Case name: Regona Properties (Pty) Ltd and Another v The City of Johannesburg Metropolitan Municipality and Another

Citation: Case No: 2023-074510

Court: Johannesburg High Court

Date of judgment: 8 April 2023

Overview of the Matter

Municipalities have a statutory duty to provide basic municipal services, including electricity.  Customers, in turn, have a duty to pay for the municipal services they consume.

This case was an urgent application by a steel manufacturing company to compel the City of Johannesburg Metropolitan Municipality to reconnect its electricity supply which had been terminated by the municipality due to a dispute around the company’s statement of account.

Legal Issues Raised in the Case

The case addresses the legal question of when a consumer can be protected from the termination of municipal services.

Relevance to Municipal Law

This case confirms the rights of consumers and the obligations of municipalities under the Municipal Systems Act, where a consumer has lodged a query or complaint against the municipality in respect of the accuracy of amounts due and payable.

Summary of Applicable Legislation

The Municipal Systems Act:  

• Section 75 provides that a municipality has a general duty to supply basic municipal services.

• Section 95 provides for customer care and management. It requires municipalities to provide accessible mechanisms for dealing with complaints, together with prompt replies and corrective action.

Electricity and Credit Control and Debt Collection By-laws 

• Section 7 states that a municipality may terminate the provision of municipal services for non-payment after giving the customer written notice of 14 days. The customer may, within the 14 days, make written representations to the municipality on why the service should not be terminated.

• According to section 9, where a consumer disputes the accounts rendered it is the responsibility of the municipality to take actual readings as soon as possible within 30 days. Where a consumer was charged incorrectly the municipality must conduct the requisite investigations, enquiries and tests, and adjust the account accordingly.

• According to section 11, where a customer has lodged a query or complaint, it must be registered and allocated a reference number by the municipality.

The municipality must investigate the query within 14 days and inform the customer of its decision in writing.

If the query relates to the accuracy of an amount that is due and payable, the customer must make full payment of any account for municipal services rendered in respect of a subsequent period, unless that account incorporates the amount in dispute.

• According to section 12, the municipality is responsible for testing the accuracy of an electrical meter if a consumer has reason to believe that the meter is not registering correctly and has notified the council that the meter should be tested.

Detailed Description of the Facts Leading up to the Case 

Regona Products (Pty) Ltd is a steel manufacturing company that receives its electricity supply from the City of Johannesburg Metropolitan Municipality.

Around 2017 the company installed smart check meters on its premises to measure its electricity consumption.

It discovered that the check meters recorded far lower usages than what the municipality charged it. The company lodged a dispute with the municipality contesting the amount it was being charged.

The municipality allocated a reference number to the dispute and was supposed to provide CSV downloads to enable a bill rerun. This did not happen.

The company then started paying the municipality based on the actual consumption as recorded by the check meters instead of the amount charged by the municipality.

The shortfall resulted in the company’s electricity account going into arrears.

In 2019 the company requested a change in the electricity supply tariff from business to industrial, which, if effected, would have influenced the electricity charges. This request was also not attended to by the municipality.

In 2022 the municipality served a pre-termination notice on the company. The company responded with a letter of demand and the municipality flagged the account pending the resolution of the raised dispute.

In 2023 the municipality served a second pre-termination notice on the company and proceeded to disconnect its electricity supply. The company approached the court for urgent relief.

Relationship Between the Parties Involved 

The first applicant, Regona Properties (Pty) Ltd, is the registered owner and landlord of the property.

The second applicant, Regona Products (Pty) Ltd, leases the property from the first applicant.

The first respondent is the City of Johannesburg, the local municipality from which the second applicant receives its electrical supply.

The second respondent is the municipal city manager, who has the responsibility to ensure that the municipality complies with its obligations.

Issues to be Determined 

The court had to determine whether or not the municipality lawfully disconnected the company’s electricity supply.

