commencing IVT delivery in October 2018 were the risk of spilling Lake Victoria if conditions turned wet or if there was one or two large rainfall events, and the risk that trade would not maintain a high volume of water available in the Goulburn IVT account during Summer and Autumn, when IVT is used to manage system shortfall risk…” Dr Davis said that causing a spill into South Australia of water from the Goulburn IVT account would be a “big deal”. Water may only be called by the Defendant from the Goulburn IVT account to the extent that it has been privately traded out of the Goulburn Valley (and hence the account is positive) which means that the private traders then have an entitlement to receive the same quantity of water in the Murray Valley. Water lost by a spill would have to be made up from another source in order to meet the entitlements of those who had purchased it. The Defendant makes a further submission that the risk of spill was even more pronounced for a call on the

Goulburn IVT account because water from the Goulburn River is exclusively Victorian water. I do not accept that submission. It is unclear whether the submission is directed to an actual spill from Lake Victoria into South Australia or an internal spill as between Victoria and NSW. If the former, the fact that the spilt water was exclusively Victorian would not have provided a reason for a river operator acting with reasonable care to take extra care to conserve the water. The framework in which the Defendant operated obliged it to conserve the water available to Victoria and New South Wales with equal jealousy. As for a risk of internal spill, in June 2018 Lake Victoria was not near full storage capacity, unlike in October 2017. The Defendant has not demonstrated that the addition of water sourced exclusively from Victoria would have caused an internal spill, or that a river operator acting with reasonable care would have perceived that to be a risk. Even so, the Plaintiffs have not demonstrated that in June 2018 a river operator acting with reasonable care would not have regarded the risk of spill into South Australia as a sound reason not to make additional calls on the Goulburn IVT account. Want of essential specificity A further defect in the Plaintiffs’ case is the lack of specificity about the quantum of the calls on the Goulburn IVT account which the Plaintiffs contend a

river operator acting with reasonable care would have made. The formulation of calls “to the extent that the relevant decision-maker at the Defendant acting reasonably considered that some further release needed to be made at some other point in time” begs three material questions: whether, how much and when? In their Reply Submissions the Plaintiffs refer to a passage in Dr Ladson’s evidence about the “opportunities” which the Defendant had to make calls for “20-30 GL” in June and July, plus an extra 13 GL in August 2018. Dr Ladson says calling for those amounts “is plausible”. The nature of that evidence is addressed below. For current purposes, Dr Ladson’s hindsight view of plausibility is not a substitute for a rational argument as to why a river operator acting with reasonable care in June 2018 would have decided to make calls in the specified amounts. Dr Ladson’s evidence is not improved by the Plaintiffs’ hindsight analysis which is said to show that calls in those amounts would have been enough. Nor is Dr Ladson’s evidence improved by the fact that experts retained sequentially to provide evidence about causation of loss were asked to assume that Dr Ladson’s amounts would have been called. It is not possible on the evidence before the Court to make a finding about this essential aspect of the Plaintiffs’ case. Absent specificity, it is not possible to conclude that a

river operator acting with reasonable care would have done any differently to what the Defendant in fact did with the Goulburn IVT account. Calling water from the Goulburn IVT account would have permitted future trade The Plaintiffs point to one aspect of the IVT water trading system which they say favoured a call on the Goulburn IVT account. Under the rules of the market, trading water out of the Goulburn Valley is not permitted when the account balance exceeds 200 GL. [214] The balance may nonetheless continue to rise above 200 GL because non-commercial transfers of water entitlements are not prohibited, such as transfers between related entities. However, above 200 GL no commercial trade is permitted which means those who hold entitlements to water from the Goulburn River are not able to sell or lease those entitlements to irrigators in the Murray Valley. It follows that an incidental consequence of the Defendant calling on the Goulburn IVT account would have been that it would have restored the ability to trade if the calls reduced the account balance below 200 GL. There is no dispute that the ability to trade water entitlements was recognised by the Defendant and the WLWG as desirable. So too the Commonwealth Parliament. [215] Potential sellers of water entitlements are disadvantaged whilst trade is prohibited, as are irrigators in the Murray Valley wishing to buy

(although perhaps not those wishing to sell into a restricted market). A contemporaneous Water Markets Report explains how the ability to trade in the early part of the water year benefits irrigators because it allows them to plan for the upcoming year. All other things being equal, this aspect of the Goulburn IVT system may have made the Defendant more inclined to call on the account when the account balance was more than 200 GL. Throughout June 2018 the balance for the Goulburn IVT account was already below 200 GL so the incidental benefit of restoring trade was not present when the Plaintiffs allege the Defendant breached its duty of care in the 2018/2019 water year. From the end of June to the end of July the account balance rose from 166 GL to 235 GL. At some point in July the account balance crossed the 200 GL threshold. After that point a call by the Defendant would have had the advantage of restoring the ability to trade if the call was large enough to reduce the account balance back below 200 GL again. Even after that point, the Plaintiffs have not demonstrated that restoration of trade would have been a material consideration, must less a consideration material to the performance of a duty to protect the Plaintiffs from economic loss. It is simply not possible to say on the evidence how that incidental benefit would have featured in the balance, any more than the

marginal detriment from the risk of spilling water sourced from the Goulburn IVT account or the marginal detriment from reduced flexibility when supplying South Australia’s entitlements over summer. Summary – no breach of duty For these reasons, even if there was a perception in June 2018 that water needed to be transferred to Lake Victoria, the Plaintiffs have not demonstrated that a river operator acting with reasonable care would have sought to address that need by making a call on the Goulburn IVT account. Further arguments by the Defendant That conclusion makes it unnecessary to consider the two additional matters which the Defendant submits made it reasonable for the Defendant not to call on the Goulburn IVT account in June 2018. They have been fully argued so I will decide them anyway. Need to save the Goulburn IVT account for summer The Defendant submits that a river operator acting with reasonable care would not have made calls on the Goulburn IVT account in June, July and August 2018 because there was a need to preserve the balance of the account for calls in summer. The Goulburn IVT account is not an unlimited source of water. Calls on the account reduce the balance so that there is less water to be called later in the water year when it is typically needed. Peak demand for water in summer To address this contention something needs to be said about seasonal demands

for water from the Murray River. Under cl 88 of the Agreement, South Australia’s monthly entitlement to receive water is significantly higher in summer than at other times in the year (see [219] above). However, the Defendant’s ability to release water from Hume Reservoir to supply South Australia’s entitlements is constrained in summer. There are a number of reasons why. Not only is summer the period of peak demand in South Australia it is also the period of peak demand for irrigators between Hume Dam and the South Australian border. There are heavy demands on the channel capacity of the Murray River before the South Australian border is reached. Further, inundation of the Barmah-Millewa Forest is environmentally undesirable in summer so overbank transfers have an environmental cost at that time. Overbank transfers may also be more inefficient in summer than in other seasons. The Defendant seeks to address these seasonal constraints by having alternative sources of water available to supply South Australia’s entitlements in summer. One such alternative is water stored in Lake Victoria, which the Defendant aims to have full by 31 December each year. Another alternative source of water is the Goulburn IVT account. The 2018/2019 AOP stated that the Defendant planned to call on the Goulburn IVT account throughout the water year as required, typically between December and March,

although calls may be made earlier than December if conditions were dry early in the water year. Consideration of this issue is further assisted by a sense of proportion. In June 2018 there was approximately 1,200 GL of water in Hume Reservoir (which was 42% of its capacity). Behind Hume Reservoir lay Dartmouth Reservoir with another 3,300 GL of water. The water in Dartmouth Reservoir is reserved for emergency use but the scale is relevant. By contrast, at the beginning of June 2018 the Goulburn IVT account balance was 152 GL. At the end of June the balance had risen to 166 GL. Under cl 88 of the Agreement, South Australia’s monthly entitlement peaks in December and January at 159 GL. South Australia’s entitlement in February is 136 GL. Risk of not having sufficient water in the Goulburn IVT account for summer There is no dispute that the Defendant faced a risk from calling on the Goulburn IVT account early in the water year because it might have meant that the account would not have a sufficient balance to meet calls over the summer months. Dr Ladson accepted that the risk was a valid consideration. Mr Bishop addressed this topic in paragraph 67 of his First Affidavit in the following terms: “During drier years the MDBA generally saves the water in the IVT accounts for use over Summer and Autumn when releases from Hume Dam are at or near channel capacity. The River Operations

team will usually only call on IVT in drier years in Winter if there is very low risk of Lake Victoria spilling.” At any given time, the magnitude of the risk of not having sufficient water in the Goulburn IVT account for summer depended on a number of matters, including the current balance of the account, the time still to go before the peak demand season arrived, the amount of water likely to be required to meet that peak demand and seasonal trading patterns. When deciding whether to make a call in June 2018, there is no dispute that a river operator acting with reasonable care would have taken into account the risk of not having a sufficient balance to meet calls in summer. Advantage of flexibility A related matter is that the availability of water from the Goulburn IVT account gave the Defendant flexibility. It permitted bulk transfers from Hume Reservoir necessary to meet South Australia’s entitlement to be reduced, thus freeing up channel capacity with which to supply demand between Hume Dam and the South Australian border. The flexibility was not completely unrestrained because water traded out of the Goulburn Valley would ultimately have to be delivered in the Murray Valley, thus increasing demand for channel capacity at the time of delivery. It is not possible to quantify the value of the flexibility or say how it would have been weighed in the balance with the other

considerations which a river operator acting with reasonable care would have taken into account when considering whether to make a call on the Goulburn IVT account early in the water year. All that can be said is that the balance of the Goulburn IVT account provided some flexibility and it was a consideration when deciding whether to call on the account. Replenishment would generally have been expected, but over what time period? In this context, one of the key elements which informs the risk of not having enough water in the Goulburn IVT account in summer is the time it takes for the account to be replenished after a call has been made by the Defendant. The Plaintiffs submit that trading patterns in 2018 were such that an early call on the Goulburn IVT account would have been quickly replenished by further trading. In support of that submission they rely on a contemporaneous Water Markets Report prepared by a water market expert for the 2017/2018 year with a 2018/2019 outlook. In global terms the Water Markets Report stated that trading out of the Goulburn Valley was increasing year-on-year from 2009/2010 until 2017/2018, although the illustrative graph showed that trade had fallen between the most recent two years. There was no information in the Water Markets Report about seasonal trading patterns within a year. The author of the Water Markets Report gave evidence in the

proceedings. He said that “at those times my recollection would be there would be a lot of unmet demand from moving water out of the Goulburn”. It is not clear from the context what were “those times” but it appears that the witness was addressing the circumstances at some time in 2018. The Plaintiffs also rely on the minutes of the WLWG meeting on 7 March 2017 which recorded: “5. Standing items … ● WLWG noted some of the potential impacts of continued deferrals of SA Storage Right. For example, the reduction of IVT calls by [the Defendant] is limiting trading opportunities from both the Goulburn and Murrumbidgee Valleys as these account balances remain at the maximum limits. That is, the deliveries being made by [the Defendant] are very quickly being followed by additional trade from these valleys to the Murray. It is conceivable that [the Defendant] may cease calling on IVT by end March so ending further trading opportunities.” The passage does not differentiate between trading with the Goulburn Valley and trading with the Murrumbidgee Valley. It is unclear what timeframe was being referred to. It may have been an observation generally or one limited to the months which preceded the meeting on 7 March 2017, which were summer months. The Plaintiffs also rely on Mr Bishop’s evidence in cross-examination that throughout 2018 there was a high likelihood that the balance would be

replenished following a call (but it was not guaranteed). Dr Davis agreed that the account would replenish quickly. The Plaintiffs also rely on the following evidence from Dr Davis: Q. “And it would have been operationally open to you, at least, to call, say, 25 GL of IVT in June and 25 GL of IVT in July without it having a significant impact on the position, come summer, you’d agree with that?” A. “On face value, yeah, I would agree with that.” This passage does not assist the Plaintiffs because Dr Davis specifically went on to say that the evidence was based on hindsight. The degree of confidence expressed by Mr Bishop and Dr Davis in cross-examination as to what would have happened in 2018 needs to be understood in the context that at the time the Defendant knew that it did not have perfect knowledge of seasonal trading patterns in the water markets. At that time, the Defendant regarded trading between the Goulburn Valley and the Murray Valley as inherently uncertain. Dr Davis said that he was nervous about future trade. Mr Bishop referred to inter-valley trade as a part of the river system which he could not control. He said that there was not a “consistent pattern” in trade. The Defendant points to evidence that the market for trading water out of the Murrumbidgee Valley came to a sudden stop which the Defendant submits was indicative of unpredictability generally. There

is insufficient evidence about the similarities and differences between the Murrumbidgee River and the Goulburn River to accept that submission. Even so, the limitations on the Defendant’s knowledge of the Goulburn River water market is apparent from the WLWG dot points circulated on 24 July 2018 ahead of the meeting of the WLWG on 25 July 2018 when the Defendant reported that any call on the Goulburn IVT account before October ought to be limited “so that trends on trade can be observed before drawing further on the account”. The dot points are a contemporaneous record of there being a degree of uncertainty and a perceived need for caution. Evidence of the contemporaneous record ought to be given weight, more so than the oral evidence of the Defendant’s witnesses about what they now know. Taking the evidence as a whole, it may be accepted that a river operator acting with reasonable care would generally have been confident that a call on the Goulburn IVT account would be followed by trading which would increase the account balance. However, the speed with which the increase would occur at any particular time of the year, specifically in June 2018, was uncertain. A reasonable river operator would have known that he or she did not have perfect knowledge of the market. A cautious approach would have been reasonable. There might have been other approaches which might also have

been reasonable but that is not relevant to the question of breach of duty by the Defendant. The question of the speed with which the account balance would replenish highlights a further problem with the Plaintiffs’ submissions on this issue. The evidence on replenishment deals with trading patterns in a broad brush way. The Plaintiffs’ submissions conform to the evidence. More detail is required before the findings for which the Plaintiffs contend can be made. The Plaintiffs contend that a river operator acting with reasonable care would have made an additional call on the Goulburn IVT account in each of June, July and August. There would have been five months after the call was made in June for the account balance to replenish before December when the Defendant would typically want to call on it. Even if a river operator acting with reasonable care may have considered that the account balance would replenish with sufficient speed to make it unlikely that the June call would compromise the Defendant’s ability to meet summer demands with water from the Goulburn River, there would be less time to replenish a call made in August. That is especially so if trading in September was still needed to replenish the call made in June. The Plaintiffs’ submissions that the account balance would have been replenished “quickly” does not permit this issue to be determined in their favour. It

needs also to be understood that there were two sides to the trades by which calls on the Goulburn IVT account would be replenished. The Goulburn IVT account was not a “free lunch”. The trading which increased the account balance would also have increased the demand for water in the Murray Valley. The account balance increased each time someone who held a water entitlement in the Goulburn Valley transferred that entitlement to someone in the Murray Valley. By virtue of the increase in the account balance, the Defendant became entitled to call for the amount of water which had been traded to be released from the Goulburn River. However, in the ordinary course the person to whom the entitlement had been traded would demand delivery of the water in the Murray Valley at some future date. It is wrong therefore simply to view trading by which the Goulburn IVT account would be “replenished” as an increase in the amount of water which was available to the Defendant for all purposes. That reality diminishes the extent to which a river operator acting with reasonable care would have regarded “replenishment” of the IVT account as a future source of water for the Defendant to call into the Murray River. The Plaintiffs resist this conclusion by saying that the logic would apply to all calls on the Goulburn IVT account and that the point is little more than an explanation of the mechanics of

the IVT account in generic terms. That is so but it does not undermine the fact that there were limitations on the extent to which calling water from the Goulburn IVT account could address the circumstances which the Plaintiffs contend confronted the Defendant in June 2018. In the light of these matters, the Plaintiffs’ submissions go too far when they contend that there was no material risk that the Goulburn IVT account would not have sufficient water to meet any calls which might be made in the 2018/2019 summer months. The Plaintiffs do not make good the submission by the next two specific points they make in support of it. A call on the Goulburn IVT account would not have provoked new trade The Plaintiffs submit that calling on the Goulburn IVT account would have kept the balance below 200 GL thus permitting further trading to occur. As I understand the submission, a call in June would itself have been the reason for the trade by which the account would have then been replenished. There is no substance in this submission for June 2018 when it is alleged that the Defendant breached the duty of care. The Goulburn IVT account balance was already below 200 GL. Any increase in the balance throughout June and afterwards would have been expected to occur as the market dictated and unrestricted by the 200 GL cap. In that context, a call on the account in June or early July might

have been expected to be “replenished”, in the sense that subsequent trading would have been expected to increase the account balance, ultimately to the level before the call was made. As already observed, there is no evidence from which it can be inferred how quickly a reasonable river operator would have expected that to occur. And when it did occur, the fact that the call had been made would nonetheless mean that the account balance was lower than it would have been if the call had not been made. The Defendant had previously made a call on the Goulburn IVT account in June The Plaintiffs submit that the fact that the Defendant actually made calls on the Goulburn IVT account on 21 May and 30 May 2018 shows that the Defendant was prepared to make calls early in the water year. The logic behind the submission is that the Defendant’s willingness to call in May 2018 shows sufficient faith in replenishment and it may be inferred that a river operator acting with reasonable care would have been willing to make a larger call in June plus further calls in July and August 2018. There is no evidence to support this line of reasoning. As with the Plaintiffs’ argument about GMW’s willingness to allow a flow of water in the Goulburn River above the specified maximum, the Plaintiffs’ argument is based on the premise that the fact that something has happened in the past means it will happen

again in the future. It may well be that, having already called for a combined 65 GL from the Goulburn IVT account on 21 and 30 May 2018, there would have been an increased concern about having a sufficient account balance by summer 2018. If so, a river operator acting with reasonable care would have been less willing to make additional calls in June, July and August 2018. In any event, the evidence suggests that the calls which were made in May 2018 were made for the specific purpose of the RMIF programme as described at [1050] above. The Plaintiffs have not proved that they are a reliable indicator of what a river operator acting with reasonable care would have done for a different purpose, namely to raise the storage level of Lake Victoria in June, July and August 2018. The Plaintiffs submit that 18 GL from the water which was called in May 2018 was not actually delivered, so the Defendant could have used that water to increase the storage level of Lake Victoria. Even if the submission is factually correct it must be rejected. The 18 GL was no different to any other water available to the Defendant in the Goulburn IVT account. Whether or not the Defendant chose to use the 18 GL to increase the storage level of Lake Victoria was subject to the same considerations. The fact that the Defendant had called it for the purposes of the RMIF programme but not then used it makes no

difference. Summary I accept the Defendant’s submission that the finite nature of the Goulburn IVT account, the typical use of the account to meet peak demand in summer and the relatively modest quantities of water available from that source (see [1367] above) meant that there was a further sound reason why a river operator acting with reasonable care could decide in June not to call on the Goulburn IVT in June, July and August 2018. The fact that the account balance would be expected to increase after any such calls were made does not warrant a different finding. A river operator acting with reasonable care may also have decided to take a less cautious approach. That alternative does not demonstrate that it was negligent for the Defendant to decide in June 2018 not to make further calls on the Goulburn IVT account. The conclusion is in no way undermined by Dr Davis’s acceptance in cross-examination that the account balance was “healthy” in August and September 2018. As it relates to the decision which the Plaintiffs contend should have been made in June, Dr Davis’s evidence was based on hindsight. Limited channel capacity of the Goulburn River The Defendant’s second contention is that there was a flow of environmental water out of the Goulburn River in June and July 2018 which meant that calls on the Goulburn IVT account could not have been made for want of channel capacity in

the Goulburn River. The evidence shows that environmental water holders caused GMW to release a Goulburn Pulse which commenced on 11 June 2018. The flow of environmental water from the Goulburn River was about 584 ML/day on 11 June. It sharply increased on 27 June. By 28 June it exceeded 3,000 ML/day. It continued to increase sharply to 8,000 ML/day on 2 July. Thereafter it decreased. It fell to about 3,000 ML/day on about 18 July. It was less than 1,000 ML/day on 27 July and back to about 580 ML/day on 31 July 2018. The constraints presented by the channel capacity of the Goulburn River and the need to coordinate with environmental water holders are referred to at [900]-[905] above. The key figure is the channel capacity of 3,000 ML/day. In late June 2018 a Goulburn Pulse was already underway. For the sake of argument, the Plaintiffs say that a call on the IVT account of, say, 25 GL would have required an increase in the flow of only around 800 ML/day spread evenly over a month. A reasonable river operator would have understood that the Goulburn River’s channel capacity was already diminishing and that by 28 June 2018 there would have been no capacity within the 3,000 ML/day limit. An additional call for IVT water in June could not be delivered unless the Defendant was able to negotiate an accommodation with environmental water holders and GMW. The same would apply to a call

on the IVT account in July unless the call was postponed to the second half of July and then at only an initial low daily release rate whilst the Goulburn Pulse receded. There is no suggestion that there would have been a constraint from the channel capacity of the Goulburn River in August 2018. Whether the Goulburn Pulse would have made a difference to the decision of a river operator acting with reasonable care in June 2018 depends on whether, as a practical matter, it would have been possible to negotiate with the environmental water holders and GMW an accommodation which would allow a call on the IVT account to proceed. In the 2017/2018 water year, a reasonable river operator had the alternative of simply waiting a relatively short period for the Goulburn Pulse to recede. That would not have been an option in the 2018/2019 water year because, on the Plaintiffs’ case, the additional calls on the IVT account had to be made in June and then again in July. A successful outcome from negotiations would have been essential. Mr Bishop’s evidence is that GMW and the environmental water holders would have been understanding and that an accommodation would have been likely. There was a degree of generalisation in this evidence but Mr Bishop did not volunteer any specific problems. More relevantly, in his contemporaneous email to Ms Hickey on 19 July 2018 Mr Bishop said that

environmental water holders were aware of the channel capacity constraints and demand challenges and were seeking to provide flexibility where possible. The purpose of the Defendant’s call on the IVT account would have been to raise the storage level of Lake Victoria. The operational water would have been diverted from the Murray River at Lock 9 into Frenchman’s Creek and thence Lake Victoria, presumably with the result that the Goulburn Pulse would have been to that extent diminished as it continued into South Australia. There is evidence that Victorian Environmental Water Holders required 100% of their water to be delivered to South Australia so it is unclear that a significant diversion into Lake Victoria would have been acceptable to them. They may have been willing to agree so long as the water was made up by a prolongation of the Goulburn Pulse after the call on the IVT account had been fully delivered to Lake Victoria, but that may have depended upon environmental considerations surrounding the month of the year when the Pulse was delivered to South Australia and/or the rate at which it was delivered. The evidence does not address these matters. Nonetheless, in view of Mr Bishop’s evidence, I accept the Plaintiffs’ contention that if there was sufficient operational necessity for a call on the Goulburn IVT account in June and July 2018, an accommodation would have been

achieved with GMW and the relevant environmental water holders, one way or another. I do not therefore accept the Defendant’s submission that the limited channel capacity of the Goulburn River presented a further reason why a river operator acting with reasonable care would not have decided in June 2018 to make (additional) calls on the Goulburn IVT account in June, July and August. Case based on hindsight The Defendant makes the further submission that the Plaintiffs’ allegations about the failure to call on the Goulburn IVT account in June 2018 are informed by hindsight. As originally articulated, the breach allegations focussed on departure from the AOP modelling documents in May 2018. As finally put, the allegations have changed the focus to a later time period and place greater emphasis on the Defendant’s failure to call on the Goulburn IVT account earlier than contemplated in the AOP modelling documents. The only apparent reason for the greater emphasis on the Goulburn IVT account is that the Plaintiffs now accept that earlier and greater releases from Hume Reservoir could not have been made as early as May. That (plus the abandonment of other breach allegations) mean that more water would have had to be called from the Goulburn River to achieve the storage levels at Lake Victoria which hindsight shows would have been necessary to make a difference to the subsequent need

to conduct overbank transfers. As stated above, hindsight is also apparent from Dr Ladson’s approach to his evidence on this issue. Dr Ladson’s support for winter calls on the Goulburn IVT account is fairly described as half hearted. He does not explain how he arrived at the specific quantities of the calls. Using the present tense he says that calls of that quantity “is plausible”. The 13 GL amount for August seems to be the difference between the 40 GL which was assumed for the modelling in August 2018 (but not before) less the 27 GL actually called. It is tolerably clear from other parts of Dr Ladson’s First Report that his approach to the quantum of alternative measures has generally been to identify the amount of water subsequently transferred overbank from Hume Reservoir, and then look for an equivalent amount from other sources. His resulting analysis depends upon hindsight. To the extent that Dr Ladson does address the prospective perspective, Dr Ladson observes that in 2018 calling on the Goulburn IVT account in June and July would have been historically unprecedented. It does not ultimately matter how the Plaintiffs came to put their case as finally alleged. They have to prove that a river operator looking prospectively at the circumstances which pertained in June 2018 and acting with reasonable care would have made additional calls on the Goulburn IVT account. They

have not done so. Summary The Plaintiffs have not proved that a river operator acting with reasonable care would have decided in June 2018 to make (additional) calls on the Goulburn IVT account in June, July and August. Alternative IVT case based on a decision made in July As set out above, the Plaintiffs’ case is limited to a failure to decide in June to make (additional) calls on the Goulburn IVT account in June, July and August 2018. Even if it was open to the Plaintiffs alternatively to contend that, the decision not having been made in June, a river operator acting with reasonable care would have made the decision in July 2018, they have not proved their case. The circumstances which pertained in June generally continued during July 2018 although with the passing of each day the point of time was different. Starting at 364 GL, the storage level of Lake Victoria continued to rise during July, albeit at a slow rate. Amongst other things, the storage level would have been seen in a dynamic context. Ms Hickey thought that 400 GL was the minimum required by the end of August. It may be accepted in the Plaintiffs’ favour that as each day of July passed the Defendant was aware that the rise in the storage level of Lake Victoria was slow. The period in which rain might fall before the peak demand of summer was diminishing, although throughout July the wettest month of the year

(August) still lay ahead. On the important matter of the risk of spill, it may be accepted that it diminished as each day of July passed. By July, Mr Bishop considered it to have become “low”. Nonetheless there remained a present risk of spill. The balance of the Goulburn IVT account was 166 GL at the commencement of July and continued to rise throughout July. At some point the balance reached 200 GL and further trade was prohibited. There is evidence that the account balance was approximately 230 GL by 24 July. The Goulburn Pulse was receding and by 27 July 2018 there was sufficient channel capacity in the Goulburn River for 3,000 ML/day of operational water. Throughout July the modelling using the Fortran Assessment Model continued to be based on the assumption that the Goulburn IVT account would not be called upon until October at the earliest. The River Operations Team gave consideration to making earlier calls. The dot points prepared for the meeting of the WLWG late in July is a contemporaneous record. The dot points were circulated on 24 July and relevantly stated: “● Given the current large balance in the Goulburn IVT account (~230 GL) RMO considers there is also a good opportunity to draw on IVT early while still maintaining significant IVT resource for use in meeting peak summer demands. At this stage, RMO are considering bringing forward delivery of IVT to August or

September — which would be earlier than indicated in the draft AOP. This approach will allow flexibility in responding to conditions and risks over the coming months and seek to make appropriate use of both Hume and Goulburn IVT resources. ● [The Defendant] will apply a cautious approach to the use of IVT, noting that early season use must be balanced against the need to have sufficient IVT water available for delivery to meet peak summer demands. Any use in August or September would initially only be to the extent to bring the balance down to ~180 GL so that trends on trade can be observed before drawing further on the account. To give effect to this, up to 50 GL of IVT would be called upon.” On 25 July 2018 there was a meeting of the WLWG at which the Defendant presented a proposal to bring forward calls on the Goulburn IVT account, but not until August. There is no suggestion that the WLWG did not approve the proposal or gave any advice inconsistent with it. By mid-August, half of the wettest month had passed. The Defendant was aware that the storage level of Lake Victoria had ceased to rise and had in fact begun to fall. There is no dispute that by mid-August a river operator acting with reasonable care would have considered that action was required, as each of Dr Davis, Ms Hickey and Mr Bishop did at the time. On the evidence, the gradual transition from the conditions at

the end of June to the conditions in mid-August cannot be fixed to any particular day. It cannot be said that the transition was complete by the end of July 2018. It is not possible on the evidence for the Court to bring all these considerations into account and form a view that a river operator acting with reasonable care would have decided at any time in July to make a call on the Goulburn IVT account. The Plaintiffs have not discharged their onus of proof. Summary of breach in the 2018/2019 water year The Plaintiffs’ formulation of the alleged breaches of duty has changed during the course of the litigation. Matters which were originally pleaded are no longer pressed. At the hearing the Plaintiffs opened their case on the basis that the Defendant’s breaches included a failure to make an allowance in its planning for the Goulburn Pulse in the winter of 2018 and a failure to use the MIL infrastructure as efficiently as possible once it became available in September 2018. Both matters have been abandoned. The original allegation about earlier and greater releases was based on a failure to adhere to the AOP modelling documents. The case has now been reversed and is based on an alleged failure to depart. The Plaintiffs amended their case during the hearing to add an allegation that after 16 July 2018 the Defendant negligently failed to use 9,800 ML/day as the channel capacity of

the Barmah Choke but do not press that allegation in their Closing Submissions. The Defendant says that the Plaintiffs have changed their case between serving their written Closing Submissions on 25 October 2025 and making their final oral addresses on 14 November 2025, although those asserted changes are overstated. The Defendant makes the submission that the history of changes speak of a weak case. That submission has merit to the extent that variability in what the Plaintiffs say a river operator acting with reasonable care would have done highlights that the Defendant was undertaking a complicated task which ultimately required an exercise of judgement. On the other hand, the Plaintiffs’ difficulties in finalising their allegations of breach does not mean that the allegations, once finalised, are not to be considered on their merits. Ultimately, the Plaintiffs allege that the Defendant failed to take a precaution which a river operator acting with reasonable care would have taken, namely to decide in June to direct earlier and greater in-channel transfers commencing late June and to make additional calls on the Goulburn IVT account in June, July and August 2018. The Plaintiffs have not proved that a river operator acting with reasonable care would have taken that precaution in the circumstances which confronted the Defendant in June 2018. Even if the Defendant owed the

Plaintiffs a duty of care, it was not breached in the 2018/2019 water year. For that additional reason the claim arising from the overbank transfers in the 2018/2019 water year is to be dismissed. The Plaintiffs have a further allegation of negligence arising out of the events in the 2018/2019 water year which relates to the discrete subject of the negotiations for access to the MIL infrastructure. Before that is addressed, it is convenient to address causation of loss on the assumption that, contrary to my findings, the Plaintiffs have proved their claim arising from the failure to make earlier and greater transfers and to make earlier calls on the Goulburn IVT account in the 2018/2019 water year. CAUSATION OF LOSS – 2018/2019 WATER YEAR Plaintiffs’ submissions on causation As with the 2017/2018 water year, the Plaintiffs’ causation case for the 2018/2019 water year is based on the five sequential propositions set out at [943] above. The harm of which the Plaintiffs complain is again the receipt of less water than would otherwise have been the case. To some extent the Plaintiffs’ ultimate case on causation for the 2018/2019 water year reflects the transition of the alleged breach from a failure to make the bulk transfers from Hume Reservoir to Lake Victoria as assumed by the AOP modelling documents for the “dry” scenario, to a failure to make bulk transfers “in order to reach

the planned Lake Victoria storage levels”. As described in their written Closing Submissions, the Plaintiffs’ case about what a river operator acting with reasonable care would have done in the 2018/2019 water year has two elements. The first element is that he or she would have commenced earlier transfers of operational water from Hume Dam to Lake Victoria within the channel capacity of the Barmah Choke. As finalised in MFI-38, the transfers would have commenced in late June 2018. Once again, the second element of the Plaintiffs’ counterfactual is described in terms which are problematic. As set out in their Closing Submissions the Plaintiffs contend that: “if and to the extent that the relevant decision-maker at the [Defendant] acting reasonably considered that some further release needed to be made at some other point in time, then they could and should have done the following: (i) prioritised releases from the Goulburn IVT account over commencing operational overbank transfers …; (ii) prioritising making transfers through the MIL infrastructure in order to bypass the Barmah Choke, either from the date at which the [Defendant] out to have obtained earlier access or at least from September 2018…” The MIL infrastructure part of the counterfactual is addressed separately below. The Goulburn IVT account part of the counterfactual is subject to the contingency “if and to the

extent that the relevant decision-maker at the [Defendant] acting reasonably considered that some further release needed to be made”. Elsewhere the Plaintiffs describe the contingency simply as “if necessary”. The Plaintiffs’ Submissions do not address the counterfactual river operations with any more certitude or specificity. In support of their causation case the Plaintiffs point out that the sequential and ultimately joint process by which the expert modellers have prepared their Reports has been undertaken using certain assumptions about the river operations which would have been undertaken had the Defendant acted with reasonable care, some of which assumptions were common. They further submit that the experts’ final agreed approach to modelling shows that by the end of October 2018 Lake Victoria would have achieved storage levels close to those forecast by the AOP modelling documents for the “dry” and “very dry” water years if certain counterfactual river operations had occurred. The expert modellers have analysed a particular counterfactual which is referred to as “Scenario P10”. The river operations specified for Scenario P10 are: an extra 170 GL transferred from Hume Dame to Lake Victoria at less than 9,500 ML/day over June, July and August 2018; and a call on the Goulburn IVT account in June (25 GL), July (25 GL) and August (13 GL). The experts’ analysis of Scenario

P10 produces a calculation of the water which would have been allocated to the Plaintiffs in the 2018/2019 water year for comparison with the water which was actually allocated (see below). The Plaintiffs submit that there would have been an increase of at least 1% and maybe more. Exactly how large the increase would have been depends on a number of contingencies, including the behaviour of environmental water holders. Some of the contingences are disputed. The modelling evidence shows that the same result would have occurred for hypothetical “Scenario P9” which is the same as Scenario P10 except that an extra 222 GL would have been transferred through the MIL infrastructure from 15 September 2018 to 31 May 2019. In the event that the Plaintiffs are not able to prove on the balance of probabilities that they would have received a greater allocation of water in the 2018/2019 water year then they advance an alternative case based on loss of a commercial opportunity to receive a greater allocation had the Defendant carried out its river operations functions with reasonable care. Defendant’s submissions The Defendant submits that the Plaintiffs have failed to identify with sufficient particularity the river operations which a river operator acting with reasonable care would have taken so as to demonstrate that there would have been more water in the storages of the Murray River

system in the 2018/2019 water year, and that the Plaintiffs would have received more water under their water entitlements. The Defendant submits that the Plaintiffs have not demonstrated a proper basis to find that a river operator acting with reasonable care would have undertaken the hypothetical river operations identified by Dr Ladson. The Defendant points out that Dr Ladson’s calculations of the greater transfers which could have been made from Hume Reservoir in June, July and August 2018 and the additional calls on the Goulburn IVT account which would have been made do not adequately take account of river operations for the whole of the 2018/2019 water year. Dr Ladson has not attempted to identify a particular sequence and timing for his alternative river operations, when sequence and timing would have made a difference to the impact on the storages, and possibly also on other decisions which were made later in the water year (with further impacts on the storages). The Defendant submits that Dr Ladson’s calculations are based on hypothetical river operations which in any event can be seen to be implausible and for which there is no foundation in the evidence. When alternatives are considered which are realistic, it is clear that some overbank transfers were always going to be necessary. The Defendant submits that the Plaintiffs have not proved on the balance of

probabilities that there would have been more water in the storages of the Murray River system in the 2018/2019 water year, nor have they proved on the balance of probabilities that they would have received more water pursuant to their water entitlements. Structure of reasons on causation in the 2018/2019 water year The following reasons are arranged to address the topics as follows: whether the Plaintiffs have demonstrated what river operations would have been undertaken by a river operator acting with reasonable care; for the identified counterfactual river operations, whether the Plaintiffs have proved on the balance of probabilities that they would have received more water had those river operations been undertaken by the Defendant; and the Plaintiffs’ alternative loss of opportunity case. Counterfactual river operations Counterfactual river operations not adequately identified The Plaintiffs’ submissions do not in any meaningful way grapple with the question what river operations would have been undertaken by a river operator acting with reasonable care in June 2018. Submissions are made on the basis that causation can be considered in terms of the Scenario P10 or Scenario P9 but the Plaintiffs do not articulate a view of the facts which supports a finding that a river operator acting with reasonable care would have decided to undertake the particular river operations

contemplated by either of those two hypothetical Scenarios. For example, no submissions have been made as to why in June 2018 a reasonable river operator would have concluded that transfers within the channel capacity of the river had to commence in late June. The only evidence about the date upon which greater in-channel transfers would have commenced is a statement by one of the expert modellers, Mr Podger, that he selected 28 June 2018 by starting with 30 August 2018 as the date by which 170 GL had to be transferred within the channel capacity of the river and working backwards to see when the transfers would have had to commence. The approach is one of impermissible hindsight and the 170 GL figure is itself an unsatisfactory starting point as explained above and addressed further below. The fact that the modelling experts retained by each party were instructed to make certain counterfactual assumptions, sometimes in common, does not relieve the Plaintiffs of their obligation to prove the assumptions. It merely identifies that which the Plaintiffs must prove to succeed. The Plaintiffs refer to Cessnock City Council v 123 259 932 Pty Ltd [216] for the proposition that a plaintiff is assisted in proof by reasonable inferences where a defendant’s breach has resulted in difficulties or impossibilities of proof of loss or damage. In a negligence case the principle may apply to

the quantification of the loss caused by the breach of duty [217] but it has no application to the anterior requirement that the plaintiff prove that the breach caused some loss. The High Court explained in Cessnock v 123 259 932 [218] that the rationale for the principle is that the plaintiff ought not to be deprived of a remedy through difficulties of proof resulting from the defendant’s wrongdoing. The principle presupposes that the defendant is a wrongdoer which, for negligence, first requires the plaintiff to prove some loss. Until (and unless) that happens, regarding the defendant as a wrongdoer begs the question. [219] If in fact no loss was caused by a defendant’s failure to take reasonable care then there is neither a wrongdoer nor a victim and the rationale for the principle is absent. It would be unfair to the defendant to apply the principle in such a case. A further and separate reason why the principle has no application in this case is that the difficulties of proof which confront the Plaintiffs are not the result of the Defendant’s negligence. There must be a direct relationship between the difficulties caused by a defendant’s wrongdoing and the resulting inferences to be drawn against the defendant. [220] The quintessential example is Armory v Delamirie [221] where the plaintiff’s claim for compensation was hampered by the defendant’s refusal to produce the

wrongfully taken jewel for valuation. The Plaintiffs have not identified anything done by the Defendant which has given rise to difficulties of proof. Indeed, there is no difficulty with proof so much as with conception. The Defendant points out that expert modelling evidence has been adduced which is essentially agreed. By their agreed method, the experts are able to receive instructions on specified river operations and simulate what would have been the implications for the water in the storages of the Murray River system, including the allocations to water entitlement holders. There is no dispute about the efficacy of the modelling evidence. There remains an outstanding point of contention between the parties (not between the experts) about one specific loss correction made in the model for a particular reach of the river but that is a matter which will be adjudicated. The Plaintiffs’ difficulties with proving causation arise from the lack of identification of the counterfactual river operations for which they contend. It is true that the counterfactual is complex but that flows from the nature of the allegations made by the Plaintiffs. Even if full allowance is given for the complexity, it would have been possible for the Plaintiffs to put forward certain counterfactual river operations, if necessary on an alternative basis, in each case supported by a rational argument as

to why a river operator acting with reasonable care would have undertaken those river operations in June 2018 in order to reach certain storage levels of Lake Victoria at certain times. In substance that is the approach which the plaintiffs successfully took in the Queensland Floods case. The task of flood mitigation in the Queensland Floods case may not have been as complex as the task of water supply in the present case, although the flood mitigation task required responses to weather developments on a daily interval. Nonetheless, the nature of the causation issue and the evidence necessary to address it was comparable with the present case. To some extent, the Plaintiffs’ evidence originally followed that path, commencing with the proposition that a river operator acting with reasonable care would have directed releases from Yarrawonga Weir in accordance with the releases assumed for the “very dry” scenario (or the “dry” scenario) in the AOP modelling documents in 2018. Dr Ladson did the mathematics in Section 6.6.1 of his First Report. The present difficulties with proof have resulted from the late change in the case to one based on a failure to direct different releases, namely those which were necessary in order to reach planned Lake Victoria storage levels. The objective of the counterfactual river operations is identified but not the river operations which would have

been undertaken to achieve that objective. A further cause of the Plaintiffs’ difficulties is the hindsight analysis of counterfactuals which Dr Ladson has used, which problem appears to pre-date the change in the case. The final reason why the principle in Cessnock v 123 259 932 does not apply in this case is that it does not operate at large. The issue in Cessnock v 123 259 932 was whether the plaintiff would have recovered the expenses it incurred in preparing for the contract which the defendant subsequently repudiated. The inference related to that specific hypothetical issue. In this case the Plaintiffs do not identify any particular matter about which they say a reasonable inference should be drawn short of the ultimate issue of whether the Defendant’s breaches caused them some loss. The failure of the Plaintiffs to articulate a basis for a finding that a river operator acting with reasonable care would have undertaken the river operations contemplated by Scenario P10 and Scenario P9 is itself a reason to reject the case on causation. Absent that articulation, it has not been possible for the Defendant to consider any particular counterfactual path and make submissions about whether a river operator acting with reasonable care would have gone down that path. Given the nature of river operations and the unpredictable, uncertain and dynamic environment in which they are

undertaken, this is not a case where the counterfactual path is obvious. Scenario P10 and Scenario P9 lack essential detail The Defendant makes a further submission which is a variation on the same theme. The Plaintiffs’ case is fixed on events in June 2018 when it is alleged that the Defendant would have made specified decisions had it acted with reasonable care. However, river operations would then have continued over the following months with the reasonable river operator continuously reassessing the river operations underway at any given point in time. Fresh decisions may have been made, each time informed by the circumstances which pertained at the time the fresh decision was made. Even if greater transfers would have commenced in late-June, they may thereafter have been accelerated and decelerated, or stopped and restarted, as the circumstances of the water year developed. A significant event occurred on 8 September 2018 when the Defendant obtained access to the MIL infrastructure which would have changed the outlook. Depending on a hypothetical storage level of Lake Victoria at that time, bulk transfers through the Barmah Choke may have been reduced or even stopped at that point. On the other hand, given the persistent lack of rain, the Defendant submits that overbank transfers would reasonably have been considered necessary at some point no matter what. The Defendant

submits that the failure to address developments after June 2018 is an important failure because the sequence and timing of river operations materially affect losses (both conveyance and evaporation) and storage levels. The objective of the Defendant’s submissions is to emphasise the height of the hurdle which the Plaintiffs have to overcome before they can be found to have proved that the Defendant’s breach of duty caused them loss. It may not be necessary for the Plaintiffs to prove what would have happened on a daily basis over a prolonged period of time, but a more granular hypothetical narrative is required. Even though it would be difficult for the Plaintiffs, the Defendant is correct to submit that a detailed understanding of the sequence and timing of the counterfactual is required before a finding can be made that the Defendant’s breach of duty caused loss. That conclusion is a consequence of the nature of river operations. There are many moving parts, all interrelated with each other. Unless the sequence and timing of river operations are laid out in sufficient detail, it is not possible to have an actual persuasion that the position of the Plaintiffs would have been better had different decisions been made by the Defendant at a particular point in time. The level of detail which would be sufficient cannot be stated in the abstract. For current purposes, the

