Potentially, one of the lessons to be learned with this story - Stuff: 24-April-2019 - is that part of the purchase of a rural or semi-rural property is to secure your access and utility services - in this case a water supply source.
From what appears to have been a "gentleman's agreement" with respect to supplying a new neighbour with a main water supply, has now turned awkward - if not nasty - when the 'supplier' falls out with the 'supply-ee'.
Other than the question: "Why was there not a condition of the subdivision to install a separate supply or agree and create an easement" (perhaps the subdivision is old?);
...one could also ask of the new neighbour (and their legal adviser): "Why did you not secure the supply by way of agreeing a right to convey water at the time of purchase"?