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Sellers, don’t pay municipal debt older than three years

In the case of Argent Industrial Investment (Pty) Ltd v Ekurhuleni Metropolitan Municipality the seller had received and paid his utility bills for five and a half years on estimated readings. When the municipality eventually took an actual reading, it was discovered that the actual consumption and the estimate differed by R1,1m. The seller was billed for this amount.

The court had to consider whether the charges older than three years prescribed or had prescription only started running once the seller was billed for the actual readings?

Municipalities may not charge forward projections for clearance certificates

The court held that the municipality had been aware of all the facts giving rise to the debt: The identity of the seller; that it was paying an account based on estimates and that they had not taken an actual reading in almost six years.

The municipality’s failure to read the meter for that amount of time was not reasonable and cannot be imputed to the seller. As such, the court declared debts older than three years to have been prescribed and the seller could not be held liable for them.

Contact MC van der Berg Attorneys on +27 (0)12 660 6000, email info@mcvdberg.co.za or visit their website


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