Plaintiffs’ submissions on counterfactual river operations do not address the circumstances after June so as to demonstrate that decisions in June 2018 would have remained unaltered as the water year developed. No rational relationship between the breach and Scenario P10 or Scenario P9 As it is, there is no basis for a finding that a river operator acting with reasonable care would have undertaken the river operations contemplated for Scenario P10 or Scenario P9. As the Court of Appeal said in the Queensland Floods case, [222] the strategies adopted at the commencement of the counterfactual have to correspond with the alleged non-negligent flood operations relied on by the Plaintiffs. This directs attention back to the alleged negligence. The breach alleged by the Plaintiffs, which is assumed to have occurred for the purposes of considering causation, is the Defendant’s failure to do that which was necessary to bring Lake Victoria to the storage levels which were forecast in the AOP modelling documents, specifically the output obtained on 5 June 2018. The Plaintiffs’ submissions on breach focussed on the “dry” scenario, in part reflecting inflows in June 2018 which were exceeded by 90% of historic inflows for that month. For the inflows assumed for the “dry” scenario, at as late-June 2018 the forecast storage levels for Lake Victoria were 450 GL at the end of July, 453 GL at

the end of August, 534 GL at the end of September, 587 GL at the end of October, 609 GL at the end of November and 521 GL at the end of December 2018. The Plaintiffs have not demonstrated a rational relationship between the assumed necessity of bringing Lake Victoria to those particular storage levels at those points in time (or any of them) and additional releases of 170 GL of water over June, July and August 2018. The 170 GL figure is derived from Section 6.6.1 of Dr Ladson’s First Report. It is the rounded average of five figures each of which represents Dr Ladson’s calculation of the difference between the quantity of water actually transferred from Hume Dam to Lake Victoria in June, July and August 2018 and that assumed to be transferred for the “very dry” scenario in the AOP modelling documents obtained by the Defendant in each of April, May, June, July and August 2018. As such, 170 GL does not have a relationship with any storage levels of Lake Victoria which is independent of adherence to the AOP modelling documents. Adherence to the AOP modelling documents is inconsistent with the Plaintiffs’ new case which says that the Defendant was negligent for failing to depart from the AOP modelling documents. The counterfactual (170 GL transfer) contradicts the assumed breach. The 170 GL figure positively mismatches the alleged breach in two further respects. First, the breach

is directed to river operations being conducted in the “dry” scenario. The 170 GL figure is based on transfers assumed for the “very dry” scenario. The planned storage levels were different for the “very dry” scenario, particularly at the critical end of December 2018. Secondly, the breach falls within the temporal framework described above which is a failure to make greater transfers commencing late June. For the breach, the maximum period during which greater transfers could have been made is from, say, 25 June to about 10 August 2018 when transfers at the limit of the channel capacity in fact commenced. The 170 GL figure is based on a significantly longer period, namely all of June, July and August 2018. In particular, it assumes the transfer of operational water throughout June. It seems clear from the evidence (see below) that it would not have been possible to transfer an additional 170 GL between 25 June and about 10 August 2018 without some of the water being transferred above the channel capacity of the Barmah Choke (i.e. overbank). There are other aspects of the 170 GL figure which mismatch the necessity of bringing Lake Victoria to the storage levels forecast in the AOP modelling documents. The 170 GL figure depends upon a river operator acting with reasonable care making the assumption in June 2018 that the rest of the water year would conform to a single scenario,

for this purpose the “very dry” scenario. The 170 GL figure (and Dr Ladson’s method of calculation) fails to accommodate the fact that a reasonable river operator would have had regard to all six scenarios, especially in June which is at the beginning of the water year. Further, the 170 GL figure was calculated in part using information from outputs from the Fortran Assessment Model which were not obtained until July and August 2018. That information would not have been known to a reasonable river operator in June 2018 when the breach of duty is assumed to have occurred. The July and August outputs are not strictly hindsight because Dr Ladson uses the average of the five outputs as a proxy for what would have been planned for the storage levels for Lake Victoria at the time of breach. However, the outputs from July and August were based on information available at the time they were obtained so they are not relevant even for the limited purpose for which Dr Ladson has used them. When the July and August outputs are excluded from Dr Ladson’s analysis for the “very dry” scenario the rounded average figure for the additional transfers which would have been required rises to 182 GL. Nor have the Plaintiffs demonstrated a rational relationship between the necessity of bringing Lake Victoria to the relevant storage levels and a decision to make additional calls on the Goulburn IVT

account in June (20-30 GL), July (20-30 GL) and August 2018 (13 GL). The origin of these figures is to be found in Section 6.6.4 of Dr Ladson’s First Report. Dr Ladson identifies three reasons for the adoption of the figures, namely “typical IVT delivered volumes in other months”, the IVT account balance at the end of June (166 GL), July (235 GL) and August 2018 (222 GL) and the total of the three calls being about 60 GL. In addition, the 13 GL figure for August is based on the fact that 40 GL was in fact called in August 2018 but only 27 GL was delivered. Dr Ladson does not refer to any relationship between the quantum and timing of his adopted figures (or any others) and the relevant storage levels of Lake Victoria. The methodology adopted by Dr Ladson for the quantum of the three additional calls on the Goulburn IVT account is inconsistent with the methodology he used to adopt 170 GL for the additional releases from Hume Reservoir. Use of consistent methodology, based on the rounded averages of the quantities assumed in the AOP modelling documents, produces a different result. For both the “dry” and “very dry” scenarios, the AOP modelling documents in April, May and June (and also in July) assumed that there would be no calls on the Goulburn IVT account in any of June, July and August 2018. The only exception is the AOP modelling documents obtained on 5 June 2018 which

assumed that there would be a call in August for 15 GL (“dry”) or 25 GL (“very dry”). The rounded average of these figures would result in calls of 0 GL in each of June and July, which is what the Defendant actually did. The rounded average for August would result in calls of 5 GL or 8 GL, which is less than the 27 GL actually called by the Defendant in August 2018. In other words, the Goulburn IVT counterfactual based on consistent methodology is that a river operator acting with reasonable care would have made less calls on the Goulburn IVT account, not more. It is the opposite to the counterfactual assumed by Scenario P10 and Scenario P9. There are other problems with matching the alleged breach with the counterfactual of calling on the Goulburn IVT account as contemplated by Scenario P10 and Scenario P9. Dr Ladson’s first reason for the monthly quantities he has adopted is that they are the quantities of IVT called in other months but he does not reveal the other months in question. It seems unlikely that the other months were Junes, Julys or Augusts because 25 GL is not typical of the volumes of IVT called in winter months (typically 0 GL). As for the balance of the Goulburn IVT account, a river operator acting with reasonable care would have known the balance of the Goulburn IVT account at the end of June but there is no evidence that he or she would have regarded 166 GL

as high. There is evidence that in July he or she would have regarded 235 GL as high but he or she would not have known the July balance at the time of the alleged breach (June). As they relate to the relevant storage levels of Lake Victoria forecast in the AOP modelling documents, Dr Ladson’s figures of 25 + 25 + 13 ≈ 60 are arbitrary. The Plaintiffs’ submissions on why a river operator acting with reasonable care would have undertaken the river operations contemplated for Scenario P10 and Scenario P9 are based on hindsight. The subsequent modelling of how the storage levels of Lake Victoria would have risen under Scenario P10 and Scenario P9 is based on conditions which were observed after June 2018 and which would not have been known to a reasonable river operator. Having regard to the alleged breach in the 2017/2018 water year, the Plaintiffs have not proved on the balance of probabilities that a river operator acting with reasonable care would have undertaken the river operations contemplated for Scenario P10 or Scenario P9. Two other hypothetical Scenarios are addressed in the evidence, namely: for “Scenario B2” there would have been an extra 170 GL transferred from Hume Dame to Lake Victoria at less than 9,500 ML/day over June, July and August without any other measure; and for “Scenario B7” there would have been an extra 170 GL transferred from Hume Dame to Lake

Victoria at less than 9,500 ML/day over June, July and August plus an extra 252 GL would have been transferred through the MIL infrastructure from August 2018 to 31 May 2019. For the same reasons as set out above the Plaintiffs have not proved on the balance of probabilities that a river operator acting with reasonable care would have undertaken the river operations contemplated for Scenario B2 or Scenario B7. The Plaintiffs submit that Scenario P10 and Scenario P9 are the bookends of “the range of alternative operational decisions” and the “range of plausible alternative Scenarios”. The bookend concept is based on the modelling which has been undertaken for the purpose of these proceedings. The Plaintiffs submit that the modelling has shown that the total quantity of water transferred to Lake Victoria under Scenario P10 (170 GL + 63 GL) would have been the minimum necessary to ensure that Lake Victoria did not fall below dead storage in early 2019, and that the total quantity under Scenario P9 (170 GL + 63 GL + 222 GL) has been shown to be “more water than is required to match the performance of observed conditions” so “there is no plausible need to release more water than” under Scenario P9. For that reason, the Plaintiffs submit that the quantity of water which would have been transferred by a river operator acting with reasonable care would have been somewhere in the

middle. The Plaintiffs’ bookend analysis is of no assistance in answering the question of what river operations would have been undertaken by a river operator acting with reasonable care in June 2018. It is based entirely on hindsight. It also reduces the counterfactual to a single variable (quantity of water transferred to Lake Victoria) when the position in which the Plaintiffs would have been depends on a counterfactual which addresses all relevant aspects of river operations. The quantity of water transferred to Lake Victoria is an important variable, but the timing, the release rates and the relative sources of the transfers are, amongst other things, also important. Scenario P10 positively implausible The Defendant further submits that it is positively implausible that a river operator acting with reasonable care would have undertaken the river operations contemplated by Scenario P10 (and also Scenario B2). Had those river operations been undertaken, the agreed modelling shows that from January 2019 onwards the storage level of Lake Victoria would have been observed to be very low and by March or April 2019 Lake Victoria would have fallen below the dead storage level of 100 GL. The storage level would have fallen as low as 85 GL or 90 GL. Below dead storage it would not have been physically possible to release water from Lake Victoria and it would have ceased to be

capable of performing the function of contributing to the supply necessary to achieve South Australia’s monthly entitlement. There is no dispute that river operations which permitted Lake Victoria to fall below dead storage level would have been regarded as unacceptable. Rather than permit that to occur a reasonable river operator would have intervened by making additional transfers, possibly overbank transfers from Hume Reservoir. That conclusion follows irrespective of whether Lake Victoria commenced the 2018/2019 water year at 270 GL (assuming that there had not been the alleged breach in the 2017/2018 water year) or 298 GL (as was in fact the case). Once additional transfers commenced, Scenario P10 and Scenario B2 by definition cease to apply. Modelling based on those Scenarios does not therefore reveal the position that the Plaintiffs would have been in had the breach of duty not occurred. The Plaintiffs do not seek to resist this reasoning but rather try to avoid the conclusion for Scenario P10 by redefining the counterfactual river operations contemplated by it. Rather than transferring 170 GL from Hume Dam at 9,500 ML/day measured at Yarrawonga Weir, a reasonable river operator would have increased the release rate to 9,800 ML/day on 16 July 2018 when the in-channel watering commenced. By that means an additional 36 GL would have been transferred to Lake Victoria, minus

conveyance losses along the way. [223] Had that happened, the storage levels of Lake Victoria would have fallen to a very low level but not below dead storage. The precise storage level has not been modelled but if 6% conveyance losses is assumed, then Lake Victoria would have fallen to a storage level between 119 GL and 124 GL. For the purposes of considering Scenario P10 as counterfactual river operations which a reasonable river operator would plausibly have undertaken, the Plaintiffs’ counter argument is ineffectual. There are three reasons why. First, it requires a reasonable river operator to have made a decision about the release rate on 16 July 2018 based on the information about the (then) future storage levels of Lake Victoria as revealed by modelling undertaken by Mr Podger and Mr Barma in September 2025 for the purposes of these proceedings. Absent foresight, a reasonable river operator would have instead had regard to the contemporaneous modelling in the AOP modelling documents which showed that the river operations contemplated by Scenario P10 were not necessary. Secondly, a reasonable river operator would not have known when the storage level of Lake Victoria would reach its nadir. Given the period of 25 days it takes water to flow from Hume Dam to Lake Victoria, in all probability overbank transfers would have been commenced well before the lowest point was

discovered actually to have been reached. Thirdly and relatedly, it seems unlikely that a reasonable river operator would have regarded river operations which would result in Lake Victoria falling below dead storage (100 GL) to be unacceptable but would nonetheless have been content to have undertaken river operations which would have resulted in Lake Victoria falling to a level which would be only just above dead storage (119 GL-124 GL). Such an approach seems inconsistent with the approach of a reasonable river operator which, as Mr Bishop explained, was trying to steer Lake Victoria through the water year to manage the competing risks of system shortfall and spill. This is especially so when even now the storage level of Lake Victoria for Scenario P10 or Scenario B2 has not relevantly been modelled for a release rate of 9,800 ML/day, so the acceptability of the slender margin above dead storage level has to be considered in the face of a degree of uncertainty. Absent evidence from a river operator about operating the river as contemplated by this argument, it is not possible to find that it would have been regarded by a river operator as acceptable, acting with reasonable care. The Defendant submits that the Plaintiffs’ argument in support of the plausibility of Scenario P10 fails for a further reason, namely that it requires first a finding to be made that the Defendant

breached its duty of care as particularised in paragraph (d)(iA) of Annexure B to the Statement of Claim. The Plaintiffs have abandoned that allegation and no such finding will be made. I do not think that the Defendant is correct about this point. The Plaintiffs’ failure to prove that it was negligent for the Defendant not to have increased the release rate at Yarrawonga Weir to 9,800 ML/day does not foreclose the submission that a river operator acting with reasonable care might plausibly have done so nonetheless. It is not, however, necessary to decide this point. The Plaintiffs point to two other options which might have been taken to address the dead level storage of Lake Victoria in March or April 2019. The first was to commence bulk transfers in May 2018, or at the beginning of June 2018, but that would not have been chronologically possible for a decision made in mid-June in response to circumstances which did not generally pertain until late-June. The second option identified by the Plaintiffs was to make use of the MIL infrastructure which in fact became available on 8 September 2018. If a reasonable river operator became concerned about Lake Victoria falling below dead storage level then it would have been possible to transfer additional water through the MIL infrastructure. Implicit in this submission is the concession that Scenario P10 and Scenario B2 are

implausible as is. The feature of those two Scenarios which sets them apart from Scenario P9 and Scenario B7 is that they do not use the MIL infrastructure. In substance the Plaintiffs concede that Scenario P10 would have been abandoned and river operations more like those contemplated for Scenario P9 (which does use the MIL infrastructure) undertaken instead. It is a significant concession because, as explained below, the Plaintiffs have not proved that they would have received more water under Scenario P9. In any event, I find that the river operations contemplated by Scenario P10 and Scenario B2 are not those which a river operator acting with reasonable care would have undertaken, whether or not the river had been operated in the preceding 2017/2018 water year as actually happened or as the Plaintiffs allege a river operator acting with reasonable care would have done. At some point in the 2018/2019 water year, a reasonable river operator would have considered that additional transfers needed to be made to Lake Victoria. The extra water may have been transferred by overbank transfers through the Barmah-Millewa Forest or by using the MIL infrastructure. Either way, the river operations would not have been those contemplated by Scenario P10 or Scenario B2. The modelling of the position of the Plaintiffs in Scenario P10 or Scenario B2 is not probative to the question whether

the Defendant’s assumed breaches of duty caused the Plaintiffs some loss. These positive findings are limited to Scenario P10 and Scenario B2. The same jeopardy to the storage level of Lake Victoria would not have become apparent had the Defendant undertaken the river operations contemplated by Scenario P9 or Scenario B7. Nonetheless, for the reasons given above the Plaintiffs have not proved that a river operator acting with reasonable care would have decided in June 2018 to undertake the river operations contemplated by Scenario P9 or Scenario B7 either. Counterfactual river operations not otherwise apparent The Plaintiffs not having articulated a case on causation of loss which corresponds with the breach of duty which for current purposes is assumed to have occurred, I have considered whether such a case is otherwise apparent from the evidence. Ultimately, I consider that it is not possible to do other than to speculate. Focussing on the assumed breach of duty, the counterfactual river operations which are inherent in that breach do not illuminate. In terms of MFI-38, the additional transfers from Hume Reservoir which a river operator acting with reasonable care would have directed would have commenced at the end of June 2018 but nothing is known about their quantum other than “greater”. The additional calls on the Goulburn IVT account cannot be identified without first

determining whether, and if so to what extent, a river operator acting with reasonable care would have considered that some further release needed to be made at some other point in time. There is no framework in the Plaintiffs’ submissions or in the evidence for such a determination to be made. The Plaintiffs’ submissions refer to a failure to make the bulk transfers which were necessary to reach the Lake Victoria storage levels planned in the AOP modelling documents. The storage levels for the “dry” scenario from the AOP modelling documents which were obtained on 5 June 2018 are set out at [1436] above. In the Plaintiffs’ favour, the large assumption may be made that a river operator acting with reasonable care would have had regard only to the “dry” scenario when the decision about future river operations was made in June 2018. Having regard to the evidence of the Defendant’s witnesses and Dr Ladson’s evidence, there can be no dispute that the first step a river operator acting with reasonable care would have taken would have been to consider the latest modelling to determine what future river operations should be undertaken to achieve the relevant Lake Victoria storage levels. Even if it is assumed that a river operator would have undertaken fresh or different modelling, the only evidence of what that hypothetical modelling would have shown is the AOP modelling documents

which were in fact obtained by the Defendant at the time. That modelling showed that the river operations actually undertaken by the Defendant in June and July would achieve the planned storage level for Lake Victoria for the “dry” scenario. The modelling assumed that there would be transfers from Hume Reservoir in August which were 111 GL greater than those which were actually made by the Defendant, although from about 10 August transfers were in fact being conducted at approximately 9,500 ML/day, above which greater transfers could not have been made without transferring water overbank through the Barmah-Millewa Forest. The actual modelling also showed that no calls on the Goulburn IVT account were necessary to achieve the planned storage level for Lake Victoria until August, and then in a quantity lower than that which was actually called by the Defendant. [224] I have considered an alternative calculation of the quantity of additional releases of water from Hume Reservoir over June, July and August 2018 which Dr Ladson carried out in Section 6.6.1 of his First Report which produced a figure of 150 GL. The 150 GL figure does not take into account water which the Defendant assumed would be transferred from Hume Reservoir for reasons unrelated to the storage level of Lake Victoria. There is no dispute that that error makes the 150 GL figure too high. When adjusted correctly to

take account of the unrelated water the equivalent figure is 51.5 GL. Dr Ladson’s methodology for calculating the quantity of 150 GL (corrected to 51.5 GL) was the same as for the 170 GL figure except that he used the quantities assumed to be transferred for the “dry” scenario in the 2018 AOP modelling documents, not the “very dry” scenario. The 51.5 GL figure has the advantage of matching the alleged breach by using the same “dry” scenario but it otherwise suffers from the same problems which render the 170 GL figure irrelevant. The 51.5 GL figure may further be adjusted to remove the information from the AOP modelling documents obtained in July and August 2018 which results in 36 GL of additional transfers. That further adjustment does not overcome the other difficulties with the figure. Additional transfers of 36 GL are far removed from the quantity of 170 GL which is contemplated in Scenario P10 and Scenario P9. I have considered whether the evidence demonstrates that a river operator acting with reasonable care would simply have decided at the end of June 2018 to increase bulk transfers from Hume Reservoir to the maximum channel capacity of the Barmah Choke, together with making the additional calls on the Goulburn IVT accounts adopted by Dr Ladson. The essential counterfactual is that a river operator acting with reasonable care would have decided to bring forward by one

month the decision which was in fact made at the end of July. Had that happened, the Defendant would have begun increasing the release rate at Yarrawonga Weir on 1 July and 9,500 ML/day would have been reached on about 10 July 2018. It is not possible to find on the balance of probabilities that these simple counterfactual river operations are the ones which a river operator acting with reasonable care would have undertaken. Even if it is assumed that a reasonable river operator would have considered in June 2018 that the simple counterfactual river operations would result in more water in the storages by 31 May 2019, other considerations would still have had to be taken into account such as the increased risk of spill relatively early in the water year, any risk of internal spill from raising the storage level of Lake Victoria in July and calling on the Goulburn IVT account, jeopardising the availability of the Goulburn IVT account for summer, damage from the eroding of the channel by running the river at maximum channel capacity prior to the commencement of in-channel watering on 16 July 2018 and diversion trends. There would in addition be the issue of a reasonable river operator being willing to disregard the modelling in the AOP modelling documents which in June 2018 showed that the counterfactual measures were not necessary in order to achieve the planned storage levels

for Lake Victoria. There may have been other considerations. The Defendant has not been heard on this simple counterfactual. The lack of evidence and the need for fairness to the Defendant does not permit a finding that a river operator acting with reasonable care would simply have brought forward by one month the decision which was actually made in August 2018. Counterfactual river operations which would have resulted in higher allocation of water to the Plaintiffs in the 2018/2019 water year are not apparent on the evidence. Summary of counterfactual river operations Having regard to the assumed breach, it is not possible on the evidence to make any finding about what river operations would have been undertaken by the Defendant had it not breached its duty of care in the 2018/2019 water year. For that reason alone, the Plaintiffs have not proved on the balance of probabilities that they have suffered some loss. The Plaintiffs refer to Seltsam Pty Ltd v McGuiness [225] at [91] where Spigelman CJ said that causation can be established by a process of inference which combines primary facts like “strands in a cable” rather than “links in a chain”. They submit that their approach is consistent with that reasoning, relying particularly on the undisputed fact that overbank transfers cause “higher losses” to the system than other river operations and the disputed fact that the range

of possible alternative river operations were bookended by those contemplated for Scenario P10 and for Scenario P9. There are some cases which may be of the strands in a cable variety, as where one of the circumstances in which causation is considered is medical research which shows that there is a high probability that a particular condition will ensue even though the research does not address the particular case in question. [226] The Plaintiffs’ case is of an altogether different variety which is founded upon a chain of events which it is alleged would have resulted in the Plaintiffs receiving more water. The best place to see the chain is in paragraphs 881 to 882 of the Plaintiffs’ Closing Submissions where they set out four sequential “Steps” which are paraphrased at [943] above. The Plaintiffs submit that each step has been proved on the balance of probabilities. It is Step 1 which is currently being addressed. The fact that all other things being equal, overbank transfers cause higher losses to the system does not obviate the requirement that the Plaintiffs identify the river operations with a river operator acting with reasonable care would have undertaken. Otherwise the Plaintiffs do not address what strands might supply the deficiency in the evidence from which an inference is to be drawn that there would have been an additional volume of water in the storages in the

Murray River system (Step 1). Position of the Plaintiffs had Scenario P9 (or Scenario P10) occurred The parties have each made submissions about the position the Plaintiffs would have been in had the Defendant undertaken river operations in accordance with Scenario P10, Scenario P9, Scenario B2 and Scenario B7. Although I have not made the necessary anterior finding that a river operator acting with reasonable care would have undertaken the river operations contemplated by any of those Scenarios, I will determine the issues raised by the parties’ submissions. The Plaintiffs’ submissions are directed to Scenario P9 and Scenario P10. I will address Scenario P9. Although I have made the positive finding that a river operator acting with reasonable care would not have undertaken the river operations contemplated by Scenario P10, the modelling evidence is most developed for Scenario P10 so I will also address Scenario P10. Very little has been said about Scenario B7 or Scenario B2. They do not add to the Plaintiffs’ case and I will not address them further. Before considering the modelling evidence about what water would have been allocated to the Plaintiffs had counterfactual river operations been undertaken, it is necessary to address the efficacy of the model and the assumptions to be made about the use of environmental water in the 2018/2019 water year. The agreed model is to be

relied upon As referred to above, evidence was adduced at the hearing from two experts in modelling the behaviour of rivers, Mr Podger and Mr Barma. As their instructions evolved over the last four years so did their approaches. Ultimately they agreed on all matters. For the purposes of quantifying the Plaintiffs’ loss, Mr Podger and Mr Barma adapted a hydrodynamic model which simulates the behaviour of the Murray River system (including its storages) in response to hypothetical river operations. The model addresses all of the first three steps along the Plaintiffs’ counterfactual path at [943] above. For any given set of assumptions about river operations, the model first calculates how much water would have been in the storages for each month of the water year. It then calculates the monthly allocations to each of New South Wales and Victoria and finally the monthly allocations to each water entitlement holder in those States, including the Plaintiffs. The model also calculates numerous intermediate data points, such as evaporation losses, conveyance losses, the storage level of Lake Victoria and fulfilment of South Australia’s entitlement. Unless relevant to a particular submission, it is not necessary to explain the structure of the model or the process of adaption by the experts. One thing Mr Podger and Mr Barma agreed upon is that the calculations for the river operations

which actually occurred in the 2017/2018, 2018/2019 and 2019/2020 water years (which the parties call “Scenario P0”) is the best comparator with the modelled hypothetical Scenarios rather than the observed historic data. By using the simulated actual behaviour, matters peculiar to the modelling process are cancelled out on each side of the comparison obviating the need for further complex and time-consuming adjustments to be made to the modelled hypothetical Scenarios so that they may be more accurately compared with the observed data. Both parties agreed with the experts about this and so do I. Apart from one discrete issue, both parties submit that the model provides a sound evidentiary basis for making findings about what would have happened to the quantity of water in the storages and the allocation to water entitlement holders had different river operations been undertaken, and for comparing those findings with Scenario P0. The single area of disagreement arises from the function of the model where it simulates water lost as the Murray River flows through the Barmah-Millewa Forest. In order to make the simulation conform to observed data for that particular reach of the river the model includes a node between the place where Broken Creek flows into the Murray River and the Barmah gauge. I will call it the “Forest Node”. The Forest Node implements a loss correction

relationship. Although it is only one of the multitude of nodes which make up the model, each one simulating a particular part of the Murray River’s behaviour, there is no dispute that the Forest Node is a significant part of the model’s overall operation. Mr Podger and Mr Barma agree about the location of the Forest Node and the loss correction relationship it implements. They used the model which included the Forest Node for the purposes of expressing opinions in their First Joint Report dated 5 August 2025 about whether water was lost as a result of the Defendant’s river operations compared to certain instructed counterfactuals and, if so, how much. The Plaintiffs have since observed that the losses calculated by the agreed model for the Barmah-Millewa Forest vary from a loss calculation undertaken by Mr Korn in 2024. It will be recalled that Mr Korn is an officer of the Defendant who gave evidence in these proceedings, including in relation to his calculation of losses actually experienced in the Forest. After their First Joint Report had been received, a supplementary question was submitted jointly to Mr Podger and Mr Barma by which their attention was specifically drawn to Mr Korn’s calculation. They were asked whether any adjustment to their model is necessary. In their Corrected Second Joint Report dated 29 September 2025 they reviewed their loss calculations and

jointly expressed the following view: “we do not believe any adjustments should be made to the loss relationships contained in the model.” The Plaintiffs nonetheless question the efficacy of the loss correction relationship implemented by the Forest Node. They do not go so far as to say that the losses calculated by the model ought not to be accepted (nor could they on the evidence) but they submit that the Forest Node supports the conclusion that the joint loss calculations of Mr Podger and Mr Barma are “conservative”. The purpose of the submission is to support the contention that if an assessment of the Plaintiffs’ losses is to be discounted because the Plaintiffs merely had the chance of avoiding the modelled losses, then the discount ought to be lower than would otherwise be the case. The Plaintiffs put forward two reasons for their submission about the implications of the loss correction relationship implemented by the Forest Node. First, counsel for the Plaintiffs asked some questions about the Forest Node when Mr Podger and Mr Barma gave evidence at the hearing. The questions were directed to calculations performed by the Forest Node when water flowed through the Barmah-Millewa Forest at close to the limit of the channel capacity of the river. The proposition was put that the Forest Node calculated the same loss irrespective of whether the forest regulators were open or

closed. The Plaintiffs submit that the answers given by the experts are to be understood as them agreeing that the Forest Node operated as suggested by the questions and therefore the model may lead to an overestimate of the losses which would have occurred had counterfactual river operations been undertaken by the Defendant. The first reason is incorrect. The questioning of Mr Podger and Mr Barma proceeded from an incorrect premise as to the flow rate which corresponded to each loss calculation made by the Forest Node as set out in Table 6 of the Corrected Second Joint Report. Table 6 listed the flow rates at a location immediately upstream of the Forest Node, not the flow rates further upstream at Yarrawonga Weir as assumed in the questioning. The flow rates are different at the two locations. At the location immediately upstream of the Forest Node the flow rate at which the water will exceed the channel capacity of the river was significantly less than 9,500 ML/day because in the ordinary course some water is diverted from the Murray River after it is released at Yarrawonga Weir and before it reaches the Barmah gauge. When the correct location of the flow rates is understood, the figures in Table 6 show that different losses are calculated by the Forest Node depending on whether the forest regulators are open or closed but not when the flow rate is sufficiently high to

exceed the channel capacity of the river. The premise for the questions was incorrect. The answers given by Mr Podger and Mr Barma do not undermine their statement that no adjustments should be made to the model. On the contrary, Table 6 shows that the Forest Node does calculate different losses depending on whether the regulators are open or closed just as the Plaintiffs say it should. Secondly, in their written Reply Submissions served the day before the final oral submissions the Plaintiffs put forward a different argument based on their own comparison between the losses calculated by the agreed model and Mr Korn’s figures. In their Corrected Second Joint Report Mr Podger and Mr Barma have calculated loss from overbank flows which assumes that the regulators were open. Mr Korn calculated losses which assumed that regulators were closed. So that apples might be compared to apples, the Plaintiffs made an adjustment to the figures in the Corrected Second Joint Report. The comparison between the Plaintiffs’ adjusted figures and Mr Korn’s figures shows that in the 2017/2018 water year the agreed model calculated losses which are too high and in the 2018/2019 water year it calculated losses which are too low, the latter outweighing the former when considered in combination. The Plaintiffs rely upon their comparison for the proposition that the experts’ model may be systematically

underestimating the losses and should therefore be viewed as conservative. For the reasons submitted by the Defendant I reject this second argument. There is no foundation in the evidence for the validity of the adjustments which the Plaintiffs made to the figures of Mr Podger and Mr Barma in the Corrected Second Joint Report. The Plaintiffs made their adjustments by using figures from the accounting treatment of losses caused by in-channel watering. The accounting figures serve a different purpose to that for which the Plaintiffs have used them with unknown consequences. Nor am I persuaded that the figures taken by the Plaintiffs from the Corrected Second Joint Report (even if properly adjusted) are directly comparable to Mr Korn’s figures because Mr Korn’s figures are directed to a discrete aspect of the river’s behaviour in the relevant water years yet the agreed model addresses that aspect as one part only (albeit a significant part) of the whole interconnected system. A further problem with the Plaintiffs’ argument is that their analysis points in opposite directions as between the 2017/2018 water year and the 2018/2019 water year. On the Plaintiffs’ analysis the agreed model is not conservative for the 2017/2018 year but over-generous. The Plaintiffs do not demonstrate an operation of the model which is systematic when half the sample set of two contradicts that

operation. It may be that the Plaintiffs’ most recent analysis could have been explained by Mr Podger and Mr Barma if it had been put to them when they were questioned at the hearing. That did not happen. The day after the Defendant was served with the Plaintiffs’ written Reply Submissions the Defendant objected to the new point being taken. Whilst the Plaintiffs are careful not to submit that the experts’ agreed model ought not to be accepted, and they do not expressly attack the evidence set out at [1478] above, the substance of their submissions is to that effect. Given the nature of the river system and the complexity of the subject matter of their expert evidence, it may well be that the experts would have given an explanation if asked. They had agreed on the loss calculation relationship in their First Joint Report, they were asked to review it (including by reference to Mr Korn’s figures) and they adhered to their original view. The loss calculation relationship is well within their expertise. The fact that their evidence was not challenged by reference to the Plaintiffs’ most recent analysis means that I ought to be hesitant to reject their evidence on this point. [227] I accept the experts’ evidence that no adjustments to the Forest Node are required. That issue resolved, the experts’ model is to be relied upon. There is no basis for finding that the results from using

the model are conservative when calculating the Plaintiffs’ loss. Nor is there a basis to find that by reason of the experts’ failure to make an adjustment to the Forest Node in the light of Mr Korn’s calculations that there is inferential support in Mr Podger’s and Mr Barma’s results for the Plaintiffs’ causation case which is not otherwise apparent. What would the environmental water holders have done? In addition to the counterfactual river operations which would have been undertaken by the Defendant had the assumed breach not occurred, the position of the Plaintiffs would have been affected by decisions made by third parties, namely the environmental water holders. Water entitlements held by environmental entities is one of the fundamental features of the regulation of the Murray River system. The volume of environmental water is significant. In each of the 2017/2018 and 2018/2019 water years environmental water holders responded to decisions made by the Defendant with their own decisions about the movement and use of environmental water. It is necessary to consider what the environmental water holders would have done if the Defendant had not undertaken transfers of operational water in the 2017/2018 and 2018/2019 water years as it in fact did. Some background is first required. The Commonwealth Environmental Water Holder is an office established by the Commonwealth Statute

for specified environmental purposes. The Commonwealth Environmental Water Holder holds water entitlements issued by the States which entitle her to be allocated water in the same way as for non-environmental water entitlement holders. She uses the water allocated pursuant to her entitlements for environmental purposes. In practical terms, the Commonwealth Environmental Water Holder can use the water in the water year when it is allocated or she can carry part of it over to the next year. Subject to restrictions on the environmental use to which the proceeds may be applied, the Commonwealth Environmental Water Holder may sell or dispose of water which she cannot use or carry over. If the water is not used in one of these ways it is forfeited back to the system. Understandably, it is rare for that to happen. There is a comprehensive and structured process by which the Commonwealth Environmental Water Holder makes decisions about when, where and how to use environmental water. Each of the States has established an environmental water holder which separately holds water entitlements along similar lines. As already stated, the magnitude of environmental water holdings is significant. In the 2017/2018 water year the Commonwealth Environmental Water Holder alone held entitlements to 757 GL of water. By the 2018/2019 water year the figure had risen to 805 GL. State environmental water

holders held additional entitlements. On behalf of the States (as the entities which issued the entitlements), the Defendant accounts for the water used by the various environmental water holders. For a number of reasons, decisions made about the transfer and use of operational water may affect decisions made by environmental water holders and vice versa. An example is the need to accommodate each Goulburn Pulse of environmental water within the limited channel capacity of the Goulburn River when calling on the Goulburn IVT account. Another example is the need to supplement a Goulburn Pulse with water from elsewhere in the system when the Pulse reaches the border with South Australia due to conveyance losses and evaporation which diminish the Pulse along the way. There is a significant relationship between a decision by the Defendant to transfer operational water above the channel capacity of the Barmah Choke and the use of environmental water to water the Barmah-Millewa Forest. There are at least two reasons why. First, the transfer of operational water through the Barmah-Millewa Forest may increase the environmental benefits from subsequently using environmental water in the Forest. There are multiple facets, but it is sufficient to give an example. An overbank transfer of operational water will increase the moisture content of the forest floor which may result in greater

absorption were environmental water to be used simultaneously with or soon after the overbank transfer. Secondly, in some circumstances the agreed accounting rules for the use of environmental water depend upon whether an overbank transfer of operational water has occurred recently. Specifically, if the Barmah-Millewa Forest is dry when environmental watering commences, the first quantity of water (up to 50 GL) is taken to have been used by the environmental water holders (“initial use”) and not thereafter available for further environmental use from return flows downstream. If the Forest has been “pre-wet”, as would be the case where there has been a recent overbank transfer of operational water, there is no initial use for the purposes of the environmental water holders’ accounts. This feature of the accounting rules in part reflects the environmental implications of the use and transfer of operational water. The accounting rules for the use of environmental water directly affect the quantity of water available to the States for allocation to the non-environmental holders of water entitlements. The relationship described in the preceding paragraph indicates that there may be an environmental advantage to environmental water holders if they water the Forest in the wake of an overbank transfer of operational water. The facts about what actually happened in the 2017/2018 water

year demonstrate the proposition. The Defendant’s decision to commence overbank transfers on 4 October 2017 was followed by decisions by environmental water holders to water the Barmah-Millewa Forest. On 13 October 2017 the Defendant began progressively to reduce the release rate of operational water at Yarrawonga Weir below 15,000 ML/day until 21 October 2017 when the flow of operational water returned below 10,000 ML/day within the channel capacity of the river. As the Defendant reduced the flow of operational water the environmental water holders ordered the release of increasing quantities of environmental water with the result that the total release rate at Yarrawonga Weir remained above the channel capacity until 25 December 2017. A total of 230 GL of environmental water was used. The events in the 2018/2019 water year conformed to the pattern. The Defendant’s decision in August 2018 to commence the transfer of operational water above the channel capacity of the river was followed by decisions of environmental water holders to use environmental water to water the Forest. As depicted by the green area in the graph at [1245] above, from about the first week of November until the end of December 2018 environmental water was included in the releases at Yarrawonga Weir above 9,500 ML/day. A total of 86 GL of environmental water was used in this way. Whilst watering the Forest

in the wake of an overbank transfer of operational water may have advantages for environmental water holders it does not mean that there are no environmental benefits from watering the Forest when it is dry. The water which is accounted for as initial use (and therefore no longer available for further environmental use downstream) is nonetheless used for the environmental benefit of the Forest. In the 2019/2020 water year the environmental water holders watered the Barmah-Millewa Forest even though 27 GL of the water had to be accounted for as initial use. There is no dispute that the decisions of environmental water holders to water the Forest in the 2017/2018 and 2018/2019 water years were directly connected to the anterior decision by the Defendant to commence overbank transfers of operational water. However, there is a lack of consensus about what the environmental water holders would have done had the Defendant instead operated the river without transferring operational water overbank through the Forest. Three different environmental counterfactuals have been articulated by the Plaintiffs, each labelled as a Question: Question 3 assumes that the environmental water holders would have decided not to use the environmental water which in fact was used in the forest and would instead have carried the water over to the following year; Question 3A assumes that the environmental

water holders would have decided not to use any environmental water above the channel capacity of the river in the forest but would have instead used the same quantity of environmental water within the channel capacity of the river; and Question 4 assumes that the environmental water holders would have made exactly the same decisions as they in fact made. These hypotheticals are only three possibilities amongst an infinite range, as demonstrated by the parties’ submissions below. Neither party submitted that the hypothetical decisions of environmental water holders would have altered the position of the Plaintiffs had the Defendant undertaken the counterfactual river operations for which the Plaintiffs contend in the 2017/2018 water year which is why it has not been necessary to address the issue until now. If the Defendant had not undertaken overbank transfers for the short period starting on 4 October 2018 then the allocation of water under the Plaintiffs’ water entitlements would have been the same whether or not environmental water holders ordered the release of 230 GL of water from Hume Reservoir. It is however necessary to consider what environmental water holders would have done in the 2017/2018 water year because it may affect what would have happened in the 2018/2019 water year. There is some common ground between the parties. The Defendant rejects Question 3A as a

plausible alternative. It submits that the assumption that the environmental water holders would have used the same quantity of water but entirely within the channel capacity of the river makes no sense, especially in the 2017/2018 water year. For hypothetical Scenario P10 or Scenario P9, there would have been prolonged transfers of operational water just under the channel capacity of the Barmah Choke which would have had to be accommodated by the use of environmental water, also within the channel capacity for Question 3A. In the 2017/2018 water year an additional 230 GL would have had to be used within the channel capacity and in 2018/2019 water year an additional 86 GL. For that accommodation to be achieved in the 2018/2019 water year, the environmental water holders would have had to decide in January 2018 to commence environmental flows. That was before the 2018/2019 water year had even begun. The Defendant submits that there is no evidential basis for accepting the strained assumptions in Question 3A. There are other problems with the Question 3A assumptions and the modelling which has been undertaken on the basis of those assumptions. For their part, the Plaintiffs do not make an enthusiastic defence of Question 3A. I am not persuaded that there is a basis for the Plaintiffs’ loss to be assessed by reference to Question 3A. The Plaintiffs do not seek to defend Question 3

either. They submit that the evidence establishes on the balance of probabilities that the environmental water holders would have made exactly the same decisions as they in fact made so that the position in which the Plaintiffs would have been is to be determined in accordance with the assumptions in Question 4. Whilst not embracing Question 3, the Defendant submits that the assumptions in Question 4 ought not to be accepted. In particular it submits that it is unlikely that the environmental water holders would have made exactly the same decisions had the Defendant not undertaken overbank transfers, especially in the 2018/2019 water year. The Defendant submits that the environmental water holders would still have watered the Barmah-Millewa Forest but on a much larger scale than they in fact did even though they would have had to incur an initial use of 50 GL. The Defendant points out that none of the Questions contemplate assumptions which accommodate a larger environmental watering than that which in fact occurred. The evidence which is relevant to this hypothetical issue includes an Affidavit by Mr Johnson who was the Director of the Southern Basin Section at the office of the Commonwealth Environmental Water Holder at the relevant time. He was not the final decision maker but he was the person responsible for advising her about what decision should be made. Mr Johnson was

called by the Defendant and cross-examined by counsel for the Plaintiffs. For the 2017/2018 water year Mr Johnson’s evidence is that he is not certain what would have happened but it is his view that it is likely that the Commonwealth Environmental Water Holder would have been advised by her staff, including by Mr Johnson, to deliver environmental water overbank. Given the subject matter of the hypothetical issue and Mr Johnson’s role, his view about what would have happened is not unimportant, but the strength of Mr Johnson’s evidence is his careful and comprehensive analysis of the objective circumstances which pertained at the time the decision would have been made. Amongst other circumstances, Mr Johnson says that at the beginning of the 2017/2018 water year there were environmental reasons why watering the Barmah-Millewa Forest was considered to be desirable. For reasons given by Mr Johnson, the Commonwealth Environmental Water Holder was holding back on that task when the Defendant’s overbank transfers commenced on 4 October 2017. Given the time in the season and the looming summer months, it seems unlikely that the Commonwealth Environmental Water Holder would have been willing to wait much longer to water the Forest in any event. The lion’s share of the environmental water actually used in the Barmah-Millewa Forest in the 2017/2018 water year was water which had been

allocated to the Commonwealth Environmental Water Holder. There is no direct evidence about what any of the State environmental water holders would have done. To some extent, the State environmental water holders respond to the same environmental considerations as the Commonwealth. There is a measure of coordination. Neither party contends that the evidence establishes that, on the balance of probabilities, the State environmental water holders would have made different decisions had the overbank transfers not commenced on 4 October 2018. There is no reason to think that there would have been any difference in the magnitude of the environmental water which the environmental water holders in fact chose to use collectively. Having regard to Mr Johnson’s evidence, the Plaintiffs’ submission is to be accepted for the 2017/2018 water year. The inference to be drawn is that the environmental water holders would have made no different decisions even if the Defendant’s overbank transfers had not commenced on 4 October 2017, at least not so as to change the operational and accounting context in which the counterfactual river operations are to be considered in this case. The Defendant did not submit otherwise. Mr Johnson’s evidence is that he has a particularly strong recollection of the 2018/2019 water year because there was an “extremely high” demand for environmental water to be

delivered to South Australia. Mr Johnson says that if the Defendant had not commenced overbank transfers in September but had instead operated the river close to the channel capacity of the Barmah Choke for a prolonged period from June 2018 then he “would still have sought to deliver environmental water overbank and advised the [Commonwealth Environmental Water Holder] to do so (although the duration and timing of the overbank flows may have changed)”. Mr Johnson stood by his evidence in cross-examination. The Plaintiffs submit that the inference to be drawn is that the Commonwealth Environmental Water Holder would have done exactly as she did in fact do in the 2018/2019 water year. The Defendant takes a different position. It agrees that the Commonwealth Environmental Water Holder would still have ordered the delivery of environmental water to South Australia, but it points out that Mr Johnson said that the duration and timing of the overbank flows of environmental water may have been different. It submits that it is to be inferred that the water ordered by the Commonwealth Environmental Water Holder would have exceeded that actually ordered. Two reasons are given. First, the 86 GL actually ordered resulted in a proportionately high return flows to South Australia because the Forest was pre-wet by the Defendant’s overbank transfers of operational water. The Commonwealth

