Chantelle Gladwin, Partner and Ramon Pereira, Associate at Schindlers Attorneys recently handled the landmark case, Friedshelf 837 (Pty) Ltd versus COJ and Others, and won.
Facts
Their client argued that the City failed to comply with its statutory and constitutional duties to investigate queries on the account meaningfully, and to provide the consumer with written notification of the outcome of such queries, say the attorneys.In this case a client purchased a property, and took vacant occupation. The COJ took over 9 months to present the client with its first account, which included massive charges for electricity.
After querying the massive charges (on the basis that the building was vacant, as it was being renovated), the City responded to advise that there was nothing wrong with the account, which was correct, because it was based on actual readings, and the client should pay it.
Unsatisfied, the client engaged electrical engineers, who determined that the owner was being billed for the supply of the property next door. The City installed a new electricity supply for the building next door, but the owner’s account kept arriving each month with inexplicably high charges for electricity.
Again, the owner queried the situation, and was again told (because the charges were based on actual readings) that the account was correct and he needed to pay it.
Baffled, he approached Schindlers Attorneys. It was discovered that the high charges arose as a result of the application of the minimum demand tariff, which resulted in approximately R 35 000 per month being billed to the consumer before a single unit of electricity was consumed. In this case the consumer did not sign a special consumer agreement with the City. The City opened the rates, electricity and water accounts, of its own accord.
The consumer argued that it did not apply for the demand tariff which resulted in it being charged R35 000 per month regardless of usage, which otherwise, had it been billed on another tariff, he would not have been liable for and as a consequence should not be held liable for. The City argued that the owner should have checked when he bought the property which tariff applied, because the City simply applied the tariff that the prior owner had applied for, to our client.
Our client also argued that the City failed to comply with its statutory and constitutional duties to investigate queries on the account meaningfully, and to provide the consumer with written notification of the outcome of such queries.
Court’s first important finding
The attorneys say the Court has acknowledged that the City must meaningfully investigate disputes raised by consumers and provide them with a proper response in relation thereto.The court ultimately held that the City had indeed failed to properly investigate the account. The court held that:
“the delay in investigating the query and doing so in what appears to be either a haphazard or disinterested manner, is not in conformity with the acceptable standards expected under the Bylaws. A duty is owed to the consumer to undertake a conscientious investigation and not simply go through the motions and then threaten a termination of services”
and further that the relevant laws:
“impose a duty on the City to at least properly investigate a query and make an informed decision”.
Court’s second important finding
It further held that the City could not hold the owner liable for such extreme charges (of R 35 000 per month) based on a special demand tariff, if that owner had not applied to be on that tariff. There is no law allowing the City to simply apply the tariff applied for by the old owner, to the new owner’s account. The Court went further in remarking that the City’s systems needed to alert it, when opening up accounts for purchasers of property, that a special tariff was used to bill the old owner, so that the City could alert the new owner as to the situation.
Court’s third important finding
The Court held further that:
“there are a large number of cases where it is alleged that the City’s administrative personnel shirk their responsibilities to provide a proper service but simply go ahead with the threat of terminating services”.
The fact that the court took judicial notice of this fact, is fantastic news for lawyers who can refer in future to this remark as judicial recognition of this fact.
Court’s fifth important finding
The Court held that by the consumer receiving monthly statements, he had not tacitly accepted the disputed charges. To the contrary, the consumer’s logging queries showed that precisely the opposite was true.
Conclusion
This judgment has had the effect of confirming that the City of Johannesburg’s policy of billing new owners in accordance with agreements in respect of tariffs reached with the prior owners is unlawful, which will have a wide-reaching effect.
Moreover the Court has acknowledged that the City must meaningfully investigate disputes raised by consumers and provide them with a proper response in relation thereto. - Chantelle Gladwin, Partner and Ramon Pereira, Associate at Schindlers Attorneys
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