In the case of Robarts Flagship Trust v Drakenstein Municipality, the Western Cape Division of the High Court, Cape Town, found that a municipality cannot ignore accruing electricity costs and must notify property owners. Doing so would result in the municipality's claim prescribing and it could prejudice a Municipalities' ability to recover these costs.
Background
A property with six units was owned by the Robarts Flagship Trust ("the Trust") of which Robarts was the trustee. Each unit was rented out to different tenants. A prepaid electricity meter was installed in one unit upon the request of a tenant in 2009. Arrear charges accrued from 2012 to 2021 in the amount of R71 052.68.
Robarts was unaware of the installation. He only became aware in 2018 and requested it to be removed. The municipality however refused due to its policy requiring outstanding amounts to be paid before removal. Furthermore, the municipality adopted a policy that it would not deal 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 Robart's request in 2018. As such, the costs accruing from October 2018 ought to not be for the account of Robarts.
Additionally, Robarts raised the special plea of prescription. 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 ("the Prescription Act").
Legislative Framework
Section 118 of the Local Government Municipal Systems Act 31 of 2000 ("the Act") provides that a municipality enjoys a right of preference over the amounts due to it by an owner of property for consumption charges.
Findings of the Magistrate's Court
The Magistrate's Court found the evidence of Robarts and the municipality to be mutually destructive of one another. The court found Robart's evidence to lack merit and saw it as a fabrication. Accordingly, the court did not deal with the defences that Robart raised and ruled in favour of the municipality. Robarts was ordered to pay the full amount that the municipality alleged he owed.
The High Court's view
The court found that the Magistrate's Court concluded the merits without considering Robart's defences. Additionally, the court found that the adjudication of the matter by a mere finding that the versions were mutually destructive was misdirected.
In quoting the Supreme Court of Appeal ("the SCA") case of BOE 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 quoted the Constitutional Court ("the CC") case of Mkontwana v Nelson Mandela Metropolitan Municipality. In doing so, the court explained that it is the owner of property who bears the risks that are associated with that property. One of these risks is the accumulation of consumption charges.
Robarts was thus obliged to keep an eye on the municipal charges levied against his 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.
As to the special plea that the municipality failed to mitigate its losses, the court found that the municipality could not be faulted for refusing to remove the meter. The court explained that a municipality discharges parts of its constitutional and statutory obligations by collecting amounts that are due to it. The policy to refuse removal of the meter is a policy designed to ensure that the municipality can collect amounts due to it.
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 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.
Conclusion
Robarts was declared to be responsible for the electricity charges and the municipality's policy of refusing to remove the meter was sound. Despite this, Robarts was only held liable for the consumption charges that accrued after 28 October 2019, due to the claim for the prior amounts prescribing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.