In brief - Serving an adjudication application via USB may not constitute service as words not in visible form
The recent New South Wales Supreme Court decision in Parkview Constructions Pty Limited v Total Lifestyle Windows Pty Ltd t/as Total Concept Group  NSWSC 194
provides some guidance as to service of electronic documents under the Building and Construction Industry Security of Payment Act 1999 (NSW)
(the Act). In light of the strict time limits and significant consequence that may result from a failure to properly serve a document under the Act, parties to construction contracts should be careful to serve documents strictly in compliance with the Act. Further, parties should consider including provisions in construction contracts allowing for electronic service.
Total Concept Group serves adjudication application via USB drive that Parkview Constructions accesses two days later
On 9 November 2016, Total Concept Group (the applicant) delivered via express post to Parkview Constructions Pty Ltd (the respondent) a covering letter stating that the applicant had submitted an adjudication application with the nominating authority and that:
By way of service, a copy of the application is contained in full on the enclosed USB drive. A hard copy of the application will also be sent via courier to your office and should arrive later this week.
It was common ground that the documents contained on the USB stick were not accessed by the respondent until 11 November 2016.
This delay gave rise to a question as to when the documents on the USB stick were "received" and therefore the due date for the respondent's adjudication response.
Adjudicator erroneously finds Parkview Constructions' response provided outside of time
The respondent served its adjudication response on 17 November 2016. If the adjudication application was received on 9 November (and not 11 November), the adjudication response was provided to the adjudicator outside of the time allowed in the Act and therefore ineffective.
The adjudicator found that service of the application had been effected upon delivery of the USB stick (being 9 November), meaning the adjudication response was out of time. The adjudicator therefore did not consider the adjudication response in making the adjudication determination.
The respondent commenced proceedings in the Supreme Court to have the adjudication determination set aside on the grounds that the adjudicator failed to have regard to the adjudication response.
Service of adjudication application via USB found not to constitute service under Security of Payment Act and Interpretation Act in the circumstances of this case
The Court found that the adjudicator’s disregard of the respondent's submissions was a denial of procedural fairness and therefore warranted the quashing of the determination.
In quashing the adjudication determination, the Court found that service of an adjudication application by way of a USB stick alone does not constitute service as:
- Section 17(3)(a) of the Act expressly provides that an adjudication application must be in writing.
- Section 17(5) of the Act provides that a copy of an adjudication application must be served on the respondent.
- Section 21(1) of the Interpretation Act 1987 (NSW) defines "writing" as:
includes printing, photography, photocopying, lithography, typewriting and any other mode of representing or reproducing words in visible form.
The Court was of the opinion that a USB does not represent or reproduce words in visible form in the way section 21 of the Interpretation Act has in mind.
Instead, the Court approached service by USB to be analogous to that of an email transmission, where service is not considered to have occurred until the email has been accessed (i.e. the person served needs to become aware of the contents of the document).
In applying this rationale to serving documents by way of USB, the Court considered that effective service by way of USB stick would ultimately require the recipient to be able to have access to compatible technology in order to view the files. The Court concluded that such access cannot be regarded as an inevitability, even today.
Adjudication application documents should be served in hard copy or as allowed under Security of Payment Act
Modern commerce is largely carried out electronically. Unsurprisingly, documents are commonly provided under the Act electronically. This is particularly so where the volume of those materials can be significant. It may be doubted that as time goes on, and the technology grows to be ubiquitous, that Courts will continue to find that it cannot be assumed that recipients will have compatible technology to view files on a USB stick. Having said that, there may remain an issue in relation to files that require proprietary software to view or access.
In light of this decision, the conservative approach is to ensure that all documents that may form part of an adjudication application are served in hard copy (or as otherwise expressly allowed for in the Act).
This is not to suggest that service of electronic documents cannot be properly effected under the Act. Section 31(1)(e) of the Act provides that parties may serve documents under the Act "in any manner as may be provided under the construction contract concerned." Nor will the terms of the construction contract necessarily constrain other recognised methods of service, as is made clear by Section 31(3) of the Act, which states that "the provisions of this section are in addition to, and do not limit or exclude, the provisions of any other law with respect to the service of notices."
Consider including provisions in construction contracts to allow for electronic service
Should parties wish to improve prospects of a method of electronic service being recognised generally and for the purposes of the Act, it would be prudent to include appropriate contractual entitlements to this effect. When drafting such a clause consideration should be given to matters such as:
- The acceptable method for the transfer of files (email, USB drive, drop box, project management software, etc.).
- The location (whether virtual or physical) where electronic documents can be sent.
- Whether there is a rebuttable presumption that certain file formats will be considered to be in visible form (i.e. Word, PDF, etc.).
- What happens if files are corrupted or otherwise not capable of being viewed.
- Who is responsible for virus scanning.
- At what point in time the document will be considered to have been received (i.e. in relation to emails: when the email leaves the sender's mail server, when it arrives at the recipient's server, or when it is actually viewed by a person etc.).
This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal or financial advice. Please seek your own legal or financial advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.