By Chantelle Gladwin-Wood (Partner) and Maike Gohl (Partner)
A question commonly asked by consumers is whether the COJ will be compensating them for their difficulty in dealing with the COJ in investigating and resolving their queries. This is because it can take months (or even years), and costs thousands of Rands in expert’s reports/assistance and/or legal fees, and causes significant disruption to the lives of the consumers (not to mention extreme psychological fatigue and stress) when a consumer is incorrectly being compelled to make payment of large amounts that should not be reflected as owing on the account.
This article explains the different types of ‘damages’ that a consumer could suffer, and which can be claimed back.
These are amounts that the consumer ends up paying as a result of the COJ’s negligence, or failure to comply with the law. These include legal costs and the costs of using experts to resolve a dispute, or even amounts lost due to the unlawful disconnection of services.
The easiest part of this question to answer deals with legal costs. If a consumer takes the matter to court and is successful, ordinarily the court will award the consumer ‘costs’, which means that the COJ must compensate the consumer for a portion of the consumer’s legal costs in bringing the matter to court. However, the decision as to whether to award the consumer costs is always subject to the court’s discretion, and the court can take into account factors such as the behaviour of the consumer in the proceedings, when awarding costs. In addition, the usual costs order is for costs on the ‘party and party’ tariff, which means that the consumer can recover an amount set by a court tariff for necessary attendances only, and not all actual amounts charged to the consumer by his/her attorney. Occasionally, costs are awarded on the ‘attorney and client’ scale, which means that the consumer can recover more from the COJ than on the party and party tariff, but even this will not result in the consumer recovering 100% of what he spends to prosecute the matter in court.
Expert’s reports and technical assistance
Where these reports are necessary in order to determine the amount owing or owed to the consumer, the costs can be included as part of the legal costs in the court proceedings. There is no guarantee, however, that the taxing master (the person who decides in each case how much legal costs are owed by the successful party to the unsuccessful party) will allow 100%, or even any portion of, those costs. Each case will be decided on its own merits. This could also be added to the court proceedings as a special addition to the costs in the matter, which should hold more weight in the taxing process.
“Big bill” damages
The most frequently asked question relating to damages, is whether the consumer is obliged to make payment of a massive bill, which is received after the City has done a massive rebill for an period of many years/months, or where the City failed to bill a consumer for a certain service or billed the consumer on the incorrect tariff for example and which would not have accrued or become as large, if the COJ had billed the consumer properly, but would rather have been split up on a month to month basis. To distinguish these from other types of damages, let’s call them ‘big bill damages’.
COJ will argue that 100% of the big bill is payable because, even though it was sent out late, the consumer used the services provided and cannot escape liability for payment merely because the bill was late or initially incorrect or not forthcoming at all. Other articles have been written on prescription and how this can be used to reduce big bills presented after service charges have prescribed, but assuming that none of the charges that make up the big bill have prescribed, what can the consumer argue when whacked with a R1,000,000 bill for 3 years of electricity?
The most common argument turns on the fact that the COJ failed to bill the consumer at all, or correctly, for an extended period of time. If the COJ did not deliver (or make available) statements (or correct statements) for many years, and the consumer had no way of knowing what his/her actual consumption during that period was and accordingly made payment of an estimated amount for that unknown consumption, is it fair to require the consumer to now, much later, have to pay for the services that it used without knowing it was using them? There are several elements to this argument.
The first is that the COJ should not be entitled to benefit from its own mistake. This is known in our common law of delict as the ex turpi causa rule, which states that no person should benefit through their own error. The consumer could argue that the COJ erred in not sending (correct) bills and that it cannot later, to the prejudice of the consumer, claim the whole amount owed. The COJ would inevitably argue, however, that it did not make any mistake, or that it is not benefiting because of the mistake, as it would have been entitled to benefit even if the mistake had not been made. Alternatively, it could show that it was denied or could not otherwise gain access to the meters, after having made reasonable attempts, or that some or other piece of information was not available to it, or that it was entitled to rely on certain information that later turned out to be incorrect, in order to justify its error.
Then there’s the argument that allowing consumers to escape liability because of the COJ’s error could result in a public entity that is responsible for the provision of municipal services to over 1,2million consumers, having to write off millions, because it made a mistake when calculating or claiming (or failing to claim) the amount in question.
- Contributory Negligence
The sentiment that a party that contributes to the incurrence of damages, should not be entitled to recover 100% of those damages, is acknowledged by our courts in the exercise of the principles of contributory negligence. The theory goes that the amount of claim should be reduced by the proportion in which the claimant was at fault and contributed to causing the damages. To give an example of how this might work in COJ cases, the court would assess how much of the mistake was caused by the COJ (say 30% in any particular case because it failed to read the meters for 2 years) and then reduce the amount claimed by the COJ, by that 30%. As mentioned above, it can be argued by the COJ in response that the COJ’s claim for a big bill payment, is not a claim for damages, and so this principle should not apply.
Another expected response by the COJ would be that it is under-resourced and through some system or process failure this one account (out of over a million) slipped through the cracks, and therefore that it was unfortunate, but not negligent, in handling the matter. Coupled with a plea for lenience because it is a public entity, this could potentially defeat any damages claim lodged by a consumer.
