BIR Investments (Pty) Limited v City of Johannesburg Metropolitan Municipality (2023/049538) [2025] ZAGPJHC 1050 (20 October 2025)

Case Note

Bir Investments (Pty) Ltd v City of Johannesburg Metropolitan Municipality, High Court of South Africa, Gauteng Local Division, Johannesburg, Case No 2023/049538, judgment delivered 20 October 2025

Reportability

The matter was marked as reportable by the presiding judge because it deals squarely with the inter-relationship between the Local Government: Municipal Systems Act 23 of 2000, the Prescription Act 68 of 1969 and a municipality’s internal credit-control policy. The judgment clarifies whether the lodging of a billing dispute in terms of section 102(2) of the Systems Act suspends or interrupts prescription of municipal charges, and it confirms the onus resting on a municipality to prove the correctness of its accounts. Given the prevalence of large-scale disputes between commercial consumers and metropolitan municipalities, the judgment is of practical significance to other courts and to local-government actors, and it therefore warrants publication in the law reports.

Cases Cited

The court referred to Euphorivia (Pty) Limited trading as Gallagher Estates v City of Johannesburg [2016] ZAGPPHC 548; 39 Van der Merwe Street Hillbrow CC v City of Johannesburg Metropolitan Municipality and Two Others, judgment of Dodson AJ delivered 24 March 2023; Body Corporate Croftdene Mall v eThekwini Municipality 2012 (1) All SA 1 (SCA); Tarica and Another v City of Johannesburg, unreported judgment of Mahon AJ handed down 27 January 2025, neutral citation [2024] ZAGPGHC 1261, together with the leave-to-appeal judgment of 25 August 2025; Argent Industrial Investment (Pty) Ltd v Ekurhuleni Metropolitan Municipality, unreported, case 17808/2016, 13 February 2017; and a host of older authorities distinguished but not decisively relied upon.

Legislation Cited

The court analysed section 102 of the Local Government: Municipal Systems Act 23 of 2000, various provisions of the Prescription Act 68 of 1969, and section 34 of the Constitution of the Republic of South Africa, 1996, dealing with the right of access to courts.

Rules of Court Cited

No specific Uniform Rule of Court was determinatively applied, although the ordinary rules governing motion proceedings, declaratory relief and costs were implicitly engaged.

HEADNOTE

Summary

Bir Investments owned industrial property in Bedfordview where it operated a glass-manufacturing plant. Electricity was supplied through several municipal meters that were repeatedly replaced, disconnected and recalibrated. From 2014 onward the company challenged the City of Johannesburg’s opening balances, tariff codes and penalty charges, contending that the bills were patently incorrect. The municipality admitted that historic re-billing had occurred but refused to produce an accurate reconciliation.

When internal processes failed, the applicant approached the High Court in May 2023 seeking an order that all electricity charges older than three years be declared prescribed, that ancillary interest and legal costs be reversed, that an adjusted statement of account be issued and that the City be interdicted from disconnecting services pending resolution of the dispute.

The City did not dispute the factual errors in billing; instead it argued that the relief was incompetent because, it said, section 102(2) of the Systems Act barred the institution of legal action while a dispute was pending and therefore prescription could not begin to run. It further contended that the applicant’s monthly part-payments constituted acknowledgments of debt interrupting prescription and that the applicant should rather have sought a review of administrative inaction.

Key Issues

The court had to decide whether the lodging of a section 102(2) dispute suspends or interrupts prescription of municipal debt, whether the applicant’s ongoing payments amounted to an acknowledgment of liability under section 14 of the Prescription Act, whether the declaratory relief sought was competent in the absence of a quantified figure, and whether the municipality could lawfully threaten disconnection in respect of amounts that had prescribed.

Held

The court held, first, that electricity charges are ordinary civil debts that prescribe after three years unless interrupted in a manner recognised by the Prescription Act. Second, section 102(2) of the Systems Act does not halt the running of prescription; at most it provides that credit-control measures “may” be suspended, leaving the municipality free to litigate if it so wishes. Third, payment of contemporaneous bills did not constitute an acknowledgment of liability for historic disputed amounts. Fourth, a declaratory order identifying classes of amounts that have prescribed is competent and practical. Consequently, all electricity charges older than three years from the date of judgment, including the quantified sum of R 8 726 121, were declared prescribed; the City was ordered to write them off, reverse interest and fees, furnish a reconciled account and desist from any disconnection threats; and costs were awarded against the City on the party-and-party scale, scale C.

THE FACTS

Bir Investments owned two neighbouring erven in Bedfordview. Each erf was originally serviced by its own municipal electricity account, but after one erf was sold the historic charges were transferred to the remaining property. Three legacy meters, ending 566, 582 and 877, continued to reflect consumption but were allegedly disconnected as early as March 2011. Despite the disconnections, the meters remained registered on the account until April 2016 and the City kept levying charges on the premise that electricity had been consumed.

From 2014 the applicant persistently queried two core aspects of the billing: first, that the City had imported an incorrect and inflated opening balance when it migrated the account, and second, that it was charging on an erroneous tariff band that did not correlate with the applicant’s low-voltage industrial usage. Each time the applicant furnished spreadsheets and engineers’ reports, the City issued a so-called “re-bill”, but the revised figures still reflected unexplained arrears running into millions. By August 2012 the original account had been closed and rolled into the surviving account number 5[…]; thereafter all further transactions appeared under that consolidated reference.

