Victory for property owners receiving huge, delayed utility bills
Wednesday, 22nd February 2017
Cape Town - A new judgment could be regarded as an important victory for property owners who receive large and delayed utility bills, according to Nicholas Gangiah and Fatima Gattoo from Cliffe Dekker Hofmeyr.
The judgment in the Gauteng Local Division of the High Court grants relief to property owners who have received exorbitant utility bills after a number of years.
The case relates to the bills for estimated water consumption which was received by Argent over a period of about 5.5 years. Argent duly paid these charges.
During this period the Ekurhuleni Municipality failed to take actual readings of the water meter. In 2015, Argent received a bill for the difference between its actual usage and estimated consumption amounting to R1 152 666.98.
Relying on prescription, Argent claimed that they were not liable for discrepancies in the costs, which were older than three years at the time when they finally received the bill.
The municipality challenged this argument by arguing that the excess water charges, older than three years had not prescribed because the prescription period only commenced when the client was billed by the municipality. It also argued that the fact that the consumer regularly made monthly payments, based on their estimated consumption, amounts to an acknowledgement of its debt and as such it interrupts the prescription period.
The municipality lost on both of these points.
According to Gangiah and Gattoo, the judgment now sets the precedent that, if a consumer receives a utility bill citing, for the first time, charges older than three years, they cannot be held liable for such amounts, as the charges have prescribed.
Also, where a consumer has made regular monthly payments based on their estimated consumption, their monthly payments do not interrupt the prescription of the actual water consumption.
"It is not the duty of the consumer to read meters and determine their actual consumption. A consumer will not be considered to have acknowledged a debt of which they do not know the particulars. In other words, a consumer cannot acknowledge a debt when the creditor withholds particular and necessary details of the debt or when only the creditor has the ability to quantify the debt and fails to do so," explained Gangiah and Gattoo.
"The prescription period commences when the municipality should have become aware of all the relevant facts, such as the actual water consumption, which give rise to its claim against the consumer and not only when the municipality read the meter and the invoice was issued. The municipality could have taken an actual reading of the meter at any time."
The experts said this means that the prescription period commences when the municipality should have taken actual readings and invoiced the consumer. The judge held that the municipality has a duty to carry out such readings and invoice consumers at its convenience, but at reasonable intervals.
The judge also ruled that, where no records of regular actual readings are available to ascertain how much of a bill for several years has prescribed, the industry standard should be applied. This means to average the consumption out over the months between the two readings and then use that average to calculate the consumer’s liability for the remaining period.