Wastern Cape high court dissents from gauteng high court and recognises the right to trade water use entitlements

EASTERN CAPE HIGH COURT DISSENTS FROM NORTH GAUTENG HIGH COURT AND RECOGNISES THE RIGHT TO TRADE WATER USE ENTITLEMENTS.​ Recently, in the judgement of Ramah Farming v. Great Fish River Water Users Association & Others, the Eastern Cape High Court dissented from an earlier judgement of a full bench of the North Gauteng High court (in the SAAWUA case1 ) , when Judge Robert Griffiths held that, on a proper interpretation of the National Water Act 36 of 1998 (the “Act”), the trade in water use entitlements is indeed countenanced by the Act. On 19 January 2018, in a complete about-face, the Department of Water and Sanitation (“DWS”) issued a circular in which it concluded that: – Section 25(1) of the Act does not allow the transfer of a water use authorisation (on a temporary basis) to a third party; and – Section 25(2) of the Act does not permit the transfer of a water use authorisation (on a permanent basis) to a third party. In October 2019, a full bench of the North Gauteng High Court heard three separate applications in which each of the applicants sought declaratory relief which had the interpretation of Section 25 of the Act at its core. The applicants were the South African Association for Water Users’ Associations (SAAWUA), the Doornkraal Besigheidstrust and the De Kalk Beigheidstrust. The applicants were seeking an order to support the continuation of a practice in which the holder of water use entitlements could sell such rights to a nominated third party. The litigation followed after the director general of the DWS in pursuance of its new interpretation of Section 25, refused applications to this effect by both Doornkraal and De Kalk. In the court’s determination concerning Section 25, it concluded the sale of water use entitlements discriminated against those who could not afford prices determined by the holder. It further held that “the sale of water-use entitlements would frustrate equal access and keep historically disadvantaged persons out of the agriculture sector”. The court placed much reliance on, what it categorized as a course changing “intervention” in the form of the Second National Water Resource Strategy (2013), wherein it was stated that there was a need to review the water policy to do away with water trading which had been part of Departmental policy for more than 20 years. The court concluded that a second “intervention” that changed course, occurred in the form of the Director General’s Circular 1 of 2017, which abolished water trading and repealed the Circular 18 of 2001 which had allowed water trading. The court in SAAWUA ostensibly disregarded an earlier ruling in Makhanya NO v De Goede Wellington Boerdery (Pty) Ltd 2 in which the Supreme Court of Appeal recognised the right of a transferor to nominate a third party of its choice to apply for the transfer of a water use entitlement pursuant to the provisions of Section 25(2) of the Act. It is in any event quite clear that for two decades up to January 2018 the DWS and all those concerned (including our courts) have interpreted Section 25 to acknowledge the practice of the sale and transfer of water use authorisations to a transferee nominated by the authorised holder thereof. In fact, the DWS itself authorised many of these transactions provided that they could be facilitated within the purview and in compliance with the prescripts of the Act. In Ramah Farming Judge Griffiths expressly dissented from the conclusions in SAAWUA and held that there are a number of provisions of the Act which “underscores, not inhibit, the practice of trading in water use entitlements”. The court’s emphasis that the Act has restricted the ambit of such trading and that if the intended transaction does not pass muster under the Act, the court will refuse to enforce such transaction, should serve as a caveat to prospective water traders and legal practitioners who seek to facilitate these transactions. Needless to say, this is not going to be the last word on water trading and the proper interpretation of Section 25. As the demand for access to water in agriculture surges and the commercial value of water entitlements rises, the debate whether or not private law transactions in respect of water use entitlements should be permitted, will almost certainly intensify and so will litigation over access to water.For further information, please contact attorney@noltesmit.co.za. Article written by: Frans Smit(Director)

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Understanding the General Valuation Roll and how to object