The applicant invoked section 102(2) of the Systems Act, compelling the City to ring-fence the disputed portion pending investigation. Nonetheless, the City continued to add interest at the punitive rate applicable to overdue balances, as well as “legal fees” triggered by automatic computer-generated letters of demand. Despite numerous meetings, no final recalculation emerged. In May 2023 the applicant approached the High Court seeking declaratory and interdictory relief aimed at bringing the stalemate to an end.

THE ISSUES

The court was required to determine whether the respondent’s reliance on section 102(2) constituted a legal bar to the running of prescription; whether part-payments without express admission interrupted prescription under section 14 of the Prescription Act; whether the applicant had pleaded the requisite factual basis for declaratory relief identifying prescribed amounts; and whether equitable considerations justified an interdict restraining service termination in respect of time-barred debt.

A secondary issue concerned the proper formulation of relief: the City argued that an order commanding it to “comply with its statutory obligations” was impermissibly vague and that the applicant should instead have pursued a review under the Promotion of Administrative Justice Act. The court therefore had to decide whether to grant tailored relief or to remit the matter to the municipality for further process.

An ancillary but important issue related to onus: jurisprudence such as Euphorivia and 39 Van der Merwe Street Hillbrow CC places the burden of proving meter accuracy and account correctness on the municipality once a bona fide dispute is raised. The court had to consider whether the City had discharged that burden.

ANALYSIS

The judgment opens by restating the principle that municipal service charges are “ordinary debts” subject to the three-year extinctive period in section 11(d) of the Prescription Act. The court then canvasses in detail the structure of Chapter 9 of the Systems Act, emphasising that section 102 empowers but does not compel a municipality to suspend credit-control measures while a dispute persists. The wording, the judge reasons, merely renders subsection (1) inapplicable in the limited circumstance of a specific disputed amount; it does not create a statutory moratorium on instituting action, still less an automatic interruption of prescription akin to acknowledgment or judicial process.

Turning to the City’s argument that its own debt-collection policy forecloses litigation during a dispute, the court notes that the policy grants the City Manager a discretion to suspend recovery steps but does not oust the municipality’s right (or duty) to sue where appropriate. An internal policy cannot override national legislation; still less can it nullify the Prescription Act. The court aligns itself with Mahon AJ’s reasoning in Tarica, endorsing the finding that section 102 operates entirely outside the scheme of section 13 of the Prescription Act and therefore cannot delay completion of prescription.

Addressing interruption, the judge distinguishes between payment of undisputed current consumption and acknowledgment of liability for historic arrears. An acknowledgment must be clear, unequivocal and directed at the debt in question. The applicant’s monthly settlement of contemporaneous invoices, coupled with its vociferous contestation of the arrears, could not satisfy that standard. Moreover, the City had failed to plead or prove any factual basis for an implied acknowledgment, leaving the purported interruption without evidentiary foundation.

Finally, the court deals with the competence of granting declaratory relief expressed in temporal terms rather than in a fixed sum. Relying on Constitutional Court guidance that courts should craft effective remedies, the judge holds that a declaration that “all charges older than three years as at date of judgment have prescribed” is both ascertainable and administratively convenient. The City, as the accounting party, possesses the data to calculate the figures and must reconcile the account accordingly.

REMEDY

The court granted a multipart order. First, it declared that every electricity charge reflected on account number 5[…] that is older than three years on 20 October 2025, including the identified sum of R 8 726 121, has prescribed. Second, it directed the City, within fourteen days, to write off those charges, to reverse all attendant interest, legal fees and miscellaneous charges, and to issue a fresh statement of account containing transparent annotations to facilitate verification by Bir Investments.

Third, the court interdicted the respondent from disconnecting, restricting or threatening to disconnect electricity or water to the applicant’s Bedfordview premises in relation to the time-barred amounts—ensuring continuity of supply while legitimate consumption continues to be billed. Lastly, costs were awarded against the City on the party-and-party scale, scale C, the judge declining to impose the more punitive attorney-and-client scale sought by the applicant but nevertheless signalling the court’s disapproval of the municipality’s conduct.

LEGAL PRINCIPLES

The judgment confirms that the Prescription Act applies to municipal service charges without qualification; municipalities cannot rely on the Municipal Systems Act or internal policies to suspend the running of time. It reiterates that section 102(2) of the Systems Act does not create a statutory impediment to litigation nor does it operate as a ground for delay envisaged in section 13 of the Prescription Act.

The decision reinforces the onus rule: once a consumer furnishes a bona fide dispute backed by concrete data, the municipality bears the burden of proving meter accuracy and account correctness. Failure to discharge that burden justifies declaratory and interdictory relief in favour of the consumer, including an order for the municipality to rectify its records.

Finally, the judgment illustrates the court’s remedial flexibility under section 34 of the Constitution and its inherent jurisdiction. A declaration based on a temporal prescription cut-off, coupled with mandatory account adjustment and a disconnection interdict, constitutes an effective remedy where historic arrears are intractably disputed and the municipality has failed to quantify the debt intelligibly.