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IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION, MAHIKENG

CASE NO: KPM14/2018

In the matter between:

CLEAR AWAY PROPERTY INVESTMENTS CC        Applicant                                          

And

MAQUASSI HILLS LOCAL MUNICIPALITY                Respondent

GURA J

DATE OF HEARING                       :        28 FEBRUARY 2019

DATE OF JUDGMENT                  :          04 JULY 2019

FOR THE APPLICANT        :                   Adv. M. OPPENHEIMER

FOR THE RESPONDENT :                      Adv. G.I MOTHIBI

JUDGMENT.

GURA J:

Introduction.

[1] The applicant seeks an order in the following terms:

“1.1 The removal of all prepaid meters from his property within seven days         of the handing down of this order;

1.2  The reversal of all prepaid meter charges within seven days of the handing down of this order;

1.3  Rebilling the applicant’s account using the post-paid tariff and the reading obtained from the bulk meter; and

1.4  The municipality refrain from termination and/or threatening to terminate the applicant’s electricity and/or water supply to the property on the basis of non-payment of the disputed pre-paid charges until such time as the dispute has been resolved between the parties;

1.5  Reversing any/all interest, and legal fees (or miscellaneous fees where these were charged for legal work done or notices sent out) from the applicant’s account, in respect of charges that stand to be reversed from same account;

1.6  Furnishing the applicant with an adjusted statement of account showing that the above adjustment has been attended to, with suitable notations appearing on the face of the account such that it is possible for our client to check the accuracy of the reconciliation conducted herein; and

1.7  Refunding the applicant any/all monies in credit once the account has been fully adjusted.

2.    The respondent is to refrain from terminating or restricting, or threatening to terminate or restrict services at Remaining Extent of Erf 946, Leeuwdoornstad, North West (including water and electricity supply) until it has complied fully with this Court order and all other requirements in law relating to the giving of a pre-termination notice;

3.    Costs of the suit on the scale as between attorney and client_ _ _”

Background.

[2]        The applicant owns a residential property that contains 44 units. During 2014, the respondent offered to install prepaid electricity meters at the property. The applicant was informed that theprepaid meters would be installed and operated at no cost. In September 2014, the respondent installed a meter in each unit.

[3]        From June 2014 to June 2017, the respondent charged the   applicant for electricity based on the bulk meter located on the    property instead of levying charges based on the prepaid meters that had been installed. In June 2017, the respondent adjusted the applicant’s account (for the period June 2014 – June 2017) by    removing the consumption charges that had been levied on the bulk meter. However, the respondent went on to add a monthly prepaid basic charge of R227.26 per prepaid meter for the period. This resulted in a total amount of R314 823.96 being charged to     the applicant’s account.

[4]        On 20 July 2017, the applicant addressed a letter of demand to the respondent asking for the prepaid basic charges to be removed from the account and for the prepaid meters to be removed from    the property. To date, the charges in question have not been removed from the account and the prepaid meters have not been removed from the property.

Applicable tariffs.

[5]        When the prepaid meters were installed on the property, the 2014/2015 tariffs for the North West Province were in place. These   tariffs set out different charges for different regions in the province.  For example, in the city of Matlosana a basic charge of R100 was    levied for domestic prepaid meters. In Kgetleng River there was no basic charge for domestic prepaid meters but there was a basic    charge of R134.62 for domestic (post-paid) meters. In the case of    the respondent (Maquassi Hills), the tariff set a basic/fixed charge of R180.84 on the domestic conventional scale (post-paid meters),    but there was no charge set out for domestic prepaid meters.

[6]        For the period 1 July 2017 to 30 June 2018, the respondent established four different domestic tariffs; Domestic Conventional,    Domestic Rural Prepaid, Domestic Prepaid and Domestic Rural: scale 2. At this juncture, a basic charge of R212.11 per month was instituted for the domestic prepaid tariff. 

The respondent’s version.    

[7]        As a result of the amount of money owed to Eskom due to none payment or partial payment of electricity bills by residents of Maquassi Hills on a monthly basis to their municipality, the respondent proposed a prepaid electricity tariff on or about 2013. Before then, the tariff used was the post payment, which had an adverse impact on the finances of the respondent. The respondent then introduced a system whereby the consumer would apply for a prepaid meter. Gigi Cell was the service provider contracted to install the prepaid meters by the respondent.

