Australia: Lost in the clouds: Supreme Court decision highlights risks of using cloud technology to serve documents

Focus: Conveyor & General Engineering Pty Ltd v Basetec Services Pty Ltd [2014] QSC 30
Services: Dispute Resolution & Litigation, Property & Projects
Industry Focus: Property

The increasing popularity of cloud-based technology and services has significant implications for the way formal business communications are made. The growing trend towards parties employing cloud-based technology to serve documents is one example.

The recent Queensland Supreme Court case of Conveyor & General Engineering Pty Ltd v Basetec Services Pty Ltd [2014] QSC 30 demonstrates the risks of relying on "the cloud" to serve documents. In this case, the Court found that service via Dropbox was ineffective, resulting in an entire adjudication process being set aside.

Cloud technology

One of the benefits of cloud technology is that it provides a cost-effective, versatile and efficient method of storing and sharing files which are too large for email. In particular, Dropbox is a personal cloud storage service which makes its remote servers available to users to store their electronic files and also share files with other users.

In terms of serving documents using Dropbox, the process would be broadly as follows:

  1. The person undertaking service saves the document in Dropbox and emails the recipient a link to the document in Dropbox.
  2. The recipient then clicks on the link to access the document (either to view it or download it).

The facts

Purported service

On 23 August 2013, Basetec Services Pty Ltd (Basetec) sent an email to Conveyor & General Engineering Pty Ltd's (CGE) solicitors attaching an adjudication application form. The email also attached a copy of the email which Basetec sent to the Authorised Nominating Authority (ANA), the body that appoints the adjudicator, which included a Dropbox link to Basetec's submissions and documents for the adjudication application. A few days later, Basetec sent a similar email directly to CGE.

CGE's solicitor and CGE read the emails and attachments on the day that they received them but they did not access the documents in the Dropbox file until 2 September 2013.

Adjudicator's decision

On 2 September 2013, CGE sought to make submissions to the adjudicator challenging service. The adjudicator found that service had occurred on 23 August 2013 when Basetec emailed CGE's solicitors with the attachment and Dropbox links.

Accordingly, the adjudicator determined that under the legislative timeframes for adjudication, he could not consider CGE's submissions regarding service. The adjudicator proceeded with the adjudication and made an award in favour of Basetec.

Court application to set aside decision

CGE then made an application to the Supreme Court to set aside the adjudication decision on the ground that CGE was denied the opportunity to provide an adjudication response because the adjudicator erred in concluding that the time for that response started running on 23 August 2013.

In determining whether Basetec's emails could constitute valid service, the Court considered section 11 of the Electronic Transactions (Queensland) Act 2001 (ETA), which provides for service of "electronic communication".

Schedule 2 to the ETA defines electronic communication as:

  1. a communication of information in the form of data, text or images by guided or unguided electromagnetic energy; or
  2. a communication of information in the form of sound by guided or unguided electromagnetic energy, if the sound is processed at its destination by an automated voice recognition system.

The Court's decision

The Court held that section 11 of the ETA did not authorise the service of the adjudication application, inclusive of the material within the Dropbox. Specifically:

...the material within the Dropbox was not part of an electronic communication as defined. 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." Rather, there was an electronic communication of the means by which other information in electronic form could be found, read and downloaded at and from the Dropbox website.

Further, to satisfy section 11 of the ETA, the parties must agree to electronic service and this did not occur.

The Court concluded that the adjudication had not been duly served on 23 August 2013 and the adjudicator erred in concluding that CGE was out of time to provide an adjudication response. Consequently, the adjudicator erred in denying CGE the opportunity to present submissions and evidence and, therefore, the resulting adjudication decision was of no effect.


This decision is important given the court's approach to the interpretation of section 11 of the ETA, which is similar to provisions in other Australian jurisdictions. It could be said that even if the documents were downloaded, it may be that the service would still be invalid. This is because the method of service was not explicitly authorised by the contract despite the party having received notice of the method of communication. Therefore, cloud services may not assist unless they are expressly agreed as an authorised method of service.

Key considerations

The use of electronic communications in a legal and business context is escalating rapidly and, so too, is the use of cloud technology as a mechanism for enabling these electronic communications.

In some commercial environments, communications are exclusively undertaken in electronic form (eg project portals). This is becoming a preferred commercial model for many industries and the commercial drivers for it are becoming increasingly compelling. In addition, in an adjudication context, some ANAs allow for adjudication material to be provided via cloud services (eg adjudication responses). It could be said that this trend is likely to continue in the same fashion as the electronic filing of documents.

However, the law concerning electronic communications is lagging behind. As this case suggests, when it comes to serving a legal document, it is important to proceed carefully and conservatively. Business operators and legal practitioners should consider:

  1. Delivering a hard copy of important documents in addition to an electronic copy.
  2. Developing provisions for agreements to address electronic communications, including:
    • expressly recording each parties' consent to electronic communications
    • specifically nominating agreed forms of electronic service and e-addresses when service is agreed to have been affected.
  1. Alternatively, avoiding cloud technology to serve the opponent (or the ANA) until laws regarding service "catch up".
  2. Obtaining advice relating to what types of electronic service may be considered valid in other jurisdictions, when dealing internationally. The forms of electronic communications deemed valid vary from jurisdiction to jurisdiction, for example, similar types of electronic communications including service via Facebook have been held to be valid in other jurisdictions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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