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Is a hyperlink acceptable for service under the Security of Payment Legislation?

Introduction

Many contractors are increasingly using information exchange systems, such as Dropbox, Apples iDrive or Sugarsync to send large documents to principals and other project consultants.  Information exchange systems allow users to share a large file through a URL link unlike email servers whether there is usually a file size restriction. 

The question is whether such systems can be used for the effective service of payment claims, payment schedules, adjudication applications and adjudication responses.

Adjudication application served through Dropbox

In Conveyor & General Engineering Pty Ltd v Basetec Services Pty Ltd [2014] QSC 30 the issue before the court was whether a Dropbox hyperlink, which was emailed to Conveyor containing an adjudication application, was effective service given that the contract did not prescribe this exchange system in their contract.

Basetic Services Pty Ltd (‘Basetic’) served part of an adjudication application by email which contained hyperlinks to a Dropbox server where the relevant documents could be downloaded.  The DropBox links directed the recipient to two files, which contained Basetec’s written submission and supporting documentation.

Conveyor & General Engineering Pty Ltd (‘Conveyor’) received the emails but did not download the documents until after the deadline for responding to the adjudication application had expired.  

The adjudicator held that the mode of service of the adjudication application was valid and accordingly, because the respondent did not submit an adjudication response on time the adjudicator did not consider the response in making his determination in Basetic’s favour. 

Conveyor applied to the Court to have the adjudication overturned on the basis that the adjudicator erred in concluding that the time for the response started on the date which, the adjudicator concluded, the application was served.

The Court’s decision – Adjudication deemed void

The issue before the Court was whether service by Dropbox was effective where the contract did not prescribe this as a mode of exchange.

The Court turned to section 11 of the Electronic Transactions (Queensland) Act 2001 (‘ETA’) to determine the question of whether the Dropbox link constituted valid service.  Because that Act did not allow the service of the documents through an electronic dropbox, the Court held that it did not constitute electronic communication within the definition of the ETA.

The next and more critical question raised by the Court was whether service via Dropbox was considered valid under section 103 of the Building and Construction Industry Payments Act 2004 (“BCIPA”).  The Court found that because the parties did not contemplate such service in their contract, the adjudication application was not validly served.

The Court agreed with previous cases that service was effective when “the efforts of a person required to serve the document have resulted in the person to be served becoming aware of the contents of the document”.

In conclusion, the Court held that service via DropBox was ineffective, resulting in an entire adjudication process being set aside.

Take Away Points

While it may seem extremely convenient at the time, contractors and subcontractors should be wary of serving documents electronically.

In summary:

  • service by emailing a link to a cloud based service will not generally be valid. This mode of service is not advisable;

  • Service by email will not be valid unless prior written consent is obtained from the recipient or expressly provided for in the contract; and

  • notwithstanding the above, service will be deemed valid if there is proof (or an acknowledgment) that the recipient received the notice (and not just a link to the notice). In these cases , the date of service will be the date the documents were received and read, not the date they were sent.

If you decide to serve electronically, please:

  • ensure that this mode of service has been provided for in the contract; or

  • ask the receiving party for a receipt that the file has been received; or

  • send additional copies of the file via fax or post or hand delivery.


Further information

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For more information onon this case or for general advice on security of payment issues, contact our Principal Solicitor/Director:

Jessica Rippon
T: + 02 9239 3120
M: 0421 877 932
E: jrippon@constructionlegal.com.au


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