Summary of the Arguments Made by Both Parties

The applicants argued that the company should not be forced to a payment arrangement by an unlawful termination when the municipality did not follow the dispute resolution process in the by-laws.

They further argued that the municipality is not entitled to the disputed portions of the account because a formal dispute was raised, and the company made payments on the actual meter readings. 

The summary of the municipality’s argument was that that it has an obligation to collect revenue and part of that obligation includes disconnecting consumers who do not pay for their services.

Discussion of Legal Principles  

The court clarified that once the issue of possible inaccurate meter readings has been flagged, the onus is on the municipality to show that the meter readings are correct.

Until that onus has been discharged, the municipality cannot rely on the billing based on the possible inaccurate readings.

The customer is not obliged to pay the disputed amount, but they are expected to pay the amount not in dispute.

The court further referred to past case law which had stated that a consumer can be protected from disconnection if the following requirements are met: 

1. There must be a dispute. This means that the consumer and the municipality must advance irreconcilable contentions. 

2. The dispute must be properly raised, which would require that it be properly communicated to the appropriate authorities in accordance with the procedures specified in the Municipal Systems Act.

3. The dispute must relate to a specific amount. It is not enough to raise a general dispute.

4. The consumer must provide enough facts to allow the municipality to identify the disputed items and the basis for the ratepayer’s objection.

5. It must be clear from the founding affidavit that all these requirements have been met.

Court’s Decision and Order  

The court made the following decision in favour of the applicant:

• The municipality was directed to immediately restore the company’s electricity supply. 

• The municipality was directed to provide the company with CSV downloads or actual readings of the meter number within seven days. 

• The municipality was directed to consider the request for the change of tariff within seven days, and to apply the change retrospectively, if effected.

• The municipality was directed to bill rerun on the company’s account if it found a discrepancy in the meter readings.

• The parties were directed to attend at a statement and debatement within 30 days in the case of a change in either the tariff or the readings.

Explanation Of The Reasoning Behind The Decision

The court said that the applicants met the five requirements to protect them from disconnection, as stated above.

The court also said that the applicants installed their own meters to measure consumption to show the municipality that they were being overcharged.

They lodged a dispute, and they appointed a person to follow up with the municipality. They went to the office when they received a pre-termination notice. They were allocated a reference number for the dispute.

They did all they possibly could to show the municipality that they were overcharged.

The court said it was, and still is, up to the municipality to go to the property to test the meter, and if they disagree, to give convincing reasons why.

The court further said that the applicants did not try and evade their obligation to pay for the electricity. They continued to pay based on their own meter readings while continuing to engage with the municipality.

The court was of the view that if the applicants were acting in bad faith, they would have stopped paying altogether, which would have entitled the municipality to terminate the services.

The court pointed out that if the municipality had carried out its statutory duty to investigate the dispute, all this could have been avoided.

Implications for Disputes with the Municipality on Consumer Accounts  

This case confirmed that a municipality is entitled to disconnect services if non-payment is not in dispute.

However, if there is a legitimate dispute lodged, and if the customers complied with their end of the bargain by paying the reasonable amounts not in dispute, it is expected that the municipality keep their end of the bargain and investigate the dispute in line with applicable by-laws and policies.

Lessons to be Learned from the Case for Potential Clients 

This case reiterates the rights of ratepayers under the Municipal Systems Act and illustrates to potential clients how consumers may be protected from termination of municipal services where their rights are infringed.

Recommendations for Individuals Facing Similar Situations 

Individuals facing similar situations are advised to speak to attorneys regarding the possible recourse available to them.

Judges and Legal Teams 

Judge: WJ Du Plessis, Acting Judge of the South Gauteng High Court

Counsel for the applicants: Ms FA Darby

Instructed by Michael Herbst Attorneys

Counsel for the respondents: Mr E Sithole

Instructed by Mojela Hlazo Practice

Read the full Judgement