Municipal debts and extinctive prescription
Contrary to common belief, municipal debts in the form of electricity and water do prescribe in 3 years. Many property owners have to contend with exornabt bills from the city council for amounts accrued over a number of years and only invoicedat the last moment.
In Argent Industrial Investments (Pty) Ltd v Ekurhuleni Metropolitan Municipality( 17808/2016) [2017] ZAGPJHC 14; 2017 (3) SA 146 (GJ) this ground breaking judgment aimed to bring relief was handed down on 13 February 2017
For several years the Ekurhuleni Minucipality charged the applicant for estimated water usage No meter readings were conducted. The applicant paid but in 2015 were billed R1,152,666.98. This bill was arrive at by calculating the the difference between Argent’s actual water usage and the estimated use.
Argent’s main argument: The applicant argued that based upon section 11(d) of the Prescription Act 68 of 1969, they could not be responsible for differences in the two amounts received after a number of years
For five and a half years Ekurhuleni Municipality charged Argent for their estimated water consumption, with no actual meter readings being done. Argent paid these bills diligently, but were slammed with a bill of R1,152,666.98 in 2015. This new bill was for the difference between Argent’s actual water usage and the estimated consumption
Argent’s argument
Relying on prescription, Argent claimed that they were not liable for discrepancies in the costs, which were older than 3 years at the time when they finally received the bill.
The court ruled as follows:
“For the reasons above, I make the following order
1.The respondent is to
1.1reverse all charges for water consumption added to Municipal account
number 2604227860 ("the applicant's account") on the invoice dated
24 March 2015, as a result of the reading of the meter on 13 March
2015;
1.2reverse all interest and legal fees charged to the applicant's account in respect of the charges for water consumption added to the applicant's account on 24 March 2015;
1.3calculate the applicant's average monthly consumption over the period 21 September 2009 and 13 March 2015, using the meter reading reflected on the invoice of the applicant's account dated 24 March 2015, and charge the applicant an amount based on that average for the period 13 March 2012 to 13 March 2015, and
1.4send the applicant a full statement of account reflecting the reversals, calculations and charges dealt with in this order, and an invoice reflecting the amoun that is due and payable, within 14 days of this order.
2.The respondent is not entitled to claim any payment from the applicant in respect of the applicant's account for any period before 13 March 2012.
3.The respondent may not terminate, restrict, or threaten to terminate or restrict services on the basis of the applicant not having paid the amounts added to the applicant's account in the invoice of 24 March 2015.
4.The respondent is to pay the costs of this application.”
The judgment in short
- where a resident/property owner gets a bill that reflects charges older than 3 years they are not liable, it prescribed, prescription can be claimed
- Monthly payments on estimated amounts will not interrupt prescription as ‘actual payment.’
- A consumer cannot be expected to conduct meter readings
- Prescription starts to run when the municipality became aware or
- should reasonably have become aware of the actual water consumption and not when the meter reading was conducted
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