The Guguletto Family Trust v Chief Director, Water Use and Another

The Guguletto Family Trust (appellant) purchased a water quota of 22.3 hectares from Mr. C.M. Uys in September 2007 for R250,000, attached to Portion 4 of the Farm Vermeulenskraal 480, Ventersburg. The sale was conditional upon obtaining a licence from the Department of Water Affairs and Forestry to transfer the water quota to the appellant's property (Portion 36 and 37 of the Farm Dayton 580). The appellant applied for a water use licence in 2008 under section 41 of the National Water Act 36 of 1998. The Chief Director: Water Use in the Free State Region recommended approval of the licence. However, the Chief Director: Water Use in Pretoria (first respondent) refused the application in June 2009, stating it did not promote redress of past racial and gender discrimination as required by section 27(1)(b) of the NWA. The appellant appealed to the Water Tribunal, which dismissed the appeal. The appellant then appealed to the High Court on questions of law under section 149 of the NWA.

• Whether the Water Tribunal erred in law by treating section 27(1)(b) of the National Water Act (the need to redress past racial and gender discrimination) as the only and overriding criterion for determining whether to issue a water use licence
• Whether the Water Tribunal erred in applying exclusively the provisions of the AGRIBEE Sector Charter on Black Economic Empowerment
• Whether the responsible authority and the Water Tribunal properly balanced all relevant factors as required by section 27(1) of the National Water Act
• What powers does the High Court have on appeal from the Water Tribunal under section 149 of the NWA

The order of the Water Tribunal dated 31 May 2010 was set aside. The appellant was granted a water use licence on the terms and conditions set out in the draft licence annexed to the Record of Decision of the Chief Director: Water Use, Department of Water Affairs and Forestry, Free State Region, dated 12 December 2008. The respondents were ordered to pay the costs of the appeal.

Section 27(1) of the National Water Act requires the responsible authority to take account of all relevant factors, including the eleven factors specifically mentioned, and then balance them all without attaching undue weight to any one factor, with a view to serving the objects of the Act. The need to redress past racial and gender discrimination under section 27(1)(b) is not a compulsory and overriding factor that must of necessity be satisfied; it must be balanced against other factors of equal or potentially greater importance depending on the circumstances, such as the efficient and beneficial use of water in the public interest under section 27(1)(c). The AGRIBEE Sector Charter issued under section 12 of the BEE Act does not compel organs of state to comply with or enforce its provisions in the context of water licence applications; at most, it may add substance to the transformation factor as one consideration among many.

The court observed that where the issue of past discrimination has been deemed by experts on the ground to be of less strategic importance at the present time (as reflected in the Internal Strategic Perspective for the relevant water management area), this contextual assessment should carry weight in the balancing exercise. The court noted that the draft licence conditions allowing for review every 5 years would permit amendment to accommodate changes in socio-economic circumstances, providing a mechanism to address transformation issues over time. Murphy J commented that there was no legal basis provided for the Tribunal's opinion that transformation factors are the focal point in licence determinations, and that the Tribunal appeared to rely primarily on the testimony of an Assistant Director whose authority to override strategic planning documents was questionable. The court also noted that it was unclear whether the appellant was ever put to any terms or required to undertake any activities aimed at empowerment or transformation before the licence was refused.

This case is significant in South African water law and administrative law because it establishes the proper approach to section 27 of the National Water Act. It clarifies that while redressing past racial and gender discrimination is an important factor in water use licence applications, it is not an overriding or exclusively determinative criterion. The decision reinforces the principle that decision-makers must balance all relevant factors listed in section 27(1), including efficient and beneficial use of water in the public interest, social and economic development, and other contextual considerations. The judgment prevents administrative authorities from applying a single-factor approach that could frustrate the multiple purposes of the NWA. It also clarifies the limited legal status of transformation charters and codes in the administrative decision-making process unless specifically incorporated into binding legislation or regulations.