Page 75 - Q&A Book.indd

Billing system of municipalities under fire

Natalie Steenkamp
March 2017

“I am in the process of selling my house. I’ve approached the
municipality for a rates clearance certificate. They’ve now
informed me that I have an outstanding amount of more than
R100,000 on my water account which they say has run up
over the last 10 years because I was charged on estimated
amounts and not actual metered amounts. I’ve made sure to
always pay my account every month, and now I have to pay
this. Surely this cannot be right?”

In a long line of court cases regarding the responsibility of owners for
outstanding debts and the ability of municipalities to recover such
from home owners, a strong view in favour of the home owner has
been upheld in the recent High Court judgement of Argent Industrial
Investments v Ekurhuleni Metropolitan Municipality.

In this case Argent Industrial received an account from the municipality
in March 2015 that showed an amount was in arrears for R1,152,666.98
after a water meter reading was done by the Municipality. Argent
Industrial paid an estimated water account provided by the
municipality every month, with the last actual water meter reading
by the Municipality only done in 2009. The arrear amount reflects Property
the difference between the actual consumption and the estimated
consumption that was already paid by Argent Industrial.

Argent Industrial contested the account and argued that they were
not liable to pay for any arrears of more than three years prior to March
2015, and any older amounts would have prescribed according to the
Prescription Act. The Municipality argued that prescription only starts to
run when the consumer is billed and that was when the Municipality
became aware of the existence of the debt. They further argued that
because Argent Industrial made monthly payments it constituted an
acknowledgement of their debt which also interrupted the running of
prescription.

The court however held that it was not Argent Industrial’s obligation
to read water meters and calculate their consumption and have
everything in order for when the Municipality demands payment for the
actual consumption of water. A delay of three years to read the water
meters was also held to be unreasonable. The court also disagreed
that prescription started running when Argent Industrial was invoiced

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