Environmental Water Holder did not therefore have to account for 50 GL in initial use. Under the counterfactual river operations, the Forest would have been dry so more than half the quantity of water ordered by the Commonwealth Environmental Water Holder (50 GL) would have been accounted for as initial use and not delivered to South Australia. In the face of that high initial use relative to the quantity of environmental water ordered, the Commonwealth Environmental Water Holder would have ordered far more than 86 GL to make the environmental flow to South Australia efficient. The second reason given by the Defendant is that Mr Johnson stated in his Affidavit that one of the reasons why he considers that the Commonwealth Environmental Water Holder would have ordered overbank flows of environmental water is that in the 2018/2019 water year she had significant quantities of water which were available for her use. Mr Johnson said: “…the [Commonwealth Environmental Water Holder], along with other environmental water managers, had sufficient water available across its portfolio of entitlements to sustain an environmental overbank event of meaningful duration (For example, approximately 210 GL is required to deliver a 6 week fresh of 5 GL/day of environmental water, which, assuming operational flows were at channel capacity, would support flows of ~14-15,000 ML/day downstream of

Yarrawonga. The [Commonwealth Environmental Water Holder] alone carried more than 240 GL of allocation against NSW and Victorian entitlements, with water also available on TLM and RIMF entitlements. This is especially so if the [Commonwealth Environmental Water Holder] had carried over the 199 GL in fact released from Hume Dam in the 2017/18 water year).” Emphasising the word “meaningful”, the Defendant submits that this evidence supports the inference that the Commonwealth Environmental Water Holder would have ordered water in the order of 210 GL just as it ordered 230 GL in the 2017/2018 water year. The Defendant also relies on the minutes of a meeting of SCBEWC on 4 September 2018 at which environmental water holders proposed an environmental overbank event in mid-September but which could not be implemented after the Defendant commenced overbank transfers of operational water. It is a finely balanced question, but on the balance of probabilities I accept the Plaintiffs’ submissions that the inference to be drawn is that the Commonwealth Environmental Water Holder would have ordered the same 86 GL of overbank flows which were in fact ordered, although the order may have been for a time earlier than November 2018. The Plaintiffs correctly point out that Mr Johnson’s statement that the hypothetical overbank flows “may” have differed as to duration and timing is merely a

recognition of that possibility. It is also a recognition of the possibility that there may have been no difference. Either way, Mr Johnson does not say that the hypothetical overbank transfers may have differed as to the quantity of water. He only refers to the timing and the duration. Not too much weight can be given to that omission because it may be that Mr Johnson regards quantity as a function of duration and timing. He does not, however, say so. I accept the Plaintiffs’ submission that the passage quoted at [1506] above is to be understood as an example which Mr Johnson gave for the purposes of illustrating the quantity of water available to the Commonwealth Environmental Water Holder and not a statement about how that water would have been used. It may also be assumed that there were other demands on the water available to the Commonwealth Environmental Water Holder. The difficulty with the Defendant’s submission that the environmental water holders would have ordered much larger overbank environmental flows to meet South Australia’s extremely high demand is that 86 GL was in fact the quantity that they chose to order. If it was thought desirable to deliver more water to South Australia, there is no apparent reason why larger orders were not in fact made. The environmental water holders commenced their orders in the first week of November when channel capacity began to

emerge with the reduction in the rate of the Defendant’s transfers of operation water. The environmental flows were not increased in mid-December and were stopped altogether in late-December 2018 even though there was channel capacity for larger environmental flows at those times. If the environmental water holders wanted to deliver more water to South Australia, they could have done so. The only apparent explanation for the limited orders in fact made is that the environmental water holders considered that the quantity actually ordered was sufficient for their purposes. It is correct to observe that, of the 86 GL ordered by the Commonwealth Environmental Water Holder in the 2018/2019 water year, a relatively high proportion was delivered to South Australia as return flows. It may be concluded that less would have been delivered in the hypothetical Question 4 counterfactual because more of the 86 GL order would have been accounted for as initial use in the dry Forest. As a matter of logic, that observation supports the inference that the Commonwealth Environmental Water Holder would have ordered the release of some additional environmental water if it considered it necessary to deliver exactly the same quantity to South Australia as it in fact did. Mr Johnson does not refer to that possibility in his evidence which, as already noted, recognises the possibility that there would

have been no difference in the duration and timing of the overbank flows of environmental water. Were the logic of a larger order of environmental water to be as robust as it might otherwise seem it would be expected that Mr Johnson would have addressed that reasoning in his Affidavit, yet he does not. In any event, the increase above 86 GL may have been relatively modest compared to the very large quantities which the Defendant now submits would have been ordered. I do not accept the Defendant’s submission that the Commonwealth Environmental Water Holder would have ordered more than 86 GL simply because a larger proportion of that quantity would be accounted as initial use and not then been available as return flows to South Australia. The Defendant’s argument does not pay sufficient attention to the fact that the initial use in the Barmah-Millewa Forest is not “loss” but is in itself beneficial use for environmental purposes. In paragraph 75 of his Affidavit, Mr Johnson said: “… in my experience, the [Commonwealth Environmental Water Holder] (and the staff made available to assist him or her) does not regard assumed use as an absolute bar to conducting overbank environmental watering of the Barmah-Millewa Forest. My view is that, even if assumed use is payable, overbank environmental watering of the Barmah-Millewa Forest may still be an appropriate use of Commonwealth

environmental water allocations, depending on ecological demands in the forest and downstream, and the other resources available to satisfy those demands. Water that is “lost” as assumed use is still delivered to the Barmah-Millewa Forest and still satisfies environmental demands in the Barmah-Millewa Forest. Further, once the initial loss is paid, return flows are able to be used to satisfy downstream demands. Depending on the circumstances, those factors can justify “paying” the assumed use.” Having regard to the whole of the evidence, including the fact that Mr Johnson did not specifically address the possibility that the Commonwealth Environmental Water Holder may have ordered materially larger quantities of environmental water had the Defendant not undertaken overbank transfers of operational water, I find on the balance of probabilities that in the 2018/2019 water year the environmental water holders would have made the same decisions as they in fact made. The Plaintiffs have made the further submission that even if it is assumed that the environmental water holders would have ordered larger overbank flows of environmental water in the 2018/2019 water year the Defendant has not demonstrated that it would make a difference to the modelling of the Plaintiffs’ position on the assumptions in Question 4. As explained by Mr Bishop in his Third Affidavit dated 25 June 2025 the

accounting used by both New South Wales and Victoria operates in a way that change in the quantity of water used by one water entitlement holder will not affect the allocation of water to others. An increased order by environmental water holders for the purposes of increased delivery of water to South Australia would have been a use of their water allocations from the States. The Plaintiffs submit that the correctness of this proposition is demonstrated by the fact that the Defendant accepts that the effect on the Plaintiffs’ position in the 2017/2018 water year is the same irrespective of whether the environmental water holders used their water as contemplated by Question 3 or as contemplated by Question 4. If true for the 2017/2018 water year, why not also for the 2018/2019 water year? That would be especially so if the increase in environmental use above 86 GL was no more than that required to ensure the same quantity in return flows as was in fact delivered to South Australia. The Defendant submits that if there is a departure from the Question 4 assumptions about the quantity of the overbank flows which the environmental water holders would have ordered in the 2018/2019 water year then the effect on the modelling is unknown. It does not seek to give context to the uncertainty nor does it seek to demonstrate by logic why a different result is to be apprehended. The

Plaintiffs bear the onus of proof on all aspects of their causation case and the Defendant is not required to demonstrate that the modelling results would have been different had the assumptions changed. However, in light of the matters referred to in the preceding paragraph I am satisfied on the balance of probabilities that there would not be a material difference to the position of the Plaintiffs in the 2018/2019 water year as demonstrated by the agreed model were the Question 4 assumptions to be changed to increase the quantity of water ordered by the environmental water holders. For those two separate reasons Mr Podger and Mr Barma’s modelling of the counterfactuals is to be undertaken on the environmental assumptions in Question 4. Results of modelling work carried out by Mr Podger and Mr Barma Having agreed on the model, Mr Podger and Mr Barma were instructed to carry out a number of calculations and set out the results in their Corrected Second Joint Report dated 29 September 2025. As noted above, they first addressed the 2017/2018 water year and calculated that for the river operations contemplated for Scenario P2 the Murray River storages would have had an extra 75 GL with the result that holders of water entitlements issued in New South Wales would have been allocated 54% of their entitlements rather than the 51%. The Defendant accepts that the Plaintiffs would have

received an additional +3% in water allocations in the 2017/2018 water year. The Defendant accepts that interpretation of the evidence. For the 2018/2019 water year Mr Podger and Mr Barma calculated that the quantities of water in the storages for all the counterfactual river operations they were asked to assume would have been higher than for Scenario P0. Their results were set out in Table 3 of the Corrected Second Joint Report. The additional water would have been 196 GL (Scenario P10) or 92 GL (Scenario P9). They also calculated the extra water in storage if Scenario P2 was assumed for the 2017/2018 water year and then either Scenario P10 or Scenario P9 followed in the 2018/2019 water year. Had that sequence occurred, then in the 2018/2019 water year the storages would have had an extra 185 GL (Scenario P2-P10) or 90 GL (Scenario P2-P9). The agreed model is capable of using the increase in the water in the storages to perform further calculations as to the increase which would have resulted for the monthly allocations to each water entitlement holder in New South Wales. Apart from Scenario P2 (+3%), Mr Podger and Mr Barma have only undertaken this further work for the composite Scenario P2-P10. Mr Podger and Mr Barma have calculated that there would have been an allocation of 1% to each water entitlement holder in the 2018/2019 water year which was +1% higher than the

allocations actually made (0%). The intermediate data which have been calculated by this process includes the storage levels of Lake Victoria. As referred to above, the intermediate data demonstrates that Lake Victoria would have fallen below dead storage had the river operations contemplated by Scenario P10 been undertaken. Error consequent upon changing the assumption about demand There is one aspect of the agreed model’s results for Scenario P2-P10 which the Plaintiffs do not accept. An element in the model is an assumption about the relationship between an increase in monthly allocations to water entitlement holders and a consequent increase in subsequent demand by them. The details and function of this part of the model do not need to be explained further. It is sufficient to know that the model addresses the issue in a way that Mr Podger and Mr Barma agree is appropriate. After the Corrected Second Joint Report was completed Mr Podger was instructed by the Plaintiffs to use the agreed model to perform some calculations using some different assumptions. His results are set out in his Fourth Report dated 6 October 2025. Mr Barma did not participate in this work. One of the new calculations performed by Mr Podger was based on a different assumption about the relationship between an increase in allocations and a consequent increase in subsequent demand. Using the instructed

assumption, Mr Podger has calculated that the Plaintiffs would have received an allocation of +3% in the 2018/2019 water year, not +1% as calculated in the Corrected Second Joint Report. Mr Podger’s calculation based on the new assumption was the occasion for him to make an error which affects the +3% result. There is no dispute that there is an error. In cross-examination Mr Podger worked through the spreadsheet which sits behind the +3% result. He readily accepted that the formula in cell J31 of the “working area” tab is incorrect. Approximately 30 GL needs to be subtracted in the formula to reduce the carryover from the 2017/2018 water year on account of increased demand in that water year. Mr Podger agreed that the error also exists in the other cells in Row 31. He accepted the proposition that his result of +3% allocations was “a bit higher than they in fact should have been”. The +3% result is displayed in cell T52 of the relevant spreadsheet. Despite the error and Mr Podger’s acceptance that +3% is a bit high, the Plaintiffs submit that the calculations in Mr Podger’s Fourth Report provide a basis for departing from the results set out in the Corrected Second Joint Report, including the calculation of +1% allocations to the Plaintiffs in the 2018/2019 water year. They put forward four reasons why that is so. First, the Plaintiffs point out that Mr Podger accepted in

cross-examination that there was an error and that his result was a bit higher than it should be. However, the cross-examination did not attempt to have Mr Podger agree to a detailed recalculation by changing the values in Row 31 to see what happened to the value in cell T52. On other issues, Mr Podger (and other witnesses) were asked to undertake such an exercise whilst sitting in the witness box. One such occasion was when Mr Podger was asked to agree to a recalculation for a corresponding error affecting allocations to Victorian water entitlement holders in the 2019/2020 water year. The Plaintiffs submit that the Defendant has not proved the “precise change” caused by the error in cell J31 and cell T52. The effect of the submission is that Mr Podger’s Fourth Report may still be relied upon because the Defendant has not proved the effect of the error. The problem with this submission is that it is the Plaintiffs who rely on Mr Podger’s Fourth Report as a basis to depart from the result in the Corrected Second Joint Report. The error having been admitted by Mr Podger, if the change consequent upon the error is immaterial, the Plaintiffs must demonstrate it. They have not demonstrated that the error is immaterial, or even submitted that the error is immaterial. They simply say that the effect of the error has not been demonstrated. A further problem with this submission is that

Mr Podger’s Fourth Report was served on 6 October 2025 and Mr Podger was cross-examined on 8 October 2025. I make no criticism of the Plaintiffs for the date upon which the Fourth Report was served relative to Mr Podger’s scheduled cross-examination, but in those circumstances the Defendant is not vulnerable to criticism about a lack of detail in the cross-examination about cell J31 or cell T52. Like the reports which preceded it, the Fourth Report (including its spreadsheets) is complicated. I do not think that the Defendant could fairly be expected to have considered all parts of it by 8 October 2025. Secondly, the Plaintiffs submit that the error in the formula for cell J31 and the other cells in Row 31 can be traced back to Mr Podger’s Second Report dated 27 May 2025, yet the Defendant did not raise the error until Mr Podger was cross-examined on 8 October 2025. In the language in which it is made, the Plaintiffs’ submission about the origin of the error is less than unequivocal, stating that it “seems” to pre-date the Fourth Report. The lack of certitude is mirrored by the Defendant’s concession that that “may” be right. The lack of clarity about the origins of the error is not surprising given the complexity of the relevant spreadsheet and the evolutionary process by which it has emerged. The Defendant says that until Mr Podger prepared his Fourth Report the error did not

make a difference to the +1% result and, it may be inferred, for that reason it went undetected. In any event, the Court is not required to proceed on the basis of an admitted error of this sort because it was not raised earlier. The Plaintiffs do not claim that they will be prejudiced. Thirdly, the Plaintiffs refer again to the Defendant’s status as a wrongdoer and the Plaintiffs’ difficulties in discharging their burden of proving loss. For the reasons already given, that is not the correct view of proof of the causation issue. In any event, there is no suggestion that the error in Mr Podger’s Fourth Report was caused by the Defendant’s wrongdoing. Nor does any principle of facilitating proof of the quantum of loss require the Court to proceed on a basis which has been shown (and admitted) to be erroneous. Fourthly, the Plaintiffs submit that it would be appropriate for the consequences of the error to be returned to Mr Podger and Mr Barma so that they may have an opportunity to consider it. This submission is made in response to an invitation by the Defendant for me to examine the spreadsheet which has been adduced into evidence in digital form. The Defendant submits that the error will be corrected by the formula in each of cells J31 through to T31 being amended by adding “-30”. The result will then be displayed in cell T52 which is the cell for the end of the 2018/2019

water year for “GS alloc scenario P2-P10_Q4”. “GS” evidently means general security, being the sort of water entitlements held by the Plaintiffs. In the spreadsheet which forms part of Mr Podger’s Fourth Report cell T52 displays 3%. The Plaintiffs submit that I should resist the invitation. They submit that there is a “potential issue” with the Defendant’s suggested correction to cells J31 to T31, namely that a decrease in the water in storage (-30 GL) will not necessarily lead to a “one-to-one” change to the allocation. However, that is the circumstance which the agreed model is designed to address not a reason why it should not be used. In a general way, the correction suggested by the Defendant (-30) accords with the content of the error which Mr Podger accepted in cross-examination. However, Mr Podger was confronted with the issue in the witness box and his acceptance of the content of the correction needs to be considered with caution. There may be consequential changes which ought to be made elsewhere in the spreadsheet which affect cell T52. Were other issues to be returned to Mr Podger and Mr Barma for further modelling then this issue might be included with them. For the reasons given below it is not appropriate for further modelling to be performed in this case. Suffice it to say for present purposes that when the correction to the spreadsheet is undertaken as the

Defendant has suggested, the value in cell T52 becomes 1%. That is so whether the formula in each of cell J31 through to cell T31 is reduced by 30 or, more accurately, by 29.5. In the context of the matters set out above, including the absence of a submission by the Plaintiffs that the consequences of the error are immaterial, or that there is any potential issue with the Defendant’s suggested correction other than that addressed above, the result of the suggested correction supports the inference that there is unlikely to be utility in returning the issue to the experts. In light of the admitted error, Mr Podger’s Fourth Report does not provide a basis to depart from the results set out in the Corrected Second Joint Report, including the calculation of +1% allocations to the Plaintiffs in the 2018/2019 water year assuming the river operations contemplated by composite Scenario P2-P10. Higher allocation to the Plaintiffs not proved under Scenario P9 It will be recalled that the difference between Scenario P10 and Scenario P9 is that under Scenario P9, 222 GL of water would have been transferred to Lake Victoria using the MIL infrastructure when it became available on 8 September 2018. Given the increase in the quantity of water transferred to Lake Victoria and the earlier time at which the transfers would have been made, Mr Podger and Mr Barma have calculated that the river

operations contemplated by Scenario P9 would have resulted in extra evaporation losses (+9.1 GL) and extra conveyance losses (+13.2 GL) compared to Scenario P0. Despite those extra losses, there would have been a greater quantity of water in the storages of the Murray River system by the end of the 2018/2019 water year (+92.2 GL). Mr Podger and Mr Barma have not calculated whether a 92.2 GL increase in the storages would have resulted in a higher allocation to each water entitlement holder in New South Wales in the 2018/2019 water year and, if so, how much. The Plaintiffs accept that further modelling work is required to calculate what those allocations would have been. They nonetheless submit that it may be inferred on the balance of probabilities that there would have been allocations of at least +1% in the 2018/2019 water year. In support of that submission they make the following points. The Plaintiffs draw on the bookend argument to say that Scenario P9 contemplates river operations by which more water would have been released than that required to match the performance of the observed conditions, so there would not have been a plausible reason to release yet more water. As explained above, the bookend argument is flawed. Even if it is assumed that the quantity of water transferred by the river operations assumed for Scenario P9 is the maximum amount that would have been

transferred by a river operator acting with reasonable care, and that Scenario P9 would therefore have resulted in the minimum additional water which would have been allocated to the Plaintiffs, those assumptions alone do not demonstrate that the minimum would have been more than 0%. Next the Plaintiffs put forward a multi-stage analysis to demonstrate that the change in allocations caused by Scenario P9 would have been +1% or more. The first stage is to say that, because the modelling of the river operations assumed for Scenario P9 has shown that more water would have been released than that required to match the performance of observed conditions at Lake Victoria, “it would be possible” to transfer less water through the MIL infrastructure than the assumed 222 GL with the result that less water would have been lost to conveyance losses. The second stage is to say that the Plaintiffs have calculated that by 31 May 2019 (end of the water year) the assumed 222 GL would have been 50 GL too much. The third stage is that the Plaintiffs have calculated that, if it is assumed that only (222 GL - 50 GL =) 172 GL would have been transferred, then conveyance losses would have been lowered by 20 GL. The fourth stage is that the Plaintiffs have calculated that by avoiding 20 GL of conveyance losses the quantity of extra water in the storages would have been 112 GL (= 92 GL + 20 GL). It

may be inferred that an extra 112 GL in the storages would have resulted in an additional allocation to the Plaintiffs because in Mr Barma’s Report dated 12 December 2024 he calculated that an extra 135 GL in the storages would have increased the allocation to the Plaintiffs by +2%. An extra 112 GL is said to be of similar magnitude to 135 GL and Mr Barma’s previous calculation is said to be a “useful yardstick”. For the purpose of the Court making a finding of fact that the Plaintiffs would have received more water in the 2018/2019 water year, even on the balance of probabilities, there are significant flaws in this multi-stage analysis. First, the initial adjustment to Scenario P9 so that only 172 GL would have been transferred through the MIL infrastructure means that the river operations contemplated by the analysis are not those contemplated by Scenario P9. It is a new hypothetical Scenario which might conveniently be referred to as “Scenario P11”. Scenario P11 is not the subject of submissions about the anterior question of causation. It has not been modelled by Mr Podger and Mr Barma, not even just to calculate whether there would have been an increase in the storages and, if so, how much. The Plaintiffs’ simplistic analysis does not obviate the need for the sophisticated modelling which Mr Podger and Mr Barma have developed. Secondly, the reason given for why the river

operations contemplated for Scenario P11 would have occurred (including the quantity of the reduction below 222 GL) is the subsequently modelled circumstances as at 31 May 2019. Without the benefit of that future information, there is no basis to infer that Scenario 11 is what a river operator acting with reasonable care would have decided to do in June 2018 or at any subsequent time. It is a hindsight analysis. A third problem with this analysis is that it is dependent on the extrapolation from Mr Barma’s calculation of an extra +2% allocation resulting from an extra 135 GL in storage. In his Report dated 12 December 2024 Mr Barma calculated allocations based on instructed assumptions. He subsequently agreed with Mr Podger that a different method of calculation is preferred, namely that described above using the agreed model. The agreed model has been the subject of discussions between the experts, apparently extensive, and adjustments have been made. The agreed model takes account of additional South Australian demand, special accounting, forecast demand and inflows, constraints and resource distribution. There is no evidence about how Mr Barma’s original calculation of increased allocations from an extra 135 GL in the storages compares to calculations carried out using the agreed model. Implicit in Mr Barma’s acceptance of the agreed model and the adjustments made to it is

his view that his original approach is not to be preferred. The Plaintiffs submit that criticism of their use of Mr Barma’s original calculation is “overstated”. They accept that there has been a change in the process by which the experts calculate allocations and that there have been “minor variations” in some assumptions. They submit that there have been no “fundamental” changes. Expressed in these terms it is not possible to give content to this submission. The dispute between the parties relates to the measure of an allocation apparently in the narrow range of 0% to 2%. It may be assumed that changes of that magnitude make a material difference to the position of the individual Plaintiffs and others in comparable positions, but it is not possible to know how the experts’ changes to the process of calculation affect the result of the estimated quantities of water in the storages of the Murray River system and the allocations to holders of water entitlements. At a superficial level more water in the storages of the Murray River system might be thought to lead to higher allocations to the holders of water entitlements, but there are aspects of the system which caution against the uncritical making of any such assumption. The quantity of water in the storages may increase because the holders of water entitlements to whom water was allocated in the previous water year did not

use the water but carried it over to the current water year. To the extent that that happens, the extra water in the storages is not available for further allocation in the current water year. The quantity of water in the storages may increase because the Defendant has called on the Goulburn IVT account (as assumed for Scenario P9). Water from the Goulburn River is allocated exclusively to Victoria so the increase in the water in the storages will not increase the water available to water entitlement holders in New South Wales, such as the Plaintiffs. An exception to this may be where there is an internal spill by which Victorian water is re-allocated to New South Wales which the WLWG at least seemed anxious to avoid in the 2018/2019 water year. Further, in the circumstances which prevailed in the 2018/2019 water year, a third of any increase in the water in the storages had to be allocated to a mandatory reserve and was not available for allocation to water entitlement holders: cl 103 of the Agreement. Some of the other results calculated by Mr Podger and Mr Barma indicate that it is not possible to take a particular quantity of additional water in the storages and draw an inference about whether an increase in allocations to water entitlement holders would have resulted and, if so, by how much. For example, Mr Podger and Mr Barma have calculated that the river operations

contemplated for Scenario P2 would have resulted in an extra 75.2 GL in the storages if it is assumed that the environmental water holders would have acted in accordance with Question 4 and an extra 293.2 GL if it is assumed that they would have acted in accordance with Question 3. Despite the significant difference in the extra water in the storages, Mr Podger and Mr Barma have calculated that there would not have been any difference in allocation to the Plaintiffs in the 2017/2018 water year, in each case +3%. Another example is the calculations for Scenario P2-P10, where the increase in the water in the storages at the end of the 2018/2019 water year would have been 185.1 GL for Question 4 and 213.8 GL for Question 3. The latter increase is greater than the former but Mr Podger and Mr Barma have calculated that the increase in allocations to the Plaintiffs would have been the other way around: +1% for Question 4 and 0% for Question 3. It may be accepted that there are explanations for each of these relative outcomes, but the explanations are not in evidence. Nor is it known how any such explanation might affect allocations to the Plaintiffs under Scenario P9 or Scenario P11. These are just examples. In cross-examination, Mr Podger gave the following evidence: MR PRINCE: “Now, just as a general proposition, simply because there is an increase in storage volume in a

counterfactual scenario does not mean that all of that additional volume in storage will be available for allocation to retail entitlement holders, do you agree with that?” MR PODGER: “Correct.” The Defendant makes the further submission that there are other aspects of Mr Podger and Mr Barma’s modelling which give rise to an inference which is the opposite of that for which the Plaintiffs contend, namely that there would not have been an increase in the allocation to the Plaintiffs if the Defendant had carried out the river operations contemplated by Scenario P9. Given the time constraints, Mr Podger and Mr Barma were instructed to calculate the allocations for the Scenario “that, in your opinion, will result in the largest and second largest counterfactual allocations”. Mr Podger and Mr Barma responded to that instruction by selecting Scenario P2-P10 for each of Question 3 and Question 4 “as these provide the greatest surpluses”. Answering Question 4 for Scenario P2-P10 Mr Podger and Mr Barma calculated that there would have been 185 GL more water in the storages at the end of the 2018/2019 water year which would have resulted in an extra allocation to the Plaintiffs of +1% in the 2018/2019. Given the experts’ selection of Scenario P2-P10 and the comparison between 185 GL (Scenario P2-P10) and 90 GL (Scenario P2-P9), the Defendant submits that it may be inferred that the extra

allocations for Scenario P9 and Scenario P2-P9 would have been less than 1%. In New South Wales (and Victoria) the determination of water allocations is rounded down to the nearest integer. The Defendant further submits that there is in any event a degree of uncertainty in the calculation of the allocations which would have occurred had the Defendant undertaken the various counterfactual river operations. Uncertainty arises because the quantity of water in the storages of the Murray River can be seen to be sensitive to the decisions made by environmental water holders in response to the various hypothetical river operations. Even if a finding can be made about which of three suggested environmental hypotheticals is more likely than the other two, there would in reality have been many different alternatives open to the environmental water holders. The results of the modelling are therefore subject to a degree of uncertainty for the purposes of finding on the balance of probabilities whether the Plaintiffs would have been allocated more water. The final observation to be made about Scenario P9 is that the Plaintiffs’ submissions commence by changing Scenario P9 into Scenario P11. Given that threshold change, the Plaintiffs do not actually submit that they would have received a higher allocation of water as a result of the water in the storages of the Murray River system being 92

GL higher in the 2018/2019 water year. Nor do they make any such submission for the composite Scenario P2-P9 where the increase in the storages would have been 90 GL. In other words, the Plaintiffs do not submit that they have suffered loss if river operations were undertaken as contemplated by an unchanged Scenario P9. For all these reasons, the Plaintiffs have not proved on the balance of probabilities that an increase in the storages for Scenario P9 or for Scenario P2-P9 would have resulted in an increase of more than a number rounded down to 0% in the allocations to the Plaintiffs in the 2018/2019 water year. The multi-stage analysis put forward by the Plaintiffs is insubstantial. The reasoning process falls on the conjecture side of the line which marks the outer boundary of permissible inference. [228] Higher allocation to the Plaintiffs not proved under Scenario P10 Whilst Mr Podger and Mr Barma have calculated the allocation to holders of water entitlements if the river operations contemplated by the composite Scenario P2-P10 had been undertaken, they have not calculated the allocation if the water operations in the 2017/2018 water year were unchanged and the water operations in the 2018/2019 water year were those contemplated by Scenario P10. The Defendant’s concession that river operations in accordance with Scenario P2 would have resulted in +3% allocations to the

Plaintiff does not extend to a concession that Scenario P2 would have occurred. I have found that it would not. If it is asserted that Scenario P2 would not have occurred by Scenario P10, the Plaintiffs submit that an inference can be drawn on the balance of probabilities that they would have received more water. The chain of reasoning starts with the proposition that they would have received +2% under Scenario P9 by virtue of the multi-stage analysis set out above. Next the Plaintiffs observe that the increase in the quantity of water in the storages of the Murray River system would have been 196 GL for Scenario P10 which is more than the adjusted quantity for Scenario P9 (which appears to be a reference to 112 GL = 92 GL + 20 GL). The Plaintiffs submit that therefore +3% is “an appropriate estimate” for the increase in the allocation which the Plaintiffs would have received in the 2018/2019 water year under Scenario P10. This reasoning cannot be accepted. For the reasons set out above the starting point of +2% under Scenario P9 is conjecture. The +20 GL adjustment to the quantity of water in the storages for P9 is also not proved, although its inclusion in this part of the Plaintiffs’ submissions appears to be against their interests. In any event, for the reasons given above it is not open to conclude from an inter-Scenario comparison between the relative increases in the

quantities of water in the storages that there would have been a corresponding relative increase in the allocations to the Plaintiffs. Even if Scenario P10 is plausible, the Plaintiffs have not proved on the balance of probabilities that they would have received more water in the 2018/2019 water year if the river operations contemplated by Scenario P10 were undertaken. No further modelling The question arises whether there ought to be some sort of procedure for Mr Podger and Mr Barma to calculate the allocations which would have been made to the Plaintiffs for some Scenario other than Scenario P2 and Scenario P2-P10. The Defendant states that if there were a need for the expert modellers to perform calculations to determine counterfactual allocations in accordance with their agreed methodology for any of the Scenarios which they have already fully modelled, then the Defendant is content for that to occur. The Defendant nonetheless submits that it is not necessary. There are three reasons why further modelling is not necessary and ought not to be permitted. First, the Plaintiffs have failed to prove that the Defendant owed them a duty of care and that any such duty was breached, either in the 2017/2018 water year or in the 2018/2019 water year. The question of causation of loss is therefore hypothetical. Whilst the hypothetical quality of the question does not relieve me of the

obligation to decide it, the principal reason for that obligation is to place the appeal court in the best position finally to dispose of the case at the conclusion of the appeal. Final disposition by the appeal court is preferable to there being a re-trial, especially in a complex case like this one. [229] However, were further modelling to be permitted at this stage a further hearing before me will in all probability be required once that modelling has been undertaken. Whilst a further hearing on a discrete matter is not a re-trial, it would be preferable to have that further hearing after the appeal so that the necessity of the further hearing is first established and it can be conducted in accordance with the judgment of the appeal court. Secondly, for the reasons given above further modelling by the experts cannot be directed to Scenario P9, Scenario B7 or Scenario B2, nor to Scenario P10 when viewed in isolation. In particular, there is no rational relationship between Scenario P9 and the breach alleged by the Plaintiffs. There are other problems with the existing Scenarios. Without a framework defined by a Scenario, Mr Podger and Mr Barma will not know where to start. The third reason why further modelling is not to be permitted is that this is not a marginal case where the evidence falls just short of that which is required to draw an inference that the Plaintiffs would

have received more water. There are complexities, but the case has been prepared in accordance with the usual procedures of the Court and the Plaintiffs’ case rises no higher than conjecture. Summary of the position of the Plaintiffs in the 2018/2019 water year On the assumption that the Defendant breached the duty of care owed to the Plaintiffs by failing to decide in June 2018 to make earlier and greater releases from Hume Reservoir to Lake Victoria and, to the extent that the Defendant considered that some further releases needed to be made, calling on the Goulburn IVT account in June, July and August 2018, the Plaintiffs have not proved on the balance of probabilities that the breach caused them some loss. Loss of opportunity Plaintiffs’ alternative claim Against the possibility of that finding, the Plaintiffs put forward an alternative case in which they seek compensation for loss of a commercial opportunity. The loss is pleaded in paragraph 205 of the Statement of Claim where the particulars include: “loss of the opportunity to receive an increased water allocation”; and “loss of the opportunity to pay lower prices for water on the temporary water market”. As for the first opportunity, the Plaintiffs submit that they had a valuable commercial opportunity to receive an additional volume of water allocated to the water entitlements held by them in New South Wales. They

recognise that they must prove on the balance of probabilities that the commercial opportunity had some value, whether it be a non-negligible value as described by the plurality [230] or a substantial value as described by Brennan J in Sellars v Adelaide Petroleum NL. [231] They submit that they are able to satisfy that requirement by virtue of the extensive evidence about the alternative operational decisions available to the Defendant, the preferability and lower loss rates of those alternatives compared to overbank transfers and the additional volume of water in the storages which would have resulted. In particular they rely on the evidence that 33% of water transferred from Hume Dam to Lake Victoria is lost when the transfer is overbank compared to 6% when the transfer is within the channel capacity of the Barmah Choke. At the most basic level they submit that they prove loss of a valuable commercial opportunity simply by proving that water was lost to the storages in the 2018/2019 water year because overbank transfers occurred. They point out that the Report prepared in 2024 by Mr Korn includes a calculation of the quantity of water lost in the Forest from the overbank transfers between 30 August and late-December 2018. Mr Korn’s Report shows that 135 GL was lost after allowance is made for the losses which would have occurred in any event from transferring water within

the channel capacity of the river. The Plaintiffs submit that the evidence establishes on the balance of probabilities that there would have been additional water allocated to holders of State water entitlements. Expressed as an alternative, the Plaintiffs submit that the evidence is sufficient to show that there was a substantial prospect that additional water would have been allocated to the holders of State water entitlements even if there is uncertainty about what a river operator acting with reasonable care would have done. The Plaintiffs submit that the High Court’s decisions in Sellars v Adelaide Petroleum NL and Badenach v Calvert [232] support a finding that the Plaintiffs lost a valuable commercial opportunity even if they cannot prove on the balance of probabilities that additional water would have been allocated to them. Defendant’s submissions For the purposes of determining compensable loss, the Defendant submits that the Plaintiffs cannot be said to have lost the “opportunity” to receive higher water allocations or to pay lower prices for water on the temporary water market. By characterising their loss as an opportunity, the Plaintiffs are attempting to dilute the requirement for proof of causation of loss on the balance of probabilities. The Defendant submits that this case is like that considered by the High Court in Badenach v Calvert where the loss of chance

argument was rejected because the plaintiff failed to prove on the balance of probabilities what the testator would have done had he been properly advised by the solicitor. The case is not like Sellars v Adelaide Petroleum NL where the plaintiff succeeded by proving on the balance of probabilities that Pagini would have entered into the contract with the plaintiff. The Pagini contract was itself a valuable commercial opportunity even though it was more likely than not that the conditions precedent to profitable performance would not have been fulfilled. There was still a non-negligible (substantial) chance. The Defendant further relies on Tabet v Gett where Kiefel J said the commercial interest which is lost must readily be seen to be of value itself and that the lost chance can be regarded as an item of property. [233] The Defendant submits that it cannot be said that but for the assumed negligence of the Defendant the Plaintiffs would have obtained an opportunity to receive higher water allocations. The Plaintiffs are to prove a counterfactual under which they would have received additional water. Uncertainties about the counterfactual are to be resolved as part of the Plaintiffs’ attempt to prove causation of some loss. Principled approach As explained in the Judgments in Sellars v Adelaide Petroleum NL, [234] if someone has a commercial opportunity which itself has value,

compensation will be ordered if the defendant unlawfully causes the opportunity to be lost. In the first instance, the principle directs attention to the nature of the situation which is said to be an opportunity. The situation must offer a prospect of acquiring a benefit that someone wants to acquire. If the prospect is substantial, not merely speculative, then the situation is an opportunity which itself has value. Kiefel J’s reference in Tabet v Gett to the opportunity being regarded as property reflects the nature which an opportunity must have for its loss to be compensable. So too does Brennan J’s reference in Sellars v Adelaide Petroleum NL [235] to the market for speculative shares. Is the opportunity the sort of thing that someone would pay for? Would an opportunity of that nature increase the value of a business? For a case to be conducted fairly the plaintiff must identify in its pleading the opportunity which it claims to have lost and it must do so with sufficient particularity to expose the case on causation and quantification of the loss. The plaintiff must prove on the balance of probabilities that the opportunity had the nature of something which itself had value and that in the particular case the opportunity had a value which was non-negligible or substantial. The minimum value which must be proved on the balance of probabilities has also been described as

more than speculative, [236] more than 1 percent [237] and beyond merely theoretical. [238] The plaintiff must also prove on the balance of probabilities that the defendant’s unlawful conduct caused the plaintiff to lose the opportunity. If the plaintiff can prove those things it is entitled to compensation for loss of the opportunity. Fairness then requires that the quantification of the loss be determined having regard to the possibilities and probabilities. [239] It is important to identify with precision the opportunity which the plaintiff says it has lost. [240] Only then is it possible to determine whether the opportunity has the nature of something which itself has value. The precise identity of the opportunity also informs the determination of the question whether the defendant’s unlawful conduct caused the opportunity to be lost, and whether in the particular case the opportunity had a value which was non-negligible or substantial. It will also inform the determination of the quantum of the loss because different opportunities, even different opportunities in relation to the same subject matter, are likely to be subject to different possibilities and probabilities. The Plaintiffs had a commercial opportunity to take additional water In the Statement of Claim the Plaintiffs allege that they lost the opportunity to receive an increased water allocation. As such, the

alleged opportunity was a creature of statute. The statutory framework needs to be understood to know whether the Plaintiffs had an opportunity and, if so, the nature of the opportunity. Throughout the period relevant to this case the Third, Fourth and Fifth Plaintiffs each held water entitlements issued under the NSW Statute. Chapter 3 of the NSW Statute establishes in New South Wales a scheme for water management which is centred on water access licenses issued under Pt 2. In terms which are simplified but sufficient for current purposes, it is an offence for someone to take water from a water source such as the Murray River unless he or she holds an access license. Under s 56(1) an access licence entitles the holder to a specified share in the “available water” from a water source, and to take water in accordance with the details set out in the licence (times, rates, circumstances, locations). Section 57 provides for different categories of access licences of which the pertinent example is the regulated river (general security) access licence. Section 58 provides a regime for prioritisation between different categories of access licences. For example, the regulated river (high security) access licences “have priority over” the regulated river (general security) access licences. Section 59(1) relevantly provides: 59 Available water determinations (1) From time to time, the

Minister may, by order in writing, make either or both of the following determinations (an “available water determination”)– (a) a determination as to the availability of water for one or more categories or subcategories of access licences in relation to one or more specified water management areas or water sources, (b) [addresses circumstances of severe water shortages or extreme events not presently relevant]. In practice access licences describe the share in the available water as a specified number of megalitres per water year. In New South Wales the water year has a one-month lag behind the Defendant’s water year and runs from 1 July to 30 June. Generally every fortnight, the Minister makes an available water determination under s 59 which incrementally increases the available water for the water year. For example, on 1 July 2017 the Minister made an available water determination which was 11%. The determination meant that the holder of an access licence for a 100 ML share in available water became entitled to take 11 ML in accordance with the details in particular the access licence. On 17 July 2017 a further available water determination was made which was 13%, which meant that the water which the holder of the 100 ML access licence was entitled to take increased to 13 ML. Each successive fortnight a further available water determination was made which increased the

available water (or sometimes kept it the same). The last available water determination for the 2017/2018 water year was made on 15 May 2018 which was 51%. On 1 July 2018 the Minister made an available water determination for the new water year which was 0%. The Minister made a further 20 available water determinations in the 2018/2019 water year, all of which were 0%. Each available water determination made by the Minister depends upon the water in the storages of the Murray River system at the time, and how much of that water is allocated to New South Wales under the provisions of the Agreement. The Minister’s determination depends on other things, such as a stated assumption about future inflows for the rest of the water year. Both parties submit that the quantity of water in the storages is “deterministic” of the water access determination next made by the Minister, although that does not mean that more water in the storages will always result in a determination that more water is available. There is no suggestion that the Minister has some form of discretion which might intrude upon the orderly allocation of water in the storages to the holders of water access licences. Holding an access licence entails expense. Some fees are paid annually which are fixed in the sense that the fees are payable irrespective of the quantity of water determined to be available and then taken

by the holder of the access licence during the water year. Some fees are variable. Water access licences have attributes which are similar to real property. The Minister keeps a register (s 71). Access licences may generally be transferred (e.g. s 71M) and devolved (s 72). If the public interest requires, an access licence may be compulsorily acquired upon payment of compensation for the market value of the access licence (s 79). There is a market for the sale of access licences. There is also a market to lease access licences. For the term of a lease the tenant receives the entitlements specified in s 56 but also the risk as to future determinations of available water. The tenant is ordinarily required to meet the expense of holding the access licence for the term of the lease. The price paid to buy or lease depends on the category of the access licence and its prioritisation under s 58. A lease of an access licence is not the same thing as a purchase of water which has already been determined to be available but not yet taken by the holder of the access licence. That sort of transaction is described in the documents as the purchase of “temporary water”. Sometimes it is referred to as the purchase of an “allocation”. The holders of access licences are commonly those who carry on the business of irrigated agricultural production, but not always. Access licences may be held by

town water utilities, other utilities, industrialists and environmental water holders. Like real property, there is also a market for people to hold access licences as investments. Within this framework, holders of a water access licence like the Third, Fourth and Fifth Plaintiffs are correctly viewed as having a chance, or an opportunity, to take water from the Murray River system. The whole point of holding an access licence is to have that opportunity. The water access licence gives a statutory entitlement. The entitlement depends upon the “available water” which is periodically determined by the Minister. The determination may be 0%. Thus, the entitlement is to an uncertain quantity of water. Given that the quantity of water in the storages is deterministic of the Minister’s determinations, the Plaintiffs’ opportunity to take water is dependent on the quantity of water in the storages. The Defendant’s submission that the Plaintiffs did not have an opportunity does not pay sufficient attention to the statutory context. The nature of the opportunity means that it has value in itself. The existence of markets for sale, lease and investment amply demonstrates the inherent value of the statutory entitlement, as does the express statutory provision for the payment of compensation upon compulsory acquisition. Specifically, the value of the opportunity is demonstrated by the fact

that for an access licence with higher priority, to receive an allocation of water under s 58 is more expensive. Inherent value is further demonstrated by the fixed-fees paid by holders of access licences even though they may not receive any water. Given the nature of the Murray River system and the terms of the entitlement under s 56, at any given time the Plaintiffs’ opportunity to take water was limited to that which resulted from the Minister’s determination following upon the vicissitudes of the Murray River system, including low rainfall, evaporation and conveyance losses. It may be argued that the vicissitudes included the operational decisions made by the Defendant, such that the Plaintiffs had no more than an opportunity to take water as was made available by the Defendant’s operational decisions whatever they were. I do not consider that to be the correct way to view the Plaintiffs’ opportunity. The functions of the Defendant pertinently included conservation of water as was made plain by, for example, cl 4(2) of the O&O Document. The nature of the Plaintiffs’ lost opportunity only arises for consideration in the context of the Defendant owing the Plaintiffs a duty of care to protect them from economic loss and further that the Defendant made operational decisions in breach of that duty. In that context, the Plaintiffs had an opportunity to be allocated water from the

