CUC error results in $1.4M claim against Morritt

Caribbean Utilities Company claims that Morritt Properties Cayman owes it nearly $1.4 million due to a billing error that went unnoticed for a decade, according to a statement of claim filed in the Grand Court of the Cayman Islands earlier 
this month. 

The error appears to be similar to a mistake that resulted in CUC underbilling Water Authority-Cayman by nearly $500,000 during a period of seven years. CUC discovered the errors – involving incorrect billing multipliers entered by CUC – in Morritt and Water Authority billing around the same time in May 2011. 

 

50 per cent off  

According to CUC’s recent Grand Court claim against Morritt, the billing error commenced when an electricity meter was installed at the Morritt property in East End on 23 June, 2001. 

“For commercial service installations where the electric current demanded by the service is greater than can practically be flowed through a meter, CUC uses interposing current transformers to reduce the current by a known ratio to a practical level that can be flowed through the meter,” according to the filing by Appleby (Cayman) Ltd. 

The “billing multiplier” is the corresponding number by which the meter reading is multiplied in order to arrive at the actual consumption of electricity in kilowatt hours. 

“At the time of the installation of [the Morritt meter], the relevant customer service agent in error entered a billing multiplier of 40 instead of the correct billing multiplier of 80,” according to CUC’s claim. 

The billing multiplier error was repeated when the meter was replaced in November 2001. 

“As a direct result of the billing multiplier for the meters being entered incorrectly, the meters incorrectly recorded the quantum of electricity supplied to and used at the premises between June 2001 and April 2011 by a factor of 2. 

“Accordingly, CUC invoiced Morritt and Morritt paid only 50 per cent of the kilowatt hours supplied to and used at the premises on a monthly basis over this period”, according to the claim. 

CUC identified and corrected the error in May 2011. The electricity provider notified Morritt of the error in June 2011, and presented it an invoice for $1,376,190.76 in August 2011. 

“Morritt has asserted that it is not liable to pay, and has not paid” for any electricity other than what was billed under the original invoices, according to the claim. 

In addition to the $1.4 million, CUC is also seeking interest on the backpayments and legal costs. 

 

Water Authority not to be hurried  

In June, the Caymanian Compass reported that according to Water Authority records, board members said in April they would not be hurried into making a decision over paying the bill. 

According to the authority’s board minutes, “Although there is no dispute whether or not the authority used the electricity, the authority’s position is that there should be some limitation on how far back CUC can go to correct their errors”. 

CUC had offered the authority the chance to pay $417,997 (representing the outstanding amount from April 2006 to April 2011) in 36 monthly instalments. 

EastEndMorrittsResort

Morritt’s Tortuga Club and Resort is located in East End in Grand Cayman. – Photo: File
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19 COMMENTS

  1. Shouldn’t there be a statue of limitations here? Seven years to discover the billing error? Really? It isn’t the first time CUC has underbilled clients. And why is CUC going back seven years looking for mistakes? Are they hard up for cash? Did anyone get fired over these mistakes? Has anyone gone back and checked the utlitiy bills for the top brass at CUC to see if they were underbilled over the last decade?

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  2. I totally agree with the Morritt’s not paying for something that is not their error. CUC needs to cut its losses from both the Water Authority and Morritt’s and MOVE ON, ensuring it doesn’t happen again. Hopefully that’s the court’s ruling, should it reach so far.

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  3. No interest should be charged as there’s no demand no delay.

    On the other side, Morrits should calculate for opportunity cost, since electricity is variable lesser cost means lower hotel rates, more customer, more savings, however it would compensate also to capitalization plan and other extravagant expenses such giving more giveaways, more advertising, more benefits to employees. These causes damages to Morrits operation and reputation and warranted to claim damages plus legal cost too.

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  4. I have never heard of such B.S. in my life.

    To allow this to happen is nobodys fault but CUC’s. I cant believe this is in court.

    To allow this to happen is like Woody Foster seeing me in the supermarket and saying I owe him money because one of his employyes priced soemthing wrong a long time ago and he now wants me to make good on it.

    Too foolish for words. If somebody was incompetent then suck it up as a cost of doing business. It happens all the time.

