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.

Commentary

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions