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Service via Dropbox ruled invalid

A recent decision by Justice Martin in the Supreme Court of Queensland highlights the limitations of the current law regarding service when it encounters online document delivery technology.

In McCarthy v TKM Builders Pty Ltd [2020] QSC 301, Patrick McCarthy (McCarthy) and TKM Builders Pty Ltd (TKM) entered into a contract for a building project, in the course of which TKM sought adjudication of a payment claim. TKM emailed the application to McCarthy, with a link to the submissions held in Dropbox.

McCarthy received the email and forwarded it to his lawyers without accessing the Dropbox link. They responded to the application, raising as part of their submissions the proposition that McCarthy had not been served with the documents in Dropbox and that because of this the adjudicator did not have jurisdiction to determine the claim.

The adjudicator disagreed and found in favour of TKM, a decision which McCarthy appealed to the Supreme Court. Justice Martin found in favour of McCarthy, stating that the application had not been served on McCarthy and therefor the adjudicator did not have jurisdiction to determine the claim. His Honour noted (at 23):

“Mr McCarthy did not become aware of the contents of the document merely by being referred to a link to a Dropbox file. It is not enough, if it can be shown, that the respondent’s solicitors saw the submissions when Mr McCarthy forwarded the email.”

His Honour found that sending a link to documents hosted on Dropbox did not constitute sending the documents by “post, telex, facsimile or similar facility to, the address of the place of residence or business of the person” as required by s39 of Acts Interpretation Act 1954.

In making this finding, Martin J followed the reasoning of McMurdo J in Conveyor & General Engineering Pty Ltd v Basetec Services Pty Ltd [2014] QSC 30 (Basetec). In that case, Justice McMurdo held that sending a link to Dropbox meant that the documents in Dropbox were not a part of the electronic communication as defined by s11 of the Electronic Transactions (Queensland) Act 2001 (Qld) (ETA). Thus, the email did not constitute service of the documents.

Justice McMurdo also made the fine distinction that, as the documents were not part of the electronic communication, s24 of the ETA – which provides that electronic communications are received when they become capable of being retrieved by the addressee at an electronic address designated by the addressee – did not apply. That is possibly an unintended consequence of legislation that seems intended to capture just such a scenario, but barring legislative amendment it remains the law.

For practitioners, this means that Dropbox and similar file-hosting sites where documents are shared using links rather than attachments (such as Sharepoint and Office 365) are not viable for serving documents, and the expensive and time-consuming process of serving physical documents remains with us.

Firms should ensure that support staff are aware of the issue and do not substitute file sharing where an email transmission fails.

When ‘served’ with material containing links, think twice before following them. In both Basetec and TKM, the parties served with the disputed material deposed that the documents available by link had not been retrieved. If either the client or solicitor served with material place themselves in actual receipt, the principles underlying the two cases referred to in this note may not apply.

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