Murray River system as determined by the quantity of water in the storages operated by the Defendant with reasonable care to protect the Plaintiffs from economic loss. In the premises the Defendant caused the loss of the opportunity One further layer of specificity is necessary because the Plaintiffs understandably do not allege that the Defendant caused them to lose their access licences. Their case is to be understood as a claim for compensation for loss of the opportunity to take a share of any additional water which would have been available had the storages been operated by the Defendant with reasonable care as opposed to the way the Defendant in fact operated them. It follows from the context that the Defendant owed the Plaintiffs a duty of care and that it was breached, and from the precise identification of the opportunity which the Plaintiffs lost, that the loss of the opportunity was caused by the Defendant’s breach. Plaintiffs have not proved that the opportunity had a non-negligible or substantial value Although the opportunity had the nature of a valuable commercial opportunity the Plaintiffs have not proved on the balance of probabilities that the opportunity had a value which was non-negligible or substantial in the 2018/2019 water year. That conclusion follows from the findings above about the Plaintiffs’ primary case on causation. There is no sufficient

articulation of the counterfactual river operations for a finding about what a river operator acting with reasonable care would have done. Nor has a rational relationship been demonstrated between the assumed breach and the hypothetical river operations contemplated by Scenario P10 and Scenario P9. There is no basis for a finding on the balance of probabilities that there may have been more water in the storages and by reason of that more water may have been allocated to the Plaintiffs’ access licenses had the Defendant’s assumed breach not occurred. The case is not one where some loss may have been caused but probably not. On the evidence, the proposition that there may have been a higher allocation had the Defendant done something differently does not rise above speculation. That is not sufficient for a finding that the Plaintiffs lost an opportunity which had some value. [241] The Plaintiffs’ submission that they prove that the lost opportunity had some value simply by proof that the overbank transfers resulted in some water being lost in the Forest cannot be accepted. It may be accepted that Mr Korn’s 2024 Report shows that 135 GL was lost due to the overbank transfers in the 2018/2019 water year. Apart from allowing for conveyance losses which would have been incurred in any event, the Report does not address any counterfactual. The losses actually suffered in the Forest

is only one part of the equation. The opportunity which is the subject of the claim, and the only opportunity which it can be said was lost by Defendant’s breach, was to receive a share of any additional water which would have been available had the storages been operated by the Defendant with reasonable care. The value of that opportunity is not demonstrated without reference to a multifaceted counterfactual. At the very least, consideration needs to be given to the water which would have been lost when overbank transfers subsequently become necessary and the extra water which would have been lost to evaporation if water was transferred to Lake Victoria earlier than was in fact done. There may be other considerations relating to the water in the storages of the Murray River system. In each instance, consideration also needs to be given to the effect on allocations which may or may not have followed in accordance with the process of the Minister’s determination of available water. The problem confronted by the Plaintiffs in this case is similar to that in Badenach v Calvert. That case involved a complex question about what would have happened had the defendant acted with reasonable care, but it was not as complex as the present case. Mr Calvert failed to prove on the balance of probabilities that events would have occurred which would have secured a better outcome for him. Like

the Plaintiffs, Mr Calvert sought to overcome the problem by alleging that he lost the opportunity of a better outcome. The argument was rejected. The plurality said: [242] “It remains necessary to prove, to the usual standard, that there was a substantial prospect of a beneficial outcome. This requires evidence of what would have been done if the opportunity had been afforded. The respondent has not established that there is a substantial prospect that the client would have chosen to undertake the inter vivos transactions. Therefore, the respondent has not proven that there was any loss of a valuable opportunity.” The same approach was taken by Gordon J. [243] The position is the same in this case. The evidence does not establish what would have been done had the Defendant not breached the assumed duty. The Plaintiffs have not proved on the balance of probabilities that there was a substantial prospect of a better outcome. Centred as it is on the mere fact that water was lost in the Forest, the loss of a better outcome for the Plaintiffs remains is theoretical. Other parts of the loss of opportunity case The above analysis of the lost opportunity addresses the claims by the Third, Fourth and Fifth Plaintiffs, each of whom had an opportunity which took its nature and content from Part 2 of Chapter 3 of the NSW Statute. The same analysis applies to the Second Plaintiff even

though his commercial opportunity to take a share of additional water was one legal step further removed from the quantity of water in the storages. Mr Doyle did not hold an access licence under s 56 but he was party to a contract with MIL which did hold a bulk general security access licence. Mr Doyle held 686 units under his contract with MIL which entitled him to receive from MIL an amount of water which corresponded to MIL’s entitlement to receive from the State. Although one legal step further removed, there is nothing in Mr Doyle’s position to distinguish the opportunity lost by him under the MIL contract from the opportunity lost by the Third, Fourth and Fifth Plaintiffs. I am satisfied that the same analysis also applies to the First Plaintiff even though its commercial opportunity to take a share of additional water was two legal steps further removed from the quantity of water in the storages. The First Plaintiff did not hold an access licence under s 56 nor was it party to a contract with MIL. Up until 31 March 2018 it was party to a lease of a property from third parties who had a contract with MIL under which they held 612 units. The landlords’ 612 units were included in the leased property. Pursuant to the terms of the lease the First Plaintiff was entitled to receive the whole annual allocation available from MIL. After the expiry of the lease the First Plaintiff

had a verbal leasing agreement with the third parties for the continued use of the 612 units. The terms of the verbal agreement are not in evidence but in the wake of the previous written lease it may be inferred that there was no change to the First Plaintiff’s entitlement to receive water. Although two legal steps further removed, there is nothing in the First Plaintiff’s position to distinguish the opportunity lost by it with respect to the leased units, either before or after the expiry of the written lease on 31 March 2018. The First Defendant had access to further water under an arrangement with Mr Doyle’s wife. Ms Doyle did not hold an access licence under s 56. She was party to an arrangement with another private irrigation company called West Corurgan Private Irrigation District under which she held units for 500 ML. There is no evidence about the terms of Ms Doyle’s arrangement but it was “similar” to Mr Doyle’s arrangement with MIL. I infer that Ms Doyle’s opportunity to take a share of additional water had the same nature as Mr Doyle’s opportunity. Ms Doyle is not a plaintiff. She does not claim to have suffered any loss. Rather, Mr Doyle says that the First Plaintiff “had” Ms Doyle’s entitlements from which I understand that the First Plaintiff made use of the water received under Ms Doyle’s entitlements, and would have made use of additional water had it been

received. Although the First Defendant has not been shown to have had a legal entitlement to water received under Ms Doyle’s West Corurgan units, I do not think that that circumstance changes the nature of the opportunity which the First Defendant had to receive additional water. The opportunity still had at its core the statutory entitlement under s 56 as implemented by the s 59 procedure for the Minister to issue available water determinations. Informality amongst the parties, including Ms Doyle, does not undermine the process which governed the actual receipt of water. Loss of opportunity to pay lower price for temporary water Separately to the loss of the opportunity to take a share of additional water pursuant to the access licences described above, the Plaintiffs make a claim for “loss of opportunity to pay lower prices for water on the temporary market”. The Plaintiffs have not directed any submissions to this part of the causation case. The factual context for this part of the case can be stated shortly. Even where an irrigation farmer holds access licences, it is common for extra water to be purchased on the temporary water market. For example, the structure of the business operated by the First and Second Plaintiffs required the systematic purchase of temporary water in addition to the water which they were allocated pursuant to their water access licences (as just

explained). In the 2017/208 water year they purchased 1,071 ML of temporary water for which they paid $128,824. In the 2018/2019 water year they purchased 1,695 ML of temporary water for which they paid $727,449. The average price in the 2017/2018 water year was over three times as high as for the previous water year and the average price paid in the 2018/2019 water year was another three times higher. The alleged opportunity to pay a lower price for temporary water is different to the opportunity based on the statutory entitlement under s 56. The price was determined by the market. The Plaintiffs have not been shown to have had any particular rights in relation to the price. There was nothing about the Plaintiffs’ situation which would be described as an opportunity to pay a lower price, and certainly not one which was a valuable commercial opportunity. Any change to the price which was caused by the Defendant’s assumed breach was simply the natural consequence of less water being available for everyone. There is nothing to distinguish this part of the Plaintiffs’ case from any other claim where the plaintiff is not able to prove on the balance of probabilities that the defendant’s unlawful conduct caused the loss. I accept the Defendant’s submission that reliance on loss of opportunity principles is an attempt to dilute what the law requires for proof of causation for this

confined part of the Plaintiffs’ case. In any event, for the same reasons as just given, the Plaintiffs have not proved on the balance of probabilities that any such opportunity had a non-negligible or substantial value. Unless the Defendant’s breach is shown to have caused a change in allocations, there is no basis to find that it caused a reduction in the water supplied to the market. Same position in Victoria The Plaintiffs all operated their irrigated agricultural production in New South Wales but the Group Members on behalf of whom they bring these proceedings may include some who operated in Victoria. A person’s entitlement to take water from a declared water system in Victoria such as the Murray River is governed by the Victorian Statute. Part 3A of the Victorian Statute establishes in Victoria a scheme for water management which in all material respects is equivalent to that which operates in New South Wales. Under s 33F(1) of the Victorian Statute a water share entitles the holder to take water under the allocation for the share during the water season for which the water allocation is allocated. Section 33AC provides that the Minister must from time to time determine for each water share the amount of water allocated to that share from the water determined to be available. Determinations as to availability are made under s 64GB. There are some differences between the

two regimes. For example, there is uniquely in Victoria a category of water share called the low reliability share to which no water is generally allocated unless conditions are wet. Despite the differences, there is nothing in the Victorian regime which warrants a different conclusion about the nature of the entitlement of the holders of water shares. They had a valuable commercial opportunity to be allocated more water. However, on the assumed breach in this case the Plaintiffs have not proved that the opportunity had a non-negligible value, let alone a substantial value. Scope of liability – 2018/2019 water year As with the 2017/2018 water year, no submissions have been made by either party about whether it is appropriate for the scope of the Defendant’s liability to extend to the harm which the Plaintiffs alleged was caused by the Defendant’s negligence. I will not address the issue further. Summary of causation in the 2018/2019 water year Even if it is assumed that the Defendant owed a duty of care and that it was breached in the 2018/2019 water year as alleged by the Plaintiffs, the Plaintiffs have not proved on the balance of probabilities that they suffered any loss. Consequences for the Plaintiffs’ case The Plaintiffs submit that their failure to prove that a river operator acting with reasonable care would have undertaken the river operations contemplated for Scenario

P10 or Scenario P9 should not result in the dismissal of the case for the 2018/2019 water year. They submit that “to the extent that the Court finds that an alternative Scenario…would have occurred” Mr Podger and Mr Barma have an agreed method by which the loss caused by the Defendant’s breach can be determined. Given the complexity of the counterfactual river operations, it is submitted that this is an appropriate case for loss subsequently to be determined in accordance with the Judgment of the Court. I do not accept these submissions for two reasons. First, the approach advocated by the Plaintiffs may have been appropriate if they had proved that they had suffered some loss and the deficit in the evidence went to the quantum of that loss. I do not express a final view on such a procedure in such a case because that is not the position achieved by the Plaintiffs. The deficit in the evidence goes to the causation of loss. There is no basis to think that the Plaintiffs might still be able to prove some loss were Mr Podger and Mr Brama to be given other counterfactuals. The contrary seems likely given the experts’ selection of Scenario P2-P10 to calculate the largest counterfactual allocations which resulted in an allocation of only 1% in the 2018/2019 water year. The Plaintiffs’ approach would merely permit them to continue speculating. Secondly, the Court is not in a position

to find on the evidence that an alternative Scenario would have occurred. It follows that by reason on the Plaintiffs’ failure to prove causation of loss in the 2018/2019 water year the proceedings are for that additional reason to be dismissed for that water year. CAUSATION OF LOSS – 2019/2020 WATER YEAR The causation issues addressed above relate to the Plaintiffs who held water entitlements in New South Wales. It may be recalled that Members in the Plaintiffs’ Group who held water entitlements in Victoria received allocations of 100% of their water entitlements in the 2017/2018 water year. They also received 100% of their entitlements in the 2018/2019 water year. The modelling which Mr Podger and Mr Barma have undertaken for allocations under composite Scenario P2-P10 extends to the allocations which would have been made to holders of water entitlements in Victoria in the 2019/2020 water year. Assuming increases in the storages of the Murray River system in the 2018/2019 water year, the modellers have made the assumption that the extra water for allocation would have been carried over to the 2019/2020 water year. Mr Podger and Mr Barma have calculated that the carryover would have resulted in an increase in allocations to Victorian Water Entitlement Holders from 65% to 69% in the 2019/2020 water year. For the reasons given above, including the finding that the river

operations contemplated by Scenario P10 are implausible, the modelling of counterfactual allocations which include Scenario P10 is not probative to the question whether the Defendant’s assumed breaches of duty caused loss to the holders of Victorian Water Entitlement Holders. The Plaintiffs do not articulate any alternative basis for a finding that loss has been caused to the holders of Victorian water entitlements. For that additional reason, the proceedings are to be dismissed as they concern Group Members who were Victorian Water Entitlement Holders.

MIL ACCESS BREACH Introduction The narratives of the facts which are set out above include references to the MIL infrastructure. As more fully explained below, the MIL infrastructure is a privately-owned network of canals which runs out of the Murray River upstream from the Barmah Choke and then returns to the River at several places below the Choke. Within the capacity of the canals and other infrastructure, it provides a means of bypassing the Choke. The Defendant did not have access to the MIL infrastructure in the 2017/2018 water year nor for the first three months of the 2018/2019 water year. The Defendant did not have access because there was no commercial agreement with the private owner which permitted it. As a discrete part of their case, the Plaintiffs allege that the Defendant’s failure to procure access was a breach of the duty of care owed to the Plaintiffs. The allegation was originally made in relation to both the 2017/2018 water year and the 2018/2019 water year. It is not pressed for the 2017/2018 water year because no loss was caused by the Defendant not having access to the MIL infrastructure at that time. Plaintiffs’ case There is a lack of precision in this part of the Plaintiffs’ case, including as to timing. Annexure B to the Statement of Claim includes the following particular of negligence in paragraph (d)(v): “…the [Defendant] failed to…in planning to

deliver South Australia’s entitlement …purchase access to MIL Infrastructure to deliver the relevant orders and meet South Australia’s adjusted entitlement prior to 10 September 2018 (Ladson Report, Chapter 6.6.3)” Chapter 6.6.3 of Dr Ladson’s First Report contains an analysis of the volume of water which could have been transferred around the Barmah Choke using the MIL infrastructure between 1 June and 10 September 2018. In their Reply Submissions dated 13 November 2025 the Plaintiffs contend that the critical period is that which followed the appointment of MIL’s interim Board on 28 November 2017. It is submitted that the Court should find that a short-term agreement could comfortably have been reached in March to May 2018 but “the [Defendant] itself did not take any active step to procure an interim or short-term agreement between the Interim Board or New Board of MIL and WaterNSW at any point in time prior to the Interim Escapes Agreement being entered into in September 2018”. In oral closing submissions the Plaintiffs said that a river operator acting with reasonable care would have reached an agreement with MIL in April or May 2018. The allegation as ultimately set out in MFI-38 is in the following terms: “The [Defendant] failed to take the reasonable precaution of purchasing access to MIL prior to the start of the water year 2018/2019 [i.e. on 1 June 2018]. Instead of

doing so, the [Defendant] did not take any active step to procure an interim or short-term agreement between WaterNSW and MIL by March to May 2018.” By reason of the formulation in MFI-38 the Plaintiffs’ case is confined to a failure which is alleged to have occurred between the appointment of MIL’s interim Board on 28 November 2017 and 31 May 2018 at the latest. The Defendant’s conduct (including omissions) after the start of the water year on 1 June 2018 is irrelevant to the alleged breach. Although the trailing words in particular (d)(v) and the Reply Submissions appear to contemplate ongoing negligence up until September 2018, consistent with the approach I have taken to the other issues in the case any such extension beyond MFI-38 has been abandoned. The Plaintiffs’ case is limited to the Defendant’s failure to procure an agreement which was interim or short-term. In order to determine this part of the Plaintiffs’ case, it is necessary to understand the MIL infrastructure, the commercial arrangements in relation to the MIL infrastructure and the efforts of the Defendant in relation to obtaining access to the MIL infrastructure prior to 10 September 2018. Background facts MIL infrastructure Starting from Lake Mulwala, the MIL infrastructure is a network of canals through which water can flow along routes which run north of the Barmah-Millewa Forest and return to the Murray

River downstream of the Barmah Choke, either directly or via tributaries (principally the Edward River). The canal network is entirely within NSW. It was previously in public ownership but in 1995 it was privatised. It is now owned by Murray Irrigation Limited. The capacity of the MIL infrastructure is significant. Subject to availability, a total of 3,250 ML/day can be transferred around the Choke by four different routes. Water transferred by the most significant route is released from Lake Mulwala into the Mulwala Canel and then returned to the Edward River upstream from Stevens Weir, from where it can flow on to join the Murray River further downstream. 2,400 ML/day can be transferred by that route. The infrastructure by which water is returned from a canal to the river is called an “escape”. The main route just described uses the Edward Escape. The capacity of Stevens Weir is 2,700 ML/day which must accommodate the flow of the Edward River plus any water returned using the Edward Escape, less any water which is diverted from the Edward River including into Colligen Creek. Commercial framework MIL was formed in 1995. It is an unlisted public company. Its shareholders are irrigators whose farms are located in the area to which water can be delivered by the MIL infrastructure. There are about 1,350 shareholders. At the relevant time, MIL’s CEO was Michael Renehan. He

described MIL’s commercial objectives as follows: “MIL undertakes commercial operations and makes commercial decisions with the aims of, among other things, servicing its irrigator-customers, and promoting the economic success of its irrigator-customer shareholders.” MIL holds an access licence under Part 2 of Chapter 3 of the NSW Statute. In the present context the significance of an access licence is that under s 85 of the NSW Statute the State keeps an account for each licence to which water allocations may be credited and debited. In other words, MIL may own water allocations for its own benefit. The water allocated to MIL may be sold as temporary water. MIL paid $150m for the MIL infrastructure when it was privatised in 1995. The infrastructure includes over 1,500 physical assets, including escapes, regulators and almost 2,800km of earthen canals. MIL has significant annual capital replacement and repair costs. Some of MIL’s costs are variable but it has very significant fixed costs which do not depend on the volume of water moved through the MIL infrastructure. MIL generates revenue by charging customers to move water through the MIL infrastructure. The customers include the local irrigators (i.e. the shareholders). Towards the end of 2015 MIL was charging irrigators $18.50/ML of the water moved. The demand by irrigators for access to the MIL infrastructure varies from

year to year, depending on the conditions. Generally, MIL has significant unused capacity to move water through its infrastructure although it can vary from route to route. Historically, WaterNSW has also been a customer of MIL. Up until 30 June 2016 WaterNSW and MIL were party to a contract under which MIL granted WaterNSW access to use the MIL infrastructure. The contract is referred to as the “Escapes Agreement”. The document in evidence is unsigned, undated and describes itself as “interim” but there is no dispute that it governed the legal relations between MIL and WaterNSW as at December 2015. Shorn of the terminology, the principal terms of the Escapes Agreement were: WaterNSW could request MIL to deliver water by one of the routes referred to above, an example of which is a request to deliver water at the Edward Escape through which the water would then flow into the Edward River and from there over Stevens Weir and on to the Murray River; WaterNSW would pay MIL a fee per megalitre, commencing at $1.50 and thereafter adjusted annually by reference to the Consumer Price Index, such that by 2015 the fee was $1.75/ML; further provisions were made to address access in circumstances where the capacity of the MIL infrastructure was insufficient to deliver the amount of water requested by WaterNSW in which case WaterNSW would not have priority over MIL’s other

customers. Another key aspect of the Escapes Agreement was the provision made for accounting for the water which was requested by WaterNSW and then delivered by MIL. When WaterNSW released water from Lake Mulwala into the Mulwala Canel, the water was debited to the water allocation account attached to MIL’s access licence. When MIL subsequently delivered the water (e.g. at the Edward Escape) it was credited back to MIL’s water allocation account. Provision was made for the water to be measured at each place and by that means to accommodate conveyance losses which occurred in between. Provision was also made for a 10% credit loading by which MIL received an additional benefit from WaterNSW’s use of the MIL infrastructure. Other provisions were included in the Escapes Agreement by which MIL could co-ordinate the movement of water from one of its private canals to another via an intervening river operated by WaterNSW (not the Murray River itself but tributaries to it). The provisions addressed matters such as access, capacity and accounting for MIL’s water allocations. These were important matters for MIL because some of its canals, including the Wakool Main Canal, were not contiguous with other canals and could only be supplied with water from an intervening river. The agreed regime for the accounting of water moved through the MIL infrastructure explains why MIL did not have a

direct legal relationship with the Defendant. As explained previously, the Defendant does not own any water entitlements. It does not have a water allocation account in New South Wales. The Defendant can account for the total amount of water in the system and its allocation between the States, but apart from what it does on behalf of a State it is not able to credit or debit water allocations for entitlement holders in New South Wales. Water allocations in New South Wales are governed by the NSW Statute and administered, relevantly, by WaterNSW. WaterNSW is the only entity which can have an agreement with MIL which includes provisions for the debiting and re-crediting of MIL’s water access account. Where WaterNSW credits water to MIL’s water access account (for example, the 10% credit loading) the credit will be reflected in the Defendant’s accounts as a loss to the available water in the Murray River system. Nonetheless, for the purposes of its river operations the Defendant has historically used the MIL infrastructure by a separate arrangement with WaterNSW. At the Defendant’s direction, WaterNSW requests MIL to deliver water at, for example, Edward Escape by which means the Defendant can transfer bulk water around the Barmah Choke. Fees charged by MIL to WaterNSW are passed on to the Defendant. There is no dispute that prior to 2016 access to the MIL infrastructure was an

integral part of the overall river system and an important option for the Defendant to manage the risk of system shortfall when water had to be transferred from Hume Reservoir to locations downstream of the Choke, including Lake Victoria and South Australia. The bulk transfer of water by the MIL infrastructure was not without costs. The 10% credit loading “paid” to MIL was treated as a deemed loss of water en route. Because of those costs it was more efficient for the Defendant to transfer water down the Murray River, so long as it could be done within the channel capacity of the Barmah Choke. If, however, more water needed to be transferred than was possible within the channel capacity of the Choke there is no dispute that generally less water would be lost by using the MIL infrastructure (including the 10% credit loading) than by transferring the water overbank through the Barmah-Millewa Forest. Due in the main part to the Defendant’s bulk transfers, as at 2015 WaterNSW was MIL’s largest customer. Depending on where it was measured, about 50% of the water which was moved through the MIL infrastructure was moved in response to requests from WaterNSW. Most of that water (about 87%) was bulk transfers being undertaken by the Defendant. On average the Defendant was transferring 118 GL/year through the MIL infrastructure. In the 20 years since privatisation, there were only two

when the Defendant transferred more than 300 GL. Since privatisation the total revenue which MIL had received from the Defendant’s bulk transfers was about $2.6m. MIL’s costs of maintaining the MIL infrastructure far exceeded that amount. Negotiations for access prior to September 2018 The history of the negotiations between MIL, WaterNSW and the Defendant prior to September 2018 is documented by emails, letters, meeting notes and reports. The Plaintiffs also adduced evidence from the CEO of MIL who was responsible for the negotiations on MIL’s side. The Defendant adduced evidence from Mr Reynolds who, for most of the relevant time, was the Defendant’s Executive Director for River Operations and was involved in the negotiations for the Defendant. No witness was called from WaterNSW. There is no dispute about the primary facts. There are disputes about the inferences to be drawn from the primary facts. As a threshold matter, the Defendant submits that the contemporaneous documents are the best guide to what happened not the recollections now given by two of the people involved in the negotiations, Mr Reynolds and Mr Renehan. I accept that submission, especially after watching each witness give evidence and observing the extent to which each claimed to have an actual recollection (rarely) or was simply reliant upon the documents shown in the witness box (usually). The

negotiations occurred over seven years ago and involved multiple interrelated issues. There was some complexity, including as to the different parties interested in the negotiations and the commercial, governmental and operational considerations which underpinned the interests of each party. The chronology is lengthy and includes changes in position and changes in personnel. It is implausible that either Mr Reynolds or Mr Renehan recalls some of the detail about which they were asked. By 2015 MIL was a loss-making entity. It made a net loss of about $10m in the 2015 financial year. Given the volume of water moved through the MIL infrastructure, the charges made by MIL were insufficient to cover its fixed capital costs. In the 2015 financial year WaterNSW transferred just over 250 GL through the MIL infrastructure for which it paid fees to MIL of about $430,000. From 1 July 2015 until 31 January 2016 WaterNSW had transferred about 110 GL for which it had paid fees to MIL of just under $200,000. Almost all WaterNSW’s transfers were made for the purposes of the Defendant’s river operations and almost all of the fees were passed on by WaterNSW to the Defendant. For the 2016/2017 water year the Defendant had budgeted $420,000 for the cost of using the MIL infrastructure. On 22 June 2015 Michael Renehan commenced as the new CEO of MIL. A chemical engineer by education, he brought to

MIL senior management experience in mining, oil, gas, civil engineering and manufacturing. He had no prior experience with water infrastructure and a fairly limited knowledge of MIL’s operations. As an illustration of Mr Renehan’s initial lack of understanding, he did not initially understand that the Defendant was making bulk transfers of water via the MIL infrastructure. In any event, Mr Renehan’s immediate task was to make MIL financially sustainable. He undertook a strategic review. In circumstances where irrigators were paying $18.50/ML for access to the MIL infrastructure and WaterNSW was paying $1.75/ML, by late 2015 Mr Renehan had formed the view that WaterNSW was not contributing to MIL’s capital and future replacement costs. He considered it necessary to renegotiate the terms upon which WaterNSW would have access to the MIL Infrastructure. He reviewed the Escapes Agreement. Pursuant to cl 2.2 MIL had a right unilaterally to terminate the agreement upon giving six months’ notice. Mr Renehan understood that “termination of the Escapes Agreement was the only mechanism available to renegotiate the terms of a new agreement”. Exactly how Mr Renehan came to understand that MIL had to terminate the existing Escapes Agreement in order to negotiate a new arrangement is not adequately explained in the evidence. He said that he received legal advice to that effect although that

seems improbable. Clause 2.2 is a relatively simple and clear provision. It does not make fresh negotiations contingent on termination of the existing agreement, even if that was legally possible. It may have been that Mr Renehan considered it to be in MIL’s tactical interests to negotiate a new agreement at a time when the termination of the existing agreement was imminent although he does not give that evidence. In any event, Mr Renehan anticipated that the six months’ notice period would be enough time to negotiate a new agreement with WaterNSW. On 23 December 2015 Mr Renehan caused MIL to issue a notice pursuant to which it terminated the Escapes Agreement with effect from 30 June 2016. The letter included the following statement: “[MIL] will separately contact the relevant personnel at WaterNSW to discuss the possibility of negotiating a new agreement to replace the [Escapes Agreement].” In February 2016 a “scoping meeting” was held between representatives of MIL and WaterNSW. Both parties said that they wanted to work cooperatively. One of MIL’s representatives was David Leslie who was a Strategic Advisor. MIL informed WaterNSW that it was loss making and wanted to move to a model which would enable it to cover its costs. WaterNSW undertook internal work to understand how much water it had historically moved through the MIL infrastructure and the fees paid. Further

meetings between representatives of MIL and WaterNSW took place in early-March 2016 which Mr Renehan attended. David Harris, who was the CEO of WaterNSW, attended one meeting. One of WaterNSW’s Executive Managers was Adrian Langdon. He was heavily involved in the negotiations with MIL. Despite a request from MIL, no one attended these early meetings from the Defendant. On 18 March 2016 Mr Renehan sent an email to Mr Harris and others at WaterNSW by which MIL made its first offer for a new agreement. The offer only addressed price. MIL offered a fixed charge of $4.356m per year for which WaterNSW would receive guaranteed access for 400 GL plus a variable charge of $7.94/ML for water actually delivered. MIL reserved the right unilaterally to increase prices in the future for all customers, including WaterNSW. The nature of the “guarantee” of access is unclear because MIL appears to have considered that its irrigator customers would have priority over WaterNSW. The price was said to be the same as that then charged to MIL’s other customers. The effect of the offer was that WaterNSW would pay $7.5m if it transferred 400 GL through the MIL infrastructure. MIL’s first offer was its opening offer. Mr Renehan says that at the time it was sent MIL would have been prepared to accept a 30% discount which would have provided WaterNSW with guaranteed access for 300 GL a year with a fixed

charge and a variable rate which would have required WaterNSW to pay $3.8m each year. MIL’s first offer was not received well by WaterNSW. It was viewed as being other than “sensible”. In early-April a consultant to MIL, Greg Baker, spoke to an officer of WaterNSW who did not seem willing to engage in discussions about alternatives, saying that at the proposed prices it would be better for WaterNSW (and the Defendant) not to use the MIL infrastructure. Mr Baker’s subsequent internal notes addressed the alternatives available to MIL if a new agreement could not be concluded by 30 June 2016. One alternative was to offer terms for “casual use” of the MIL infrastructure by WaterNSW which appears to mean a fee per megalitre without any commitment either to use or to make available access. The contemplated fee was more than ten times the $1.75/ML which WaterNSW was then paying. In his evidence in these proceedings, Mr Renehan says that MIL’s underlying commercial principle was that WaterNSW would be treated like MIL’s other customers which, to some extent, is reflected in Mr Baker’s notes. The evidence suggests that it was not until March 2016 that WaterNSW thought it necessary to tell the Defendant that MIL had given notice to terminate the Escapes Agreement and was looking to negotiate new terms. Now that MIL’s first offer was to hand Mr Langdon contacted Mr Reynolds to arrange a

meeting. The Defendant was told about MIL’s first offer. Under MIL’s proposed terms, the cost to the Defendant of moving 100 GL through the MIL infrastructure would increase by approximately 3,000%. The $4.356m fixed charge alone was more than ten times the Defendant’s budget for use of the MIL infrastructure. A total payment of $7.5m would be more than 10% of the Defendant’s entire budget. The Defendant’s operations were funded by the Commonwealth and the States. Part IX of the Agreement set out the governments’ agreement about financing the Defendant. Pursuant to cl 77 of the Agreement the Defendant was required to adhere to the approved budget with only limited flexibility. An increase in the Defendant’s costs of the magnitude contemplated by MIL’s first offer would require approval by the Ministerial Council. On 16 May 2016 a further meeting was held between MIL, WaterNSW and, for the first time, representatives of the Defendant. At that time David Dreverman was the Defendant’s Executive Director of River Management. He attended the meeting. Mr Renehan represented MIL at the meeting. He says that the negotiation was “civil” but it quickly turned to the question of price. He formed the view that WaterNSW and the Defendant regarded a fee of about $18.50/ML as unreasonable in light of the $1.75/ML which was then being paid. Mr Renehan said in cross-examination that he was

unsure exactly why his offer was unacceptable, but the evidence makes clear that the overwhelming consideration for WaterNSW and the Defendant was the price. There can be no doubt that their representatives at the meeting made the position clear to Mr Renehan. The clarity with which WaterNSW and the Defendant communicated their position may be inferred from the fact that MIL bid against itself four days after the meeting. On 20 May 2016 MIL made a second offer. The second offer contained two options. First, MIL offered a fixed charge of $3.267m per year for which WaterNSW would receive guaranteed access for 300 GL plus a variable charge of $7.94/ML. Whilst the first option had a lower fixed charge than that offered on 18 March 2026, as a quid pro quo MIL required the 10% credit loading for the water which WaterNSW credited back to MIL’s water allocation account to be increased to 17%. The second option was for the fixed charge to be reduced below the original $4.356m in exchange for WaterNSW making a capital contribution to the maintenance of the MIL infrastructure. The amount of the reduction and the amount of the capital contribution were still to be worked out. Mr Renehan thought that the capital contribution would have to be more than $10m. When making the second offer MIL stated that it was not willing to offer an option which was simply a variable charge per megalitre or

a “casual rate”. The reason given was that it would discourage WaterNSW from using the MIL infrastructure any more than was necessary, and would not reflect MIL’s costs structure. As 30 June 2016 loomed, MIL offered an interim arrangement whereby WaterNSW would continue to have access to the MIL infrastructure on the terms of the expiring Escapes Agreement “except for price”. If a new permanent agreement was agreed within three months, the terms of the new agreement would be applied retrospectively to WaterNSW’s use of the MIL infrastructure during the three-month period. If no new agreement had been reached the terms of MIL’s “current proposal” would be applied retrospectively. On 31 May 2016 WaterNSW sent an email to MIL in which it rejected MIL’s second offer because it was “highly cost prohibitive”. No counteroffer was made. Mr Renehan was surprised that WaterNSW would allow the Escapes Agreement to come to an end without making a counteroffer. After May 2016 communications between MIL and WaterNSW were limited. At the meeting of the RMOC in June 2016, Mr Dreverman reported that MIL was proposing a tenfold increase in charges and that MIL “was unwilling to extend previous arrangements for a reasonable period”. He said that “until the issue is resolved the Mulwala Canal will not be used”. Mr Dreverman said that modelling had been undertaken to assess the impact of not having

access to the MIL infrastructure and that it would be distributed to interested parties. The RMOC chair subsequently included this information in his report to the BOC. On 30 June 2016 the Escapes Agreement came to an end. In August 2016 Mr Dreverman was on leave and temporarily replaced by Mr Reynolds. Emails between Mr Reynolds and Mr Langdon show that Mr Reynolds sought an update on the negotiations with MIL and expressed concern about not having access to the MIL infrastructure. Mr Reynolds expressed a preference for trying to progress negotiations rather than letting the issue sit. It was Mr Reynold’s view that it was not possible for the Defendant to deal directly with MIL because the Defendant was not able to re-credit MIL’s water access account. Mr Langdon told Mr Reynolds that WaterNSW had tried to negotiate with MIL about other options but that MIL “only offered the one price and indicated they would not move from that”. A meeting of the RMOC occurred on 15 September 2016. It was chaired by a representative of the Commonwealth. A representative of WaterNSW attended, as did representatives of GMW and South Australia. The negotiations with MIL were discussed. The Commonwealth chair informed the meeting that MIL had met with the Commonwealth Department of Agriculture and that MIL would shortly provide some proposals for consideration. Mr Reynolds told the meeting that

“conversations with land managers had been initiated” but there was less concern about access to the MIL infrastructure given the “current wet conditions”. There had been rain at that time which mitigated the Defendant’s need to transfer water to Lake Victoria. The minutes of the meeting record a request by Dr Davis for information about “how the costs for use of the canal were being shared under the terms of the joint venture”. The Commonwealth representative said that when negotiations resume with MIL and “details of the parameters of the costs of the agreement are set, the details would be shared with joint venture members”. That would be the appropriate time for members to become more involved. The representative from South Australia queried supply during summer and Mr Reynolds provided information about operational planning. The RMOC chair subsequently reported to the BOC for its meeting on 20 October 2016. The report included a statement that the RMOC was to be kept fully informed of negotiations and was to be consulted at key decision points. The report also noted that a Commonwealth department was in separate negotiations with MIL about funding upgrades to the MIL infrastructure under a programme called the Private Irrigation Infrastructure Operators Program. The RMOC noted links and opportunities for strategic alignment between the two negotiations. Further information

was to be provided to establish links and maximise benefits for all parties. On 7 December 2016 Mr Renehan sent a letter to Mr Harris in which he proposed a meeting which included the Defendant. Also on 7 December 2016 Mr Harris sent a letter to Mr Renehan in which he proposed a further meeting. It is not entirely clear whether one letter was in response to the other or whether they crossed. Given the number of politicians copied in to both covering emails, it seems likely that some political pressure had been applied to one place or another, or possibly to both. There may have been a further meeting on 13 December 2016. There was a further meeting on 20 December 2016 which was attended by Mr Dreverman from the Defendant and possibly Mr Reynolds who was in the process of replacing Mr Dreverman permanently. As at the time of these meetings MIL’s position had not changed from its first offers and nothing was achieved at the meeting. There was then a pause in negotiations. The evidence does not reveal any material communications prior to June 2017. In early 2017 it was Mr Reynolds’s view that the current conditions including the availability of water from the Menindee Lakes and the IVT accounts were such that the Defendant would not next need to use the MIL infrastructure until December 2017 (depending upon the conditions). He was involved in consultations with other officers of

the Defendant, WaterNSW and forest managers from both New South Wales and Victoria about the potential advantages and disadvantages of overbank flows though the Barmah-Millewa Forest under the current conditions. Officers of the Defendant were also involved in further work by the RMOC on the economic implications of not having access to the MIL infrastructure and the potential allocation of the increased costs sought by MIL. On 30 May 2017 the RMOC held a workshop at which access to the MIL infrastructure was discussed. The notes record Mr Langdon as saying “may need a 12 month agreement initially (short term deal)”. On 21 June 2017 representatives of MIL met with representatives of WaterNSW. The purpose of the meeting is unclear but it may have been to “reset” the negotiations. Mr Renehan attended the meeting together with Rob Liney who was MIL’s newly appointed Commercial Manager. MIL told the meeting that it preferred to have “medium term contracts”, not year to year. The meeting was also informed that Mr Renehan would “not be part of the negotiations moving forward”, to be replaced by Mr Liney. Whilst that may have been MIL’s position as at 21 June 2017 it appears that Mr Renehan continued to play a role. Mr Renehan’s evidence in these proceedings was that Mr Liney did not have authority to make any decisions. To put that in context, it seems likely that Mr Renehan also

lacked authority to make any material decisions. The Board of MIL was evidently the relevant decision-making body which makes sense because the shareholders were local irrigators. At about this time Mr Reynolds was continuing to undertake work on the monetary and non-monetary costs of not having access to the MIL infrastructure, including the impact on the Barmah-Millewa Forest from overbank flows. Mr Reynolds reckoned the monetary costs of addressing the impacts on the Forest to be less than $500,000 and the non-monetary costs through lost water to be about 6-10 GL in most years. For dry years, the lost water was calculated to be more (about 50 GL) because more water seeps into the ground when it is dry. On 13 July 2017 Mr Reynolds attended a meeting of the RMOC at which he presented a paper about the issues arising in the negotiations with MIL. He put forward a proposal for the components of an acceptable outcome. Relevantly, the new agreement would be for a minimum ten-year term, the maximum fixed charge would be $350,000 for delivery of up to 100 GL and there be a variable charge of $4.50/ML for water in excess of 100 GL. MIL would also receive a loss allowance of 10%. Mr Reynolds told the meeting that he did not expect that the proposed position would be attractive to MIL. A protracted negotiation should be expected at least up until the end of the current water year in

May 2018. The RMOC nonetheless endorsed Mr Reynolds’s proposal. The Defendant also kept the BOC informed about the MIL negotiations. The Defendant reported that WaterNSW was leading the negotiations with MIL. The BOC was informed that operational planning for the coming water year indicated that without access to the MIL infrastructure overbank transfers may be required for two to three months in all conditions other than “extreme dry” conditions. These matters were noted by the BOC. At the same time WaterNSW undertook its own analysis of what it was willing to pay for access to the MIL infrastructure. In any given year WaterNSW might move about 20 GL of water through the MIL infrastructure for its own purposes. The evidence includes a draft internal memorandum which explained the considerations which affected WaterNSW’s position. According to the draft relevant considerations included the price WaterNSW was paying for access to infrastructure owned by another private operator, the accounting arrangements between WaterNSW and the Defendant, conveyance losses from using the MIL infrastructure relative to transferring water through the Barmah-Millewa Forest, budgetary considerations and the price which the customers of WaterNSW might be willing to pay if MIL’s higher fees had to be passed on. The draft memorandum included a recommendation that a price above $3.38/ML was not

commercial for WaterNSW. On 11 September 2017 Mr Langdon sent an email to Mr Renehan in which he proposed a further meeting. On 23 October 2017 a meeting was held which was attended by Mr Langdon and Mr Reynolds. WaterNSW made an offer. This was the first time an offer had been made by WaterNSW since MIL had given notice of the termination of the Escapes Agreement on 23 December 2015. WaterNSW offered to pay a mixture of fixed and variable charges which would equate to $3.50/ML for a commitment of 120 GL/year. If WaterNSW moved all 120 GL through the MIL infrastructure, MIL would receive a total of $420,000. The offer also included two components which were said to benefit MIL through the process of re-crediting MIL’s water allocation account when water was returned to the river system. The re-credit was estimated to benefit MIL by approximately 15 GL to which a 10% water rebate was added as a conveyance allowance (e.g. a further 12 GL). When the value of the rebated water and the conveyance allowance were taken into account, WaterNSW calculated that the total value of the offer to MIL would be $1.77m per year. The offer was said to be a 106% increase on the terms which WaterNSW had paid under the terminated Escapes Agreement. On 21 November 2017 Mr Liney sent a letter to WaterNSW by which MIL rejected WaterNSW’s offer. He said that MIL believed that $3.50/ML was too low and

did not reflect the value of the MIL infrastructure and the benefit it could deliver to WaterNSW. He put forward a proposal that discussions proceed on a casual usage basis for which he proposed $35.00/ML. That price was said to compare favourably with the casual use charge which MIL made to its other customers of $45.00/ML. In his evidence in these proceedings Mr Renehan said that he regarded the offer to be a compromise to address the “sticking point” of a fixed charge. On 22 November 2017 another meeting occurred between MIL and WaterNSW. Following the meeting WaterNSW sent an email which attached an analysis of the value to MIL of WaterNSW moving 120 GL in accordance with the terms of the offer on 23 October 2017, compared with another customer moving the same quantity of water in accordance with MIL’s standard pricing. By including the water MIL would receive under the rebate and the conveyance allowance, which was valued at the then market price to buy temporary water ($123.00/ML), the analysis showed that MIL would receive approximately $1.7m more from WaterNSW than it would from its other customers. Mr Renehan saw the analysis. He did not agree with it because he thought the water should be valued at the historic long-term price which was lower than the then market price. MIL’s own internal analysis showed that MIL would receive approximately $0.8m less from WaterNSW

than it would from other customers when a 17% conveyance allowance was brought to account which was apparently part of MIL terms for its other customers. MIL also considered that the terms being offered by WaterNSW were significantly disadvantageous compared to those which MIL had recently negotiated and agreed with Commonwealth and State Environmental Water Holders. MIL was concerned that the environmental water holders might seek to renegotiate if they learned that WaterNSW was receiving better terms. On 28 November 2017 all the members of MIL’s Board of directors resigned. The evidence suggests that the Board resigned to accommodate a restructure of the Board to increase the number of independent directors and to make MIL more democratic. An interim Board took over. Mr Renehan was still the CEO. In his Affidavit dated 3 July 2023 he refers to a document which he calls the Board “Transition Document” which stated that the purpose of the interim Board was to operate MIL through liaison with the CEO, although the intention was to defer any significant decisions where possible. The Transition Document stated that the interim Board would nonetheless need to address the Escapes Agreement. The provenance and status of the Transition Document is unclear. In any event, Mr Renehan says that the interim Board was expected to remain in place until late May 2018 by which time democratic

elections would have been held for a new board. Further meetings occurred in early-December 2017 between MIL and WaterNSW. The Defendant was not involved but Mr Reynolds was copied in on subsequent emails. Guiding principles were agreed between MIL and WaterNSW for further discussions, one of which was a term of ten years plus two five-year options. On 11 December 2017 Mr Liney sent an email to WaterNSW in which he stated that a term of ten years plus options “may need to be discussed with our interim Board as they may wish the future Board approve a contract of this length”. Mr Renehan’s evidence is that the interim Board was not willing to commit to a long-term agreement, an example of which Mr Renehan describes as “over 10 years”. Mr Renehan says that the interim Board subsequently declined to commit to a five-year term. The dates at which the attitude of the interim Board is thus reflected are unclear. On 19 January 2018 Mr Liney ceased employment with MIL. One email said he was “let go”. He was to be replaced in the negotiations by David Leslie who was aware of the previous discussions but was not a “party” to the guiding principles which had been agreed in December 2017. Mr Renehan went on leave on 22 January 2018 until 11 February 2018. The evidence includes a paper which Mr Leslie apparently prepared for MIL’s interim Board on 22 January 2018. The provenance and status

of the paper is unclear. It contained a review of negotiations with WaterNSW and an analysis of the issues. The document addressed the leverage of WaterNSW having regard to the current conditions, including the storage level of Lake Victoria, how that leverage may change in the future, the funds available to MIL with which to continue operations without receiving revenue from WaterNSW, the governmental approval process which would be involved in WaterNSW accepting a significant price increase (e.g. New South Wales Treasury and the Defendant would have to agree) and potential benefits to MIL if WaterNSW would agree to support (or not oppose) reforms by which MIL could in future undertake “water shepherding” which Mr Leslie perceived to be a source of future profits for MIL. Other issues were addressed. Mr Leslie expressed the view that WaterNSW would be unlikely to accept a new agreement for a term of less than three years. He recommended that MIL’s interim Board accept the price most recently offered by WaterNSW as the basis for a new agreement for three years plus a ten-year option. On 24 January 2018 Mr Reynolds sent an email to WaterNSW in which it is said that the Defendant would be willing to agree to a minimum annual payment to MIL of $420,000 plus $3.50/ML for water moved in excess of 120GL. Mr Reynolds put forward the 120GL figure because the Defendant’s analysis showed

that to be the quantity of water typically moved by the Defendant through the MIL infrastructure. On 24 January 2018 Mr Leslie sent an email to WaterNSW part of which said: “Term of agreement: the interim board is unable to enter into a 10-year agreement. While our preference remains a one year agreement, to move past this point we propose an initial term to 30 June 2020 with provision for a ten-year extension…” WaterNSW sent an email the next day which responded as follows: “Term We recognise the respect the desire of the Board to progress a significant matter such as the Escapes agreement, however, given the short nature of the Boards outlook, it does concern us that a longer-term partnership still be achieved.” On 25 January 2018 there was a meeting of MIL’s interim Board. After the meeting, Mr Leslie telephoned another officer at WaterNSW who was involved in the negotiations, Jonathan Dickson. As summarised by Mr Dickson, Mr Leslie said that the Board’s previous desire to have a one-year agreement had been put to one side and that they saw the importance of a long-term relationship. On 2 February 2018 MIL offered to accept $5.00/ML. The offer was for five years plus an extension for a further ten years. Having regard to the price and the other terms, MIL valued the annual benefit to it from the offered terms to be $1,196,000. On the same day as the offer was made Mr Leslie

telephoned Mr Dickson and told him about some of the internal machinations on MIL’s interim Board. He said that the interim Board wanted to resolve the negotiations whilst Mr Renehan was on leave. He named some individuals in MIL’s management who were canvassing their fellow managers for support of an agreement and said that majority support was expected if WaterNSW made a counteroffer. On 6 February 2018 WaterNSW made a counteroffer. It offered to pay a fixed charge of $490,000 for access for 140 GL plus $3.50/ML for excess usage. The offer was for five years plus an extension for a further ten years. Having regard to the price and the other terms, MIL subsequently valued the annual benefit of the offer to be $653,000. On 12 February 2018 Mr Leslie had a conversation with Mr Dickson who then sent an email to others within WaterNSW, including Mr Langdon. Part of Mr Dickson’s stated: “Just caught up with David Leslie. The Board’s decision last week was to not accept our offer, despite having been positive on a number of items. David tells me the core issue remains the majority of the Board seeing their role as short-term and believing they cannot commit to a 5 Year term. There is an EGM planned for March, at which they hope to change the constitution, thereby increasing the number of independent board directors. David specifically asked me to keep our offer alive for several

months, as he thinks a new board will likely see it very differently.” At the end of February 2018 WaterNSW withdrew its offer. On 8 March 2018 a further meeting of the RMOC occurred. Mr Reynold’s report to the meeting included the following: “11. Negotiations with Murray Irrigation Limited (MIL) for WaterNSW and MDBA to utilise spare capacity in the MIL system have again stalled. Following a period of apparent progress in which WaterNSW and MDBA tabled a revised proposal for consideration, MIL advised that the current interim Board had determined that it would not enter into a longer term agreement prior to Board elections which are scheduled for March 2018.

