By Liad Hadar, Director at Hadar Incorporated, Specialist Property Law Firm
This article first appeared in Asset Magazine’s February 2024 edition

The City of Johannesburg, like many municipal entities, has faced criticism and legal challenges regarding its billing systems. I’ve previously written about this in my article titled “How to Manage Municipal Shock” in the May 2022 edition of Asset Magazine.

This article delves into a real-life case involving a client of ours, the owner of a large hotel in the northern suburbs of Johannesburg, who encountered an astonishing invoice of R26,475,253.39 in November 2023.

The invoice, fraught with irregularities and errors, led to a series of events highlighting the challenges faced by property owners dealing with inaccurate billing systems, the threat to property owners and the measures taken to protect their rights.

The 26m+ Rand Invoice

Our client received an unexpected, shocking, invoice from the City of Johannesburg in November 2023, purportedly for electricity consumption over a period of more than 5 years for which it was not billed.

This was the first invoice ever received for this meter, which, upon investigation, was found to be inactive and completely non-operational.

Reacting promptly, our Team addressed an urgent letter to the City, demanding that it provide:

• specific details, including identification of the meter being read;
• proof of billings; and
• a statement and debatement of the account.

Perhaps most importantly, at that time, we required an irrevocable written undertaking that the City would not disconnect services pending the resolution of the dispute.

Our Team emailed the letters to several City officials, hand-delivered it two main offices in Johannesburg and followed-up, in person, at their offices all of which yielded no response.

The City’s Response and Pre-Termination Notice

Despite our efforts, the City’s response was to issue a 14 day pre-termination notice, threatening to disconnect services unless the full disputed amount was paid.

This was in direct contradiction to our attempts to resolve the matter amicably. It also left our client with no option but to protect their position by proceeding with urgent legal action.

Urgent Legal Action

Faced with the imminent threat of disconnection, we warned the City of our intention to file an urgent application in the High Court to prevent the termination of services. Again, no response nor undertaking was received.

With no resolution or undertakings, we were compelled to launch an urgent High Court application during the Court recess period, on December 19 2023, to protect our client’s interests.

The urgency was heightened by the presence of international guests at our client’s property, making a swift resolution crucial to avoid substantial and irrecoverable revenue loss and irreparable harm to the hotel’s reputation.

Resolution by Agreement

The legal proceedings prompted the City to properly consider our client’s dispute and to take action swiftly.

Ultimately, a mechanism was agreed by the parties which resulted in a Court Order which set out, in summary, that:

• the City would attend for a joint site inspection at our client’s property by no later than 30 January 2024 to try to locate the meter linked to the 26m+ invoice;
• if such meter was located, to then investigate the correctness of the alleged billings and totals claimed by the City and to provide our client with a report; and
• to conduct a statement and debatement of such charges.

Again, most importantly in the interim, the City was interdicted from disconnecting services to our client’s property pending the proper investigation and resolution of the dispute.

In addition to the above, it was also included that if the City could not locate the meter or if it was unable to link it to electrical supply to our client’s property, the entire invoice under dispute would be credited and the dispute would be finally and unequivocally resolved.

This ultimately best protected our client from the risk of disconnection whilst also ensuring that the dispute would be resolved one way or another.

Site Inspection Results

The City attended at our client’s property with us and our client’s experts in attendance and conceded that the meter was untraceable. The invoice was therefore wholly unfounded.

As a result, the City will now have to fully credit our client’s account.

We will now be seeking an amicable settlement of our client’s legal fees incurred during the dispute and ultimate High Court urgent application.

Conclusion

This case exemplifies the challenges property owners face with inaccurate billing systems and the need for a vigilant approach to protect their rights including, unfortunately, engaging the services of property law experts to assist in these matters.

The City’s billing practices, as showcased in this real-life scenario, underline the importance of transparency, accountability, and swift resolution in municipal dealings to avoid unnecessary legal battles. Failing this, means that the City fails to protect the interests of ratepayers who are ultimately contributing toward the legal costs to be awarded against the City for all unfounded termination notices or actions which are challenged in our Courts of law.