[8]         The first prepaid meter was to be installed free of charge and any other was to be charged at R2800. The applicant through his representative, Mr Lington Matukuta, applied on behalf of the applicant. The applicant has 44 flats on the property and has not been charged even for a single meter installed.

[9]         Due to the under recovery of debts as a result of post-paid electricity which was provided through bulk meter reading, and the indebtedness to Eskom, Council made an application to the National Electricity Regulator of South Africa (NERSA) for new electricity tariffs. NERSA considered all factors that are relevant in deciding on a new tariff, approved the application, granting the respondent new tariffs.

[10] The new tariffs were then adopted by the Council of the respondent,    gazetted and published on the respondent’s website and notice boards. Even after the installation of prepaid meters at the   applicant’s     premises, the respondent continued to bill the applicant  on the reading of the bulk meter and old tariffs due to the delay in     the application form of the applicant being processed by the     respondent. Soon thereafter the respondent charged the applicant   for consumption of electricity on new applicable tariffs, resulting in   the applicant being indebted to the respondent in the amount of   R314 000.

[11] The applicant now wants this Honourable Court to reverse the process claiming that his representative is a lay person and did not   know the results of the application for prepaid meter. He further    alleges that the billing is incorrect without laying any basis thereto.   The fact that the respondent acquires the same service from       Eskom at a cost seems to elude the applicant. The applicant’s     basis for the relief sought seems to find its genesis in the mistaken belief that the prepaid meters were to be installed free of charge,       nothing could be further from the truth. The applicant has launched       this application so that he could enjoy the previous lower tariffs   that brought the respondent financial distress.

[12]     The respondent is not responsible for generation of electricity,   which is Eskom’s competence. Therefore, it cannot buy at a high       price but sell at a low price. That does not make economic sense.   The applicant has a duty to appraise himself with the prevailing,       new tariffs as operated by the respondent, failure to do that is a        mistake on his part. The applicant also seems to have misunderstood the R216.20 monthly fee. This fee is for  maintenance of the electricity infrastructure because Eskom only     deals with supply. This fee is applicable to all consumers and not    to the applicant alone.   

[13]     The only recourse which the applicant has under the circumstances is to take the decision of the Council to increase tariffs on review under PAJA, which the present application is not about. The respondent has always acted fairly with regard to the applicant and consistently applied its Credit Control and Debt Collection Policy across the board. There are also several disputes of fact that cannot be resolved on affidavit which the applicant should have foreseen and instituted a civil case.

The issues.

[14]     There are four issues that fall to be determined by this Court. Firstly, whether the respondent was entitled to charge the applicant a monthly basic charge for prepaid meters which were installed on the applicant’s property. Secondly, whether the respondent is obliged to remove the prepaid meters and bill the applicant on the conventional electrical tariff. Thirdly, whether the respondent is obliged to rectify the applicant’s account to remove all inaccurate charges. Fourth, whether the respondent should be prevented from terminating water and electricity services to the applicant in respect of charges that stand to be removed,

Legal principles

[15]      Section 95 of the Municipal System Act[1] (the Systems Act) provides:

“In relation to the levying of rates and taxes by a municipality and the charging of fees for municipal services, a municipality must, within its financial and administrative capacity –

            (e) ensure that persons liable for payments, to receive regular  and accurate accounts that indicate the basis for calculating the  amounts due;

            (f) provide accessible mechanisms for those persons to query or   verify accounts and metered consumption, and appeal procedures      which allow such persons to receive prompt redress for inaccurate accounts;

            (g) provide accessible mechanisms for dealing with complaints from such persons, together with prompt replies and corrective    action  by the municipality;”

[16]     On the other hand, Section 102(1) of the Act provides:

“A municipality may – (c) implement any of the debt collection and credit control measures provided for in this Chapter in relation to any arrears on any of the accounts of such a person. (2)Subsection (1) does not apply where there is a dispute between the municipality and a person referred to in that subsection concerning any specific amount claimed by the municipality from that person.”