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  5. In my business if I under bill a customer I would never think to send a bill for anything after the the original was paid. I would just take it as a loss and move on. I would not try to collect even a portion of the loss the next time I bill the customer also. The CUC should just move on drop the suit and cut their losses If not and I was the Morritt’s management I would ask the court if I can re-bill my customers that stayed for that period of time for the electricity used? How do you think that would come about? Electricity costs are included in room charges and should be re-billed if the court sides with the CUC Morritt’s should not have to just eat that cost.

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  6. Why is it that only underbilling charges have been detected. It is understandable that employees can make errors but one would expect errors either way.I have certainly not heard any announcement that CUC have made substantial refunds for overbilling.Maybe CUC considers if a customer has overpaid for 10 years he has no right of recourse.

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  7. Good point AQuaman71755,

    The relationship of Morrit-CUC is direct while Morrit customer and CUC is indirect. Morrit cannot go after the customer because the agreed price and obligation to serve was already fulfilled. Morrit and CUC has a continuing business, though it is past event there is no obligation to fulfill, In fact Morrit is benefiting from the use of electricity. As a rule you cannot enrich yourself at the expense of another. The only recourse for Morrit is to ask for damages.

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  8. If they made a mistake it should not be rectified at the cost of the consumer. CUC gets away with this becuase they have no competition in Cayman. If the court rules in favor or CUC, this will set a presedent for them to start going after individual home owners saying they were under billed and now have to pay more..

    If people pay what they were billed for a service, they shouldn’t owe anything else. I can see if it was discovered rather quickly but 10 Years give me break.

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  9. As a time share owner at Morritts we are billed for the electricity we use when we stay at the property. For CUC to install a meter that is incapable to keep an accurate record and offer correct billing is not Morritts fault. In my business, if I incorrectly charge or bill a customer and they pay me our transaction is complete. If I under charged them, I would never ask for additional funds. How stupid do you think I am.

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  10. There may be a 6 year limitation and it will be interesting to see if the claim can actually be proved considering how difficult it may be to prove that a 10 year old arrangement was not set up knowingly.

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  11. If that happens NJ2Cay,

    CUC would have to pay a friend of mine back, because they came to him one time about a backlog bill, and threatened to disconnect his light if he didn’t paid the bill along with his current one on time.

    The bill was in the range of 500-600 C.I. dollars – it was a backlog bill that occurred 5 years ago!

    CUC would have to apologize and recompense many people; especially low income people struggling to make ends meet.

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  12. catchandrelease, I don’t even think there should a 6 year limitation. It takes 6 months maximum for a police officer to prepare a criminal case before it goes statute bar. So for a simple thing as monitoring payments, I think it should be no more than 1 year max.

    Bear in mind, these socalled dug up logs in CUC storage, takes place years after a customer has no memory of what was consumed, and I think that should be investigated.

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  13. What if my local suppliers come back to me after and tell me that their marging of profits was too low for the past 10 years and they now bill me 1.4 millions. If CUC wins, I may just that. So, to all customers that I did work for, I will come back to you with notices, starting with Appleby.

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  14. Section 7 of the Limitation Law (1996 Revision) states that:

    An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued

    Of course, there are exceptions to s7, but generally speaking CUC has 6 years to find an error in their billings (and should not be able to collect throught the courts debts older than 6 years).

    Of course, a lesson from Ivan was that certain Governments will allow CUC to recover uninured losses from the Country – so such Governments may be willing to allow them to recover debts older than the 6 years as well.

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  15. When the first new meter was installed at Morritts more than ten years did it suddenly seem like the hotel was suddenly using half the normal number of kilowatt hours? There should be such a change evident if CUC’s story is true.

    Meanwhile I’m sure that Morritt is incurring legal costs. Can they recover those against CUC?

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  16. Both CUC and government need to address the cost of electricity in Cayman. The public are grossly overcharged and there needs to be an investigation into how and why this continues. There are less expensive suppliers of fuel for the generators – why does Cayman not source cheaper fuel? The creative management of CUC assets creates an unrealistically high operating cost for the company – then factor in a guaranteed profit margin (government) and you have grossly overpriced electricity.

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  17. When a friend of mine moved from one 1bd apartment to another 1bd apartment 9mo ago and her CUC bill doubled, she officially asked to investigate and install watt-hour meters. She is still waiting for a response from CUC.

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