12. Further progress is now dependent on a new MIL Board being established and subsequently agreeing to recommence negotiations. It is unclear how quickly this may occur.” The minutes of the meeting on 8 March 2018 include the following: “14. In relation to access to Murray Irrigation infrastructure, Mr Reynolds informed the Committee that negotiations had again stalled as the interim Murray Irrigation Limited (MIL) board had determined it was not in a position to enter into a long term agreement. It is anticipated that negotiations will recommence following the MIL Board elections scheduled for May 2018.

15. Members discussed options for progressing the Murray Irrigation access to infrastructure including whether there was scope for an interim arrangement with the existing Board of the MIL but were advised that there was little prospect of success.” There is a dispute between the parties about whether it was Mr Reynolds who advised the RMOC meeting that an interim arrangement with MIL had little prospects of success and whether that advice was correct. For the reasons given below, it is clear that it was not Mr Reynolds who gave the advice. It was most likely given by Mr Langdon or another officer from WaterNSW. There is no reason to consider that the advice did not represent the informed and considered view of the officers of WaterNSW who were negotiating with MIL. On 27 March 2018 Mr Leslie sent an email to Mr Dickson in which he made a further offer. The offer included both a fixed charge and a variable rate. The offer contained four sub-options for the breakdown of the fixed charge and the variable rate, all of which were for a term of five years plus an extension of ten years. Mr Leslie said that each of the four options was acceptable to the MIL’s interim Board and CEO. WaterNSW began working through the options. However, in the first week of April 2018 WaterNSW was informed that there was another change in MIL’s negotiating team. It is not entirely clear all that

WaterNSW was told but at the very least it was told that Mr Renehan was taking over the negotiations again. It may also have been told not to deal with anyone at MIL other than Mr Renehan. On 12 April 2018 Mr Renehan sent an email to Mr Harris in which MIL made an offer of $3.50/ML plus a fixed contribution of $437,000. A 10% conveyance allowance was included and the term was to be for five years plus a ten-year option. MIL valued the annual benefit to it from the offer to be $924,000 which was said to be the mid-point between the last two offers. Compared to Mr Leslie’s offers on 27 March 2018, Mr Renehan’s offer was marginally more favourable than sub-option 3. Mr Renehan thought that splitting the difference was a commercially reasonable position for MIL to take to bring the negotiations to a conclusion. It is unclear on the evidence whether the Defendant was aware of this offer at the time. On 2 May 2018 Mr Langdon sent an email to Mr Reyolds as follows: “Andrew David Harris is meeting with Michael Renehan on Friday to discuss the escapes agreement> We are putting a paper together for David today with a couple of options with our preferred value of up to $4.25 but looking at an upper liming fee of $4.78. While we will start between $3.50 - $4.25 and but just trying to get to a final point and just need to confirm with you your upper point. Thanks Adrian” Mr Reynolds replied

on 3 May 2018 as follows: “Adrian I would anticipate that a cost of up to $4.78/ML would be acceptable to Governments. This would be on the basis of delivery of 120GL for the [Defendant] on a five year rolling average with underuse carried forward. I have to reserve the right to confirm the final package through RMOC/BOC (noting that the previous discussion at RMMOC was 100GL @3.50/ML) but negotiations can proceed in good faith based on the $4.78/ML maximum. Regards Andrew” Meetings between MIL and WaterNSW occurred in early-May 2018. On 16 May 2018 Mr Harris sent a letter to Mr Renehan. He referred to extensive negotiations with the Defendant as part of the work required by WaterNSW to respond to MIL’s offer on 12 April 2018. The letter included an offer the main terms of which were $4.00/ML with no fixed contribution plus a 10% conveyance allowance and a cap on a small re-credit for a term of ten years with two five-year options. By pricing the conveyance allowance and the re-credit at the then market price for temporary water, WaterNSW valued the annual benefit to MIL of its offer at $2.42m. Although WaterNSW made the offer on 16 May 2018 it is clear that the Defendant did not become aware that the offer had been made until 24 May 2018 when Mr Reynolds had the exchange of emails with Mr Langdon which is described below. Unaware of WaterNSW’s latest offer, on 17 May 2018 Mr

Reynolds reported to a meeting of the BOC, during which he said: “Just on the MIL issue, so access to MIL infrastructure, those negotiations have stalled. MIL put them on hold while they go through a board election process. I understand that that election should be concluded in the next week or so, and hopefully we’ll then be in a position to re-institute negotiations. We thought a few months ago we were close to a resolution. I’m not so sure that that will be the case again, so we’ll have to wait and see what the new board has to say. Getting access to that infrastructure though is pretty critical to us, given how the season’s panning out and where the water’s likely to be available to us.” When asked about that statement in cross-examination, Mr Reynolds said: Q. “Just focusing on my question, though, in your mind, getting access to the MIL infrastructure by this point in time was critical?” A. “It certainly - having it, gave us greater flexibility, yes.” Q. “But you are telling the Committee not just that, you are telling the Committee, this is the Basin Officials Committee that it’s critical?” A. “Is important, yes, very helpful.” At this time the Defendant’s modelling showed that, depending on future rain, there may be scenarios where overbank transfers of operational water could be avoided if the Defendant had access to the MIL infrastructure. On 24 May 2018 Mr Reynolds

sent an email to Mr Langdon in which he wrote: “Hi Adrian Capacity through the Choke is becoming a more prominent issue with stakeholders and media. I was wondering how David Harris got on with his meeting with MIL a couple of weeks ago. Any sense of what next steps will be and when they might commence? I may get a question about capacity and shortfall issues at Senate estimates tomorrow so am trying to make sure I am up to date. Andrew” Later that day, Mr Langdon replied as follows: “Andrew We met with Michael 2 weeks ago and provided an updated proposal which I will forward to you. We went with $4:00 but a reduced agreed volume and a cap on the re-crediting. The offer was seen by Michael as a step forward, but the reduced volume and cap on the re-credit was to give David a final step forward on getting a deal. Have not heard by from Michael but he was talking about taking it to this months Board meeting so we expect to here back from him by the end of the Month. I think the board meeting is this week. Adrian” In early-June 2018 MIL’s new Board took office. Further meetings between MIL and WaterNSW then occurred, some of which were attended by Mr Reynolds. At about this time Mr Leslie left MIL. One document refers to his departure as “sudden”. Mr Renehan met Mr Dickson at a conference and told him that the new Board would respond to the latest offer in the next ten days,

although Mr Renehan hoped to take a pause in negotiations while he was on leave during July. A meeting of the RMOC occurred on 20 June 2018. Both Mr Reynolds and Mr Langdon were at the meeting (albeit by teleconference in the case of Mr Langdon). The RMOC was informed that negotiations with MIL had recommenced but remained contingent on the new MIL Board establishing a position on an acceptable outcome for MIL. The RMOC was informed that WaterNSW and the Defendant had been developing a revised negotiating position in light of previous discussions with MIL. The RMOC endorsed a budget of $475,000 for access to the MIL infrastructure although approval was still required from the BOC. WaterNSW’s offer on 16 May 2018 was considered by MIL’s new Board in the last week of June. On 29 June 2018 Mr Renehan sent an email to Mr Harris in which he said that the new Board thought that further discussions were required and that the Chair of MIL’s Board would contact the Chair of WaterNSW’s Board. On 9 July 2018 WaterNSW prepared an internal briefing note. As part of the background it stated that MIL had sacked its negotiating team several times and that more recently it had instructed WaterNSW that no communications from MIL’s management were to be trusted unless they came from Mr Renehan. It also stated that there was mistrust within MIL and that MIL was not clear what it really wanted. On

15 August 2018 Mr Reynolds sent an email to WaterNSW asking for an update. The evidence does not include a response. A meeting between the two Chairs occurred on 20 August 2018. An email from WaterNSW’s Chair to Mr Harris on 20 August 2018 said that MIL recognised that there had been many changes of position at MIL’s end, that there had been “board upheaval” and an inability to make decisions. WaterNSW could expect a further proposal from MIL. The Defendant does not appear to have been involved in the negotiations at this time. On 27 August 2018 the Board of MIL agreed in principle to enter into a new Escapes Agreement with WaterNSW. It would be an interim agreement until 30 June 2019 with a view to agreement being reached on a long-term arrangement in the meantime. On 27 August 2018 MIL communicated a further offer to WaterNSW. Apart from the short term, the offer was the same as that made by WaterNSW on 16 May 2018 except there was no cap on the re-credit. The Defendant was informed of the offer and, evidently, the response from WaterNSW. On 6 September 2018 WaterNSW accepted the offer. The new Escapes Agreement was finalised on 10 September 2018. It appears that the Defendant was not consulted about the documentation of the new agreement. Although the new Escapes Agreement had not yet been finalised, on 7 September 2018 the Defendant directed WaterNSW to use the MIL

infrastructure as close to channel capacity as possible. The direction was communicated by the Duty Operator who was Ms McCann. On 15 September 2018 WaterNSW commenced to move water through the MIL Infrastructure for the purpose of the Defendant making bulk transfers from Hume Reservoir to Lake Victoria. Plaintiffs’ submissions Having regard to MIL’s interim Board’s commencing on 28 November 2017 and the commencement of the new Board in June 2018, the Plaintiffs’ essential propositions may be summarised as follows: the Defendant acting with reasonable care would have procured WaterNSW to propose an interim agreement to MIL’s interim Board prior to 1 June 2018; the Defendant did not do that; and on the question of causation, had “such an agreement” been proposed by WaterNSW the likelihood is that it would have been accepted by MIL. The submissions do not address how the Defendant acting with reasonable care would have procured the proposal by WaterNSW other than by what may be inferred from the words “active steps”. In support of the first proposition, the Plaintiffs submit that having access to the MIL infrastructure was important because it provided flexibility for river operations. The Defendant had encountered some difficulties when it had to operate the Murray River system without the MIL infrastructure in the 2017/2018 water year. Specifically, overbank transfers of

operational water had been necessary for the short period at the beginning of October 2017. The Defendant was obviously aware of that event at the beginning of 2018 when it was preparing for the commencement of the 2018/2019 water year. The Plaintiffs submit that by April 2018 the Defendant was aware that access to the MIL infrastructure would be critical to river operations in the 2018/2019 water year in order to avoid overbank transfers. As for procuring that WaterNSW propose an interim agreement to MIL, the Plaintiffs submit that WaterNSW was primarily acting on behalf of the Defendant when negotiating with MIL because the Defendant was the most significant user of the MIL infrastructure. They point out that WaterNSW received extensive input from the Defendant on the negotiations and that the Defendant was required to confirm key terms before an offer was made to MIL. The Plaintiffs also point out that there is a reference in a WaterNSW email about a RMOC workshop in May 2017 at which Mr Langdon was recorded as saying “may need a 12 month agreement initially (short term deal)”. The Plaintiffs submit that the email is evidence that WaterNSW had itself contemplated an interim agreement. As for the Defendant’s failings, the Plaintiffs submit that by December 2017 MIL had made it clear that a long-term agreement would have to wait for the new Board to be elected. They submit

that after the offers in early 2018 the Defendant ought to have considered that there were at least reasonable prospects of success of reaching a short-term agreement with MIL on acceptable terms. The Plaintiffs submit that the Defendant ought to have formed that view “by at least March 2018, and certainly by no later than April 2018”. They emphasise that MIL’s offer in January ($5.00/ML) and WaterNSW’s offer in February ($3.50/ML) were only $1.50/ML apart. On 3 May 2018 Mr Reynolds anticipated that $4.78/ML would be acceptable to the governments. By 20 June 2018 the Defendant had received endorsement from the RMOC to have a budget of $475,000 that would permit agreement to be reached with MIL at a rate between $4.00/ML and $4.75ML. These figures were higher than the $4.00/ML which MIL ultimately accepted in September 2018. The Plaintiffs submit that by May 2018 it would have been obvious to the Defendant that it would face the same difficulties in the 2018/2019 water year as had been faced in the 2017/2018 water year. There were features of the 2018/2019 water year which would make it more challenging, such as the lack of access to the Menindee Lakes. By way of example, the Plaintiffs point out that on 17 May 2018 Mr Reynolds reported to a meeting of the BOC that conditions continued to be hot and dry which put a fair bit of pressure on the system. Mr Reynolds told the BOC

that irrigation demand was staying strong through May and there had been significant pressure on the Barmah Choke. He told the BOC that access to the MIL infrastructure was “pretty critical”. The Plaintiffs submit that despite these matters, Mr Reynolds did not tell the BOC that “MIL had been seeking a short-term interim agreement since the last BOC meeting” on 8 February 2018. The Plaintiffs submit that the Defendant took no active steps to procure an interim agreement between April and September 2018. The Plaintiff points out that the Defendant’s inaction coincided with the five circumstances referred to above in relation to the broader breach of the Defendant’s duty of care in the 2018/2019 water year, including the historically low levels of Lake Victoria. By mid-August 2018 the Defendant realised that bulk transfers needed to be made from Hume Reservoir. The Plaintiffs say that there was a “lack of urgency” by the Defendant in the negotiations with MIL which is “striking”. Defendant’s submissions The Defendant accepts that at all times MIL wanted to enter into an agreement with WaterNSW. However, MIL’s first offer (March 2016) shows that MIL approached the negotiations in an aggressive way. Depending on how much water the Defendant transferred through the MIL infrastructure, the early offers contemplated an increase on the existing fees of up to 3,000% which was dramatic.

The aggressive approach was also apparent from MIL’s unilateral termination of the previous Escapes Agreement. The Defendant submits that the early offers reinforced to the Defendant and WaterNSW that MIL was approaching the negotiations with an unrealistic expectation about price. In terms of dollars per megalitre, the Defendant submits that the offer made by MIL on 21 November 2017 was no better than those made in 2016 when regard is had to the quantity of water which WaterNSW and the Defendant were likely to move through the MIL infrastructure. MIL was still seeking to extract millions of dollars per annum from a new Escapes Agreement. As for the period when the interim Board was in place the Defendant submits that MIL vacillated about whether it was willing to enter into an interim agreement. After WaterNSW’s offer on 16 May 2018 there was no material activity by MIL, first while the new Board became operative and then while Mr Renehan was on leave in July. MIL next requested the meeting between the two Chairs which occurred after Mr Renehan returned from leave. MIL gave its response to WaterNSW’s offer on 27 August 2018 which for the first time provided a basis for agreement between MIL and WaterNSW. The delay in reaching agreement on an interim arrangement was entirely the fault of MIL. The Defendant further submits that the negotiations with MIL were difficult because

the two sides had very different starting positions but that the ultimate outcome was very favourable to WaterNSW and the Defendant. In that context the Defendant urges the Court not to accept the Plaintiffs’ invitation to supervise the merits of the commercial decisions made by WaterNSW and the Defendant during the negotiations. It makes three particular points about why it would be inappropriate to do so in this case, namely the decisions were affected by the financial constraints of a public authority, the undertaking and outcome of the negotiations were the product of bona fide commercial decisions and there were evident personal dynamics in the negotiations including perceived questions of trust. The Defendant makes the further point that the role of the Defendant has to be considered in light of the fact that WaterNSW was an essential part of the negotiations with MIL and had its separate interests in the outcome. The Defendant submits that it is wrong to treat WaterNSW as no more than the Defendant’s agent. It was not a case of the Defendant making a decision and instructing WaterNSW what to do. The negotiations were in substance and not just in form conducted by WaterNSW. The negligence now alleged by the Plaintiffs is not a failure to reach agreement with MIL but a failure to persuade WaterNSW to do so. As WaterNSW was the principal negotiator, it was better placed

than the Defendant to make commercial judgements about how to proceed and it would have been presumptuous for the Defendant to do more than it did. Pleading issue Before turning to the substance of the allegation there is a pleading issue which needs to be addressed. The issue arises because the subject matter of this part of the Plaintiffs’ case has a qualitative difference to the rest of the case. The other allegations of breach arise from decisions which the River Operations Team made in the day-to-day operation of the Murray River system, specifically in relation to making bulk transfers of water from Hume Reservoir to Lake Victoria. The case about access to the MIL infrastructure does not concern the river operations by the River Operations Team. The MIL access case concerns a different level of management within the Defendant, namely the executive leadership. It arises from the commercial relationships between the Defendant and third parties. It concerns the reasonableness of the Defendant’s conduct when conducting those relationships. As with the other allegations of breach, the MIL access case is to be determined on the assumption that the Defendant owed the duty alleged in paragraph 86 of the Statement of Claim. The Plaintiffs rely on the Defendant’s alleged duty to take reasonable care in exercising river operations functions to avoid the risks of harm that a failure

to take care would cause loss to persons in the position of the Plaintiffs. The term “river operations functions” means the functions of the Defendant under the Agreement and s 18E(1) of the Commonwealth Statute which “relate to the operation and maintenance of works connected to the upper River Murray storages”. The Plaintiffs correctly point out that under cll 29 and 30 of the Agreement the Defendant is required to carry out its functions in relation to river operations in accordance with the O&O Document. At the relevant time, the O&O Document included a specific objective in cl 12.9(d) in the following terms: “The Committee advises that in circumstances where water is required downstream of the Barmah Choke that could potentially exceed the maximum regulated flow through the Forest (see section 3.1), a controlled flow may be directed through irrigation channels in New South Wales and Victoria, the Edward/Wakool River system (see section 5.1) or in certain circumstances the Gulf Regulator, and to assist in ‘bypassing the Choke’. Use of these systems should be through discussion with the appropriate system managers (e.g. Murray Irrigation Limited, State Constructing Authorities, Forest managers, Water Liaison Working Group), including agreement on additional losses. The Committee notes that the use of these systems may incur additional costs.” The cross-reference to Section

5.1 of the O&O Document incorporated the purpose specified in cl 5.1(a), namely gaining authorisation from WaterNSW to use the Wakool System into which some (but not all) of the water moved through the MIL infrastructure flows. The Plaintiffs also point out that under s 173 of the Commonwealth Statute the Defendant has the power to do anything necessary or convenient to be done for or in connection with the performance of its functions. By reason of these provisions, the Plaintiffs submit that the Defendant was exercising river operations functions when negotiating with MIL. These submissions are unpersuasive. The definition of river operations functions in paragraph 15 of the Statement of Claim does not apply to all functions of the Defendant but only those which relate to the “operation and maintenance of works” connected with the upper Murray storages, including Yarrawonga Weir. As noted by a footnote in the Statement of Claim, the words of limitation in paragraph 15 make it a subset of cl 29(2)(e) of the Agreement which requires the Defendant to act in accordance with cl 30 (and hence the O&O Document) but only “in relation to river operations”. The term “river operations” is defined in cl 2 of the Agreement relevantly to include the construction, operation, maintenance and renewal of works on, adjacent to or connected to the upper River Murray. At that point the

definitions have run their course and the intention with the words that have been used is to be ascertained from their ordinary meaning. In the context of specifying the relevant functions of the Defendant, negotiations with MIL for access to privately owned infrastructure is not naturally described as the “operation” (let alone “maintenance”) of works. The Plaintiffs point out that negotiating with MIL need only “relate to” the operation or maintenance of works. Like all such formulations, the phrase “relate to” is wide, [244] but there must still be a logical and discernible connection with the thing referred to. [245] In both paragraph 86 of the Statement of Claim and the definition in cl 2 of the Agreement, the thing to which there must be a logical and discernible connection is the “operation of works” connected to the River Murray system. The negotiations about access to the MIL infrastructure did not relate to the operation of any works for which the Defendant was responsible or which the Defendant would operate. In view of the qualitative difference between the subject matter of this alleged breach and the rest of the Plaintiffs’ case there is substance to the pleading issue. It is one thing to contend that a river operator acting with reasonable care would have made a particular operational decision about releasing water for bulk transfers to Lake Victoria, and another

thing altogether to contend that the Defendant acting with reasonable care would have taken a particular approach to commercial negotiations with a third party. However, the Defendant’s pleading objection was raised late and then only faintly. The Plaintiffs are correct to submit that the case was conducted on the basis that the MIL access case was part of the case which the Defendant had to meet. In those circumstances, were I to find that the Defendant failed to take reasonable care when negotiating with MIL I would not dismiss this part of the case for want of pleading. Determination For the reasons which follow, the alleged failure to take reasonable care has not been proved. The Defendant had no need for an interim agreement prior to 1 June 2018 Although it is largely unexpressed, the Plaintiffs’ case is squarely based on the premise that the Defendant had an immediate need for access to the MIL infrastructure in the first half of 2018. Insight into that premise comes from the submission that the Defendant showed a striking lack of urgency in the negotiations with MIL. The Plaintiffs also submit that the Defendant “really needed to get access to the infrastructure because they were facing a dry year”. Subsequent events have proved that it is factually correct to say that the Defendant was facing a dry year. It is now known that the first months of the 2018/2019 water year

were dry and that in August 2018 the storage level of Lake Victoria began to fall from an already low level. It became necessary to transfer water above the channel capacity of the Barmah Choke in order to avoid a system shortfall. The relevance of these facts to the question whether the Defendant breached its duty of care depends entirely on hindsight. This is a fatal defect in this part of the Plaintiffs’ case. The correct approach is to consider the circumstances in which the Defendant was operating at the time the breach is said to have occurred, as made plain by the passage from Gleeson CJ in Rosenberg v Percival which is set out at [598] above. The most important circumstance which needs to be considered is the perception reasonably held of a need for access to the MIL infrastructure at the end of 2017 and prior to 1 June 2018. It is important because the Plaintiffs contend that the Defendant ought to have procured an agreement which was “interim or short-term”. From the outset, the negotiations with MIL focussed on a long-term agreement. For major infrastructure like a canal system which is the subject of high fixed costs (on MIL’s side) and strategic and operational planning (on the Defendant’s side) a long-term agreement made sense. No long-term agreement had been achieved by 28 November 2017 about which the Plaintiffs make no complaint. According to the Plaintiffs,

thereafter negotiation of a long-term agreement became impossible because MIL was operating under the interim Board. For the Plaintiffs to succeed they have to prove that the Defendant acting with reasonable care would have departed from its previous approach and would instead have sought the only agreement which was then achievable, namely an interim agreement. The Plaintiffs’ case is even more ambitious because they have to prove that a reasonable person in the position of the Defendant would have perceived the need to procure the interim agreement immediately. That is because at all relevant times the Defendant was aware that MIL expected to have a new Board in place in May or June 2018. Once that occurred, negotiation of a long-term agreement would once again be possible. The Plaintiffs have to prove that despite that knowledge, the Defendant acting with reasonable care would not have been willing to wait. To use the Plaintiffs’ word, they have to prove that prior to June 2018 a reasonable person in the position of the Defendant would have recognised a sense of urgency. The Plaintiffs submit that when MIL’s interim Board commenced on 28 November 2017 it wanted an interim agreement. Even if it be accepted that the advent of the interim Board was the occasion for entry into an interim agreement (which was not invariably so), it was not of itself a reason for the Defendant to

seek a short-term agreement. No other reason has been identified why the Defendant acting with reasonable care would have immediately considered an interim agreement to be necessary or even desirable. The Plaintiffs are correct to submit that the Defendant was aware that overbank transfers had been necessary in the 2017/2018 water year, but that is not the full story. The Defendant also knew that overbank transfers had not been needed until October 2017. Otherwise, the Defendant had been able to operate the Murray River system uneventfully since it lost access to the MIL infrastructure on 30 June 2016. Even if the Defendant thought that access to the MIL infrastructure would be critical for the operation of the river in the upcoming 2018/2019 water year, there was no rational reason why it needed to procure access prior to the appointment of the new Board in May or June 2018. It is a truism that an interim agreement would give the Defendant more flexibility but not such as would have been regarded as necessary in the short-term. The Plaintiffs are also correct to point out that it was hot and expected to continue to be hot, but that was only one piece of information amongst all the other information which informed the Defendant’s outlook. Contrary to the Plaintiffs’ case, the evidence demonstrates that in early 2018 the Defendant acting with reasonable care would have been

confident that it would not require access to the MIL infrastructure until after MIL’s new Board was in place. In Section 6.6.3 of his First Report, Dr Ladson has included Figure 131 which depicts the Defendant’s historic use of the MIL infrastructure between 1989 and 2022. That figure is set out here: Whilst the Defendant would not yet have known the data from 2018 to 2022, in early 2018 it would have been apparent to the Defendant acting with reasonable care that it was rare for it to require access to the MIL infrastructure before October in any given year. The MIL infrastructure was almost never used by the Defendant in May, June, July and August and only occasionally used in April and September. Access was most unlikely to be necessary until October at the earliest, which is what had just happened in the 2017/2018 water year. The Plaintiffs have not put forward any analysis to show that the Defendant acting with reasonable care would have considered that the 2018/2019 water year might depart from the historic pattern. Emphasising that Mr Reynolds accepted in cross-examination that future use would be “critical” does not supply the deficiency. The Plaintiffs’ do not put forward any analysis of the storage level of Lake Victoria (actual or modelled) or the demands of South Australia or other users (actual or modelled) or any other circumstance which would have caused a

reasonable person in the position of the Defendant to be concerned in the first half of 2018 about its ability to avoid a system shortfall unless it immediately commenced transferring water through the MIL infrastructure. There was little rain in February, March, April and May 2018 but the more pertinent issue was future rain, especially rain after the next water year commenced on 1 June 2018. The Defendant knew that the wettest months of the year all lay ahead which meant that it was most unlikely that a need for access to the MIL infrastructure would become apparent before October. Prior to October, a decision to commence the transfer of operational water above the channel capacity of the Choke would court a high risk of spill. It is only with hindsight that it is now known that June, July and August 2018 turned out to be dry. There is evidence that the Defendant conducted contemporaneous modelling with the Fortran Assessment Model which showed that there was no immediate need to transfer water through the MIL infrastructure and that there would not be any such need until after MIL’s new Board had been appointed. Leaving aside future inflows which conformed to the “wet” scenario, as at 22 May 2018 the Defendant’s modelling showed that the operation of the river would not be constrained by the channel capacity of the Barmah Choke until September 2018. The only exception was

the case where future inflows conformed to the “near average” scenario in which case overbank transfers were modelled to commence at some point in August 2018. Otherwise water was expected to be released at Yarrawonga Weir below, mostly well below, 9,500 ML/day. On 22 May 2018 Mr Bishop emailed the output from that modelling to Mr Reynolds. There is nothing to suggest that at any time before 22 May 2018 the Defendant perceived the conditions differently. This conclusion is confirmed by recalling the actual conditions in which the river was being operated by June 2018, which were the subject of detailed submissions and are the subject of the findings as set out above. I have found that in June 2018 the conditions called for vigilance as to the storage level of Lake Victoria but not so as to be different to any other year, and that the storage level of Lake Victoria was lower than the Defendant was expecting. I have also found that the Defendant was aware that environmental water holders were planning to undertake in-channel watering from mid-July 2018 which would reduce the quantity of water which would reach Lake Victoria from releases from Hume Reservoir. There was presently unused channel capacity at the Barmah Choke. There was no reason to seek immediate access to the MIL infrastructure in June 2018. Without hindsight there is no basis for the premise upon which the

Plaintiffs’ case is based. Given the course of the negotiations which had occurred, including Mr Leslie’s request that the offer from WaterNSW on 12 February 2018 be kept alive until the new Board was appointed, a reasonable approach was simply to wait until the new Board was appointed. There is no dispute that once agreement was reached with the new Board it would be expected to be implemented quickly. For this threshold reason the contention that the Defendant did not act with reasonable care by failing to procure an interim agreement for access to the MIL infrastructure is to be rejected. There are other flaws in the Plaintiffs’ case If, contrary to the foregoing, the Defendant acting with reasonable care would have perceived a need immediately to enter into an interim agreement for access to the MIL infrastructure, the Plaintiffs have not proved that the Defendant failed to act with reasonable care by failing to bring that about by 1 June 2018. There are four reasons why. The Defendant did not conduct the negotiations with MIL First, the negotiations with MIL were not conducted by the Defendant. They were conducted by WaterNSW. The Plaintiffs submit that WaterNSW was acting “on behalf of” the Defendant. The submission may be accepted in the sense that the Defendant did not participate in direct negotiations with MIL, although Mr Reynolds (and before him Mr Dreverman)

attended some of the meetings. There was no representative for the Defendant’s undisputed interests in the negotiations other than WaterNSW. It is also correct in the sense that the Defendant would not be a party to the final agreement even though the access obtained by WaterNSW would be used by the Defendant. However, it is not correct to say that WaterNSW was acting as the Defendant’s agent. WaterNSW had its own independent interests in the negotiations. The fact that the Defendant’s use of the MIL infrastructure was significantly larger than WaterNSW’s use did not negate WaterNSW’s separate interests in using the MIL infrastructure for its own operational purposes. Nor were WaterNSW’s separate interests gainsaid by the fact that the Defendant had input into the approach taken by WaterNSW, even extensive input, and that the Defendant was permitted to confirm key terms. As a matter of substance, WaterNSW undertook an analysis of its own commercial interests to determine what was acceptable to it. The analysis took into account considerations which were irrelevant to the Defendant, such as the price WaterNSW was paying for access to another private infrastructure operator, WaterNSW’s own budgetary considerations and the price which the customers of WaterNSW might be willing to pay. WaterNSW’s analysis produced an acceptable price which was different to that produced by the

Defendant. As the entity responsible for administering water access accounts in New South Wales, WaterNSW was both commercially and legally interested in any agreement about re-crediting MIL’s account when water was returned to the Edward River from the MIL infrastructure which was a central element in the negotiations. As addressed in more detail below, WaterNSW had its own interests in the duration of any new agreement with MIL. As a matter of form, it is true that Mr Harris initially raised a query about the correct counterparty for negotiations with MIL, but it was soon explained. From the outset representatives of WaterNSW attended every meeting with MIL, often in the absence of the Defendant’s representatives. The Defendant was not always copied in on emails between MIL and WaterNSW. The chronological narrative shows that WaterNSW did not always inform the Defendant about the outcome of the meetings, sometimes in important respects. Mr Reynolds had to ask for updates, including at important times such as the period around WaterNSW’s offer on 16 May 2018 and the period leading up to the final meeting between the Chairs on 20 August 2018. The Defendant was not even aware that MIL had given notice to terminate the Escapes Agreement until late-March 2016. All offers to MIL were made by WaterNSW. The fact that WaterNSW sometimes described itself as being engaged “on behalf of”

the Defendant is to be understood as explained above. The final meeting was attended by MIL’s Chair and WaterNSW’s Chair. No one from the Defendant was thought to be required, either by MIL or WaterNSW. On one reading of the email which WaterNSW’s Chair sent to her CEO after the final meeting, there may have been some sensitivity on WaterNSW’s part about the inclusion of the Defendant. The Defendant’s limited role in the negotiations was made clear by Mr Reynolds in cross-examination. In evidence which stood out from much of the rest of Mr Reynolds’s evidence, he was definite in his rejection of the proposition that WaterNSW was merely negotiating on behalf of the Defendant. An example is his evidence in the following passage from the transcript: Q. “And that was because WaterNSW were really conducting the negotiations on behalf of [Defendant] as we saw in that earlier letter?” A. “Not on behalf of. In conjunction with. WaterNSW had an interest in the outcome of the negotiations as well.” Q. “But we looked at the final letter accepting the agreement, and you recall that it said that WaterNSW had been negotiating on behalf of the [Defendant]?” A. “Well, as in the [Defendant] were not at the table for a lot of those negotiations, but the outcome of the agreement was important to both WaterNSW and the [Defendant].” Mr Reynolds subsequently gave the following evidence: Q. “Yes. And

yet at that point in time, you made no attempt to put any form of interim proposal through WaterNSW to MIL?” A. “There was conversations with WaterNSW as to what would happen next. They were leading the negotiation.” Q. “But you don’t seriously say to his Honour that if you had as the [Defendant] wanted to put a short-term proposal to MIL through WaterNSW, that WaterNSW would have refused?” A. “I can’t speak for what they would have done.” Q. “But you’re not –” A. “There was certainly a negotiation in place.” Q. “But you’re not suggesting they would have had any reason to refuse to do what [the Defendant] had wanted at that point in time?” A. “They would have evaluated against their requirements as well for theirs. They probably would have taken it forward.” Q. “They probably. Well, you know they would have. There is no reason why they wouldn’t have?” A. “Well, need to be consistent with what they were prepared to pay as well. They also have customers that operate under that agreement.” Q. “Yes. But the short point is, you made no attempt at that point in time to urge WaterNSW to put to MIL a short-term offer in circumstances where you knew the infrastructure was critical to the operations of the [Defendant] at that point in time?” A. “I disagree with that. I’d had conversations with Adrian Langdon about the progress of negotiations. Adrian was also a member of RMOC, so part of

the discussions that were happening in that forum when I was briefing. So WaterNSW were of an understanding of the [Defendant] position and the importance of moving that forward.” The Plaintiffs’ submissions may reveal scepticism about WaterNSW having a substantive role in the negotiations with MIL and there is some merit in their contention that the Defendant’s submissions overstate the difficulties caused by WaterNSW’s involvement. However, the secondary role played by the Defendant is nonetheless significant because it directs attention to the content of the duty of care which it is alleged that the Defendant owed to the Plaintiffs. The Plaintiffs do not criticise the Defendant for permitting WaterNSW to conduct the negotiations. The language in MFI-38 (“failure to procure”) implicitly accepts that it was reasonable for the Defendant to do so. That must be so when WaterNSW’s primary role in the negotiations was known to the RMOC and evidently approved. It must also be so when WaterNSW would be the counterparty to the final agreement. The Plaintiffs must therefore demonstrate that the Defendant acting with reasonable care would have dealt differently with WaterNSW. The Plaintiffs’ submissions do not identify anything that the Defendant acting with reasonable care would have done differently in its dealings with WaterNSW. There are generalities like “took no real or effective

steps” or “procure an interim or short-term agreement” but nothing specific. The details are important. WaterNSW’s representatives had knowledge of the negotiations which was superior to that of Mr Dreverman or Mr Reynolds. WaterNSW wanted a long-term agreement (see below). In order for the Plaintiffs to prove that the Defendant did not act with reasonable care they need to identify something specific which they say the Defendant should have done and the circumstances which pertained at the time which made it negligent for the Defendant not to have done it, including the knowledge of the Defendant and the attitude of WaterNSW. Absent that specificity, it is not possible for the Court to consider the alleged failure against an objective standard of reasonableness. [246] It is also not possible for the Court to consider whether the Defendant’s negligence caused any loss because the causation enquiry must begin with a clear understanding of what the Defendant acting with reasonable care would have done. In the context of the Defendant not conducting the negotiations with MIL but the negotiations instead being conducted by WaterNSW, the Plaintiffs have not demonstrated a basis upon which the Defendant can be found to have breached the alleged duty of care. The Defendant was subject to the direction of multiple governments Secondly, as a matter of substance the Defendant’s role in

the negotiations was to represent jointly the Commonwealth and State governments which were parties to the Agreement. This is another point of distinction between the MIL access case and the allegations of negligence which are made against the Defendant’s River Operations Team. River operations were allocated to the Defendant as the expert agency to act independently as between the States. The task of obtaining access to the MIL infrastructure was of a different nature. In large part it was an issue about expenditure and funding. As previously explained, the Defendant is funded by the governments of the Commonwealth and the relevant States. Some of the documents refer to a “joint venture” between the governments which is indicative of a common interest. Reference is made above to Part IX of the Agreement which contains the regime for the allocation of the Defendant’s costs amongst the governments. Of immediate relevance is cl 74 which requires the Defendant to prepare annual and forward estimates of its expenses which are ultimately to be approved at the level of the Ministerial Council. Under cl 72 the Ministerial Council is to apportion the Defendant’s costs between the governments by reference to a number of matters including the proportion of the services provided by river operations which is attributable to each State. Clause 75 provides that the governments must pay the

costs allocated to them. Upon receipt, the Defendant must apply funds in accordance with the approved estimates (cl 77). Whilstsoever the demands of MIL contemplated payment of fees which exceeded the approved estimates for the cost of accessing the MIL infrastructure, the Defendant’s participation in the negotiations was subject to the approval and oversight of the governments. The Defendant did not have its own financial interests in the outcome of the negotiations. The reality of the Defendant’s position is illustrated by the fact that the negotiations were handled at a different level within the management of the Defendant and within a different part of the oversight structure set up by the Commonwealth Statute and the Agreement. Operational issues about transferring water from Hume Reservoir to Lake Victoria were addressed within the River Operations Team and were the subject of advice from the WLWG. The negotiations with MIL were handled by Mr Reynolds, the Executive Director of the Defendant’s River Management Division. The negotiations were considered at meetings of the RMOC and the BOC. Had an agreement been reached which required the Defendant to pay fees in excess of the existing estimates, approval would have had to be obtained from the Ministerial Council. It was clear from the cross-examination of Mr Reynolds that he perceived his role in the negotiations to be

that of a representative of the governments and subject to their approval. For example: Q. “And that was within your authority, namely, to put forward a particular figure?” A. “Well, within reason, based on my judgement of the discussions I’d had at RMOC and other places, yes.” Q. “But you had had authority on behalf of the [Defendant] to put forward particular positions?” A. “To put forward a position subject to ratification with RMOC at some point, yes.” Mr Reynolds subsequently gave the following evidence about the RMOC meeting on 13 July 2017: Q. “…Do you see in about point 20 and 21 on the page, that you were seeking to have approved a budget of 475,000 that would permit agreement to be reached at the rate of $4.00 to $4.75 a megalitre?” A. “Yes.” Q. “And that was approval that you obtained at that time?” A. “Well, its endorsement is not approval. The approval ultimately has to come through Ministerial Council.” Q. “Okay, but endorsement that was obtained?” A. “Yes.” The significance of the Defendant’s subservience to the State governments on financial matters is that it too informs the content of the duty of care which it is alleged that the Defendant owed to the Plaintiffs. The Defendant was not acting as a free financial entity. The Plaintiffs have to demonstrate that the Defendant acting with reasonable care would have dealt differently with the RMOC and the BOC.

