Property
Luke Fraser
·22 Jun 2024
Homeowners and landlords in South Africa cannot plead ignorance when it comes to the accrual of debt related to electricity use, even if its by tenants.
But municipalities also have to let them know of the mounting charges—and can’t expect to collect debt that has prescribed.
These are the key findings from a new court case that made its way through the South African high court, where landlords tried to shake off over R70,000 in charges.
According to Aslam Moosajeeand Zameer Omar from ENS, the drama played out in the case of Robarts Flagship Trust v Drakenstein Municipality.
Robarts Flagship Trust owned six residential units, which were rented out to different tenants.
In 2009, a tenant requested that a prepaid electricity meter be installed in one unit. From 2012 to 2021, arrear charges accrued in the amount of R71,052.68.
However, Robarts only became aware of the installation in 2018 and requested that it be removed.
The municipality refused as its policy required outstanding amounts to be paid before the removal.
In addition, municipalities adopt a policy of not dealing with tenants but rather with owners directly, as they are liable for outstanding electricity costs.
“Robarts raised the special plea that the municipality failed to mitigate its losses. This was due to the municipality failing to remove the meter despite Robarts’s request in 2018. As such, the costs accruing from October 2018 ought to not be for the account of Robarts,” said the experts.
“Additionally, Robarts raised the special plea of prescription (a debtor’s liability to pay an outstanding debt passed after a certain time).”
“It was pleaded that since the municipality only issued summons during February 2022, any debt due to the municipality prior to March 2019 had prescribed in terms of the Prescription Act 68 of 1969.”
Section 118 of the Local Government Municipal Systems Act 31 of 2000 states that a municipality enjoys aright of preferenceover amounts due to it by a property ownerfor consumption charges.
The Magistrate’s Court found Robarts’s and the municipality’s evidence mutually destructive.
The court said that Robarts’s evidence lacked merit and saw it as false. As such, it did not deal with the defences raised by Robart and ruled in favour of the municipality.
Robarts thus had to pay the full amount that the municipality alleged he owed.
At the High Court
“The court found that the Magistrate’s Court concluded the merits without considering Robarts’s defences. Additionally, the court found that the adjudication of the matter by a mere finding that the versions were mutually destructive was misdirected,” said the experts.
“In quoting the Supreme Court of Appeal (SCA) case ofBOE Bank v City of Tshwane Metropolitan Municipality, the court emphasised that ‘preference‘ in section 118 of the Act extends to all debts owed to a municipality which have not prescribed.”
“A debt is deemed to have “prescribed” if the debt due to the municipality became due three years before a summons being issued.”
The court also quoted the Constitutional Court case ofMkontwana v Nelson Mandela Metropolitan Municipality, highlighting that the property owner bears the risks associated with that property.
One of these risks is the accumulation of consumption charges. Robarts was thus obliged to keep an eye on municipal charges levied against the property.
“He was to ensure that the debts associated with his property did not get out of hand. He failed to do so, and his argument that he was unaware of the installation of the meter was misguided.”
When looking at the special plea that the municipality failed to mitigate its losses, the court said that a municipality could not be faulted for refusing to remove the meter.
The court said that a municipality discharges parts of its constitutional and statutory obligations by collecting amounts that it is owed.
The policy to refuse removal of the meter is designed to ensure that the municipality can collect the amounts due.
“In regard to the special plea of prescription, the court held that a municipality cannot sit back and let costs accrue without notifying the owner of the property and by demanding immediate payment years later.
“Such conduct constitutes an abuse of the municipality’s position in relation to the consumer. This conduct will be heavily scrutinised by a court and result in a claim prescribing in terms of the Prescription Act.”
Ultimately, Robarts was declared responsible for the charges, and the municipality’s policy of declining to remove the meter was correct.
That said, Robarts was only held liable for the consumption charges accrued after October 2019 due to the claim for the prior amounts prescribing.
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