Analysis of evidence

[17]     For a period of almost four years the municipality failed to implement the provisions of section 95 of the Act due to the delay in converting the applicant’s electricity account from post-paid to prepaid. It is true that from June 2014 to June 2017, the applicant had prepaid meters on all his 44 units. However, for the said period the applicant could not enjoy the use of the services of a prepaid meter. To me therefore, there is no valid reason why the applicant should be charged anything related to the pre-paid meters because such devices were mere white elephants decorating his properties from June 2014 to June 2017. It is to this Court irrelevant what name the respondent gives to the alleged outstanding amount which the applicant is alleged to owe the municipality. What is important is that for the said period, the respondent billed the applicant on the post-paid system, but not in terms of the tariffs of the prepaid meters. The alleged delay in converting the applicant from post-paid to prepaid system was not due to any conduct on the part of the applicant. It was due to the respondent’s systems. In my view, the respondent has made its own bed and it must lie on it. The applicant, by paying what the municipality billed him in terms of the post-paid system, has discharged its obligation and it is no longer indebted to the respondent for any amount in respect of the period June 2014 to June 2017.

[18]     The second reason why the applicant should not be held liable to the respondent for any costs whatsoever related to the pre-paid meters (for June 2014 to June 2017) is that during that period the respondent’s tariffs did not make provision for a basic charge for pre-paid meters. The first point in issue must be answered in the applicant’s favour. Once this finding has been made, it follows that the decision of the Court on the third and the fourth points in issue should also be answered in favour of the applicant.

[19]     The second issue is whether the respondent should be obliged to remove all pre-paid meters from the applicant’s property, and to bill the applicant on the conventional electrical tariff. It is common cause that all residents of Maquassi Hills municipality are currently being billed on the pre-paid meter tariff. The evil sought to be addressed by this system is a huge arrear amount of electricity bill which remains unpaid by consumers. The advantage of the pre-paid meter system is that anyone who intends to use power will pay before consuming it. This (prepaid system) is a very healthy tool to reduce the respondent’s indebtedness to NERSA. For good governance and proper management, it is in the public interest that all consumers of electricity within the respondent’s area of jurisdiction should be on a pre-paid meter system. 

[20]     In my view, the applicant has failed to advance sufficient reasons why he should get this special treatment, of being excluded from the pre-paid meter system. His bid in that regard should fail.

Costs.

[21]     There was an exchange of correspondence between the parties on the applicant’s alleged outstanding fees. It does not appear, throughout all those negotiations, that the respondent was prepared to seriously apply its mind to the reasons advanced by the applicant that the amount in question was not payable by him. Had the municipality applied its common sense this matter would long have been resolved before this application was issued. The defendant’s attitude has finally led to the applicant approaching this Court at huge costs on his defence team. In my view, it would not be fair for the applicant to be out of pocket because of the respondent’s laxity.

[22]     Had the municipality made a proper planning before it took a decision around 2014 to switch form post-paid to pre-paid, all this unfortunate spat would have been avoided. Lack of proper planning or the inaptitude of the municipality gave rise to this problem. It is rare, in a properly run municipality, to find pre-paid meters being installed and remain unused for four years. This is a waste of public funds. It is my view therefore that the municipality should be mulct with a punitive cost order. 

Order.

[23]     Consequently, respondent is ordered to:

23.1 Write off all prepaid basic charges, together with VAT,    interest, legal and miscellaneous fees on such amounts   within thirty (30) days from date hereof;

            23.2 Bill the applicant using the prepaid tariff with effect from July     2017 onwards within thirty (30) days from date hereof;

            23.3 Forward to the applicant amended statements of account with    suitable notations showing that the above adjustments have    been   attended to;

23.4 Refund the applicant all money in credit once the account has been fully adjusted;

23.5 Refrain from terminating the supply of services, electricity   and/or water to the applicant’s property in relation to prepaid basic charges in respect of the period June 2014 to June   2017;

23.6 Pay the costs of this application on the scale as between   attorney and client. 

SAMKELO GURA

JUDGE OF THE HIGH COURT

ATTORNEYS

For the Applicant                 : SCHINDLERS ATTORNEYS c/o MAREE &                                                       MAREE ATTORNEYS     

For the Respondent : KGOMO ATTORNEYS INC.                   

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