Page 69 - Q&A.indd

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
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 Property
meters was also held to be unreasonable. The court also disagreed that
prescription started running when Argent Industrial was invoiced and
when the Municipality became aware of the debt. The Municipality
knew that they were supplying water to Argent Industrial and that
they were paying monthly estimates provided by the Municipality.
The Municipality however did not know what the exact consumption
of Argent Industrial was, knowledge which was within its reach, had
it fulfilled its functions and the Municipality could have acquired this
knowledge by exercising reasonable care. The court held further that
the Municipality’s argument that Argent Industrial’s regular payments
for estimated consumption amounted to an acknowledgement of their
liability did not carry any weight as a consumer cannot acknowledge
a debt that he was not aware of, when either the details of the debt are
particularly within the knowledge of the other party, or only the other
party has the ability to quantify the debt, and does not do so.
Accordingly, the court ordered the Municipality to calculate the average
monthly water consumption of Argent Industrial from September 2009
until March 2015, using the meter reading on the municipal account

63