How long are you liable for municipal charges?
If you own a property, you are responsible for payment of certain charges to your municipality. If you are a tenant, you may pay your own utility costs or you may have an “all-in” rent, in which the landlord accommodates the cost of electricity, water and sewerage, etc., within the rental amount, and they pay the municipality directly. The property owner must always pay the property rates. What happens if you fail to pay the municipal charges you are liable for, either as owner or occupier? Is there a statute of limitations on debt to the municipality? The answer is complicated. In this context, the law refers to “prescribed charges”.
What does “prescribed” mean?
A charge is prescribed when the law considers the debt too old for the creditor to enforce collection. A creditor can still demand payment of prescribed charges and include them on an invoice, but the defence of prescription may be used by the debtor to avoid payment.
The National Credit Act 34 of 2005 (read with the National Credit Amendments Act 19 of 2014) makes it unlawful for a municipality to invoice a consumer for prescribed charges, or to collect them.
When do municipal charges prescribe?
The prescription of municipal charges is covered by the Prescription Act, Act 68 of 1969, read with current case law. In South Africa, refuse, rates and sewerage charges prescribe after a period of 30 years. However, water and electricity charges prescribe after a period of just three years. Water and electricity can easily be disconnected by the municipality for non-payment, unlike refuse collection or sewerage, which may explain the shorter prescription period.
Principles of prescription of municipal charges
There is a mild anomaly in the way the prescription period is set for municipal charges. Debts generally fall due when the customer (the debtor) receives the invoice. The prescription period theoretically starts running when the debt falls due. However, we have all experienced times when our municipal bills arrive later than usual. In this case, prescription starts running when the knowledge of the claim should reasonably have come to the creditor’s attention. In plain English, if the municipality fails to invoice consumers for an extended period, then prescription starts when it reasonably ought to have done so, and not when the invoices were eventually despatched.
Prescription is “interrupted” and the prescription period restarts if a consumer has admitted liability for the charge unambiguously and unequivocally. This can be problematic if a consumer signs an acknowledgement of debt for charges under dispute, to procure a payment plan or arrange for reconnection of services which were terminated due to non-payment.
Payment of a prescribed charge and interruption of prescription
Once an amount has been paid, it cannot prescribe. Even if you made the payment in ignorance of this condition and in error, you cannot claim a reversal of the prescribed amount, or a refund of the amount paid. If a municipality has summonsed a consumer for an unpaid amount, this amount does not prescribe.
Part payment of a debt, or acknowledgement of part of a debt, can interrupt the prescription period for the whole debt. This is sometimes an issue when a municipality sends out invoices based on estimated readings for an extended period of time. If a consumer either pays or admits liability for the charges raised on estimated readings, and the municipality then reconciles the consumer’s account with the actual readings and raises further charges, the new charges cannot prescribe.
Do you need further information?
Prescription should not arise if you pay your bills on time. If you think you have been invoiced inaccurately or unfairly, relying on the prescription period is not the most appropriate way to avoid paying a charge you believe is unfair. If the charge is for water or electricity, you are likely to be disconnected. If the charge is for rates, refuse or sewerage, 30 years is a long time to be in dispute with the council!
If you have any questions about your bill, speak to your municipality in the first instance. If you are in financial difficulty and are unable to pay your bill, it will usually agree to arrange a payment plan, but it’s important to make contact as early as possible and not as a last resort.
If you have done this and are still in dispute, SD Law can help. We are a firm of specialist eviction lawyers in Cape Town, Johannesburg and Durban. We help landlords and tenants maintain healthy working relationships and we can also resolve matters with municipalities. Contact one of our attorneys on 086 099 5146 or simon@sdlaw.co.za if you need help with any property issues.