Murray-Darling Basin Authority wins $1.5 billion class action

The New South Wales Supreme Court has found in favour of the Murray-Darling Basin Authority (MDBA) in a long-running class action over river management.

The action, which sought damages of between $750 million and $1.5 billion, was brought on behalf of 28,000 irrigators from the central Murray region of southern NSW and the Goulburn Murray region of northern Victoria.

It claimed the MDBA mismanaged river operations, causing lower water allocations, a loss of profits and higher temporary water prices which meant some farmers could not meet supply contracts.

But Justice Tim Faulkner found the MDBA had no duty of care to avoid pure economic loss to one group of people above others, and ordered the plaintiffs to pay the defendant's costs.

In handing down his findings, Justice Faulkner said the MDBA was the independent body responsible for implementing the water-sharing framework agreed to by the states, and that the Murray River system was to be operated in the "public interest".

He accepted the defendant's submission that having a duty to irrigators would distort its independent role in exercising the provisions of the agreement in sharing water between the states.

The justice also found that as water allocations to individual irrigators were determined by respective states, there was not a sufficient relationship between the MDBA and the plaintiffs for a duty of care to be owed.

Decisions in 'dynamic' river system

The case centred around over-bank flooding at the Barmah Choke, a narrow section of the Murray River between Tocumwal and Deniliquin in southern NSW, from 2017 to 2019.

The plaintiffs argued the MDBA failed to follow its own operating plan, that over-bank transfers which flooded the Barmah-Millewa forest were unjustified and known by the MDBA to cause high transmission losses.

The defence argued that over-bank transfers were not "unprecedented" and were done to ensure there was sufficient water to meet supply in South Australia.

It said the decisions were guided by modelling and the "experience of the MDBA operations team".

During the hearing last year, counsel for the MDBA, Sophie Callan SC, said the lawsuit was the latest manifestation of a problem that had existed since Federation.

"Namely that the waters of the Murray are a scarce resource, subject to conflicting claims between those interested in the use and conservation of the waters," she told the court.

Justice Faulkner described the Murray system as "unpredictable and dynamic".

"The decisions made by the MDBA were made in the context of balancing the risk of a shortfall [in meeting water requirements to SA] and the risk of a spill [by sending too much water to Lake Victoria],"

he said.

In regard to allegations of negligence, the justice found there was no breach of duty in the MDBA's reading of climate outlooks, operating plans, or in the delegation of water releases in 2017.