CoJ accounting and billing system problems laid bare in damning high court judgment

The problems with the accounting system of the City of Johannesburg (CoJ) have been laid bare by a damning judgment handed down in the High Court in Johannesburg in which a property owner claimed the city conjured up inflated, excessive and contrived “false actuals” for electricity charges.

An application by the CoJ for summary judgment against Mir-Air Prop (Pty) Ltd, the owner of a property in Stormill Extension 3, for R1 677 739.34 in electricity charges, interest of 10.75% a year on this amount, and the costs of its court application was dismissed by acting judge Stephan van Nieuwenhuizen this month.

Van Nieuwenhuizen issued a punitive cost order against the CoJ and granted Mir-Air leave to proceed with the conduct of its defence in this matter.

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‘Quantum’ jumps from R1.6m to R4.4m in months

A verification affidavit by Tuwani Ngwana, who is employed by the CoJ as a legal advisor, said the quantum in the particulars of the claim of R1 677 793.24 in respect of Mir-Air’s liability for electricity as at 11 December 2023 had jumped from the original figure stated on the account number for the property to R4 447 841.07.

Mir-Air disputed the totality of the inflated, excessive, and contrived electricity charges levied by the CoJ on 17 August 2020.

The company said the CoJ has raised alleged additional charges, which it disputes and is indicative of the abysmal and chaotic state of the CoJ’s account system.

Mir-Air denied being indebted to the CoJ for any amount under any purported account number raised and/or referred to by the city and claimed it was in credit of municipal charges/fees.

David Alistair Lang, a director of Mir-Air, said in an affidavit the CoJ did not plead any period during which electricity was supplied to the property nor that electricity was supplied at all.

Lang said the CoJ also did not plead that it measured electricity consumption at the property or how this was measured and through which electricity meters.

He said the amount claimed is impermissibly inflated.

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He lodged a dispute with the CoJ regarding the electricity account via a telephone conversation on 11 August 2020 and thereafter sent several follow-up emails to resolve the disputes commencing on 17 August 2020.

Lang said the lodging of disputes continued in 2020 but none were resolved and no reasons for the CoJ’s accounting in justification of the unlawful charges were ever received.

He said the CoJ terminated electricity supply to the property in August 2022 and there could thus be no consumption charges from September 2022 or thereafter.

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No supply, no meter readings … yet still the charges came

Lang added that the property had an electricity meter, which was replaced with a new meter during June 2023 but the old meter ceased registering consumption because the electricity supply was terminated.

He said the new meter had a commencement reading of zero and never measured any consumption because there was no electricity supply to the property since August 2022 and still stood at a zero reading in November 2023.

Lang said the July 2023, September 2023 and December 2023 readings relied on by the CoJ all reflect “estimated readings” that can never render the quantum liquid or certain.

He added that the CoJ claim relates to charges levied from 2018 to 2023, and all purported electricity charges arising three years prior to the date of service of the summons being 9 October 2023 have prescribed.

Lang said the CoJ’s application was also an abuse of process because the Municipal Systems Act (MSA) prohibits enforcement steps where there is a dispute on the account.

He said all charges raised by the CoJ after August 2022, when electricity supply was terminated to the property, is disputed and the credit of over R430 000 must be deducted from charges lawfully leviable after 1 May 2018.

Van Nieuwenhuizen said the massive defect in the CoJ’s claim that still remains is its failure to allege that during the relevant period electricity was supplied.

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He said the CoJ’s purported verifying affidavit in fact does not even engage the difficulties raised that there was no electricity supply since the termination.

Van Nieuwenhuizen said Mir-Air’s affidavit supports the allegations that since August 2022, and absent supply, the old meter was removed by the CoJ in October 2022.

“Despite no supply since August 2022 and in the absence of any meter between November 2022 and June 2023, the CoJ regardless rendered statements levying charges on estimates and purported actual meter readings on the old meter.

“The full import of this nonsense is clearly lost on the CoJ,” he said.

“Notwithstanding the termination, the consumption of the old meter is still reflected as late as July 2023.”

Van Nieuwenhuizen added that the CoJ’s heads of argument reflect the claim that Mir-Air intended to create a “self-laid dispute of fact which should be adjudicated at trial”.

“I cannot agree that this is the case. If anything, the various annexures and photographs demonstrate the problems with the accounting system of the CoJ and, rather than embarking on further argument, it [CoJ] should have accepted the offer made by Mir-Air to withdraw the application for summary judgment.

“By not doing so, it opened itself up to the risk of a punitive costs order,” he said.

Van Nieuwenhuizen said the CoJ then rather startlingly submitted that Mir-Air’s opinion on how and what the readings should be does not constitute a valid query and/or dispute.

He said it was submitted that on Mir-Air’s own admissions there were actual readings captured on the account which, in Mir-Air’s opinion, are “false actuals” and to successfully counter the actual charges captured by the CoJ, Mir-Air should have appointed a technical expert to prepare a report detailing the alleged correct readings.

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“In my view, obvious arithmetic demonstrates the fallacy of these submissions and the various photographs with their respective dates of the various readings from the relevant meters demonstrates that this argument is devoid of any content,” he said.

Van Nieuwenhuizen said Mir-Air provided the CoJ with ample evidence of the items in dispute and they are all properly identified and properly raised and he cannot fault Mir-Air’s calculations.

He agreed with Mir-Air that the CoJ’s quantum and claim cannot be liquidated given that it has not been fixed by agreement or by a judgment of the court “and no amount of credit control policy or bylaws can change these principles”.

“This is even more so where the figures are estimates,” he said.

Judge van Nieuwenhuizen said it is clear the CoJ “has not the faintest idea of what is going on on the ground and that its accounting system seems to take cognisance of fictitious facts”.

He said it is also highly doubtful that the deponent to the CoJ’s verifying affidavit “has the slightest knowledge of what is really going on in the accounting systems, let alone what is going on in terms of electricity supply in reality”.

This article was republished from Moneyweb. Read the original here.