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The legalities behind disconnection of utilities

Many trustees and managing agents take the action of disconnecting services when scheme members do not pay their levies. Using disconnection as a means to force payment for non-payment of levy is very contentious issue.

In December 2000, a body corporate disconnected the electrical supplies to the sections of owners who disputed the method of calculation, and failed to pay a special levy raised to pay for improvements to common property. The affected owners made a joint and urgent application to the High Court, as a result of which the Court ordered the immediate restoration of the electrical supplies to the sections. The Court also ordered the managing agent and body corporate to jointly pay the costs of the application.

The case above dealt with non-payment of a special levy that was not in any way connected to the supply or consumption of electricity. Would the situation have been different if the body corporate had switched-off the electrical supply to an owner who failed to pay for electricity or a monthly levy? The answer is “no”. Unlike a local authority, a body corporate is not considered to be a supplier of electricity and therefore cannot terminate the supply to one of its members. A body corporate purchases electricity from the suppliers and re-distributes it to sections within the scheme. In fact, neither the Act nor the Rules make it compulsory for sectional schemes to be supplied with individual electric meters. Nevertheless, levies and costs must be paid.

Owners who continue to enjoy the benefits and services provided to them while in arrears with their levies may be considered as parasites that are doing so at the expense of their neighbours. However, irrespective of how justified it may seem, a body corporate cannot interfere with either the electrical or water supply as punishment for non-payment of levies, and a body corporate that sanctions disconnection must be aware of the legal risks of so doing. Lost data on a computer, a missed fax or telephone message or spoilt supplies in a refrigerator may well give rise to a claim for damages against the body corporate.