‘What if’ damages reduction argument
Another common response by consumers to a large bill is that, had they received their bills regularly, showing accurate monthly charges, they would have realised that they were incurring much higher charges, and would have taken measures to reduce their consumption. This is most typically brought up in situations where the COJ under-estimates for extended periods of time and the consumer does not realise that the charges are based on estimated, as opposed to actual, readings; or where a water leak/theft of electricity is occurring without the consumer’s knowledge.
To my mind, this is the most interesting of the damages arguments, because the scope for reduction of the claim is staggering. The writers hereof have come across numerous examples, where the non-receipt of invoices, or the receipt of estimated readings for extended periods of time, have severely prejudiced our clients and could have been avoided, if the COJ had done what it is legislatively required to do.
These examples highlight that even very experienced property developers, attorneys and architects do not understand how COJ bills work. It is submitted that the ordinary lay person cannot possibly be expected to understand the intricacies of tariffs, meter readings, consumption and other charges. Seen in this context, it is submitted that the consumer has no duty to engage experts to detect problems with his account, where he has no reason to suspect that there is a problem. This was confirmed by the South Gauteng High Court in Argent Industrial Investments CC v Ekurhuleni Metropolitan Municipality in which the judge stated that “It is not the applicant’s duty to read meters, determine what its consumption is, and be ready to pay for that consumption whenever the respondent gets around to asking for payment, whenever in the future that may be.”
Another aspect to consider of the reasonable consumer, is to what lengths he is expected to go, in trying to resolve the dispute with the COJ. Is logging one query enough, or should he log 50? Is it enough to log queries and follow up, or is a visit to the walk in centre essential? Should the consumer exhaust all other remedies, like going to the Consumer Commissioner, or lodging an appeal with the Municipal Manager, before coming to court? If the consumer just gives up after months of attempting to resolve the query, does this constitute acceptance of the COJ’s version?
Lastly, when will a reasonable consumer be entitled to damages (or a reduction in the amount claimed by the COJ) as a result of the inconvenience and mental fatigue caused by the process? General damages can be claimed in terms of common law, which include amounts for pain and suffering and other intangible harms, but which are notoriously difficult to quantify precisely because they are intangible and so subjective.
Reasonable COJ official
This must be compared to the ‘reasonable COJ official’ who investigates queries logged. Firstly, they must be investigated within a reasonable time, otherwise the COJ should be held responsible for damages incurred by the consumer as a result of the COJ’s failure or unreasonable delay in investigating the query.
Secondly, the level of investigation must be appropriate to the query logged and the investigator must be sufficiently experienced or qualified to undertake the query. What is required in each case will differ on a case by case basis, but ultimately each query must be treated with care and diligence, because only the COJ is in a position to investigate and resolve these types of queries (without having to engage experts).
Thirdly, where the COJ fails to investigate or resolve a query, as it is required to do so by law, and the consumer has suffered damage as a result, the courts should not condone this failure merely because the COJ pleads poverty. To do so would empower the COJ to continue acting with a disregard for the rights of the consumers, and will only delay the ultimate resolution of the billing crisis.
Negligence assumed in NERSA regulations
The Electricity Regulation Act creates a rebuttable presumption that where an electricity provider fails to act, its conduct is negligent. This is a useful legal weapon in the hands of consumers wanting to claim compensation for their damages.
Ultimately the courts are required to strike a balance between the rights of consumers, and the rights of the COJ. Both have obligations to each other (for example, consumers have obligations to check that their accounts are correct and log queries if they are not and to make payment of any amounts which are not disputed, whereas COJ has obligations to investigate and resolve queries). But there is no precedent telling us how far the COJ or the consumer is expected to go when a dispute arises, or how to handle the situation where one or both have been negligent in complying with their obligations, or even what to do when a consumer is unable to make payment of massive bill precisely because he is unable to recover the amounts claimed from the persons who incurred those charges, as a result of the delay in the COJ’s issuing of the big bill.
At some level fairness to the consumer, and accountability on the part of the COJ, must be brought into it by the courts. Whilst one can appreciate that the COJ needs to collect its debts in order to continue providing services, consumers should not be unduly prejudiced by the COJ’s failure to comply with its obligations within a reasonable time. It is submitted that prescription should not be the only weapon a consumer has to a big bill – the principles of turpitude and contributory negligence, as well as general damages for pain and suffering, should be brought into account by the court, when deciding whether a claim under the circumstances discussed above is valid, or if it is found to be valid, to what extent that claim should be reduced in fairness to the consumer.
City’s own policies
The City’s own Credit Control and Debt Collection Policy recognises that the COJ is empowered to write off debt that it is unlikely to recover, because (among other reasons) there was negligence or fault on the part of the COJ or any of its officials.
To date there are no answers to the above in our law. We hope to make some, and be the catalyst for change in COJ’s attitude towards its obligations to its consumers.
Caveat: Please note: this article is for general public information and use. It is not to be considered or construed as legal advice. Each matter must be dealt with on a case by case basis and you should consult an attorney before taking any action contemplated herein.