Again, the Plaintiffs’ submissions do not generally address what the Defendant should have done in that direction. Only one particular criticism is made, namely that on 8 March 2018 Mr Reynolds should not have advised the RMOC that there were little prospects of success for an interim agreement. The relevant part of Mr Reynolds’s report to the RMOC on 8 March 2018 is extracted at [1675] above together with the minutes at [1676] above. Mr Reynolds was cross-examined about the minutes and in particular the advice in paragraph 15 that there was little prospect of an interim arrangement with MIL. From observing Mr Reynolds answering these questions, glancing at the documents as he spoke and qualifying his answers by reference to the papers, it was apparent that he had no actual recollection of the events and that he was doing no more than drawing inferences from the text of the documents as he sat in the witness box. The contemporaneous documents are the best guide and they make clear that it is against the probabilities that it was Mr Reynolds who advised the RMOC that an interim agreement had little prospects of success. The minutes refer to Mr Reynolds giving his report in paragraph 14 but then move on in paragraph 15 to record a discussion amongst the members of the RMOC. The relevant advice was given during that discussion. The minutes do not record who gave the advice. As at

8 March 2018 Mr Reynolds had no knowledge of the recent negotiations with MIL other than what he had been told by the negotiators from WaterNSW, principally Mr Langdon. Mr Langdon was present at the RMOC meeting on 8 March 2018, representing New South Wales. It is implausible that the RMOC wanted to hear from Mr Reynolds about Mr Langdon’s negotiations with MIL when Mr Langdon was sitting in the room. Nor is it plausible that Mr Reynolds would have taken it upon himself to advise the RMOC (including Mr Langdon) that an interim agreement had little prospects of success. On the balance of probabilities it was Mr Langdon who gave that advice based on his direct involvement in the negotiations with MIL. Mr Reynolds was one of the recipients of the advice. There is no reason to find that the Defendant breached its duty of care to the Plaintiffs because of the advice given to the RMOC on 8 March 2018. The Plaintiffs have not proved that there was a failure by the Defendant to act with reasonable care when dealing with the RMOC and the BOC in relation to the negotiations with MIL. The Defendant’s interests stretched beyond the 2018/2019 water year Thirdly, even if before 1 June 2018 the Defendant perceived a need immediately to access the MIL infrastructure, the Defendant still needed to consider the long-term operation of the Murray River system. The Defendant is the statutory body

established to operate the Murray River system long term. The Defendant’s long-term framework is apparent from the Commonwealth Statute and the Agreement, including the Defendant’s role in reviewing the long-term sustainable diversion limits for the river system, the provision for review of the Basin Plan once a decade, the provision for five-yearly review by the Productivity Commissioner and the nature of the general objectives and outcomes in cl 4 of the O&O Document, including long-term management of physical infrastructure such as dams and environmental outcomes which are sustainable. The Defendant’s responsibilities are not intended to be limited to operating the Murray River system during the immediate water year. Consistent with that framework, the Defendant addressed access to the MIL infrastructure at the level of the Executive Director of River Management. River operations fell within the Executive Director’s responsibility and he had a substantive oversight role which including approving the final Annual Operating Plan and authorising overbank transfers. However, his responsibilities were not limited to the immediate operation of the river. Listening to the cross-examination of Mr Reynolds, there was an apparent disconnect between many of the questions asked and the answers given. The questions contained a heavy emphasis on the importance of having access to the MIL

infrastructure to address the immediate river operational needs for the 2018/2019 water year. For example, Mr Reynolds was asked questions about the importance of modelling the operation of the river for the upcoming water year with and without access to the MIL infrastructure. The emphasis on the 2018/2019 water year makes obvious sense for the Plaintiffs in these proceedings because they relevantly sue on behalf of Group Members who, by definition, received or utilised an allocation of water between 1 July 2017 and 30 June 2020. The Plaintiffs’ case is unconcerned with the operation of the river after 30 June 2020. The emphasis on the immediate water year did not make sense to Mr Reynolds. In some instances the emphasis on the immediate water year gave the questions an air of unreality for someone considering the long-term operation of the river. Whilst the documents show that Mr Reynolds was aware of the current and upcoming water years, for him they were only one part of a bigger picture. The disconnect is illustrated by the following: Q. “In the circumstances that you found yourself in as at May of 2018, it was incumbent upon you as the Executive Director of the [Defendant] to push hard for an arrangement with MIL so as you could get access to that infrastructure?” A. “I think it was incumbent on me to manage a negotiation with MIL effectively for an outcome –” Q. “And to

push it hard –” HIS HONOUR: “No, no, no. Finish the answer, please.” Q. “Sorry, Mr Reynolds, what was the end of the answer?” A. “So in getting an agreement with MIL, I felt that it was important that that agreement represented the interests of all water users in the system, and that it in the long term would give a good outcome, not just in any particular year but over a longer term. That was what I was seeking to do.” The long-term operation of the river system called for a consideration of access to the MIL infrastructure beyond the immediate water year. A prominent issue in the negotiations between MIL and WaterNSW was the duration of any new agreement. It became important after the interim Board was appointed. The clear inference arising from the evidence is that WaterNSW wanted a long-term agreement. On 6 December 2017 WaterNSW and (apparently) MIL agreed to five principles for further negotiations, one of which was a term of ten years plus two five-year options for a total of twenty years. Mr Liney’s email on 11 December 2017 indicated possible resistance to a contract of that length, in response to which WaterNSW expressed “concern” and the hope that it would not be an issue. MIL subsequently described the issue as a “point” to be moved past by MIL making a compromise. Despite Mr Liney’s erstwhile reservation, all the negotiations which occurred in 2018 were conducted

on the basis that there would be a long-term agreement when the options were taken into account. There is no evidence that at any time WaterNSW wanted a short-term or interim agreement. The comment attributed to Mr Langdon at the RMOC meeting on 30 May 2017 is the only time the topic was referred to. The comment does not prove a preference by WaterNSW. In any event, after 30 May 2017 the circumstances changed with the appointment of the interim Board. Thereafter WaterNSW was insistent on a long-term agreement. Having regard to its own separate interests, there is nothing to suggest that WaterNSW did not act reasonably in taking that position. There is nothing to suggest that the Defendant’s position was any different. Given its concern for the long-term operation of the Murray River system, there is nothing to suggest that the Defendant acting with reasonable care should have taken a different position, including in responding to the position taken by WaterNSW. The multi-year duration of the new agreement was integral to another aspect of the new agreement, namely the fixed payment MIL was seeking from WaterNSW (and hence the Defendant). At all times a fixed payment was highly desirable to MIL because it had large costs which were incurred irrespective of the amount of water moved through the MIL infrastructure. MIL initially proposed that a fixed payment be made annually

irrespective of the amount of water moved by WaterNSW. By its offer on 23 October 2017 WaterNSW had communicated a willingness to accept a fixed payment but it was tied to the amount of water moved by WaterNSW each year so that the amount of the payment per megalitre was acceptable. WaterNSW (and the Defendant) arrived at the amount of the fixed payment by analysing the amount of water they had historically moved through the MIL infrastructure each year. WaterNSW (and the Defendant) required that the expected annual volume be part of the new agreement and, importantly, that it be averaged over a five-year period so that under-use of the MIL infrastructure in one year would be carried forward across the next four years with an increase in cost. By that mechanism, the cost of the Defendant’s use of the MIL infrastructure would be spread across a rolling period of up to five water years. One water year might subsidise the cost to the years which followed. That makes sense when it is remembered that the Defendant is responsible for the long-term operation of the river. All negotiations in early 2018 were conducted on the basis of the five-year rolling mechanism. The Plaintiffs accept that the impact which an interim agreement might have on the Defendant’s negotiating position for a long-term agreement would have been “in the mix” of the considerations to which the Defendant could

have regard. Having regard to Defendant’s interests beyond the immediate water year, it is not possible for the Court to find that there were short-term considerations which meant that the Defendant was negligent for not seeking an immediate interim agreement during the first half of 2018. It was a commercial and governmental negotiation Fourthly, the Defendant correctly submits that an agreement for access to the MIL infrastructure was a commercial matter. It also included matters of governmental policy. One need only consider the Briefing Note which Mr Reynolds prepared for the RMOC on 13 July 2017 to see the breadth of issues which informed the Defendant’s approach to the MIL negotiations. Amongst other things, the Briefing Note addressed a fee based on future use, the Defendant’s historic use of the MIL infrastructure, an annual fee irrespective of use, the Defendant’s budget for the current year and the next three years, a loss allowance, the losses actually incurred by MIL when conveying water, a credit for return flows, a connection between the Defendant’s use of the MIL infrastructure and a capital upgrade programme run by the Commonwealth, the impact on charges to entitlement holders, the willingness of entitlement holders to pay, the ability to pass on costs to particular users, the general socialisation of the costs across all Murray valley entitlements, the attitude

of the economic regulator in each State, the financial cost of lower yield from under-irrigating crops, different crop types, the price of temporary water, the cost of achieving the same outcomes by alternative means, alternative infrastructure, the cost of mitigating negative impacts of alternative means, water losses resulting from alternative means, environmental impacts of alternative means, the quantification of environmental losses, erosion of the channel capacity of the Barmah Choke, investment in riparian works, MIL’s interests, MIL’s attitude, the benefits to MIL’s customers, prioritisation of the Defendant’s access over that of other MIL customers, cost sharing arrangements between the governments and the need for approval from all the relevant governments. Other matters considered by Mr Reynolds included a potential cross subsidisation by the Commonwealth of the States through combining the negotiations for access to the MIL infrastructure with the subsidised capital upgrade of the MIL infrastructure, the River Operations Team’s immediate and future need for access to the MIL infrastructure and the duration of any new agreement with MIL. Having regard to these matters, on 13 July 2017 Mr Reynolds made a recommendation to the RMOC about an “outcome” which would be acceptable, albeit one which he thought would not be attractive to MIL. The recommendation addressed a

minimum duration for a new agreement (ten years), the maximum fixed fee for a specified amount of water to be rolled forward if not used, a variable fees for excess use, a loss allowance and prioritisation of access for the Defendant. The RMOC endorsed the recommendation although Mr Reynolds’s evidence was that it still needed to be approved by the Ministerial Council. To a limited extent the RMOC’s endorsement (subject to the Ministerial Council’s approval) narrowed the issues which informed the Defendant’s approach to the future negotiations, but agreement for access was still a substantial commercial and governmental matter. In this respect, the RMOC endorsed an outcome. It did not endorse any particular approach for the Defendant to take let alone any particular offer to be made. It remained for the Defendant to participate in the negotiations and to form views about the terms of any proposed agreement. In doing so, the Defendant would still need to have regard to many of the issues which underpinned Mr Reynolds’s recommendation to the RMOC. Although the areas of difference with MIL subsequently narrowed, well into 2018 there were still matters about which agreement had not yet been achieved. Assuming the cap on the re-credits which WaterNSW proposed on 16 May 2018 was not a matter for genuine dispute, there remained disagreement about the minimum term, the fixed fee, the

specified quantity of water to be rolled forward if not used and the variable fee (whether it would apply to all use or only to excess use and, in either case, the rate). The Defendant was still confronted with a negotiation about commercial and governmental issues. There is no suggestion that the Defendant did not approach the negotiations in a bona fide way. In considering all the issues and deciding upon an approach to take, the Court is not in a position to find that the Defendant did not act as it would have done had it acted with reasonable care. That applies both to the terms to be offered to MIL and to the Defendant’s engagement with WaterNSW and MIL. The Defendant’s further submission that there were interpersonal dynamics which affected the negotiations does not take this issue any further. The Defendant seeks to draw inferences from contemporaneous records mostly emanating from WaterNSW. No evidence was given by the individuals who conducted the negotiations on behalf of WaterNSW. Mr Renehan gave evidence but the cross-examination on personal difficulties in the negotiations was limited. Mr Reynolds was one step removed from the interactions which appear to be the basis for the Defendant’s submissions. The references in the contemporaneous documents do not provide a sound basis for any findings about the underlying facts asserted by the Defendant. The Defendant has

not demonstrated that there were personal dynamics which took the negotiations with MIL outside what might ordinarily be the case for commercial and governmental negotiations of the sort which occurred in this case. The Defendant’s budgetary constraints The Defendant puts forward its budgetary constraints as a further free-standing reason why negligence has not been demonstrated. The Defendant submits that it is a public authority subject to budgetary constraints which is a classic instance of a case which the Court will not supervise. This is not a separate issue for the period prior to December 2017 because the position taken by MIL was not capable of acceptance by the Defendant other than by direction from the RMOC and the BOC and, if necessary, the Ministerial Council. After Mr Leslie made the offer in early-February 2018 the negotiations moved to a sphere where the Defendant’s budgetary discretion might have become applicable. Even then MIL was still seeking more than the Defendant had budgeted although the excess began to diminish as the negotiations continued. The Plaintiffs dispute that the Defendant was subject to any financial constraints which would have prevented it from entering into an interim agreement. They point out that by the beginning of May 2018 Mr Reynolds thought that it would be possible for the Defendant to pay $4.78/ML and that by 20 June 2018 the RMOC

had endorsed an agreement up to $4.75/ML. These dates are at the tail end of or beyond the period when the Plaintiffs say a reasonable Defendant would have procured an interim agreement with MIL. Nonetheless, I accept the Plaintiffs’ submission that at some point budgetary consideration ceased to be a reason which would make it inappropriate for the Court to determine whether the Defendant’s failure to procure an interim agreement was negligent. As the Plaintiffs submit, it is common for a precaution against a risk of harm to entail expenditure and the Court may nonetheless find that it would be a failure to act with reasonable care not to incur the expense and to take the precaution. The expense may be taken into account on the question of reasonableness but it is not determinative. [247] In this case the Plaintiffs contend that the precaution which a reasonable Defendant would have taken was procurement of an agreement which would have had a temporary operation only, and which the Defendant would reasonably have expected would soon be replaced by a long-term agreement approved by the RMOC and the BOC. Assuming the interim agreement did not require an immediate payment of a fixed fee beyond the Defendant’s budget (which assumption may not be justified having regard to the offers actually made and MIL’s large fixed costs), the Defendant’s short-term acceptance of a rate per

megalitre might have been accommodated within the Defendant’s existing budgetary constraints even if that rate was higher than would be affordable over the long term. That is especially so during the early months of 2018 when the Defendant would reasonably have expected that it would not immediately want to move any significant quantity of water through the MIL infrastructure. Had the Plaintiffs otherwise demonstrated that the Defendant had failed to act with reasonable care, that conclusion would not be negated merely because the Defendant was a public body which would have to incur expense within its budgetary constraints. Summary of breach The Plaintiffs have not proved that the Defendant breached the alleged duty of care in relation to the negotiations for access to the MIL infrastructure. Causation not proved If contrary to the foregoing the Defendant did not act with reasonable care in relation to the negotiations, the question arises as to whether that breach caused any loss. In accordance with the principles set out above, the Plaintiffs must prove that the acts or omissions of the Defendant which constituted the breach of duty were a necessary condition to them suffering the economic loss for which they seek compensation. Requiring as it does a comparison between the position of the Plaintiffs now and what the position would have been had the Defendant not been

negligent, the inquiry requires a clear understanding of what the Defendant would have done had it acted with reasonable care. The Plaintiffs have not made any submissions on the counterfactual, other than what is implicit in their submissions on breach. The Defendant would have taken active steps and procured WaterNSW to offer an interim agreement by no later than 1 June 2018. Without more, it is not open to make the necessary findings about what specifically the Defendant would have done. Not proved that WaterNSW wanted an interim agreement Even if it is assumed that a person in the position of the Defendant would have taken active steps to request WaterNSW to offer to enter into an interim agreement with MIL, the offer would not have been made unless WaterNSW agreed. As an essential link in the chain of causation for which the Plaintiffs contend, they bear the onus on this issue. [248] It is not something which can be assumed. In the absence of objective facts which give rise to an actual persuasion that WaterNSW was willing to enter into an interim agreement, the necessary finding cannot be made. The Plaintiffs rely upon one objective fact only, namely the reference in the email about the RMOC workshop in May 2017 which recorded Mr Langon saying that a 12-month agreement may be needed. The email has no probative value to the question of WaterNSW’s attitude in early 2018.

The circumstances in May 2017 were different to those which pertained in early 2018. As at May 2017 there had been no offer or other communication from MIL which revealed a willingness to depart from its original price demands which have since been described as “aggressive”. Nor was MIL in the process of changing its structure to implement a new, democratic Board. By early 2018 the parties were for the first time negotiating in the same ballpark and MIL’s new Board was expected in May or June 2018. Although it is not necessary for the Defendant to prove that WaterNSW was not willing to enter into an interim arrangement with MIL there is evidence which supports that conclusion. The pertinent history of WaterNSW’s negotiations are summarised at [1749] above. WaterNSW consistently put forward a long-term agreement and resisted attempts by MIL to consider a short-term agreement. It is most likely that Mr Langdon told the RMOC meeting on 8 March 2018 that there was little prospect of a short-term agreement. There is no evidence of WaterNSW’s operational needs in the early months of 2018 so as to make it necessary to have immediate access to the MIL infrastructure. The attitude taken by WaterNSW in the negotiations suggests that there was no such need. Like the Defendant, WaterNSW was aware that MIL’s new Board was expected in May or June when negotiations for a long-term agreement

would again be possible. On 12 February 2018 MIL had requested WaterNSW to keep its offer alive until it could be considered by the new Board. The Plaintiffs have not proved that WaterNSW would have agreed to offer an interim agreement to MIL even if the Defendant had taken active steps to procure it. MIL’s attitude to an interim agreement If contrary to the foregoing it is assumed that WaterNSW could have been procured to offer an interim agreement, the Plaintiffs submit that MIL would have accepted the offer. That conclusion is said to follow from the fact that MIL’s interim Board wanted an interim agreement. The submission is oversimplified and cannot be accepted in the broad terms in which it is put. The contemporaneous documentary evidence shows a more nuanced position. The interim Board commenced on 28 November 2017. Whilst there were some mixed messages in the Transition Document it essentially contemplated that the interim Board would continue the negotiations for a new Escapes Agreement. In any event, the interim Board did not cause Mr Renehan and the other senior officers to cease participation in the negotiations. In December 2017 Mr Renehan and Mr Liney met with WaterNSW and high-level principles were agreed for the purposes of further negotiations. The summary of the high-level principles which WaterNSW subsequently prepared specified a term of ten years. Whether

or not Mr Renehan or Mr Liney had previously communicated agreement to such a term, on 11 December 2017 Mr Liney sent the email in which he suggested that the interim Board may wish to have an agreement for such a long term approved by the new Board. For a number of reasons, Mr Liney’s email is not reliable evidence of what the interim Board members actually thought at the time. Mr Liney was not a member of the interim Board. The terms of his email were tentative and merely referred to a possibility, not a known fact. The interim Board was made up of a number of individual members who did not always agree with each other, as revealed by subsequent events. Most importantly, the interim Board’s subsequent conduct shows that it was willing to accept a multi-year agreement with WaterNSW which undermines the statement made by Mr Liney on 11 December 2017. After Mr Leslie took over from Mr Liney in January 2018 he made a recommendation to the interim Board that it agree to a three-year term, plus a ten-year option. The recommendation appears largely to have been accepted because on 24 January 2018 Mr Leslie made an offer to WaterNSW of a new agreement for just under two and half years with a ten-year extension. In his email, Mr Leslie said that MIL’s preference was for a one-year term but it was willing to agree to a longer term to progress negotiations. The next day Mr Leslie said

that the interim Board was willing to put aside its preference for a one-year term because it saw the importance of a long-term relationship. On 2 February 2018 MIL put an offer for an agreement for a five-year term plus a ten-year extension. That appears to have been the position of the interim Board up until 12 February 2018 when it appears to have changed its mind, or perhaps some of its members changed their minds. Mr Leslie told WaterNSW that the majority of the interim Board believed it could not commit to a five-year term. However, by 27 March 2018 the interim Board appears once again to have changed its position because Mr Leslie made a further offer for an agreement with a five-year term plus an extension of ten years. After Mr Leslie was in turn replaced by Mr Renehan on 12 April 2018 the interim Board made a further offer, still for five-year terms plus a ten-year option. No further offers were made by the interim Board before it was replaced by the new Board in early-June 2018. In support of their submission that MIL’s interim Board would not have agreed to a long-term arrangement, the Plaintiffs emphasise that on 24 January 2018 Mr Leslie said that the interim Board had a preference for a one-year term. They also emphasise that statements by MIL about being willing to accept a long-term agreement were couched in terms of compromise. Both matters are factually

correct but neither is evidence that the interim Board would not have agreed to a multi-year agreement (plus a long option). In summary, despite Mr Liney’s tentative statement on 11 December 2018 there is no evidence that the interim Board would not have agreed to a multi-year agreement (plus a long option). Between 12 February 2018 and 27 March 2018 it appears that the interim Board was not willing to stretch its agreement to a five-year term, but apart from that discrete period the interim Board was willing to agree to a five-year term or longer. There is nothing in Mr Renehan’s Affidavit which contradicts the documentary evidence. He states in his Affidavit that he recalls that in early 2018 the interim board was not willing to commit to a long-term agreement “(i.e., over 10 year)”. The fact that the interim Board would have accepted a long-term offer does not directly determine the question whether it would have accepted an interim agreement had WaterNSW offered one in the first half of 2018. It undermines the reasoning relied upon by the Plaintiffs (MIL did not want a long-term agreement, therefore it must have wanted an interim agreement as the only agreement on offer) but the more likely inference from the evidence as a whole is that the two issues were separate. With the new Board due in May or June 2018, the circumstances which confronted MIL in early 2018 were the

same as those which confronted the Defendant and WaterNSW. In those circumstances, would the interim Board have considered it in MIL’s commercial interests to enter into an interim agreement? There is little in the evidence to shed light on this question. It cannot be assumed that MIL wanted an interim agreement. Like the Defendant and WaterNSW, it may be inferred that MIL was aware that historic patterns made it unlikely that WaterNSW would want to move any water through the MIL infrastructure before September and probably not until October. MIL was not therefore at jeopardy of missing out on fees if there was no interim agreement before the new Board commenced. In December 2015 MIL had decided to terminate the previous Escapes Agreement which may suggest a preference to negotiate the new agreement whilst WaterNSW was excluded from using the MIL infrastructure, which strategy might be undermined if WaterNSW were now to have interim access whilst the negotiations concluded. That, however, seems unlikely because Mr Renehan did not give that explanation for the decision to notify termination of the previous Escapes Agreement and in any event he expected that the six-month notice period would be sufficient to put a new agreement in place without any interruption to WaterNSW’s access. On 8 March 2018 the RMOC had been advised that the was little prospect of agreement on an interim

arrangement, for which advice there was presumably a reason but that reason, is not apparent from the evidence. Ultimately this is another issue upon which the Plaintiffs bear the onus of proof. The Plaintiffs have not identified objective facts which give rise to an actual persuasion that the interim Board of MIL was willing to enter into an interim agreement and the necessary finding cannot be made. Summary of causation Even if the Defendant did not act with reasonable care in the negotiations for access to the MIL infrastructure prior to 1 June 2018, that breach of duty did not cause any loss. Summary of the MIL access case The Plaintiffs have not proved that the Defendant did not act with reasonable care when participating in the negotiations for access to the MIL infrastructure before 1 June 2018, or that any such failure caused the Plaintiffs loss. For each of those two reasons, the claim based on access to the MIL infrastructure is to be dismissed.

QUANTUM Principled approach Where there has been negligence, damages are awarded with the object of placing the plaintiff in the position in which the plaintiff would have been had the tort not been committed. [249] Unlike the issue of causation, quantification of loss arises for determination only after the Plaintiffs have established that the Defendant’s negligence has caused some loss. The Plaintiffs are therefore entitled to be compensated for the loss they have suffered. Where there are difficulties in quantifying the loss, the Court must do the best it can on the evidence. In Commonwealth v Amann Aviation Pty Ltd at [31] Mason CJ and Dawson J said: “The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can: Fink v. Fink [1946] HCA 54; (1946) 74 CLR 127, at p 143; McRae v. Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377, at pp 411-412; Chaplin v. Hicks (1911) 2 KB 786, at p 792. Indeed, in Jones v. Schiffmann [1971] HCA 52; (1971) 124 CLR 303, Menzies J. went so far as to say that the “assessment of damages ... does sometimes, of necessity involve what is guess work rather than estimation”: at p 308. Where precise evidence is not available the court must do the best it can: Biggin and Co. Ltd. v. Permanite Ltd. (1951) 1 KB 422, per Devlin J.

at p 438. And uncertainty as to the profits to be derived from a business by reason of contingencies is not a reason for a court refusing to assess damages: see McGregor on Damages, 15th ed. (1988), pars 357-359.” [250] If necessary, the Court may have regard to possibilities and probabilities. [251] Structure of the Plaintiffs’ claim In paragraph 205 of the Statement of Claim the Plaintiffs plead that they have suffered loss by reason of the Defendant’s alleged breaches of duty. The following particulars are given: “The Plaintiffs have suffered loss or damage in the following categories: a. loss of the market value of the water which they would have received (or which they lost the opportunity to receive) referable to the Doyle Water Entitlements and Coobool Water Entitlements; … d. reduction in goodwill, including their ability to retain existing supply contracts; e. increased costs of business; f. lost profits; g. loss of opportunity to make a profit (including by reason of the loss of opportunity to receive an increased water allocation); h. cost of the funding necessary to bring the present proceeding; and i. increased costs of water on the temporary market (or loss of opportunity to pay lower prices for water on the temporary market).” The various heads of loss contemplated by these particulars suggest a number of different ways in which the loss suffered by the

Plaintiffs may be analysed. However, each party retained an expert accountant who agreed about the appropriate approach. The agreed approach is to analyse the difference between the profit which each business of irrigated agricultural production earned in each of the relevant water years, and the profit which it would have earned had there been increased allocations of water. That approach conforms to particular (f) and, to the extent that they are a component of the calculations of the profits of the businesses, particulars (e) and (i). For each water year, the experts have broken down the lost profit into two elements, namely the reduction in profit suffered by each business because it was allocated less water and the increased prices it had to pay for the temporary water it actually purchased. There is no dispute about that breakdown as a matter of principle. No submissions have been made about the cost of funding the present proceedings and it need not be considered further. [252] Factual background Up to this point the issues in the case have concerned the Murray River system, the river operations and commercial negotiations of the Defendant, the market for the supply of temporary water and rain. Given the systems of water sharing and allocation in New South Wales and Victoria, there has been no occasion to address the circumstances of individual holders of water

entitlements, even in relation to the issue of causation. It is, however, necessary to address those circumstances in order to determine the quantum of the loss suffered by the Plaintiffs if it is assumed that the Plaintiffs succeeded on all anterior issues in the case (which they have not). There are three businesses of irrigated agricultural production which need to be addressed, two in New South Wales carried on by the Plaintiffs and one in Victoria carried on by RyanAG as a representative Group Member. Doyle’s Farm Since 1987 the Second Plaintiff, John Doyle, has owned land near Berrigan in New South Wales. For irrigation purposes, the land is located in the New South Wales Central Murray region. Over the years Mr Doyle and his wife have purchased and sold other land which, as far as the issues in the case are concerned, may be described as being in the same general area. In the 2018/2019 water year Mr Doyle acquired another property at Lurg in Victoria. The land owned by Mr Doyle and/or Ms Doyle has been farmed by a corporate entity which, since 2006, has been the First Plaintiff, Doyle’s Farm Produce Pty Ltd. Doyle’s Farm is the trustee of a family trust. Mr Doyle and Ms Doyle are the owners and directors of Doyle’s Farm and the beneficiaries of the trust. Doyle’s Farm’s operation is a family business. The arrangements for Doyle’s Farm’s use of the land owned by the

Doyles have generally been informal. The same is true of the water entitlements which Mr and/or Ms Doyle have held over the years. No issue has been raised about the corporate structure and nothing further needs to be said about it. Much of the land owned by the Doyles is particularly suitable for growing potatoes because it has sandy soil which has advantages when it comes to harvesting and cleaning the crop. Doyle’s Farm has mainly used the land for growing potatoes and, to a lesser extent, raising cattle and growing cereal crops. A significant portion, but not all, of the land is necessarily irrigated given the limited local rainfall patterns and the intensity of the agricultural production by Doyle’s Farm. Doyle’s Farm has invested in significant infrastructure for use in the irrigated production of potatoes. The water entitlements available for use by Doyle’s Farm are referred to elsewhere in this Judgment. In his Affidavit dated 23 June 2021, Mr Doyle explains his water strategies. It is his invariable practice to carry over to the following water year 50% of the water allocated to his entitlements as a way of managing the risk that allocations will be low in that year. The strategy makes it necessary for Doyle’s Farm routinely and regularly to purchase temporary water to ensure that it has sufficient water for use in the current water year plus sufficient to carry over

to the next. In the 2017/2018 water year Doyle’s Farm purchased 1,071 ML of temporary water. In the 2018/2019 water year it purchased 1,782 ML of temporary water. In the 2019/2020 water year it purchased 622 ML of temporary water. Doyle’s Farm uses credit to finance the purchase of temporary water. Doyle’s Farm enters into annual contracts for the sale of specified quantities of potatoes at agreed prices. Doyle’s Farm has two main long-term customers, McCain and Snack Brands. The annual contracts are entered into before Doyle’s Farm plants its crops. The annual contracts are valuable to the business, particularly in view of the business’s reliance on credit for its working capital. The timing of entry into the annual contracts and other contracts for the acquisition of seed is such that Doyle’s Farm has limited flexibility around its requirements for irrigation water once the year starts. In each of the three water years before the 2019/2020 water year Doyle’s Farm contracted to sell 6,000 tonnes of potatoes to Snack Brands and successfully delivered that quantity, plus or minus a small amount. In the 2018/2019 water year the holders of NSW Murray general security water entitlements received 0% allocations. By the commencement of the 2019/2020 water year the price of temporary water was high. Doyle’s contract with Snack Brands differed in the 2019/2020 water year in two

respects from the preceding years. First, Snack Brands agreed to pay a supplement of $45 per tonne because of the low water allocations and the high water prices faced by Doyle’s Farm. Secondly, the contracted amount was only 4,500 tonnes. In order to cut costs, Doyle’s Farm used some of its own seed rather than purchasing all the seed from external suppliers, which resulted in smaller potatoes. Ultimately Doyle’s Farm was only able to deliver 3,955 tonnes. Coobool Downs Pastoral Co. The Fourth Plaintiff, Rodney Dunn, and the Fifth Plaintiff, Valerie Dunn, are part of the Dunn family which has carried on farming operations near Swan Hill in New South Wales for over 100 years. Since 1984 the operations have been undertaken through the Dunn Family Trust of which the Third Plaintiff, Coobool Downs Pastoral Co Pty Ltd, it the trustee. Mr Dunn and Ms Dunn are the owners and directors of Coobool. Over the last 40 years Coobool has been growing cereals and rice crops and grazing livestock. Coobool’s operation uses a mixture of irrigated production and dryland farming (which relies entirely on rainfall). Rice can only be grown as an irrigated crop whereas cereal crops may be grown either as irrigated crops or as dry land crops. Coobool has also diversified into aquaculture in more recent years. Coobool carries out its farming operations on nine parcels of land, most of which are owned

by Mr and Ms Dunn. One parcel is owned by Mr Dunn alone, as it was by his father before him. Coobool also uses a parcel of land owned by a son, Brett, and his wife, and another parcel owned by another son, Paul, and his wife. Amongst the parcels is a mixture of irrigated land variously for rice or cereal crops or for improved grazing, and unirrigated land either for cereal crops or for grazing. Coobool’s use of the land is informal within the setting of a family business. Apart from an issue about the admissibility of evidence from Brett Dunn (see below), no issue has been made about the Dunns’ corporate structure and nothing further needs to be said about it. Mr and Ms Dunn are elderly and Brett and Paul manage the farming operations. Brett Dunn made three Affidavits in these proceedings in which he explains Coobool’s farming operations and the considerations which inform the decisions which Coobool makes each year. The water entitlements available for use by Coobool are set out elsewhere in this Judgment. As explained by Brett Dunn, Coobool carries on its farming operations holistically. It rotates its land use. Given the variety of crops which Coobool grows and its livestock and aquaculture operations, each year Coobool makes different land use decisions in response to a number of factors of which the quantity of available water is the most prominent. When there is

sufficient water, Coobool’s preferred crop is rice because there is an assured buyer at a stable price. Coobool needs to be confident by spring that it will receive an allocation of more than 50% in order to plant a viable rice crop. If the expected allocation is between 50% and 60% Coobool will plant a small rice crop. When the expected allocation is less than 30%, Coobool only grows dryland crops and uses the water allocation which it receives to grow pasture to graze livestock and maintain ground coverage. Coobool incurs certain costs in growing pasture, namely fertiliser (at $15 per tonne of hay grown), bailing (at $37.50 per tonne) and other costs for labour, irrigation, machinery and spraying (too small to quantify). Coobool may also carry some of the water allocation over to the following year to improve its chances of being able to plant a rice crop in that year. In the 2017/2018 water year Coobool received a 51% allocation for its water entitlements which was 828 ML. In the spring of 2017 it planted a small rice crop. It did not need to purchase any temporary water. It had sufficient hay to maintain its livestock without needing to purchase hay from outside sources which it was reluctant to do for fear of introducing pests, weeds and diseases. In the 2018/2019 water year Coobool received a 0% allocation. It did not plant a rice crop. It purchased 20 ML of temporary

water. It had sufficient hay in reserve to be able to maintain its livestock without needing to purchase hay from outside sources. RyanAG RyanAG is not a plaintiff but evidence has been adduced about its circumstances as a sample of the Members of the Group who are from Victoria. RyanAG is a family-run business which has carried out farming operations across fourteen parcels of land located about Yarrawonga since the 1860s. It is the trustee of a family trust. The beneficiaries of the trust and the owners and directors of RyanAG are Evan William Ryan, who has made three Affidavits in these proceedings, and his parents Helene Marie Ryan and John William Ryan. The Ryan family are also directors and shareholders of Ryansfield Pty Ltd and Cananea Pty Ltd. RyanAG conducts a wide variety of farming operations across approximately 800 hectares of land. That land is made up of approximately 600 hectares of irrigated land and approximately 200 hectares of dryland. As such irrigation plays a key role in RyanAG’s crop production during times of limited rainfall. During the relevant years RyanAG principally grew wheat and canola (which are winter crops), maize and adzuki beans (which are summer crops) and lucerne (which is a perennial crop). Since approximately 2011 RyanAG has contracted with two clients, Bean Growers Australia Limited and Companion Australia Pty Ltd, for the production

and sale of adzuki beans. Between the water years of 2010/2011 to 2017/2018 the area planted by RyanAG to supply the adzuki beans sold under these contracts has varied between 65 to 130 hectares. RyanAG typically requires between 1,000 ML to 1,700 ML of water each year depending on rainfall in order to irrigate its crops and maximise its yield. RyanAG meets its water requirements by drawing on 373.8 ML of high reliability water entitlements jointly held by the Ryan family’s companies Ryansfield and Cananea, as well as by purchasing temporary water. RyanAG also holds a low reliability water entitlement of 269.8 ML per year. In his First Affidavit dated 13 May 2022, Mr Ryan explains that RyanAG’s usual practice is to plant its entire winter crop regardless of water allocations or the long-term weather forecast. With favourable rainfall a winter crop can still be profitable. However, in dry years when irrigation water is scarce it can be uncommercial to finish a winter crop with the result that the winter crops needs to be cut. That occurred in the 2019/2020 water year. In the 2017/2018 water year RyanAG received a water allocation of 100% which was 373 ML. 487 ML was carried over from the previous year and an additional 1,332 ML of temporary water was purchased at an average price of $136.00/ML. Mr Ryan explains in his First Affidavit that a larger quantity of water was purchased

by comparison to the previous two years as it was a dry spring and RyanAG needed the additional water to irrigate its summer crops. The 2017/2018 water year was commenced with the crops being planted in line with RyanAG’s usual process. During the summer, it grew adzuki beans, corn and lucerne hay. Throughout the water year it also grew canola, wheat, oaten hay and lupins. A total of 1,321 ML of water was used for farming operations across the water year and 55 ML water sold. 611 ML was carried over to the next water year. In the 2018/2019 water year RyanAG again received a water allocation of 100% which was 373 ML. 611 ML of water carried over from the previous water year. Due to the high market price, RyanAG did not purchase any temporary water and it did not sell any temporary water. Mr Ryan states in his First Affidavit that in the 2018/2019 water year RyanAG was unable to grow summer crops due to the timing of allocations and the high costs of temporary water. It was only able to grow winter crops, being canola, wheat and hay. In the absence of growing summer crops, a strategic decision was made to use the available water to irrigate winter crops in spring in order to achieve some production. While it was able to water the winter crops, the inability to grow summer crops significantly impacted RyanAG’s income in the 2018/2019 water year. A total of 922 ML of water was used

for farming operations across the water year. 59 ML was carried over to the next water year. In the 2019/2020 water year RyanAG only received an allocation of 66% of its water entitlements which was 246 ML. Only 59 ML was carried over from the previous year which was significantly lower than the water carried over in previous years. At the start of the 2019/2020 water year the price of temporary water was high. Mr Ryan explains in his Second Affidavit that consequently RyanAG sold 156 ML of water on the temporary market because it was not economically viable to use the water for farming operations. This is RyanAG’s usual practice when water prices are above $500.00/ML. In August 2019 RyanAG decided not to use any water to irrigate the winter crops unless the price of temporary water fell substantially. In December 2019 RyanAG purchased 50 ML of temporary water at a heavily subsidised price through an Australian government program called “Water for Fodder”. It used the water to irrigate the winter crops in an attempt to increase the hay yield. Later in the water year the price of temporary water had fallen and RyanAG purchased 50 ML of temporary water at a price of $200 per ML in February 2020 and 100 ML at a price of $245 per ML in June 2020. RyanAG also obtained at no cost 68 ML from a neighbour in June 2020. RyanAG ultimately grew canola hay and wheat for hay on its irrigated

land in the 2019/2020 water year, having used a total of 44 ML of water for farming operations. 307 ML was carried over to the following year. RyanAG’s income was significantly impacted due to the inability to grow beans or grain. Basis upon which quantum of loss is to be addressed Assumptions as to increased allocations of water For the purposes of considering the issues in dispute about the quantification of loss, it is necessary to make an assumption about the increases in allocations which the Plaintiffs would have received if it is assumed that the Defendant’s assumed breaches of duty caused them loss. Given the Defendant’s concession, I will assume that the Plaintiffs would have been allocated 54% in the 2017/2018 water year as the holders of Murray general security water entitlements in New South Wales, which would have been an increase of +3% on what they actually received. The appropriate assumption for the 2018/2019 water year is an allocation of 1%, which would have been an increase of +1% on what they actually received. That assumption is appropriate because it is the most favourable result for the Plaintiffs as selected by Mr Podger and Mr Barma in the Corrected Second Joint Report. For Group Members who held Murray high reliability shares issued in Victoria, as set out at [1607] Mr Podger and Mr Barma have calculated that the carryover of additional water

allocated to Victoria in the 2018/2019 water year would have resulted in an increase in allocations from 65% to 69% in the 2019/2020 water year, which is an increase of +4%. Mr Ryan’s evidence is that RyanAG actually received an allocation of 66% in the 2019/2020, not 65%. An explanation of the discrepancy between Mr Ryan’s figure and the figure modelled for the actual allocation by Mr Podger and Mr Barma is not apparent. It does not ultimately matter because the approach taken by the expert accountants does not depend upon the quantum of the assumed allocation but on the increase which Mr Podger and Mr Barma have calculated to be +4%. Subject to the issues addressed below, the Plaintiffs accept the +4% figure. I will therefore assume that those people who held high reliability shares in Victoria would have received an increase of +4% of the water allocated to them in the 2019/2020 water year. There does not appear to be any dispute that that is the appropriate assumption for the purposes of quantifying loss. Doyle’s Farm counterfactual Had there been increased allocations in accordance with these assumptions, there is broad agreement about the difference it would have made to Doyle’s Farm’s business. In each of the 2017/2018 water year and the 2018/2019 water year, Doyle’s Farm would have needed to purchase less temporary water than it in fact purchased and it would have paid

a lower price for the temporary water which it did purchase. The parties agree how much temporary water would still have been purchased but they do not agree about the price which would have been paid for it. The parties also agree that increased allocations would have continued to make a difference to Doyle’s Farm’s business in the 2019/2020 water year. The temporary water which Doyle’s Farm purchased in that year would still have been purchased but at a lower price, although again the parties do not agree what the price would have been. The final element in the quantum of the loss claimed by Doyle’s Farm relates to the contract to sell 4,500 tonnes of potatoes to Snack Brands in the 2019/2020 water year. Doyle’s Farm originally alleged that the availability of more water would have resulted in the usual contract for 6,000 tonnes which would have been fully delivered. Doyle’s Farm accepts that it would have incurred higher productions costs had it planted for 6,000 tonnes rather than 4,500 tonnes, and that it would not have received the supplement of $45 per tonne, but it says that its overall position would have been better. As part of that analysis, Doyle’s Farm says that it would not have used any of its own seed which would have instead been sold for $350 per tonne. Most of Doyle’s Farm’s claims about the Snack Brands contract were abandoned in final oral submissions. As

ultimately put, Doyle’s Farm accepts that even with the higher allocations of water it would have contracted to sell only 4,500 tonnes of potatoes to Snack Brands. The position appears to follow Mr Doyle’s acceptance in cross-examination that there would have been no change in his “cropping decisions” if the increase in water allocations was only 1% in the 2018/2019 water year. Doyle’s Farm nonetheless presses its claim for loss arising from not being able to sell 200 tonnes of its own potato seed. At the trial objection was taken to certain parts of Mr Doyle’s Affidavit which were said to be inadmissible under s 5D(3)(b) of the NSW Liability Statute. The parts of the Affidavit to which objection was taken are identified in the Schedule which is marked MFI-14. I have found that s 5D(3)(b) is picked up and applied to these proceedings by force of s 79(1) of the Judiciary Act 1903. As I understand the Plaintiffs’ closing submissions, they now accept that s 5D(3)(b) operates to make the relevant parts of Mr Doyle’s Affidavit inadmissible. [253] Those parts are taken not to have been read and there is no occasion to rule on the objections. Objection to Mr Dunn’s evidence The position is different for Coobool’s counterfactual. The Plaintiffs press certain parts of the Affidavits of Brett Dunn to which the Defendant objects under s 5D(3)(b). It is necessary to rule on these

objections. It is convenient to set out s 5D of the NSW Liability Statute again: 5D General principles (1) A determination that negligence caused particular harm comprises the following elements— (a) that the negligence was a necessary condition of the occurrence of the harm (factual causation), and (b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (scope of liability). (2) In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. (3) If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent— (a) the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and (b) any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest. (4) For the purpose of determining the scope of liability, the court is to consider

(amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. Before turning to particular paragraphs which are subject to the Defendant’s objection, the Plaintiffs make a threshold submission that s 5D(3)(b) has no application to Brett Dunn’s evidence because it only applies to a statement made by the person who suffered harm. In the case of the Dunn family business, the harm was suffered by the corporate entity Coobool, not by Brett Dunn. The facts said to be relevant to the contention are that Mr and Ms Dunn are the owners and directors of Coobool. Coobool is trustee of the Dunn Family Trust which is a discretionary trust. Brett Dunn describes himself as one of the beneficiaries of the trust. Brett and his brother Paul manage the farming operations of Coobool. Brett and his wife own one of the parcels of land which Coobool uses for its farming operations. It may be inferred that, amongst others, Brett Dunn depends upon Coobool’s business for his livelihood. Unless compelled by authority to find otherwise, s 5D(3)(b) applies to the relevant statements in Brett Dunn’s Affidavits in the circumstances of this case. Assuming the other requirements are satisfied, s 5D(3)(b) applies to statements “made by” Coobool. Coobool is the Third Plaintiff in these proceedings. On 4 May 2021 the Plaintiffs were ordered to file and

serve their lay evidence in chief. On 15 June 2021 a further order was made extending the time for the filing and serving of that evidence. Brett Dunn’s Affidavit dated 25 June 2021 was filed (and presumably served) in compliance with that order. Brett Dunn’s other Affidavits were presumably filed and served in similar circumstances. In any event, counsel appearing for Coobool read each of Brett Dunn’s Affidavits at the trial including the paragraphs to which the Defendant objects under s 5D(3)(b). As will be seen below, Brett Dunn’s evidence is generally expressed in the first-person plural. There are places where Brett Dunn gives evidence about matters specific to him, such as his experience, but his evidence is generally to be read as evidence about the business operated through Coobool. In paragraph 1 of each of his Affidavits, Brett Dunn states: “The third plaintiff, Coobool Downs Pastoral Co Pty Ltd (ACN 002 806 617) (Coobool), is the trustee of the Dunn Family Trust (Dunn Trust) and I am authorised to swear this affidavit on behalf of Coobool.” The position brought about by these facts is neatly summarise in Re Metal Storm Limited (in liq) (receivers and managers appointed) (No 2) where Rees J said: “Whilst a corporation is an abstract concept, it is not without voice. A corporation can make a statement through its officers or authorised representatives. Where the

admissibility of statements containing hindsight evidence is in question, then the answer must be whether the statement of the natural person is a statement “made by the person” who suffered harm, that is, the corporation. In some cases, this will be obvious: a sole director and shareholder is effectively the same thing as the corporation and a statement by them may readily be considered to be a statement made by the corporation. A statement by a former, disenchanted chair of the board of a large publicly listed corporation may be a different matter entirely. A statement by a shadow director may be different again. It may be the case that, if objection is taken to the admissibility of hindsight evidence sought to be given by a person with a past or present association with a corporate plaintiff then a voir dire will be needed to ascertain whether a statement by that person is a statement “by” the corporation under section 5D(3)(b). If it is, then the evidence is not admissible.” [254] The sentence in paragraph 1 of Brett Dunn’s Affidavits establishes two things, namely that each of his Affidavits was sworn “on behalf of” Coobool and that Brett Dunn was authorised to swear it. For the purposes of s 5D(3)(b), the statements made in the Affidavits are properly characterised as statements “made by” Coobool. In support of the contrary position, the Plaintiffs made a number of

submissions which were directed to the relationship between Brett Dunn and Coobool so as to distinguish his position to that of the sole director and shareholder of a company which might be described as the director’s alter ego. Such an enquiry may be relevant in some cases, especially if the statement to which s 5D(3)(b) is said to apply was made other than for the purposes of proceedings in which the corporation which suffered harm seeks compensation. The relationship would likely be relevant in such a case to the question whether the statement was made as the authorised representative of the corporation. However, once it is accepted that Brett Dunn has been authorised to make the statements in his Affidavits on behalf of Coobool, his particular relationship with Coobool does not matter. He is Coobool’s authorised representative for the purpose of making the statements. There is nothing in the authorities on s 5D(3)(b) or any of its analogues which warrants a different conclusion. The only case relied upon by the Plaintiffs is Anchorage Capital Master Offshore Ltd v Sparkes. [255] That was a case where a corporate plaintiff failed to adduce evidence of reliance upon certain misrepresentations. In the context of a dispute about what, if any, inference arose from that failure, it was submitted that the failure to adduce evidence was explained because any such evidence would

have been inadmissible under s 5D(3)(b). Rejecting that submission, the Court of Appeal said at [386]: “It is doubtful that s 5D(3) precludes the receipt of statements of officers of a corporate plaintiff. However, that question need not be explored. Nor need it be considered how s 5D(3) might operate in the context of parallel statutory claims to which the Civil Liability Act does not apply. That is because s 5D(3) only precludes the adducing of evidence on the hypothetical question of what the plaintiff would have done but for the negligence. It does not preclude the adducing of evidence of what the plaintiff did as a result of the negligent act. In the context of a medical advice case, a patient may permissibly give evidence that he or she agreed to undergo an operation because the doctor recommended it; what is not permitted is evidence as to what the patient would have done had different advice, which was not given, been given.” Thus, the application of s 5D(3)(b) was raised in Anchorage Capital Master Offshore Ltd v Sparkes but the Court of Appeal considered it to be misconceived. [256] Although the Court of Appeal doubted the application of s 5D(3)(b) in the case of a corporate plaintiff it expressly did so without exploring the issue. Anchorage Capital Master Offshore Ltd v Sparkes does not preclude the Defendant’s reliance on s 5D(3)(b) in the circumstances of this

case. A footnote reveals that the doubt expressed by the Court of Appeal was based on four cases. A detailed survey of the four cases and some others was undertaken by Rees J in In the matter of Metal Storm Limited. The cases where the application of s 5D(3)(b) has arisen fall into two categories. First, there are cases where an objection is taken to evidence sought to be adduced by a corporate plaintiff. Secondly, there are cases like Anchorage Capital Master Offshore Ltd v Sparkes where the failure to call a particular witness is sought to be explained by the s 5D(3)(b) prohibition on that witness giving evidence. Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) was a case in the first category where evidence was adduced from officers of a local government body. [257] Rares J was not required to decide the issue because it was common ground between the parties that s 5D(3)(b) did not apply to the evidence. Nor was it necessary to resolve the issue in UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd where hindsight evidence from a somewhat distant employee was adduced apparently without objection and to which little weight was given in any event. [258] Ball J nonetheless observed that s 5D(3)(b) does not obviously apply where the person who suffered harm is a corporation. On the other hand in Gunns Limited v State of Tasmania Pearce J held that evidence given by

a key employee of a corporate plaintiffs was inadmissible under the Tasmanian analogue of s 5D(3)(b). [259] In Geju Pty Ltd v Central Highlands Regional Council McMeekin J held that evidence given by the guiding mind of a corporate plaintiff was inadmissible under the Queensland analogue of s 5D(3)(b). [260] The cases in the second category include Lym International Pty Ltd v Marcolongo where the Court of Appeal said that the correct construction of s 5D(3)(b) is that the prohibition on giving hindsight evidence is directed only to the person who suffered harm and, in that case, the son of the elderly plaintiff could have given evidence about what he would have done. [261] On the other hand in A.I. McLean Pty Ltd v Hayson Bergin J said that a director of the corporate plaintiff would have been prohibited from giving hindsight evidence. [262] In Richtoll Pty Ltd v WW Lawyers Pty Ltd (in liq) the Court of Appeal’s enquiry about the absence of hindsight evidence from the principal of the corporate plaintiff elicited the response that the evidence had been rejected under s 5D(3)(b) and therefore no adverse inference was available. [263] The Court of Appeal observed that there is an issue about the application of s 5D(3)(b) in such circumstances but did not decide it. In each of these cases the conclusion about the applicability of s 5D(3)(b) was stated but the reasons for the

conclusion were not. The position was otherwise in AvWest Aircraft Pty Ltd v Clayton Utz which involved an objection to hindsight evidence from the sole director of a corporate plaintiff. [264] The objection was taken under s 5C(3)(b) of the Civil Liability Act 2002 (WA). There are a number of differences between the wording of that provision and s 5D(3)(b) of the NSW Statute, chief amongst being the prohibition on “evidence of the injured person” compared to “any statement made by the person”. Vaughan J considered that the different wording reduced the significance of the authorities about the operation of the NSW Liability Statute. His Honour did not consider significant the use of the pronouns “he” and “she” but nonetheless concluded that the wording of s 5C(3)(b) requires that the prohibition only apply where the injured person is capable of giving evidence himself or herself. [265] It followed that the prohibition under the WA Liability Statute only applies where the injured person is a natural person. The director’s evidence was held to be admissible. The issue was also considered in PPK Willoughby Pty Ltd v Baird where an objection was taken to the evidence of the plaintiff’s director. [266] Harrison J held that s 5D(3)(b) applied and said at paragraphs [6]-[8]: “[6] I think that the issue can be sensibly determined having regard to the following realities. A company

cannot give evidence other than through natural persons either as oral testimony or by the tender of documents created by them. If Mr Webb’s evidence in paragraph 50 of his affidavit is to achieve or to be given any relevance in the proceedings, given that he is not personally interested in the outcome, it can only be if it is given for or on behalf of the plaintiff. If the rhetorical inquiry at the end of the case is, “What does the evidence given by Mr Webb in paragraph 50 go to?”, the answer can only be that it is evidence upon which the plaintiff wishes to rely to advance its case. If the plaintiff therefore approbates the relevance of this evidence as material supporting the plaintiff’s case, it can hardly reprobate the applicability of s 5D(3) as applying to evidence given by or on its behalf by natural persons such as Mr Webb as the plaintiff’s agent for that purpose. [7] I note in passing that some authorities have appeared to place emphasis upon the use of the personal pronouns in paragraphs (a) and (b) of the provision, so as to suggest that the section could not have been intended to apply to a corporate plaintiff. However, the reference in the opening sentence of s 5D(3) to “the negligent person” must necessarily have been intended to extend to a corporate defendant. There is accordingly little to be said, as a matter of statutory construction, for limiting the

exclusion for which the sub-section provides to plaintiffs who are also natural persons or, put another way, for not applying the exclusion to evidence given by natural persons on behalf of a corporate plaintiff. [8] It seems to me that the evidence is in these circumstances either inadmissible because it is irrelevant or, if relevant, inadmissible because it offends the sub-section.” The point made by Harrison J is that the reference to a statement “made by” the person who suffered harm is to be considered in the context of a corporate plaintiff seeking to adduce evidence in proceedings. Apart from the plain meaning of the words and the corporate realities to which his Honour referred, that conclusion follows from the fact that the subject matter of s 5D(3)(b) is the admissibility of evidence. In that respect, there is a material difference between the NSW Statute and the WA analogue. Under the WA Liability Statute, the relationship between the evidence and the injured person is defined by the preposition “of”. In AvWest Aircraft Pty Ltd v Clayton Utz Vaughan J paid close attention to the preposition and concluded that it could not be equated with “on behalf of”. [267] Under s 5D(3)(b) of the NSW Statute the relationship is defined by the preposition “by”. Consistent with Harrison J’s analysis, the wording of s 5D(3)(b) naturally addresses the situation where someone gives

evidence for or on behalf of a corporation. Re Metal Storm Limited (in liq) (receivers and managers appointed) (No 2) was a case in the first category where objection was taken to hindsight evidence given by a witness who was involved in the management of a corporate investment vehicle by way of a services agreement with another corporate entity. Having surveyed the authorities, Rees J concluded that the reference in s 5D(3)(b) to a “statement made by” the person who suffered harm may apply where the person is a corporation depending on the facts of the case. In reaching that conclusion Rees J had regard to s 21 of the Interpretation Act 1987 (NSW) which provided that the word “person” (now defined in Schedule 4) includes a corporation except in so far as the context or subject-matter otherwise indicates or requires. Like Vaughan J and Harrison J, Rees J considered that the pronouns “he” and “she” were not relevant to the construction issue. Having regard to the facts of the management structure of the plaintiff in Re Metal Storm Limited (in liq) (receivers and managers appointed) (No 2), Rees J found that statements made by the particular witness were not statements “made by” the plaintiff for the purposes of s 5D(3)(b). The great merit in the construction adopted by Harrison J and Rees J (and applied by Bergin, Pearce and McMeekin JJ) is that the prohibition in s 5D(3)(b)

applies uniformly to evidence which is susceptible to the mischief which s 5D(3)(b) is intended to address. The mischief was identified in Neal v Ambulance Service of New South Wales as the enormous difficulty of counteracting hindsight bias which undermines the value of the plaintiff’s own testimony about what they would have done. [268] None of the authorities have identified a reason why the mischief might be expected to arise only where the plaintiff is a natural person and not where the plaintiff is a corporation. Witnesses for a corporate plaintiff may just as likely be susceptible to hindsight bias as if they personally were the plaintiff. To construe s 5D(3)(b) in a way that it will never be applicable where the plaintiff is a corporation will give it an irrational operation which it is not to be supposed was the intention of the legislature. [269] The construction of s 5D(3)(b) which makes it applicable where the person who suffered harm is a corporation will not preclude the corporation from adducing evidence of objective circumstances from which it may be determined what it would have done had the negligence not occurred. For these reasons the statements made by Brett Dunn in his Affidavits about what Coobool would have done are statements “made by” Coobool for the purposes of s 5D(3)(b). The particular paragraphs of Brett Dunn’s Affidavit to which the Defendant

objects are in MFI-14. Objection is taken to the whole of paragraphs 141 and 142 of Brett Dunn’s Affidavit dated 25 June 2021 where he makes the following statements: “141 If we had been forced to buy hay in to feed our livestock in 2018-19, based on my experience we would have been able to buy hay at $450 per tonne. For every hectare of Improved Pasture irrigated with 3.5 ML of water, we obtain feed equivalent to 3-5 tonnes of hay per hectare. 142 Since growing pasture under irrigation with a small allocation of water would have been an alternative to buying in hay, the cost of hay at the time provides another indication of what such an allocation would have been worth to Coobool in that year.” The first sentence of paragraph 141 of Brett Dunn’s Affidavit does not contain a statement about what Coobool would have done. Although the first clause of the sentence is expressed in contingent terms, the second clause is no more than a statement about the price of hay in the 2018/2019 water year. Brett Dunn does not say that Coobool would have bought the hay. He says that Coobool would have been able to buy it at the specified price. The statement is about a circumstance which is to be taken into account under s 5D(3)(a) if relevant. The second sentence of paragraph 141 is similar. Neither does s 5D(3)(b) make paragraph 142 inadmissible. Read in the context of Brett Dunn’s detailed

description of Coobool’s farming operations, including paragraphs 68, 134 and 138 to 141 of his Affidavit, the first clause of paragraph 142 contains a statement about an operational choice which is generally available to Coobool. The choice is not specific to any particular water year and it was not specific to the negligence which is alleged against the Defendant in the 2018/2019 water year. It is evidence of another circumstance which may be relevant to determining what Coobool would have done in accordance with s 5D(3)(a). The last clause of paragraph 142 is not so much evidence of a fact as an expression of an opinion. It is not inadmissible under s 5D(3)(b). Further objection is taken to paragraph 142 because it is an opinion and for that reason the last clause is rejected (plus the word “since” which ties the first clause to the second). Apart from that, the objections to paragraphs 141 and 142 of Brett Dunn’s Affidavit dated 25 June 2021 are rejected and those paragraphs are otherwise admitted into evidence. Objection is also taken to paragraphs 9, 10 and 11 of Brett Dunn’s Affidavit dated 9 April 2024. Those paragraphs need to be read in the context of the two preceding paragraphs: “7. In the 2017-18 water year, as I refer to at paragraphs [99], [100] and [104] of My First Affidavit, Coobool: 7.1 received 51% water allocation (made up of entitlements and carry over);

and 7.2 planted a rice crop in the spring of 2017. 8 Our usual practice for using the balance of water in addition to what is necessary to grow a smaller rice crop of around 40 hectares is set out in paragraph [130] of My First Affidavit. 9 As we had already planted our rice crop and as we were already growing cereal crops on the Dryland Country in the 2017-18 water year, we would have followed our usual practice and used any additional water to grow pastures for feeding livestock. This is because in my experience, as described at paragraphs [138] and [142] of My First Affidavit (in the context of the 2018-19 water year though applies for the 2017-18 water year), growing pasture under irrigation helps to maintain the condition of the soil and would have been an alternative to buying in hay. 10 If we had been forced to purchase hay to feed our livestock in 2017-18, to my best recollection, we would have been able to purchase hay at approximately $450 per tonne. B. Alternate water allocation scenarios – 2018-19 11 In the 2018/2019 water year, in the event Coobool received an allocation, it would have used any additional water: 11.1 to reduce the volume of water it purchased on the temporary market (being 20 ML I refer to at paragraph [113] of My First Affidavit); and 11.2 if the additional allocation exceeded the volume of water it purchased on the temporary market, the

difference would have been used to grow hay for the reasons set out at paragraphs 138 to 142 of My First Affidavit.” Without objection, in paragraph 130 of Brett Dunn’s Affidavit dated 25 June 2021 he gives evidence of Coobool’s usual practice when it is allocated between 50% and 60% of its water entitlements, namely to plant a small rice crop “and use the balance of the water for Cereal Crops or growing pastures for feeding livestock”. The first clause of paragraph 9 refers to two circumstances, namely that Coobool had already planted a rice crop in the 2017/2018 water year and that Coobool was already growing cereal. The first clause is not inadmissible under s 5D(3)(b). The second clause is a statement of what Coobool “would have” done and is inadmissible (plus the word “as” at the beginning of the sentence). Without the second clause of paragraph 9, the first clause of the second sentence in paragraph 9 is meaningless and is included in the rejection of the second clause of the first sentence. The second clause of the second sentence of paragraph 9 is a statement about a circumstance and is admissible. Paragraph 10 of the Affidavit dated 9 April 2024 is the same as paragraph 141 of the Affidavit dated 25 June 2021 and is admissible. Paragraph 11 falls squarely within the terms of s 5D(3)(b) and is inadmissible. Objection is also taken to paragraphs 32, 33 and 34 of Brett

Dunn’s Affidavit dated 10 April 2025. In those paragraphs Brett Dunn makes the following statements: “32 When I say that if we had been forced to purchase hay to feed our livestock in 2017-18 and 2019-18, to the best of my recollection, we would have been able to purchase hay at approximately $450 per tonne, I am mainly referring to vetch hay. Vetch hay is a good quality hay in terms of nutrition for feeding livestock. While poorer quality types of hay, such as straw, can be used for feeding feed livestock, in my experience supplements (for example, molasses) need to be added to provide the required nutrition. 33 Further, I am also referring to what would have been the delivered, ‘on-farm’ price of purchasing hay. That is: a. We order a full load of hay but depending on the weight, the delivered price would differ. Accordingly, the ‘on-farm’ unit price of hay varies depending on the volume bought (i.e., more or less volume equates to a lower or higher dollar per tonne equivalent). b. There are additional expenses factored into the price such as delivery fees. 34 The price of good quality hay is also, in my experience, subject to localised supply and demand issues in the Murray. For example, the price of good quality hay could be $250 per tonne south from Kerang towards Ballarat, whereas at the same time the price of good quality hay could be up to $500 east from Kerang towards

Shepparton because of increased demand in that area from dairy farmers forced to feed their cows, and lower supply due to water shortages.” The first sentence of paragraph 32 is substantially the same as paragraph 10 of the Affidavit dated 9 April 2024 and paragraph 141 of the Affidavit dated 25 June 2021. It is admissible. The second and third sentences of paragraph 32 are evidence of objective circumstances well within Brett Dunn’s knowledge. They are also admissible. Paragraphs 33 and 34 are also admissible because they are evidence about the price of hay irrespective of any allegation of negligence by the Defendant which is alleged in this case. Coobool counterfactual Despite the debate about the admissibility of Brett Dunn’s evidence there is no dispute about how increased allocations of water would have affected Coobool’s business. That is not surprising given the clarity of Brett Dunn’s evidence about Coobool’s usual practices and the reasons for those practices. Informed by those objective facts, if Coobool had received a 54% allocation for its water entitlements in the 2017/2018 water year it would have received an extra 48.72 ML compared to what it actually received. Coobool did not purchase any temporary water so the extra water would have been used to irrigate more land to grow pasture for feeding livestock. For each additional irrigated hectare, 3.5 ML of water

would have produced 4 tonnes of hay. The total extra hay production would have been 55.68 tonnes. Coobool would have incurred additional costs for the extra productions (fertiliser, bailing, other) which have been calculated at $52.50 per tonne of hay produced. These matters are agreed but the parties do not agree about the price of hay. In the 2018/2019 water year, Coobool would have received 16.24 ML of water allocated to its water entitlements (+1%) when it in fact received nothing. Coobool in fact purchased 20 ML of temporary water so the extra allocation would have to that extent made the purchase of temporary water unnecessary. Coobool would also have paid a lower price for the 3.76 ML of temporary water which it still would have purchased. These matters are agreed but the parties do not agree about the price for the temporary water. Ryan AG counterfactual There is no dispute about how increased allocations of water would have affected RyanAG’s business. Although RyanAG would not have received an increased allocation of water in the 2017/2018 water year because it already received 100% of its entitlements, it both bought and sold temporary water in that year. Given the increased allocations received by other market participants, the prices paid and received by RyanAG would have been lower. RyanAG would not have received an increased water allocation in the 2018/2019 water

year because it already received 100% of its entitlements in that year too. It neither purchased nor sold temporary water. RyanAG does not claim to have suffered any loss in the 2018/2019 water year. In the 2019/2020 water year RyanAG would have received +4% of its allocation compared to what it actually received. The quantity of the extra water would have been 14.95 ML. There is no dispute that RyanAG would have sold the extra water in December 2019 and January 2020 and therefore it lost the revenue from those sales. In addition, in the 2019/2020 water year RyanAG purchased 218 ML of temporary water and sold 156 ML of temporary water. Given the increased allocations received by other market participants, the prices paid and received by RyanAG would have been lower. The only dispute between the parties about the quantum of the loss suffered by RyanAG is the counterfactual price of temporary water. The Defendant notified objections to paragraphs 99 and 100 of the Affidavit of Evan Ryan dated 13 May 2022 which contain statements about what RyanAG would have done in certain circumstances. The statements made in the two paragraphs do not appear to have any relevance to the parties’ agreement on the position which RyanAG would have been in had it received an increased allocation of water in the 2019/2020 water year. The evidence has not been referred to by the Plaintiffs. In those

circumstances it may be inferred that the Plaintiffs do not press the evidence and it is not necessary for the objections to be decided. Outstanding issues on quantum Given these counterfactuals and the parties’ agreements, the following issues need to be determined in order to quantify the loss of the Plaintiffs and RyanAG: what would have been the price of temporary water in the 2017/2018, 2018/2019 and 2019/2020 water years; whether Doyle’s Farm would have sold 200 tonnes of its own seed in the 2019/2020 water year; and the price of hay. Price of temporary water The issue The effect of the assumptions which are made for the purposes of quantifying the loss suffered by the Plaintiffs and RyanAG is that there would have been increased allocations not just for the Plaintiffs and RyanAG but for all holders of Murray general security water entitlements issued in New South Wales and Murray high reliability water shares issued in Victoria. The increased allocations would have had the consequence that the market for water would have been supplied with more water than was in fact the case in the relevant water years. In accordance with elementary economic principles, the increase in supply means that the price of temporary water would have been lower. The Plaintiffs and RyanAG would have paid less for the temporary water which they purchased. There is no dispute about these

matters. The parties do not agree on the extent to which the price would have been lower. Water entitlements and temporary water The resolution of this dispute requires something further to be said about water entitlements and temporary water. Reference has been made above to the scheme established by Chapter 3 of the NSW Statute for water access licenses to be issued, such that the holder of the water access licence receives an entitlement to a specified share in the available water from a water source. There are different types of water access licenses which may differ as to prioritisation and/or location. Upon the Minister making a determination that water is available, the holder of the water access license becomes entitled to take water in the current water year. A scheme exists in each of Victoria and South Australia which is relevantly equivalent. Amongst the documents there is a variety of terminology but there are two central concepts which are relevant to the current issue. The first is the water access licence itself, which is referred to in the Victorian Statute as a water share. These are often referred to as “water entitlements”. The nature of water entitlements is explained above in the context of the Plaintiffs’ allegation that the Defendant’s negligence caused it to lose a commercial opportunity constituted by their right to receive an allocation under their

water entitlements. The markets for trading water entitlements (selling, leasing, investing) are also referred to above. Water entitlements are sometimes referred to as “permanent water”. The second concept is the right to take water. Once the Minister determines that water is available, the holders of water entitlements receive a separate right, namely the right to take water in the current water year. That right is often referred to as an “allocation” or “temporary water”. The person entitled to the temporary water may take the water and use it for irrigation or some other purpose. Subject to certain limitations, the person may also carry over the right to take the water into the next water year. If the person who has the right has not yet taken the water, he or she may sell it. The market for selling and purchasing temporary water is different to the markets for the trading water entitlements. The purchases (and sales) made by the Plaintiffs and RyanAG in the relevant water years and which are the subject of this part of the claim were purchases (and sales) of temporary water. The evidence Each party served reports from an expert witness about the price of temporary water. Dr Bunting, who was retained by the Plaintiffs, is a highly qualified and experienced economist with particular expertise in statistical methodologies including econometrics, but without any experience in

water markets. Dr Bunting prepared a series of reports in which he performed a calculation of the change in price for each water year which is relevant to the case. It is sufficient for present purposes to say that his equation for the change in price is a function of two variables, namely the proportionate increase in the supply of water in the market and the price elasticity of demand. Dr Bunting calculated his own price elasticity of demand using a linear regression of publicly available data from historic transactions in markets for temporary water. Mr Olszak, who was retained by the Defendant, is a highly qualified and experienced economist with particular expertise in water markets in general and the southern basin of the Murray River system in particular. He is not an econometrician. Mr Olszak prepared a Report dated 20 December 2024 in which he made a number of criticisms of Dr Bunting’s calculations. He agreed with Dr Bunting’s equation for the change in price but neither of Dr Bunting’s two variables. Mr Olszak took his price elasticity of demand from a survey of the published research on water prices. The published research prominently features a 2024 Report by the Australian Bureau of Agricultural and Resource Economics and Science about the likely impact on the price of temporary water caused by a reduction in supply. Mr Olszak’s price elasticity of demand is

(generally) a smaller negative number than Dr Bunting’s which means that a given proportionate change in the supply of water would have caused a greater impact on the price. However, Mr Olszak’s other variable (the proportionate increase in the supply of water in the market) is much lower than Dr Bunting’s with the result that the overall outcome of Mr Olszak’s calculation is lower than Dr Bunting’s and, hence, less favourable for the Plaintiffs. Based on the experts’ evidence, the parties agree that the two variables interact with each other in a way which makes them a package deal. Dr Bunting’s price elasticity of demand cannot be used with Mr Olszak’s calculation of the proportionate increase in the supply of water in the market. As the Plaintiffs submit, the choice between the experts’ calculations and results is binary. The Defendant submits that there are a number of defects in Dr Bunting’s analysis. That may be so but ultimately the key reason why Mr Olszak’s calculation is to be preferred may be stated shortly. Having regard to the features of the relevant market for temporary water, the calculation of the proportionate change in price ought not to be based on inputs which are limited to NSW Murray general security water entitlements and Victorian Murray high reliability water shares, but ought also to include inputs from all water entitlements which are relevant to the

supply of water to the market in which the temporary water would have been traded. Having adopted the former approach, Dr Bunting’s calculation is less probative than Mr Olszak’s broader calculation. The relevant market An important aspect of this issue is the identity of the market for temporary water in which the Plaintiffs and RyanAG made their purchases (and sales) in the relevant water years. Identification of the market is an economic question which involves an assessment of the purposes of human activity in a commercial environment and the appropriate economic framework in which to view that human activity. As Allsop J said in another context, for such an issue there is a role for economists to assist the Court by expressing what the underlying facts reveal to him or her as an economist. [270] Mr Olszak has had extensive experience in analysing the southern Murray-Darling Basin water markets, with twenty years of advisory engagements for governments, regulators, market participants, banks and investors. A significant part of Mr Olszak’s Report is devoted to explaining the markets and how they operate. His evidence is central to the definition of the market which is relevant to the issue in this case and is to be accepted. Mr Olszak explains that there are some unique features of the market in which the Plaintiffs and RyanAG purchased (and sold) water. The market is

affected by topography, climate and government regulation. Within the market the product (temporary water) is fungible. The market is populated by participants who make complicated decisions, including agricultural decisions, and who might relevantly be viewed as sophisticated consumers. People may participate in the market as purchasers, sellers or both. Some of the decisions made by the participants are short-term and some are long-term. Geographically, there are three connected rivers, the Murray River, the Goulburn River and the Murrumbidgee River. The physical connection of the rivers means that water allocated to someone from one of the rivers may be traded to someone else who is located on a different river. There are, however, barriers to trade imposed by the States which may prohibit trade in certain circumstances. There are three particular trade barriers, namely the Goulburn IVT account (by which trade from the Goulburn River is prohibited when the account balance is above 200 GL), the Murrumbidgee IVT account (by which trade from the Murrumbidgee River is prohibited when the account balance is above 100 GL) and the Barmah Choke (where net trade is generally prohibited from above to below the Choke). There are other trade restrictions, including some restrictions on trade between water entitlement holders in New South Wales and those in Victoria which are imposed to

manage the risk of internal spill. The circumstances determine whether any of these barriers are up at any particular time. As the barriers rose and fell in the relevant water years, the extent of the market in which the Plaintiffs and RyanAG participated changed. Mr Olszak illustrates the market with the following diagram: The lower Murray market is depicted in dark blue in the diagram. The inclusion in the same market of the Murrumbidgee area (purple), the upper Murray area (light blue) and the Goulburn area (green) depends on whether the applicable barrier was up or down at any given time. Mr Olszak has undertaken a review of the circumstances which determine the status of the relevant barriers in the three relevant water years. For example, Mr Olszak has reviewed the periodic balance of the Goulburn IVT account. Subject to an understandable degree of generalisation, Mr Olszak has found that the barrier to trade with the Goulburn River was almost always up during the relevant water years. He has also found that the barrier to trade with the Murrumbidgee River was generally down in the 2017/2018 and 2018/2019 water years but up in the 2019/2020 water year. The barrier to trade between the upper and lower Murray was generally down except in the 2019/2020 water year when it was generally up. On that basis Mr Olszak has formed the opinion that the market relevant to the price

paid (or received) by the Plaintiffs and RyanAG in the 2017/2018 and 2018/2019 water years was all the areas depicted in the above diagram except for the green Goulburn River areas. In the 2019/2020 water year there were two separate markets which are relevant, one either side of the Barmah Choke. The market below the Choke was the dark blue areas and the market above the Choke was the light blue areas. Mr Olszak has given these two markets separate consideration. The Plaintiffs did not adduce evidence which contradicts or qualifies Mr Olszak’s evidence. Dr Bunting does not have the expertise to give such evidence. Supply of water in the market (or markets) Having identified the market (or markets in the 2019/2020 water year), many different types of water access licences have been issued in New South Wales which potentially permit water to be taken from rivers within the market (or markets), so too many different types of water shares in Victoria. Entitlements to take water have also been issued in South Australia. Leaving aside those which relate to the Goulburn River, Mr Olszak says that there are eleven types of entitlements which are “key”. Four of the key entitlements are the NSW Murray general security water entitlements and the Victorian Murray high reliability water shares which are the subject of claims by the Plaintiffs and RyanAG in these proceedings. Two of those

key entitlements relate to the upper Murray (area 10 for New South Wales and area 6 for Victoria in the diagram) and two relate to the lower Murray (area 11 for New South Wales and area 7 for Victoria). The other seven key entitlements are described as NSW 10 Murray high security, NSW 11 Murray high security, NSW Murrumbidgee general security, NSW Murrumbidgee high security, Victorian 6 Murray low reliability water share, Victorian 7 Murray low reliability water share and South Australian Murray high reliability. Mr Olszak’s evidence about the total quantity of water which was the subject of the eleven key entitlements is summarised in the following table: Entitlement Total entitlement on issue (2018-19) (GL) Environmental entitlement on issue (2018-19) (GL) Estimated volume of entitlement on issue (2018-19) (GL) Upper Murray NSW 10 Murray HS 23 GL 4 GL 18 GL NSW 10 Murray GS 1,301 GL 365 GL 936 GL Vic 6 Murray HRWS 320 GL 117 GL 203 GL Vic 6 Murray LRWS 131 GL 18 GL 113 GL Lower Murray NSW 11 Murray HS 167 GL 21 GL 146 GL NSW 11 Murray GS 373 GL 120 GL 253 GL Vic 7 Murray HRWS 938 GL 268 GL 670 GL Vic 7 Murray LRWS 179 GL 23 GL 156 GL SA Murray HS 608 GL 200 GL 408 GL Murrumbidgee NSW Murrumbidgee HS 364 GL 15 GL 348 GL NSW Murrumbidgee GS 1,892 GL 475 GL 1,416 GL Goulburn Vic 1A Goulburn HRWS 982 GL 301 GL 681 GL Vic 1A Goulburn LRWS 427 GL 49 GL 378 GL The further righthand

column is non-environmental water. In the 2018/2019 water year (which it may be accepted is typical of the entire period given Mr Olszak’s evidence about the limited way in which the number of entitlements on issue can change) the total quantity of non-environmental water which was subject to the eleven key water entitlements was 4,667 GL. Of that total 2,062 GL (44%) was subject to the four key water entitlements which are directly relevant to the Plaintiffs’ and RyanAG’s claims. The total quantity of water which was subject to the Murrumbidgee water entitlements was 1764 GL (38%) and the South Australia water entitlements was 408 GL (9%). The last four water entitlements were the Murray River entitlements other than NSW general security entitlements and Victorian high reliability entitlements to which 433 GL (9%) was subject. As explained above, the supply of temporary water to the market (or markets) depends on the determinations of available water by the respective State Ministers or water authority. Once a determination is made, the water entitlement holder has a right to take temporary water which may then be sold to others. It is Mr Olszak’s evidence that it does not matter whether the right to take temporary water arose under a high security water entitlement or a general security entitlement, and it does not matter whether the right to take the water is from the

Murrumbidgee River or the Murray River, or in New South Wales, Victoria or South Australia so long as there is no barrier to trade between the locations. Given the requirement of a determination by a State Minister or water authority, the figures set out in the above table and added together in the following paragraphs are not the quantities of temporary water which have existed at all times. Nor do they demonstrate fixed relativities between different areas because the allocations to different water entitlements may differ. For example, in the 2018/2019 water year allocation to the NSW Murray general security access licenses was 0% and the allocation the Victorian Murray high reliability water shares was 100%. The figures are, however, indicative of the relative quantities with which each area and each type of entitlement is concerned. Proportionate increase in market supply by reason of increased allocations to the Plaintiffs Having regard to his identification of the market (or markets), Mr Olszak has calculated the change in supply consequent upon the assumed increases in allocations to the four types of entitlement which are the subject of the Plaintiffs’ (and Group Members’) claims as a proportion of the quantity of temporary water the subject of the eleven key entitlements (or seven in the 2019/2020 water year, with the remaining four key entitlements constituting the

separate upper Murray market). On Mr Olszak’s analysis, the assumed increases in the allocations would have occurred within a large pool and the proportionate increase in supply caused by the increased allocations would have been lower than would have been the case if the pool was smaller. There is no dispute that it is the proportionate increase in the supply of temporary water which is relevant to the calculation of the change in price, not the increase in the quantity of gigalitres supplied. [271] Dr Bunting calculations are based on a small market made up only of the temporary water allocated under the four types of key water entitlements which are the subject of the Plaintiffs’ and RyanAG’s claims. His pool is smaller, as indicated by the relationship between 2,062 and 4,667, with the result that Dr Bunting has calculated that the assumed increase in allocations would have had a much larger proportionate impact on the supply of water. Hence the reduction in the price which the Plaintiffs and RyanAG would have had to pay would also have been much larger. Mr Olszak and Dr Bunting prepared a Joint Report dated 1 July 2025 in which they answered a number of questions about the differences in their respective approaches. As requested, they included in their answer to each question a statement of the materiality of the issue raised by each question. Mr Olszak and Dr Bunting

agreed that the issue about supply to the market is “highly material”. No other issue is considered by them to be as material. Given Mr Olszak’s undisputed explanation of the market for temporary water, Dr Bunting’s approach is flawed. The experts’ evidence is relevant to the price which the Plaintiffs and RyanAG would have had to pay for purchasing temporary water. It is artificial to consider only part of the supply to the market by which that price would have been determined. The Plaintiffs do not put forward any substantive justification for Dr Bunting’s limitation on the supply to the market. They submit that the Defendant’s criticism of the limitation is theoretical but that is not right. Once the product is understood (temporary water) and the sources of supply to the market are correctly identified, the flaw in Dr Bunting’s approach follows from accepting that the price is determined by the balance of supply and demand across the entire market. Dr Bunting says in the Joint Report that he has considered “like-for-like” by which he means the types of water entitlements which are the subject of the claims by the Plaintiffs and RyanAG in these proceedings and the types of water entitlements pursuant to which water is supplied to the market. The likeness of the degree of security or reliability or location of the entitlements pursuant to which increased allocations would

have been made would be relevant to the market for the water entitlements themselves, but it is irrelevant to the market for temporary water once a determination of available water has been made. As the Plaintiffs say in another context, from that point “water is water”. It may be supplied (and purchased) in competition with all other temporary water in the market. In cross-examination Dr Bunting said that not all temporary water would be traded because some would be used by the holder of the entitlement pursuant to which the water was allocated. That may be accepted but it is not relevant to the operation of the market as the mechanism by which price is determined. An increase in the availability of temporary water for use would to that extent reduce the demand for temporary water in the market just as the offer for sale of the temporary water would increase the supply. The impact on the price from an increase in the allocation of temporary water would be the same either way. In any event, Dr Bunting has not identified a rational relationship between some water being used rather than supplied to the market and his particular limitation of the supply to the market from the four types of water entitlements which are the subject of the Plaintiffs’ and RyanAG’s claims. In re-examination Dr Bunting gave evidence directed to reducing the significance of his limited approach. He said

that the inclusion of supply pursuant to the other seven types of key entitlements would result in an impact on price which was “a little bit more subdued” than that which he has calculated. There was no exposure of the reasons for that statement nor a quantification of the impact. He said that he had tried adding South Australia which only made a “relatively minor” difference. He accepted that the amount of supply to the market makes a difference and he accepted that his calculation of the change in price was too high. It is difficult to reconcile the moderate terms of this evidence with paragraph 3.18.5 of the Joint Report where Dr Bunting agreed that the issue is “highly material”. The language of the Joint Report seems consistent with the mathematics of various sources of supply to the market (or markets) as indicated in the table above. The total quantity of water the subject of South Australian water entitlements is 408 GL which is less than 9% of the market in the 2017/2018 and 2018/2019 water years, so the addition of the South Australian entitlements alone may not be significant to Dr Bunting’s calculation. However, Dr Bunting’s approach has excluded not just South Australia but temporary water from six other types of entitlements which altogether comprise 56% of the market. It is a material exclusion or, to use the language of the Joint Report, highly material. Mr

Olszak’s approach may also exclude some relevant information. As he explains in Section 4.3.3 and paragraph 260 of his Report dated 20 December 2024 and in paragraph 3.8.2 of the Joint Report dated 1 July 2025, he has calculated the proportionate increase in supply by using the assumed increases in allocations for the four types of key entitlements which are directly relevant to the Plaintiffs’ and RyanAG’s claims. They are the increases in the allocations which the model prepared by Mr Podger and Mr Barma calculates would have resulted from an increase of water in the Murray River storages. Mr Olszak has not included any increases in allocations for any of the other seven key types of entitlements which may have resulted from the increase of water in the Murray River storage. It may be accepted that there would not have been any such increases in South Australia because under cl 88 of the Agreement South Australia’s entitlements (from which South Australia allocations are made) are specified without reference to the quantity of the water in the Murray River storages. It seems unlikely that an increase in the water in the Murray River storages would have resulted in an increase in allocations to entitlements to take water from the Murrumbidgee River because under cl 94(1)(a) of the Agreement New South Wales is entitled exclusively to the water in the Murrumbidgee River,

although the evidence does not sufficiently address the operation of the Murrumbidgee IVT account to be able to know with certainty how an increase in the storages of the Murray River (which includes Lake Victoria) might affect allocations from the Murrumbidgee River. Whether an increase in the water in the Murray River storages would have resulted in an increase in the allocations under the NSW Murray high security entitlements and the Victorian Murray low reliability water shares is not revealed by the evidence. In theory it could, but in practice it presumably depends upon the conditions in any particular year. In any event, Mr Olszak has not taken this issue into account. It may be presumed that he would not have been able to do so without further work by Mr Podger and Mr Barma about the increased allocations which would have resulted for these other types of entitlements (if any). For two reasons, the exclusion of any such information from Mr Olszak’s analysis is less material than the exclusion of information from Dr Bunting’s analysis. First, it is not known whether there would have been an increase in allocations to other types of entitlement in the relevant water years: there may not have been. By contrast, the information excluded by Dr Bunting is definite and known. Secondly, the total quantity of water the subject of the NSW Murray high security entitlements and the

Victorian Murray low reliability water shares is relatively small. By reference to Mr Olszak’s table set out above, the total quantity of water the subject of these entitlements was only 433 GL, which is 9% of the total market. That figure is much smaller than the 56% of the market excluded from Dr Bunting’s analysis. A further reason why Mr Olszak’s approach is to be preferred is that Dr Bunting has treated the market as an undivided whole in the 2019/2020 water year when there was generally a prohibition on trade from above to below the Barmah Choke. Mr Olszak’s evidence, based on his experience of the Murray River system, is that there are two separate markets for the purposes of determining the price paid (or received) by the Plaintiffs and RyanAG when trade is not permitted from above to below the Choke. The data shows that the upper Murray area is distinct because there is a higher proportion of flexible annual crop production systems above the Choke compared to permanent horticultural enterprises below, which are conditions which are consistent with more elastic demand for water. Dr Bunting’s approach does not pay sufficient (or any) regard to these differences. Summary Dr Bunting’s calculations of the proportionate increase in the supply of water in the market are flawed. Mr Olszak’s calculations of that variable are to be accepted. It follows that Mr Olszak’s opinion

about the other variable, the price elasticity of demand, is also to be accepted because it is part of the same package and, in any event, it is more favourable to the Plaintiffs than Dr Bunting’s calculation. The quantification of the Plaintiffs’ loss from having to pay a higher price for temporary water in the relevant water years is to be calculated in accordance with Mr Olszak’s analysis. It is not necessary (or possible) for current purposes to make any further finding than that. Price elasticity of demand Having reached that conclusion, it is not necessary to consider the criticisms made by each party of the other party’s calculation of the price elasticity of demand. For present purposes it is sufficient to make the following observations. There is no dispute that the price elasticity of demand in the temporary water market between 2017 and 2020, although a historic fact, can only ever be the subject of an estimate. Neither Dr Bunting nor Mr Olszak has tried to do any more than give an estimate. Both accept that to some extent their respective estimates depart from the true position. For example, both estimates assume that there was a linear relationship between a proportionate increase in supply and a reduction in price when that is unlikely to be correct. It is likely that there was a different relationship at different places on the demand curve. Dr Bunting’s estimate

falls within the range of estimates which arises from Mr Olszak’s survey of the literature. There is neither so much merit in Dr Bunting’s process of estimation nor so little merit in Mr Olszak’s survey of the literature to warrant the Court accepting Dr Bunting’s flawed calculation of the proportionate increase in the supply of water in the market in order to conform to Dr Buntings calculation of the price elasticity of demand. Doyle’s Farm’s use of its own potato seed in the 2019/2020 water year The next issue relates to the use by Doyle’s Farm of its own potato seed in the 2019/2020 water year. In his Affidavit dated 23 June 2021 Mr Doyle explains the operation of Doyle’s Farm’s business. His evidence makes clear that the business is geared towards the systemised production of potatoes within the context of an established market constituted by two long-term customers. The market is stable both as to quantity to be supplied by Doyle’s Farm and price. Of the two customers, Snack Brands is the largest, purchasing about 60% of the Doyle’s Farm’s production. There is no doubt that Snack Brands is very important to Doyle’s Farm’s business. Reliability of supply is a key part of the ongoing relationship. Mr Doyle states: “[140] The capacity of Doyle ‘s Farm to deliver the quantities and qualities which these customers require at stable prices year after year sustains that goodwill.

