Minister of Water and Sanitation and Others v Lotter N.O. and Others; Minister of Water and Sanitation and Others v Wiid and Others; Minister of Water and Sanitation v South African Association for Water Users Associations

Three related matters concerned the interpretation of section 25(1) and (2) of the National Water Act 36 of 1998. In the Lötter matter, the Doornkraal Business Trust purchased 30 hectares of water use entitlement from Britzkraal for R1,950,000. Britzkraal surrendered its entitlement under section 25(2), and Doornkraal applied for a licence under section 41. The Director-General refused the application, stating that section 25(2) does not permit transfers of water use entitlements to third parties and prohibits trading in such entitlements. In the Wiid matter, three agreements were concluded for the surrender of water use entitlements at prices ranging from R2,666,667 to R15,413,333, which were also refused. The SAAWUA matter sought declaratory relief on the meaning of section 25(1) and (2). Until January 2018, the Department of Water and Sanitation had consistently allowed trading in water use entitlements, but changed its policy position in a circular dated 19 January 2018. The High Court dismissed all applications, holding that trading in water use entitlements was not permitted. The Supreme Court of Appeal upheld the appeals in a four-to-one majority decision.

• Whether section 25(1) of the National Water Act permits the transfer of water use entitlements to third parties
• Whether section 25(2) of the National Water Act allows a holder to surrender a water use entitlement to facilitate a licence application by a third party under section 41
• Whether the National Water Act permits the charging of fees for transactions involving water use entitlements
• Whether the interpretation of section 25 permitting trading in water use entitlements infringes sections 9 (equality) and 27 (access to water) of the Constitution
• Whether section 25 must be interpreted in light of section 2(c) of the Water Act which requires redressing past racial and gender discrimination

Leave to appeal granted in all three applications. The appeals dismissed with costs, including costs of two counsel. The Supreme Court of Appeal judgment upholding the permissibility of transfers of water use entitlements to third parties and the charging of fees was confirmed.

Section 25(1) of the National Water Act, properly interpreted according to its ordinary grammatical meaning, permits a water management institution to authorize a holder of a water use entitlement to allow a third party to use water on another property in the same vicinity for the same or similar purpose. Section 25(2) permits a holder to surrender a water use entitlement to facilitate a section 41 licence application by a third party, not only by the holder. The National Water Act does not prohibit the charging of fees in respect of such transactions, as evidenced by sections 26(1)(l) and 29(2) which contemplate "transactions" and "compensation" in relation to water use. Section 22(1) must be read harmoniously with section 25(1), such that section 25(1) provides for permissible water use not itemised in section 22(1). Words cannot be read into a statute by implication unless the implication is necessary - no such necessity exists to limit section 25(2) to applications by the holder alone. Private persons may do anything not prohibited by law, whereas public bodies may only act where positively authorized by law.

The Court acknowledged the state's concerns about water, a scarce national resource, being largely in the hands of advantaged white farmers, and understood why the state sought to redress this injustice. The Court recognized that section 2(c) of the Water Act requires redressing the results of past racial and gender discrimination, which attests to the reality of racially skewed enjoyment of water use entitlements. However, the Court observed that the existing legislative instrument does not admit of the redress sought, at least not in the manner contended for by the applicants. The Court did not definitively resolve whether a water use entitlement is capable of being "sold" in the strict legal sense, noting that when a holder surrenders a right under section 25(2) and a new right is granted under section 41, the original right is extinguished and a new right comes into existence, so there is no transfer or sale in the strict legal sense. The Court noted the difference in value between farms with and without water use rights, and observed that market forces dictate fees in the absence of logical connection to administrative fees.

This case provides authoritative interpretation of section 25 of the National Water Act, confirming that water use entitlements may be transferred to third parties for consideration, notwithstanding policy concerns about racial inequality in water access. It demonstrates the limits of statutory interpretation: even where the court acknowledges legitimate policy concerns about redressing past discrimination (as required by section 2(c) of the Water Act), the court cannot read restrictions into legislation that are not textually supported. The judgment clarifies that private individuals may engage in transactions not expressly prohibited by law, while organs of state may only act where positively authorized. It illustrates the principle that transformative objectives must be pursued through appropriate legislative instruments rather than strained interpretation. The case is significant for water law, administrative law, and statutory interpretation methodology in South Africa.