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Lotter N O and Others v Minister of Water and Sanitation and Others (SCA)

8 November 2021

The judgment of the Supreme Court of Appeal is available here.

Neutral citation: Lotter N O and Others v Minister of Water and Sanitation and Others (725/2020) [2021] ZASCA 159 (8 November 2021)

Coram: Makgoka, Plasket, Gorven and Hughes JJA and Kgoele AJA

Heard: 20 August 2021 2021

Judgment delivered: 8 November 2021

Outcome: Appeal from Gauteng Division of the High Court (Pretoria) upheld with costs.

Summary: The Supreme Court of Appeal found that section 25 of the National Water Act 36 of 1998 allows for the transfer of water use entitlements.

Section 25 of the National Water Act provides as follows:

25. Transfer of water use authorisations.

(1) A water management institution may, at the request of a person authorised to use water for irrigation under this Act, allow that person on a temporary basis and on such conditions as the water management institution may determine, to use some or all of that water for a different purpose, or to allow the use of some or all of that water on another property in the same vicinity for the same or a similar purpose.

(2) A person holding an entitlement to use water from a water resource in respect of any land may surrender that entitlement or part of that entitlement—

(a) in order to facilitate a particular licence application under section 41 for the use of water from the same resource in respect of other land; and

(b) on condition that the surrender only becomes effective if and when such application is granted.

(3) The annual report of a water management institution or a responsible authority, as the case may be, must, in addition to any other information required under this Act, contain details in respect of every permission granted under subsection (1) or every application granted under subsection (2).”

Whether the holder of a water use entitlement can alienate and transfer such right lawfully to a third party has been a contentious and important issue in South Africa for some time. In 2013, the Department of Water and Sanitation issued a circular prohibiting such transfer and trading in water use rights. The majority decision in this matter has, however, found otherwise.

The central issue in this matter was whether section 25 of the National Water Act permits the transfer of water use entitlements from one person to another and whether the sale or trade of such entitlements is prohibited.

The majority decision found that section 25 does allow for the transfer of water use entitlements in two circumstances:

  • First, a water user association is empowered in terms of section 25(1) to allow a holder of a water use entitlement for irrigation, to use it temporarily for another purpose or to allow it to be used on another property by another person.
  • Second, section 25(2) creates a mechanism for permanent transfers of water use entitlements, where such entitlement is surrendered to a third party on condition that a water use licence (WUL) is obtained to exercise such right. The surrender of the entitlement becomes effective, and transfer occurs, once the WUL is granted.