Introduction

When undertaking large construction projects parties routinely exchange large documents in electronic form.  Email inboxes often limit the size of attachments, requiring alternative methods of exchanging large documents or drawings.

Information exchange systems allow a party to upload a document of almost any size to a server (or ‘The Cloud’) and invite another party to access and download the document via an URL hyperlink.  Construction contracts often prescribe a particular information exchange system for the project.  One such system available at low cost to the general public is Dropbox.  Another system frequently agreed on in construction contracts is Aconex.

While Dropbox is a simple and effective way of exchanging large electronic documents, it has been unclear until now whether courts would regard service by a method such as Dropbox as legally effective where the parties had not agreed on this system in their contract.

In a recent Queensland Supreme Court decision[1], the Court considered whether providing an emailed hyperlink to Dropbox constituted effective service of adjudication documents uploaded to The Cloud.

The background facts

Basetec Services Pty Ltd (“Basetec”) served part of an adjudication application by email.  Basetec attached another email including hyperlinks to the Dropbox server where documents which formed part of the adjudication application could be downloaded. Conveyor & General Engineering Pty Ltd’s solicitor (“CGE”) received the emails but did not download the Dropbox documents until after the deadline for responding to the adjudication application had expired.

Due to the late receipt of the information, CGE was late in providing its adjudication response.  The Adjudicator disregarded the late adjudication response.

The adjudication challenged

The Adjudicator made a determination in Basetec’s favour, and in doing so determined that the service of documents by Dropbox was effective.  CGE sought judicial review of the determination in the Supreme Court, arguing that service by Dropbox was not effective service of the documents and therefore the Adjudicator’s decision should be set aside.

The Court held that if by the efforts of one party, the other becomes directly aware of the contents of the document, service has been effected.  However, the Court said as CGE was not aware of the contents of the document until they accessed Dropbox and downloaded it, the email did not effect service.

The Court stated:“None of the data, text or images within the documents in the Dropbox was itself electronically communicated, or in other words communicated ‘by guided or unguided electromagnetic energy’ [as prescribed in the Electronic Transactions (Queensland) Act 2001]

On this basis, the Court determined the Adjudicator’s decision void.

Conclusion

While electronic service of documents may be convenient and efficient, parties should be cautious about the use of electronic facilities, including email.  In Basetec, the Court also confirmed serving documents by email is not a valid method of service unless it is agreed to in advance, for example, by a provision in the contract.

It appears Dropbox and similar systems used to avoid the inbox restriction limits imposed by email servers  have not yet been accepted by the courts as valid means of service for legal documents.  However, if a party were to confirm the receipt of a document provided by any means, it is likely the Court would confirm service has been effected.

To ensure the service of documents by electronic means, particularly by email, is valid, parties should ensure they take appropriate steps, including:

  • agreeing with the other party/parties to electronic service of documents prior to serving any document in this format (preferably by an express clause in the contract);

Or

  • if the contract does not contain any provision for the sending and receipt of notices, a party should obtain confirmation that the documents have been received using either a read receipt, a return email or by phone call to the other party; and
  • follow up by sending a second copy of the documents by fax or post to a registered address for service.

It is important to maintain accurate records of these steps being taken to support your case, should a matter be referred to adjudication and/or litigation.

Should you have any further queries about service of Payment Claim, Payment Schedules or adjudication documents please contact our office on (08) 8110 8000.

Contributor:  Tom Grace

 

[1] Conveyor & General Engineering Pty Ltd v Basetec Services Pty Ltd [2014] QSC 30