A recent High Court judgment has delivered a significant victory for a business owner in a long-running electricity billing dispute with the City of Johannesburg, while setting an important legal precedent on the prescription of municipal debts.

In a ruling handed down on 20 October 2025, the court held that electricity charges owed to a municipality qualify as ordinary debts and are therefore subject to a three-year prescription period under the Prescription Act. Crucially, it found that the lodging of a billing dispute under section 102(2) of the Municipal Systems Act does not suspend or interrupt prescription.

The case, brought by Bir Investments (Pty) Ltd, centred on alleged billing errors affecting two industrial properties in Bedfordview. The company claimed that the City had incorrectly transferred historic charges, used inflated opening balances, and applied the wrong tariff category to its electricity account. Despite multiple disputes and submissions of detailed technical reports, the City continued to levy interest and legal fees on what Bir maintained were inaccurate and time-barred charges.

After years of unsuccessful correspondence, Bir approached the High Court in May 2023, seeking a declaratory order to the effect that the disputed debts had prescribed, as well as an order preventing service disconnection. The court was asked to decide whether: (a) the City’s internal processes or section 102(2) of the Municipal Systems Act interrupted prescription; (b) the applicant’s partial payments amounted to acknowledgment of debt; and (c) declaratory relief could be granted for prescribed amounts without requiring a review under the Promotion of Administrative Justice Act.

In its reasoning, the court reaffirmed that municipal service charges fall within the ordinary debt category, meaning they prescribe after three years if not lawfully interrupted. Section 102(2), the judge held, merely empowers a municipality to withhold credit control measures while a dispute is unresolved. It does not stop time from running for prescription purposes.

Rejecting the City’s reliance on its credit control policy, the court ruled that internal policies cannot override national legislation or the Prescription Act. It further held that Bir’s ongoing payments, made under protest while disputing the account, did not constitute an acknowledgment of liability and therefore did not interrupt prescription.

The court granted comprehensive relief in favour of Bir Investments and declared that all electricity charges older than three years as of 20 October 2025, including R8.7 million in disputed amounts, had prescribed. The City was ordered to write off and reverse all prescribed amounts, interest, and related legal fees within 14 days, provide a fully reconciled and transparently annotated statement of account and refrain from disconnecting electricity or water services tp/o the properties.

The judgment has substantial implications for both municipalities and ratepayers, clarifying the interaction between the Municipal Systems Act, the Prescription Act, and municipal credit control frameworks. It affirms that municipalities bear the burden of proving the correctness of their billing once a bona fide dispute is raised and that they cannot rely on internal processes to delay or suspend statutory prescription periods. As municipal billing controversies continue to generate public frustration and litigation, the decision underscores the courts’ growing insistence on financial accountability and procedural fairness in local government administration.