An important victory occurred in court, for property owners who have been issued extremely high utility bills after a number of years.
According to Nicholas Gangiah and Fatima Gattoo from Cliffe Dekker Hofmeyr, relief for property owners who have received exorbitant utility bills after many years, comes in the form of a high court judgment. Issued by Judge S. Yacoob, this judgment means that property owners will not be liable for these huge utility bills anymore.
The case of Argent versus the municipality
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.
Municipality’s argument
The municipality built its argument around the fact that the prescription period only began once Argent was billed by them. Therefore, the excess water charges that were older than 3 years had not prescribed.
Argent’s regular monthly payments based on the estimated consumption meant that Argent was acknowledging their debt and therefore interrupting the prescription period.
Final judgment
The municipality lost on both of these points. The judge ruled the following:
- 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.
- When a consumer has made monthly payments based on estimated consumption, this will not interrupt the prescription of the actual water consumption.
- It is not the consumer’s responsibility to do the meter readings. A consumer can also not acknowledge a debt of which they do not know the details, or when the creditor has the ability to quantify the debt but fails to do so.
- The prescription period begins when the municipality should have become aware of the facts (the actual water consumption) not when they did the meter readings. This means that the prescription period begins when the municipality should have taken actual readings and invoiced the consumer.
Where no regular readings have occurred for several years, the judge ruled that the industry average should be applied. This means that the consumption should be averaged over the months between the two readings, to calculate what the consumer should be liable for.
All in all, this is a win for property owners who diligently pay their estimated consumption bills, but who have dealt with huge, extra bills being issued to them long after the consumption has taken place.
