In a case where the Supreme Court of Appeal found that section 25 of the National Water Act, 1998 (NWA) permits the transfer of water use entitlements subject to a licence being granted to the transferee by the Minister, the court made some important observations about the transfer of government-granted rights generally.

The NWA abolished the common law distinction between public and private water rights and the government was granted the overall responsibility for and authority over the country’s water resources and their use.  The court based its interpretation of the NWA on an examination of the text of section 25 and its context and purpose.  This included a reference to the preamble to the Act and the government white paper that preceded the Act.  The context was enhanced by the fact that the transfer of similar rights where regulation involves the public interest is commonplace, for instance in relation to mining rights, commercial fishing rights, the right to trade in liquor and the right to engage in road transportation to name a few.

The court drew the required distinction between the conduct of public bodies and private persons.  Private persons can choose to do anything that the law does not prohibit.  Public bodies take action that is justified by positive law including statutory powers.  Because there is a right to freedom of contract, the holder of entitlement to water rights can transfer those rights to a third party provided this happens with the approval of the authority in granting a licence to the third party transferee based on the principles of public law including just administrative action under the Promotion of Administrative Justice Act, 2002.

The court also made the following important point.  When a longstanding universally accepted interpretation of a statutory provision is suddenly interpreted differently, 20 years into the life of the statute in this case, with far-reaching social and economic consequences for a large number of people throughout the country, exceptional circumstances arise.  The interests of justice require a court to be engaged as soon as reasonably possible to resolve the dispute.

The minority judgment made the point that transferring historical rights would entrench discrimination in regard to the granting of water rights which preceded the new regime.  This can however be dealt with in the licensing process where transformation must be taken into account.

Lotter v Minister of Water and Sanitation [2021] ZASCA 159 (8 November 2021)