In these circumstances, it is important to Doyle’s Farm that these contracts are honoured every year irrespective of water allocations as, otherwise, McCain and Snack Brands will take their business elsewhere as it is a very competitive market.” Mr Doyle explains that each year Doyle’s Farm enters into a contract with Snack Brands before it plants its crop and that the quantity to be delivered under the contract determines how extensively it plants. Doyle’s Farm usually produces 40 tonnes of potatoes per hectare. As at 2019/2020, the price per tonne paid by Snack Brands was about $350 (not including the $45 supplement). Doyle’s Farm incurred $7,435 in costs for each hectare it planted, made up of the following expense items: seed, fertiliser, chemicals, preparing the ground, leasing land, pumping and harvesting. The figure includes expenses for irrigated water within the allocations received under the Doyles’ water entitlements but not the cost of any temporary water which had to be purchased on top of the allocated water. Doyle’s Farm usually purchases seed from third-party suppliers. In 2019/2020 the cost of seed was about $670 per tonne. As set out above, in each of the three water years before the 2019/2020 water year Doyle’s Farm contracted to sell 6,000 tonnes of potatoes to Snack Brands and successfully delivered that quantity, plus or minus a small amount. The

circumstances in which Doyle’s Farm entered into and performed the contract with Snack Brands in the 2019/2020 water are explained by Mr Doyle as follows: “[143] In 2019-20, Snack Brands agreed to pay a supplement to the agreed price per tonne of $45 per tonne to partially compensate Doyle ‘s Farm for the additional cost of production in that year incurred because of the need to purchase water on the temporary market because of the successive year of zero allocations. [144] In view of this supplement, Snack Brands was only willing to take a lesser quantity of potatoes from Doyle ‘s Farm in the 2019-20 year, as they had other options, including in Victoria, where they did not have to pay any supplementary water compensation. The contracted volume was 4,500 tonnes, whereas in the previous three years it had been 6,000 tonnes. This is illustrated in table at paragraph 146 below. [145] Even at this reduced volume of potatoes in 2019/2020, and with the aid of the $45 per tonne surcharge for water, Doyle ‘s Farm was not able to deliver the contracted volume to Snack Brands in 2019-20. Against a contracted volume of 4,500 tonnes, Doyle’s Farm delivered only 3,955 tonnes. This was caused in part by the need to cut costs and we harvested smaller potatoes due to using some of our own seed to reduce costs rather than seed purchased from third parties.” Doyle’s Farm’s usual practice is to

purchase seed from third-party suppliers because the seed may be healthier and there are more avenues of recourse if something goes wrong. In the 2019/2020 water year Doyle’s Farm needed to implement cost-cutting measures because of the “huge temporary water bill” which it had paid in the 2018/2019 water year, including the finance costs it had incurred to meet that expense. Doyle’s Farm still planted 190 tonnes of seed which it had purchased from third-party suppliers but supplemented it with 200 tonnes of its own seed. When deciding to use his own seed, Mr Doyle assumed that it would be as productive as the seed purchased from the third-party suppliers. When the time came to harvest the crop it became apparent to Mr Doyle that his own seed had been less productive than he had assumed. Mr Doyle believes that the reason was the age of his seed. Had he been aware of that fact when he planted, Doyle’s Farm would have planted more of its own seed to compensate for the lower productivity. Had Doyle’s Farm not used 200 tonnes of its own seed in the 2019/2020 water year, it claims that it would have sold it for $350 per tonne. Whilst Doyle’s Farm now accepts that even if it had received higher allocations in the preceding water years it would still have contracted only to sell 4,500 tonnes to Snack Brands in the 2019/2020 water year, it continues to claim the opportunity cost of not

selling 200 tonnes of its own seed at $350 per tonne. The difficulty with the seed claim is that it cannot be looked at in isolation from the broader Snack Brands claim. Had Doyle’s Farm not used 200 tonnes of its own seed it would have had to purchase the same quantity from third parties (at $670 per tonne) which presumably would have had a higher yield with the result that Doyle’s Farm would have delivered 4,500 tonnes to Snack Brands rather than 3,955 tonnes. At the price paid by Snack Brands of $350 per tonne plus the subsidy of $45 per tonne, Doyle’s Farm would have received an extra $215,275 from Snack Brands. Given the additional 545 tonnes produced, there may have been increased harvesting costs. It is not necessary to understand how Doyle’s Farm submits that the part of the claim which is still pressed interacts with the parts which have been abandoned. The changes in allocation of water which would have occurred in the counterfactual are relatively minor. In particular, in the 2018/2019 water year Doyle’s Farm would have received 1% allocation compared to the 0% it actually received. It would still have been a very dry year and very large quantities of temporary water would still have had to be purchased at a high price. Whilst I accept that every megalitre matters to a business of irrigated agricultural production such as that operated by Doyle’s Farm, the evidence

does not give rise to an inference that a change of +1% in the 2018/2019 water year (even on top of a change of +3% in the 2017/2018 water year) would have caused Mr Doyle to make a different decision about the seed to use when planting his potato crops in the 2019/2020 water year. His evidence about the objective circumstances which pertained at the relevant time does not descend below “the need to cut costs”. Even if a modest extra allocation pursuant to Doyle’s Farm’s water entitlements had reduced the temporary water expenses Doyle’s Farm had to bear in the preceding water years, it has not been demonstrated that the economy of using Doyle’s Farm’s own seed would not still have been chosen by Mr Doyle. Whilst the parties have addressed the issue about the potato seed in the context of the quantum of loss suffered by Doyle’s Farm, it is in fact a question of causation. Doyle’s Farm has not proved that the Defendant’s alleged negligence (or more immediately the lower allocations of water in the 2017/2018 and 2018/2019 water years) was a necessary condition of its non-receipt of the proceeds from the sale of potato seed in the 2019/2020 water year. The foregone proceeds of such a sale are not part of Doyle’s Farm’s loss. The price of hay Issues The final quantum issue is the price of hay. With an extra 48.72 ML of water in the 2017/2018 water year Coobool would have produced

an extra 55.68 tonnes of hay. There is no dispute that it would have cost $52.50 for each tonne of extra production, nor is there any dispute that it would have cost Coobool $450 per tonne to purchase vetch hay if there was an occasion to do so. Coobool therefore submits that the quantum of its loss from not being allocated extra water is (55.68 x (450 - 52.5)) = $22,132.80. The Defendant submits that the quantum is overstated in three ways. First, Brett Dunn’s evidence is that it was Coobool’s practice to purchase vetch hay because of its superior nutritional value compared to other types of hay but he does not say that Coobool would have produced vetch hay in the 2017/2018 water year. The contemporaneous documents show that the hay actually sold by Coobool in the 2017/2018, 2018/2019 and 2019/2020 water years was barley hay and wheat hay at an average price of $235 per tonne. The Defendant submits that that is the appropriate price to use for assessing the quantum of Coobool’s loss, not $450 per tonne. Secondly, a further reason why the $235 price is appropriate is that it is the price which Coobool would have received as the seller which better conforms to the counterfactual. Thirdly, even if Coobool would have grown and sold vetch hay, market data shows that the average selling price in the 2017/2018 and 2018/2019 water years was $392.50 per tonne which is to be preferred

to Mr Dunn’s recollection of the price at the time. Coobool to be compensated as a buyer, not a seller It is convenient to address the second issue first. There is no dispute that Coobool would have produced extra hay in the 2017/2018 water year. The Plaintiffs submit that it is not necessary to determine what Coobool would have done with the extra hay because it was itself a thing of value and Coobool ought to be compensated for having to “replace” it. For a commodity such as hay, in which Coobool had no interest other than for its use or sale, I do not accept the Plaintiffs’ submission. Coobool did not in fact “replace” hay which it did not produce. The correct approach is to determine what Coobool would have done with the extra hay because that approach better aligns with the principle that damages are awarded with the object of placing the plaintiff in the position in which the plaintiff would have been had the tort not been committed. [272] The three options revealed by the evidence are that Coobool may have used the extra hay to feed its own livestock, it may have stored the extra hay for use in subsequent years or it may have sold it. The choice between the three options is to be determined subjectively in the light of all relevant circumstances: s 5D(3)(a) of the NSW Liability Statute. A relevant circumstance is that Coobool did not purchase any hay in the 2017/2018

water year from which it may be inferred that it had sufficient hay for the purposes of feeding its own livestock at that time. Another relevant circumstance is that Coobool’s usual practice when it receives a water allocation between 50% and 60% is to plant a small rice crop and use any additional water for cereal crops or, as described by Brett Dunn, “growing pastures for feeding livestock”. This is to be understood as a reference to feeding Coobool’s own livestock which its grazes as part of its holistic farming operations. There is nothing in Brett Dunn’s description of Coobool’s purpose in growing pasture which limits it to feeding livestock in the year in which the pasture is grown. Elsewhere in his Affidavit dated 25 June 2021 Brett Dunn refers to hay being stored and used in subsequent years. There is no mention in any of Brett Dunn’s three Affidavits to pasture being grown for the purpose of sale as hay. Other relevant circumstances are that on 20 December 2016 and 9 February 2017 Coobool contracted to sell approximately 16 tonnes of vetch hay. [273] The inference to be drawn from those sales is that on each date Coobool considered that it had more hay than it needed and it would prefer to have the money. Apart from a small sale of 2.5 tonnes of rice straw on 20 October 2017, Coobool did not sell any hay in the 2017/2018 water year. Coobool did not sell any hay in the

2018/2019 water year. Nor did it purchase any hay but it did use hay which had been harvested “in the prior years” to feed its own livestock. Depending on the type of hay and the price, the proceeds from the sale of 55.68 tonnes of hay would have been between $13,000 and $25,000. The inference to be drawn from all these circumstances is that Coobool would not have used the extra hay to feed its own livestock in the 2017/2018 water year. It already had enough for that purpose. The inference to be drawn is that Coobool would have stored the extra hay for future use rather than sell it. Brett Dunn explains in his Affidavits that Coobool’s primary interest in growing pasture is to feed its own livestock and to manage the erosion of soil on its land. Selling hay was not a material part of Coobool’s business. The evidence of sales suggest that selling was more an opportunistic occurrence amidst an otherwise methodical operation. There were no material sales in the 2017/2018 water year, which does not necessarily indicate that there would not have been had Coobool been able to grow more hay, but Coobool ended the year with a stockpile which it was able to use in the 2018/2019 water year. This suggests that Coobool husbanded the resource which had value to its future operations. The water allocation in the 2017/2018 would have been 54% which, although not high, did not give rise to the

straitened circumstances subsequently experienced with the 0% allocation in the 2018/2019 water year. Whilst the proceeds from a sale of hay would not have been insignificant in the context of Coobool’s financial performance in the 2017/2018 water year, there is nothing to suggest that Coobool would have thought that there was a financial necessity to earn additional revenue by selling hay it could otherwise store and feed to its livestock in the future. Storing the hay for future use would have had the added advantage of reducing the risk of introducing pests and diseases which might accompany any hay which Coobool needed to be purchased from external sources. Having regard to all the relevant circumstances, the inference to be drawn is that Coobool would have stored the extra hay grown by it in the 2017/2018 water year. The more appropriate way to compensate Coobool for not producing the extra hay is to calculate the loss having regard to the price Coobool would have had to pay for the extra 55.68 tonnes of hay. Although not necessary to decide, the Defendant’s submission that Coobool’s loss is to be calculated using the selling price of $235 per tonne is rejected. That price is based on limited data from a small number of sales of barley hay and wheat hay which Coobool actually made in a three-year period, most of which were significantly after the 2017/2018 water year when

the extra hay would have been grown. Given the small number of sales, the weekly industry data is a better guide had a selling price been relevant. The price of vetch hay Once it is accepted that Coobool is to be compensated on the basis of the price it would have paid for the extra 55.68 tonnes of hay, the correct price to use is the price of vetch hay. The price of vetch hay is appropriate not because of Brett Dunn’s evidence that Coobool would have purchased that type of hay but because the inference to be drawn is that Coobool would have grown that type of hay. It has superior nutritional qualities. There is no need to add additives which may be needed for other types of hay. There is no apparent reason why Coobool would have chosen to grow any other type of hay. Mr Dunn’s evidence about the purchase price and market data It also follows that appropriate price to use is $450 per tonne. Brett Dunn’s evidence was that $450 per tonne was the price, not only for the hay but also for delivery and other fees. The evidence was not challenged and I accept it. The value to Coobool from growing extra hay would not only have been that it did not have to purchase hay from third parties but also that the extra hay would already have been on site. Coobool will not be overcompensated if the $450 price is used per tonne. Summary The determination of these matters provides the framework

within which the loss suffered by Coobool can be calculated. Summary of quantum The determination of the three outstanding issues listed at [1856], together with the parties’ agreement about the other elements of the counterfactual, provide the framework for the final calculation of the loss suffered by the Plaintiffs and by RyanAG. The expert accountants have an agreed structure for each such calculation to be performed. The evidence includes a spreadsheet with “switches”. With sufficient attention, the switches are said to permit the calculations to be undertaken for the each of the Plaintiffs and for RyanAG. Had I found that the Defendant was liable to the Plaintiffs I would nonetheless have directed the parties to agree on the final figures. That work is unnecessary given my conclusion that the Defendant is not liable.

INHERENT RISK Issue does not arise The Defendant positively pleads that it is not in any event liable to the Plaintiffs because the loss suffered by them is the result of the materialisation of an inherent risk. It submits that liability for such loss is excluded by s 5I of the NSW Liability Statute or s 55 of the Wrongs Act 1958. Whether or not it is a defence, the inherent risk pleading raises a question of substance. [274] It is to be determined according to the law of the place where the tort was committed, which is the Australian Capital Territory. The statutory provisions relied upon by the Defendant do not apply. There is no corresponding provision in the ACT Liability Statute. It is not therefore necessary to determine this issue. The parties have nonetheless made submissions on the issue so I will determine it. Defendant’s submissions Section 5I of the NSW Liability Statute provides as follows: 5I No liability for materialisation of inherent risk (1) A person is not liable in negligence for harm suffered by another person as a result of the materialisation of an inherent risk. (2) An inherent risk is a risk something occurring that cannot be avoided by the exercise of reasonable care and skill. (3) This section does not operate to exclude liability in connection with a duty to warn of a risk. Section 55 of the Wrongs Act 1958 is in the same terms, except the definition

of “inherent risk” refers to avoidance by the exercise of reasonable care, not reasonable care and skill. In paragraph 208 of the Defence to Fourth Further Amended Statement of Claim dated 8 August 2025, the Defendant alleges that in any water year the exercise of the Defendant’s functions and powers carried a risk that the allocation of water to the States “may be reduced” which may lead to “a reduction” in the volume of water allocated to particular water entitlement holders. It is further alleged that that risk was an inherent risk because it could not be avoided by the exercise of reasonable care and skill. It is then alleged in generalised terms that any harm suffered by the Plaintiffs was the result of the materialisation of the risk. There is only a minor development of that economical pleading in the Defendant’s Closing Submissions dated 6 November 2025. The Defendant says that the harm suffered by the Plaintiffs was between 1% and 4% of their water entitlements and that the conveyance and evaporative losses sufficient to produce “such small decreases” in allocation were inevitable. The risk of receiving “slightly less” water was not something which could have been avoided through the exercise of reasonable care and skill. It is submitted that s 5I therefore applies and the Defendant is not liable for the harm suffered by the Plaintiffs. Not harm as a result of the

materialisation of inherent risk There are two flaws in the Defendant’s argument. They may be a variation on the same theme but either way they make clear that s 5I has no application in this case. First, on a number of occasions in its Closing Submissions on this issue the Defendant refers to the risk of something occurring. In each such reference the something is phrased in relative terms. The submissions cannot be understood apart from the relativity. By reference to what would the allocations to the States have been reduced? Small decreases on what? Slightly less than what? In each case the answer is that which would have been allocated to the States and received by the Plaintiffs had the Defendant exercised reasonable care. Once that is understood, the risk pleaded in paragraph 208(a) of the Defence and submitted in paragraph 146 of the Defendant’s Closing Submissions was by definition not an inherent risk within the meaning in s 5I(2). Secondly, if as the Defendant appears to submit in paragraph 146 of its Closing Submissions the risk was of the occurrence of conveyance and evaporation losses, then the risk was inevitable but the harm suffered by the Plaintiffs was not a result of the materialisation of that risk. The harm in respect of which the Plaintiffs sue is alleged to have been the result of the overbank transfers occurring in the 2017/2018 and 2018/2019 water years. For these reasons, there is no substance in the inherent risk defence.

COMMON QUESTIONS For these reasons, the questions set out in Exhibit P are to be answered as follows: Q1. Are any, and, if so, which, of the following questions common to some or all of the Group Members? A1. Apart from Question 9(b), all the following questions are common to some or all of the Group Members. Question 9(b) is common to all Group Members who purchased water on the relevant temporary water market in the 2017/2018, 2018/2019 and/or 2019/2020 water years. Governing Law Q2. What is the governing law applicable to the claims of Plaintiffs and Group Members against the Defendant? A2. The substantive issues are to be determined according to the law of the Australian Capital Territory. Procedural issues are to be determined according to the law of New South Wales. Duty of care Q3. Did the Defendant owe a duty of care to the Plaintiffs and Group Members to take reasonable care in exercising: (a) the River Operations Functions; (b) further or alternatively, the Environmental Water Functions; (c) further or alternatively, the Release Power, to avoid the Risks of Harm? A3. No. Breach of duty Q4. If the Defendant owed the Plaintiffs and Group Members the duty of care referred to in question 3, did it breach that duty of care in the 2017/2018 water year by: (a) conducting the 2017/2018 Overbank Transfers; and/or (b) failing to operate the River Murray System so as to avoid

making the 2017/2018 Overbank Transfers; and/or (c) failing to act in compliance with the Lake Victoria Operating Strategy? A4. No. Q5. If the Defendant owed the Plaintiffs and Group Members the duty of care referred to in question 3, did it breach that duty of care in the 2018/2019 water year by: (a) conducting the 2018/2019 Overbank Transfers; and/or (b) failing to operate the River Murray System so as to avoid making the 2018/2019 Overbank Transfers; and/or (c) failing to act in compliance with the Lake Victoria Operating Strategy? A5. No. Causation Q6. If the answer to question 4 and/or 5 is “Yes”, did any such breaches cause the holders of NSW Entitlements to: (a) receive a reduction in the volume of water allocated to those entitlements; or (b) lose a valuable opportunity to receive a higher volume of water allocated to those entitlements, in the 2017/18 and/or 2018/19 water years? A6. Not necessary to answer. Q7. If the answer to question 4 and/or 5 is “Yes”, did any such breaches cause the holders of Victorian Entitlements to: (a) receive a reduction in the volume of water allocated to those entitlements; or (b) lose a valuable opportunity to receive a higher volume of water allocated to those entitlements, in the 2019/20 water year? A7. Not necessary to answer. Q8. If the answer to question 6(a) and/or 7(a) is “Yes”, did this reduction in the volume of water allocated

cause higher prices of water on the relevant temporary water markets in the southern connected Murray-Darling Basin in the 2017/18, 2018/19 and/or 2019/20 water years? A8. Not necessary to answer. Q9. Did the Plaintiffs or Group Members suffer at least some loss or damage by reason of: (a) any reduction in the volume of water as referred to in question 6(a) and/or 7(a); (b) any payment of a higher price of water on the relevant temporary water markets, being the markets referred to in question 8; (c) any loss of a valuable opportunity to receive a higher volume of water as referred to in question 6(b) and/or 7(b); and/or (d) any loss of a valuable opportunity to pay a lower price of water on the relevant temporary water markets, being the markets referred to in question 8? A9. Not necessary to answer. Q10. If any of the Plaintiffs or Group Members suffered harm in the form of: (a) any one or more of the forms of loss or damage set out in question 9; (b) any other loss or damage caused by suffering any one or more of the forms of loss or damage set out in question 9, is it appropriate for the scope of the MDBA’s liability to extend to that harm having regard to s 5D(1)(b) of the NSW CLA, s 51(1)(b) of the Vic Wrongs Act, or s 43(1)(b) of the ACT CLWA (if any of those provisions is applicable to the claims of the Plaintiffs and Group Members)? A10. Not necessary to answer. Loss

or damage Q11. If the answer to question 9(a) is “Yes”, what was the amount of the reduction in the volume of water allocated to the entitlements referred to in question 6(a) and/or 7(a)? A11. Not necessary to answer. Q12. If the answer to question 9(b) is “Yes”, what were the increases to the monthly average prices of water on the relevant temporary water markets referred to in question 8? A12. Not necessary to answer. Q13. If the answer to question 9(c) is “Yes”, what was the value of the lost opportunity to receive a higher volume of water allocated as referred to in question 6(b) and/or 7(b)? A13. Not necessary to answer. Q14. If the answer to question 9(d) is “Yes”, what was the value of the lost opportunity to pay a lower price of water on the relevant temporary water markets referred to in question 8? A14. No necessary to answer. Inherent risk Q15. If s 5I of the NSW CLA or s 55 of the Vic Wrongs Act is applicable to the claims of the Plaintiffs and Group Members, was there an inherent risk, within the meaning of those provisions, that, in any water year, the exercise of the MDBA’s functions and powers under the Act and the Agreement might result in: (a) a reduction in the volume of water available to NSW, Victoria and South Australia under the Agreement; and (b) consequently, a reduction in the volume of water allocated to particular retail entitlement holders in any water year? A15. Does not arise. Q16. If the answer to question 15 is “Yes”, has any harm suffered by the Plaintiffs or Group Members been suffered as the result of the materialisation of that inherent risk, such that, pursuant to s 5I of the NSW CLA or s 55 of the Vic Wrongs Act, the MDBA is not liable to any such Plaintiff or Group Member for that harm? A16. Does not arise.

ORDERS Uniform Civil Procedure Rules 2005 r 28.4(2) relevantly applies to the circumstance where the decision of a separate question substantially disposes of the proceedings or of the whole of any claim for relief in the proceedings. In that case the Court may, as the nature of the case requires, dismiss the proceedings. Section 179(a) of the Civil Procedure Act 2005 provides that a judgment given in representative proceedings must describe or otherwise identify the group members who will be affected by it. The orders of the Court will be: The proceedings on the Fifth Further Amended Statement of Claim filed on 30 September 2025 brought by the Plaintiffs on behalf of the Group Members described in paragraphs 8 and 9 of the Fifth Further Amended Statement of Claim be dismissed. The Plaintiffs pay the Defendant’s costs. Any party which wants to apply for a different or further costs order has liberty to apply, such liberty to be exercised within 21 days by email to my Associate. ** Annexure Endnotes 1. The “water year” which is observed by the Defendant and, for some purposes, some State water authorities, conforms to the seasons. Like winter, it commences on 1 June and, like autumn, it ends on 31 May. For some other purposes some State water authorities observe a water year with a one-month lag behind the Defendant’s water year.

2. Tcpt, 19 August 2025, pp 797(9)-798(11).

3. Tcpt, 21 August 2025, p 932(38).

4. Commencing at Tcpt, 21 August 2025, p 913(1).

5. Commencing at Tcpt, 21 August 2025, p 929.

6. Commencing at Tcpt, 21 August 2025, p 934(31).

7. Tcpt, 21 August 2025, p 936(14).

8. Tcpt, 21 August 2025, p 936(14). 9. (1959) 101 CLR 298; [1959] HCA 8.

10. John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36 at [102] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

11. John Pfeiffer v Rogerson at [99].

12. Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; [1990] HCA 55 at 567 (Mason CJ, Deane, Dawson and Gaudron JJ).

13. Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575; [2002] HCA 56 at [43] (Gleeson CJ, McHugh, Gummow and Hayne JJ).

14. Dow Jones v Gutnick at [43]; Voth v Manildra Flour Mills at 568.

15. Hazlett v Presnell (1982) 149 CLR 107; [1982] HCA 58 at 115-119 (Gibbs CJ, Mason, Murphy, Wilson, Brennan and Deane JJ).

16. Ward v The Queen (1980) 142 CLR 308; [1980] HCA 11.

17. Voth v Manildra Flour Mills at 576 (Brennan J). 18. [2025] FCA 796. 19. [2019] VSC 331.

20. Voth v Manildra Flour Mills at 569 (Mason CJ, Deane, Dawson and Gaudron JJ).

21. Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 22) [2019] NSWSC 1657 (Beech-Jones J) (“the Queensland Floods case”); Queensland Bulk Water Supply Authority (t/as Seqwater) v Rodriguez & Sons Pty Ltd (2021) 393 ALR 162; [2021] NSWCA 206 (Basten, Meagher and Leeming JJA) (“the Queensland Floods appeal”).

22. At [438].

23. Pabai at [81].

24. Sutherland Shire Council v Heyman (1985) 157 CLR 424; [1985] HCA 41 at 469 (Mason J).

25. Doyle's Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) (2021) 106 NSWLR 41; [2021] NSWCA 246 at [21] (Leeming JA, Bathurst CJ and Bell P agreeing).

26. See Glavinic v Commonwealth [2023] ACTSC 361 at [289]-[290] (Mossop J) which considered s 36 (extension of liability for mental harm) and s 100 (damages for loss of capacity to perform domestic services). 27. (1988) 165 CLR 55; [1988] HCA 29 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ).

28. Moorebank at 62-63.

29. Moorebank at 63.

30. Maguire v Simpson (1977) 139 CLR 362; [1977] HCA 63 (Barwick CJ, Gibbs, Stephen, Mason, Jacobs and Murphy JJ).

31. John Pfeiffer v Rogerson at [99]. 32. [2019] NSWSC 1682.

33. Doyle's Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) at [43].

34. Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23 at [61] (Bell, Gageler, Keane, Nettle and Gordon JJ).

35. Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; [2001] HCA 1 at [130] (McHugh J). 36. (2002) 211 CLR 119; [2002] HCA 47 at [23] (Gleeson CJ, Gaudron, Gummow, Hayne and Callinan JJ).

37. At [63].

38. Strong v Woolworths Ltd (2012) 246 CLR 182; [2012] HCA 5 at [18] (French CJ, Gummow, Crennan and Bell JJ). 39. (1998) 194 CLR 355; [1998] HCA 28 at [78] (McHugh, Gummow, Kirby and Hayne JJ).

40. Neal v Ambulance Service of New South Wales [2008] NSWCA 346 at [39] (Basten JA, Tobias JA and Handley AJA agreeing).

41. Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55 at 246 (McHugh J) and 272-273 (Kirby J); Rosenberg v Percival (2001) 205 CLR 434; [2001] HCA 18 at [221] (Callinan J); Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 560 (Kirby P) and 581 (Samuels JA, Meagher JA agreeing). 42. (1997) 191 CLR 471; [1997] HCA 29 at 556.

43. Australian Securities and Investments Commission v Edensor Nominees at [72] (Gleeson CJ, Gaudron and Gummow JJ).

44. Vairy v Wyong Shire Council (2005) 223 CLR 422; [2005] HCA 62 at [60] (Gummow J).

45. Dansar Pty Ltd v Byron Shire Council (2014) 89 NSWLR 1; [2014] NSWCA 364 at [158] (Meagher JA, Leeming JA agreeing).

46. Vairy v Wyong Shire Council at [124]. 47. cf the Queensland Floods case, Chapter 11, [34].

48. Cullen v New South Wales [2026] HCA 19 at [23] (Gageler CJ, Gordon, Steward, Gleeson, Jagot and Beech-Jones JJ).

49. Mallonland Pty Ltd v Advanta Seeds Pty Ltd (2024) 418 ALR 639; [2024] HCA 25 at [30] (Gageler CJ, Gordon, Steward, Gleeson, Jagot and Beech-Jones JJ agreeing) cf [71] (Edelman J).

50. ACT Liability Statute, s 40.

51. Fifth Further Amended Statement of Claim, paragraph 205.

52. Tame v New South Wales (2002) 211 CLR 317; [2002] HCA 35 at [6] (Gleeson CJ).

53. Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36 at [70]-[73] (McHugh J).

54. The Mallonland case at [31].

55. The Mallonland case at [30] cf [89] (Edelman J).

56. The Mallonland case at [29] and [32]; ACT Liability Statute, s 43(1)(a).

57. The Mallonland case at [36]-[37] cf [59] and [86] (Edelman J).

58. The Mallonland case at [94] (Edelman J). An inclusive list of 17 salient features is in Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 at [103] (Allsop P).

59. The Mallonland case at [38].

60. At [112].

61. The Mallonland case at [83] (Edelman J).

62. Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54 at [149] (Gummow and Hayne JJ).

63. Minister for the Environment v Sharma (2022) 291 FCR 311; [2022] FCAFC 35 at [338] (Allsop CJ).

64. The Mallonland case at [39].

65. Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36 at [22] (French CJ); The Mallonland case at [25].

66. Pyrenees Shire Council v Day (1998) 192 CLR 330; [1998] HCA 3 at [18]-[19] (Brennan CJ) cf [163] (Gummow J) and [230] (Kirby J); Ibrahimi v Commonwealth of Australia (2018) 366 ALR 341; [2018] NSWCA 321 at [216] (Payne JA, Meagher JA and Simpson AJA agreeing); Sharma at [340].

67. The Mallonland case at [33].

68. The Mallonland case at [66]-[67].

69. The Mallonland case at [36].

70. The Mallonland case at [32].

71. Perre v Apand at [101]-[102], [106] and [133] (McHugh J).

72. The Mallonland case at [31]-[32].

73. Perre v Apand at [107] (McHugh J) cf [336] (Hayne J).

74. At [112] (McHugh J) cf [353] (Hayne J). 75. (2001) 207 CLR 562; [2001] HCA 59 at [60] (Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ).

76. Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1; [1999] HCA 59 at [292] (Hayne J).

77. X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 739 (Lord Browne-Wilkinson).

78. Graham Barclay Oysters at [146].

79. Electricity Networks Corporation v Herridge Parties (2022) 276 CLR 271; [2022] HCA 37 at [21] (Kiefel CJ, Gageler, Gordon, Edelman and Steward JJ).

80. Cullen v New South Wales at [35].

81. The Electricity Networks case at [20] and [27]-[29].

82. Graham Barclay Oysters at [145]; Dansar at [108].

83. The Electricity Networks case at [27].

84. Commonwealth Statute, s 20.

85. Commonwealth Statute, s 33.

86. Commonwealth Statute, s 86A.

87. Commonwealth Statute, ss 86C and 86D.

88. Commonwealth Statute, s 171.

89. Commonwealth Statute, s 176.

90. Commonwealth Statute, s 189.

91. Commonwealth Statute, ss 178(2)(a) and 178(3).

92. Commonwealth Statute, ss 178(2)(b) and 186.

93. Commonwealth Statute, s 199.

94. Commonwealth Statute, s 202(3).

95. Commonwealth Statute, ss 86F, 86G and 86J. 96. 2017/2018 O&O Document, cl 4(3)(b)(iv). 97. 2017/18 O&O Document, cl 12. 98. 2017/2018 O&O Document, cl 4(6)(a)(iv).

99. Commonwealth Statute, ss 89(3) and (5).

100. Commonwealth Statute, s 89(2).

101. Productivity Commission Act 1998, s 12.

102. Commonwealth Statute, s 52A.

103. NSW Statute, s 63.

104. NSW Statute, s 66.

105. NSW Statute, s 56.

106. NSW Statute, s 57.

107. NSW Statute, s 59.

108. N v Poole Borough Council [2020] AC 780 at [73] (Lord Reed); DFX v Coventry City Council [2021] EWHC 1382 (QB) (Lambert J); JP SPC 4 and another v Royal Bank of Scotland International Ltd [2022] 4 All ER 431 (Lords Hamblen and Burrows), [61]; HXA v Surrey County Council; YXA v Wolverhampton City Council [2024] 3 All ER 341 at [53], [57], [87], [165] and [196] (Lords Burrows and Stephens with, Lords Reed, Briggs and Sales agreeing).

109. Commonwealth House of Representatives, Parliamentary Debates (Hansard), 25 September 2008.

110. Weber v Greater Hume Shire Council (2019) 100 NSWLR 1; [2019] NSWCA 74 at [21] (Basten JA, Gleeson JJA agreeing) cf [209] (Sackville JA).

111. M Leeming, Statutory Foundations of Negligence (2019) at 24-25.

112. Bevan v Coolahan (2019) 101 NSWLR 86; [2019] NSWCA 217 at [48]-[51] (Basten, Leeming and McCallum JJA).

113. Sullivan v Moody at [60].

114. For example, cll 88 and 94 of the Agreement. 115. cf the Queensland Floods appeal at [138].

116. Graham Barclay Oysters at [145]; Dansar at [108].

117. Fifth Further Amended Statement of Claim, Annexure A (k); Annexure B (e).

118. Fifth Further Amended Statement of Claim, paragraph 77.

119. Commonwealth Statute, s 172(1)(ea).

120. The Mallonland case at [61] (Edelman J).

121. The Electricity Networks case at [27].

122. Plaintiffs’ Closing Submissions (25 October 2025), [654].

123. The Mallonland case at [33].

124. The Mallonland case at [66]-[67] (Edelman J).

125. The Queensland Floods case, Chapter 11, [35].

126. Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HCA 42 at [60] (Gummow J).

127. Perre v Apand at [37] (Gaudron J).

128. Perre v Apand at [15] (Gleeson CJ).

129. Perre v Apand at [15].

130. Perre v Apand at [112] (McHugh J) cf [209] (Gummow J) cf [353] (Hayne J).

131. Fifth Further Amended Statement of Claim, paragraph 77.

132. The Mallonland case at [37].

133. The Queensland Floods appeal at [7].

134. The Queensland Floods case, Chapter 11, [62], [93]-[94].

135. The Queensland Floods case, Chapter 11, [64]-[67].

136. University College Cork – National University of Ireland v Electricity Supply Board [2018] IECA 82 (Ryan P). 137. (2012) 42 WAR 287; [2012] WASCA 79 (McLure P, Pullin and Buss JJA).

138. The Queensland Floods case, Chapter 11, [70].

139. The Queensland Floods case, Chapter 11, [90].

140. The Queensland Floods case, Chapter 11, [59]-[62].

141. The Queensland Floods case, Chapter 11, [98]-[99].

142. The Queensland Floods case, Chapter 11, [100].

143. The Queensland Floods case, Chapter 11, [13].

144. Electricity Networks Corporation v Herridge Parties (2022) 276 CLR 271; [2022] HCA 37 (Kiefel CJ, Gageler, Gordon, Edelman and Steward JJ).

145. Minister for the Environment v Sharma (2022) 291 FCR 311; [2022] FCAFC 35 at [338] (Allsop CJ, Beach and Wheelehan JJ).

146. Pabai v Commonwealth of Australia (No 2) [2025] FCA 796 (Wigney J). 147. (2001) 206 CLR 512; [2001] HCA 29 (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ). 148. (1995) 182 CLR 609; [1995] HCA 17 (Mason CJ, Deane, Toohey and Gaudron JJ).

149. PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312 at [15] (Leeming JA, Basten JA and Simpson AJA agreeing).

150. Commonwealth Statute, s 178(3).

151. Rogers v Whitaker (1992) 175 CLR 479; [1992] HCA 58 at 483 (Mason CJ, Brennan, Dawson, Toohey and McHugh JJ).

152. The Queensland Floods appeal at [137].

153. Farriss v Axford [2023] NSWCA 255 at [57]-[58] (Meagher, Mitchelmore JJA and Simpson AJA); Perez de la Sala v Perez de la Sala [2026] NSWCA 160 at [41] (Bell CJ, Payne and Stern JJA). 154. 2017/2018 O&O Document, cl 10(1)(a). 155. 2017/2018 O&O Document, cl 10(3). 156. 2017/2018 O&O Document, cl 10(1)(b)(ii). 157. 2017/2018 O&O Document, cl 10(1)(b)(iii). 158. 2017/2018 O&O Document, cl 10(1)(c). 159. 2017/2018 O&O Document, cl 10(1)(b)(i). 160. 2017/2018 O&O Document, cl 10(2).

161. Affidavit of Andrew Wilmont Bishop (30 June 2022), [189]-[192].

162. ACT Liability Statute, s 43(1)(c); Pyrenees Shire Council v Day at [177] (Gummow J).

163. ACT Liability Statute, s 43(1)(c); Dederer at [51] (Gummow J).

164. ACT Liability Statute, s 43(2).

165. Wyong Shire Council v Shirt (1980) 146 CLR 40; [1980] HCA 12 at 47-48 (Mason J, Stephen, Murphy, Aickin and Wilson JJ agreeing).

166. Dederer at [43].

167. Dederer at [59].

168. ACT Liability Statute, ss 42, 43(1)(a).

169. Duchess of Argyll v Beuselinck [1972] 2 Lloyd’s Rep 172 at 185 (Megarry J).

170. Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24 at 424 (Brennan CJ, Dawson and Toohey JJ).

171. Voli v Inglewood Shire Council (1963) 110 CLR 74; [1963] HCA 15 at 85 (Windeyer J).

172. Sibley v Kais (1967) 118 CLR 424; [1967] HCA 43 at 427-8 (Barwick CJ, McTiernan, Kitto, Taylor and Owen JJ).

173. Plaintiffs’ Reply Closing Submissions (Chapter 1) (12 November 2025), [53].

174. Plaintiffs’ Closing Submissions (25 October 2025), [721].

175. Plaintiffs’ Closing Submissions (25 October 2025), [721].

176. ACT Liability Statute, s 46.

177. ACT Liability Statute, s 42.

178. Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541 at 556 (Kirby P).

179. Rogers v Whitaker at 493 (Gaudron J).

180. First Expert Report of Tony Ladson (12 December 2023), [256(g)]. 181. 2017/2018 AOP Document, pp 12-13.

182. Plaintiffs Closing Submissions (25 October 2025), [164].

183. Plaintiffs Closing Submissions (25 October 2025), [737].

184. Second Expert Report of Tony Ladson (16 May 2025), [55].

185. Tcpt, 22 August 2025, p 1181(28)-(32).

186. Tcpt, 10 November 2025, p 3166(31)-(41).

187. First Affidavit of Joseph Patrick Davis (27 July 2022), [596], [599] and [704]; Second Affidavit of Joseph Patrick Davis (5 July 2024), [55].

188. Cf [704(a)(iii)].

189. Tcpt 21 August 2025, p 1193(23)-(28).

190. First Affidavit of Andrew Wilmont Bishop (30 June 2022), [493].

191. Cullen v New South Wales at [34].

192. Exhibit 17.

193. O&O Document, cl 4(6).

194. The Queensland Floods case, Chapter 11, [97].

195. Wyong Shire Council v Shirt at 47-48.

196. Tabet v Gett (2010) 240 CLR 537; [2010] HCA 12 at [109] (Kiefel J).

197. Tabet v Gett at [111].

198. Tabet v Gett at [113].

199. Tabet v Gett at [140].

200. Vairy v Wyong Shire Council at [126].

201. Hill v Van Erp (1997) 188 CLR 159; [1997] HCA 9 (Brennan CJ, Dawson, Toohey, Gaudron and Gummow JJ).

202. Tekin v Stratford [2026] NSWCA 54 (Adamson JA, Mitchelmore and Stern JJA agreeing).

203. Chamberlain v Ormsby [2005] NSWCA 454 (Tobias JA, Giles JA agreeing).

204. The Queensland Floods case, Chapter 1, [8].

205. Chamberlain v Ormsby at [107(f)]; Timberland Property Holdings Pty Ltd v Bundy [2005] NSWCA 419 at [37] (Basten JA, Handley JA and Hunt AJA agreeing).

206. Strong v Woolworths.

207. The Queensland Floods appeal at [415].

208. Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 at 355 (Mason CJ, Dawson, Toohey and Gaudron JJ).

209. The Queensland Floods case, Chapter 13, [19].

210. The Queensland Floods appeal. 211. [2007] NSWSC 36 (Studdert J).

212. Tabet v Mansour at [378].

213. Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460; [2002] HCA 9 at [16] (Gleeson CJ).

214. Trading Rules For Declared Water Systems 2014 (Vic), cl 12F2.

215. Commonwealth Statute, s 10(2). 216. (2024) 281 CLR 39; [2024] HCA 17 at [127] (Edelman, Steward, Gleeson and Beech-Jones JJ).

217. Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3 at [74] (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ). 218. at [129]-[132].

219. PPK Willoughby Pty Ltd v Baird at [74].

220. Cessnock v 123 259 932 at [132]. 221. (1722) 1 Stra 505; (1722) 93 ER 664.

222. The Queensland Floods appeal at [451].

223. In cross-examination Mr Podger and Mr Barma accepted the 9,800 ML/day figure when Question 4 is being considered.

224. First Expert Report of Tony Ladson (22 December 2023), Table 64. 225. (2000) 49 NSWLR 262; [2000] NSWCA 29.

226. East Metropolitan Health Service v Ellis (by his next friend Ellis) [2020] WASCA 147 at [282] (Quinlan CJ, Mitchell and Beech JJA).

227. M & E M Hull Pty Limited v Thompson [2001] NSWCA 359 at [21] (Rolfe AJA, Sheller JA & Davies AJA agreeing); Samm Property Holdings Pty Ltd v Shaye Properties Pty Ltd (2017) 345 ALR 633; [2017] NSWCA 123 at [140] (McColl JA, Gleeson JA and Sackville AJA agreeing).

228. Seltsam Pty Ltd v McGuiness at [84] (Spigelman CJ, Davies AJA agreeing).

229. Transport for NSW v Hunt Leather Pty Ltd (2024) 115 NSWLR 489; [2024] NSWCA 227 at [99] (Bell CJ, Leeming and Mitchelmore JJA).

230. Sellars v Adelaide Petroleum NL at 355.

231. At 364. 232. (2016) 257 CLR 440; [2016] HCA 18 (French CJ, Kiefel, Gageler, Keane and Gordon JJ).

233. At [124].

234. At 355, 364.

235. At 364.

236. Tabet v Gett at [124] (Kiefel J).

237. Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20 at [7] (Deane, Gaudron and McHugh JJ).

238. Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135 at [99] (Barrett AJA).

239. Sellars v Adelaide Petroleum NL at 355.

240. Mal Owen Consulting Pty Ltd v Ashcroft at [37].

241. Tabet v Gett at [124] (Kiefel J).

242. Badenach v Calvert at [40] (French CJ, Kiefel and Keane JJ) (citations omitted).

243. Badenach v Calvert at [97]-[98] (Gordon J).

244. Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602; [1961] HCA 35 at 620-621 (Taylor J).

245. McLennan Asset Services Pty Ltd v Macquarie Investments Ltd [2017] NSWSC 1811 at [35] (McDougall J).

246. Graham Barclay Oysters at [192].

247. Wyong Shire Council v Shirt at 47.

248. ACT Liability Statute, s 46.

249. Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; [1986] HCA 3 at 12 (Mason, Wilson and Dawson JJ). 250. (1991) 174 CLR 64; [1991] HCA 54.

251. Malec v JC Hutton Pty Ltd at [7].

252. Hunt Leather Pty Ltd v Transport for NSW [2025] HCA 53 at [10] (Gageler CJ) cf [166]-[171] (Gordon and Edelman JJ) cf [257] (Jagot J) cf [262] (Beech-Jones J).

253. Tcpt, 11 November 2025, p 3226(5)-(6).

254. At [30]. 255. (2023) 111 NSWLR 304; [2023] NSWCA 88 (Ward P, Brereton JA and Griffiths AJA).

256. Anchorage Capital Master Offshore Ltd v Sparkes at [385]. 257. [2012] FCA 1028 at [1124] (Rares J). 258. [2014] NSWSC 1959 at [191]-[192] (Ball J). 259. [2015] TASSC 52 at [84]. 260. [2016] QSC 279 at [122] (appeal allowed on other grounds: Central Highlands Regional Council v Geju Pty Ltd [2018] 3 Qd R 550; [2018] QCA 38). 261. [2011] NSWCA 303 at [229] (Campbell JA, Basten JA and Sackar J agreeing). 262. [2008] NSWSC 927 at [245]. 263. [2016] NSWCA 308 at [54] (Sackville AJA, McColl JA and Barrett AJA agreeing). 264. [2018] WASC 167 (Vaughan J).

265. AvWest Aircraft Pty Ltd v Clayton Utz at [77]. 266. [2019] NSWSC 704.

267. At [66]-[70].

268. At [38].

269. Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297; [1981] HCA 26 at 321 (Mason and Wilson JJ).

270. Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd and Woolworths Limited [2006] FCA 826 at [839]-[840] (Allsop J).

271. See Dr Bunting’s explanation of his equation at paragraph 3.7.2(k) of the Joint Report dated 1 July 2025.

272. Gates v City Mutual Life Assurance Society Ltd at 12.

273. These sales are apparent from the contemporaneous invoices summarised in Appendix K.2 to the Report of Mr Howman-Giles dated 20 December 2024.

274. Paul v Cooke (2013) 85 NSWLR 167; [2013] NSWCA 311 at [79]-[80] (Leeming JA, Basten and Ward JJA agreeing). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 August 2026