Understanding the General Valuation Roll and how to object Article written by: Nicola Sülter (Associate Attorney at Nolte Smit Attorneys). Introduction As many of you will have noted, the Makana Municipality has published notices calling for the inspection of the General Valuation Roll (here in after referred to as “theGVR”). This article seeks to explain the purpose of the GVR and how to go about lodging objections. What is the General Valuation Roll? Property rates are an amount that the municipality charges property owners each month for services (supposedly) provided for or on behalf of the municipality. These rates are charged in accordance with the valuation and categorisation (i.e business/residential etc.) of your property. Municipalities are empowered to charge these amounts in terms of section 229(1)(a) of the Constitution. These rates are an important source of revenue collected by the municipality for the purpose of financing operational expenses. The GVR is effectively a register of properties and their values. These values are supposed to reflect the market value of properties and the market conditions in which the property is situated. Thus, properties in well-established and sought-after neighbourhoods will be valued higher than those in less affluent or sought-after areas, because of factors such as location, service provision and crime rates.It is clearly important to inspect the information pertaining to your property and to object to the valuation if necessary. Failure to do so could result in property owners being charged unfairly high (or low) rates. In terms of the Makana Rates Policy, the Makana GVR is renewed every 4 years, which means that property owners could pay incorrect rates and taxes on their properties for this duration. Understandably, it sometimes happens that a GVR excludes a property. This may happen because a property came into existence after publication of the GVR, was incorrectly omitted, had a category change or was subdivided/consolidated after the publication of the roll. For this reason, a Supplementary Valuation Roll is prepared every 12 months or as required. How to lodge an objection As mentioned above, the valuation of a property must reflect the property’s market value and must accord with market conditions. However, it often does not. If a person is of the view that the valuation does not reflect the market value or that a property has been categorised incorrectly, such person may lodge an objection. Interms of section 50(2) of the Rates Act, an objection must be in relation to a specific individual property and cannot be lodged against the valuation roll as a whole. Makhanda residents have until 1 April 2019 to lodge an objection to the value or categorisation of their property with the municipal manager. Within 14 days of the 1stof April, the municipal manager must submit the objections to the municipal valuer.The municipal valuer is then obliged to (promptly) consider all objections and if he makes adjustments upwards or downwards of more than 10%, must provide written reasons to the municipal manager. The municipal manager will then submit the municipal valuer’s decisions, reasons and other documentation to the valuation appeal board for review for the purpose of confirming, amending or revoking the decision taken by the municipal valuer.While section 50(5) of the Rates Act states that the municipal valuer must make the above mentioned decisions “promptly”, no specific time limits are allocated in this regard. The municipal valuer must notify objectors and the owners of the properties concerned, in writing, of his/her decision regarding the objection, the adjustments made to the roll and whether there was a compulsory review of the municipal valuer’s decision. Where the municipal valuer adjusts the valuation by less than 10%(either upwards or downwards), he only needs to provide written reasons for the outcome of the objection after an objector or owner has applied for same, in writing and after payment of a fee. The request for reasons for the municipal valuer’s decision must be made within 30 days of receipt of notification of the outcome of the objection, to the municipal manager. The municipal valuer then has a further 30 days(from the date on which he receives the application from the municipal manager) in which to provide his/her reasons. Available recourse to those unhappy with the result of an objection An objector/property owner can appeal to the valuations appeal board, via the municipal manager. An appeal must be lodged within 30 days of the date on which notification of the outcome of the objection was sent to the objector/ property owner or within 21 days of the date on which the reasons for the decision regarding the objection were sent to the objector/ property owner. It is important to note here that the Act refers to the date on which notification of the outcome/reasons was/were sent, and not the date on which either of these were received by the objector or the property owner. The chairperson of the valuation appeal board is required to convene a meeting within 60 days of receipt of an appeal from the municipal manager, in order to consider same. If your appeal fails, you may need to consider approaching an attorney in order to make an application to court to review the decision taken by the valuation appeals board. It is important to abide by the time limits outlined in the Municipal Property Rates Act6 of 2004 (as amended) as objections will (in most circumstances) not be considered after the 1st of April 2019. We trust this article has been of some use. For further information, please contact attorney@noltesmit.co.za.

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