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Our binding decisions

Compensation for loss and damage to land due to construction of a water main

Case number: WD/2002/10
Date of Decision: 5 September 2003

Decision accepted by the customer: Yes

Mrs P contacted EWOV in May 2002, dissatisfied with the actions of her water authority in preparing for, and constructing, a water main at the rear of her property. She considered she had been dealt with unreasonably throughout this process. The water main was installed on land she bought from a Government department in August 2001.

Mrs P had initiated purchase of the land in 1997 on becoming aware that, although the family believed it had owned the land for the last 25 years, it was not a part of the land title. The purchase was finalised in August 2001. She expressed concerns about her water authority's information provision regarding the creation of an easement whilst she was negotiating its purchase.

Despite assurances that the main would be located within the easement, it was incorrectly laid partly outside the easement, requiring the authority to extend the easement.

Mrs P was aware of the authority's intention to remove a number of trees for installation of the water main. She had advised it that many of the trees on her property had environmental and sentimental value, having been planted by her late husband over the past 25 years. She said she was assured that specified trees would be under-bored and that there would be no damage to them. The day before an onsite meeting to formalise this agreement, contractors for the authority entered Mrs P's land and removed many of the trees and other flora, which had been the subject of negotiations.

Subsequent negotiations about compensation and reinstatement failed to settle the matter. Mrs P sought a total of $32,774 in compensation for her losses.

In responding to EWOV's investigation, the water authority stated that Mrs P was kept informed of its intentions to acquire the easement and was served with all appropriate notices during the purchase process.

The authority accepted that the main was unintentionally constructed outside the easement. It advised that this incorrect placement was due to a survey misunderstanding and noted that the pipeline was correctly aligned elsewhere.

The authority also accepted that its contractors had entered Mrs P's land and removed a number of trees on the day before the agreed meeting. It advised, however, that its contractors had acted in contravention of its directions in commencing these works.

The authority stated that its offer to Mrs P was made in accordance with its statutory obligations under the Water Act 1989 (Vic), (the Water Act), and the Land Acquisition and Compensation Act 1986 (Vic), (LACA), which limited compensation payable. It further advised that this offer should be considered in light of the purchase price of the land as at August 2001, which was $6,900. This compensation sum did not include the costs of reinstatement of the land, which was treated as a separate matter by the authority.

EWOV's investigation was wide-ranging. It centred on quantification of Mrs P's loss and assessment of a fair and reasonable outcome as to the loss and any inconvenience she may have suffered. It was noted that there were several methodologies which might legitimately be used to quantify Mrs P's loss and that different methodologies might be applied to each of the distinct components of her claim.

Contact was also made with a number of relevant stakeholders, including the Environmental Officer of the local Shire Council and the authority's contractors. In addition, the Ombudsman made a site visit to Mrs P's property, also meeting with adjoining landowners, with Mrs P's consent.

In partial resolution of the matter, the water authority provided, planted and assumed responsibility for the maintenance of 250 native tube plants. It also offered Mrs P a sum in lieu of additional reinstatement works. Mrs P was satisfied with these reinstatement actions. To formalise this agreement, and as the matter of compensation still remained unresolved, the Ombudsman moved to make a Binding Decision on the case.


In making this Binding Decision, the Ombudsman operated in accordance with her roles and responsibilities under the EWOV Charter, the National Benchmarks for Industry-Based Customer Dispute Resolution Schemes and the Australian Standards on Complaint Handling and Dispute Resolution, to arrive at a decision that was fair and reasonable in light of good industry practice and the law.

The Ombudsman considered that the water authority's communication of its intention to create an easement could have been more effective. She further stated that the authority had a heightened responsibility to ensure the main was positioned wholly within this easement, since Mrs P had been in contact several times about the positioning and was assured by the authority that it would be correct.

The Ombudsman accepted the trees that were removed had sentimental and environmental value and that Mrs P had informed the authority of this. She stated that it was apparent that the authority led Mrs P to expect her wishes would be taken into consideration in the execution of the works.

While accepting that the events were not intentional on the water authority's part, the Ombudsman noted that the authority was responsible for the actions of its contractors. She was critical of the authority's formal and legalistic approach in seeking to rely solely on the Water Act and LACA in its offers to resolve Mrs P's complaint, noting that it should have approached compensation in a more flexible way. Her views in this respect were supported by EWOV's investigation into good industry practice in such matters.

The Ombudsman took into account the authority's view that consideration should be given to the price paid by Mrs P for the land, including trees and vegetation. She noted, however, that Mrs P's claim for loss extended to matters beyond the trees and vegetation. The Ombudsman considered the authority's arguments in support of its interpretation of its legal obligations regarding compensation for Mrs P, as well as her independent legal advice.

In considering the valuation material the Ombudsman decided that it was clear that the trees and other vegetation removed had an intrinsic value which could be separated from the value of the land within which they grew.

The Ombudsman noted that there were inadequacies in respect to the substantiation provided by Mrs P and took this into account in her Decision.

Taking account of identified differences in valuation methodologies, information provided by Mrs P and the water authority, and her own assessment of the manner in which Mrs P had been treated, the Ombudsman directed that the authority pay Mrs P a total of $11,661. This sum included: $5,740 for the loss of trees/vegetation; $520 for loss of hay; $303 for agistment; $1,543 for legal fees; $1,370 for survey fees; $200 for telephone calls; $1,000 for customer service/disturbance; $250 for the acquisition of the additional easement (which was necessary due to the incorrect pipeline placement) and $735 as payment in lieu of reinstatement works.

The Ombudsman further directed that the authority review its policies and procedures in relation to project management and control, with a report of this review to be provided to EWOV within four months of the date of the Binding Decision.