On 13 February
2017, in the case
of Argent Industrial Investment (Pty) Ltd and Ekurhuleni
Metropolitan Municipality, the court had to rule on whether the
municipality’s claim for water consumption had prescribed.
The court concluded that if
a consumer receives a utility bill reflecting, for the first time, charges
older than three years, it cannot be held liable for such amounts, as the
charges have prescribed.
It is not the duty of
the consumer to read meters and determine their actual consumption. As a result,
a consumer will not be considered to have acknowledged a debt when the
municipality has failed to provide details.
1. The Facts:
1.1.
Between September 2009
and March 2015, the applicant (Argent) was charged, and paid, for estimated
water consumption. The meter installed at the applicant's premises was not read
between 21 September 2009 and 13 March 2015. After the meter was read on 13
March 2015, the applicant was billed R1 152 666.98 for the difference between
its actual usage and the estimated consumption for which it had already paid,
during the period September 2009 and March 2015, almost six years. The
applicant then raised a dispute regarding the charges for usage that had occurred
more than 3 years before that date.
1.2.
The applicant did not dispute that it
had consumed the water reflected by the meter reading in March 2015. Its only
contention was that its obligation to pay for any consumption more than three
years before that date had already prescribed by the time the respondent (the
municipality) presented the applicant with its invoice.
1.3.
The respondent did not proffer any
reason, on the papers, why no meter reading was taken between September 2009
and March 2015.
1.4.
The respondent argued
that the consumer is never released from its obligation to pay when the
respondent has not issued an invoice or otherwise informed the consumer of the
charges which it has incurred (because of several acts, notably the Local
Government: Municipal Systems Act, and the Ekurhuleni Metropolitan Municipality
Credit Control and Debt Collection Policy 2015/16). Further, that that monthly
payments constituted an acknowledgment of debt, and an amount due and payable
by a consumer is a consolidated debt, and that any payment into the account
will be allocated to that consolidated debt as determined by the respondent.
1.5.
The Prescription Act, 68 of 1969
("the Prescription Act") provides that:
1.5.1.
a debt is extinguished after the lapse
of three years;
1.5.2.
prescription starts to run as soon as
the debt is due;
1.5.3.
prescription does not commence to run
until the creditor is aware of the existence of the debt, but only if the debtor
has wilfully prevented the creditor from becoming aware of the debt;
1.5.4.
a debt is only due when the creditor
has knowledge of the identity of the debtor and the facts giving rise to the
debt, but if a creditor could have acquired that knowledge by exercising
reasonable care, the creditor is deemed to have that knowledge, and
1.5.5.
the running of prescription is
interrupted by an acknowledgement of debt or by the issue of process.
1.6.
The respondent relied
on section 12(3) of the Prescription Act for the contention that it was only
when the meter was read and the invoice issued that the respondent, the
creditor, became aware of the facts giving rise to the debt.
2. The Judgment:
2.1.
The court found that
the respondent had a duty to take reasonable steps to
collect what was due to it. In any event, the respondent had knowledge of the
relevant facts. At all times, the respondent was aware that it was supplying
water to the applicant. It was aware of the applicant's identity. It was clear
from the fact that the applicant was paying an estimate each month, if from
nothing else, that the respondent had not read the meter on the applicant's
property. These are the facts giving rise to the debt. The only
"fact" of which the respondent did not have knowledge was the exact
consumption of the applicant, and this was knowledge within the respondent's
reach, had it simply fulfilled its functions.
2.2.
On that basis, it found that the claim
over three years only had prescribed,
and ordered the respondent to reverse all charges (plus interest and legal fees,
thereon) raised before March 2012. It also prevented the respondent from terminating
services because applicant had not paid the amounts added to the applicant's
account in the invoice of 24 March 2015.
2.3.
The respondent was ordered to pay the
costs of the application.
Image courtesy of ©Alexander Kharchenko