Yesterday’s judgement in a case where Ekurhuleni municipality failed for approximately 5.5 years to take actual readings of a water meter, billing on estimated readings, is a victory for consumers battling against bullying municipalities.
The plaintiff, Argent, argued that it was not liable for charges for water that were older than three years at the date that the inflated bill finally arrived in 2015 on the basis that these charges had already prescribed by the time the bill was presented to it.
The municipality argued, in response, that:
Firstly, because the consumer made payments each month during the period in question for the estimated charges, that this constituted an acknowledgement of its debt for the large bill presented years later based on actual readings (it lost on this point); and
Secondly, that the water charges older than three years included in the big bill in 2015 had not prescribed because prescription can only start running when the municipality actually bills the client, and not before that (it lost on this point too).
This is a victory for property owners against errant municipalities, as the judgment sets a precedent on the following very important principles of law. We quote/paraphrase from the judgment:
- A consumer who receives a bill for municipal charges for electricity or water for any period older than three years cannot be held liable for the amounts older than three years, because they have prescribed. This is taken from the judgment read as a whole.
Prescription of charges more than three years old has not been interrupted (stopped) by payments made by a consumer of estimated charges during the period that the municipality was billing on estimates. A debtor cannot be considered to have acknowledged a debt of which it knows nothing, when either the details of the debt are particularly within the knowledge of the creditor, or only the creditor has the ability to quantify the debt (paras 18 and 19).
- Prescription starts running not when the invoice is presented to the consumer, but rather when the municipality should have become aware of all of the facts that gave rise to its claim – one of those facts being the actual charge (as opposed to the estimated charge). The municipality could have taken actual readings at any time. It simply failed to. It thus could have become aware of the actual charge at any time. This means that prescription starts running when a municipality should have taken actual readings and billed the consumer on actual readings. Note that this judgment did not, unfortunately, say when a municipality should be taking actual readings – the judge specifically did not decide this issue and this has been left open for consideration in future (para 11).
However, the court did say that it is not the consumer’s duty to read meters and determine what its consumption is. The municipality is under a duty to take reasonable steps to collect what is due to it – this duty exists for the benefit of both the consumer and the municipality. The municipality has a duty to read the meters and invoice for consumption at its convenience but at reasonable intervals (paras 12 and 15).
- Where there are no records of regular actual readings to assist in determining how much of a bill for several years has prescribed, it is appropriate to apply the industry standard – which is to average the consumption for the entire period out over all of the months in that period, and then use the average arrived at to calculate the consumer’s liability for the whole period by multiplying that average by 36 months (para 20).
The judge was quite scathing of the municipality’s contention that the court should show deference to the municipality, because of the responsibility of the municipality in providing services to consumers.
Words: Chantelle Gladwin, partner at Schindlers Attorneys