What constitutes effective service of key legal documents?

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Timothy Bates of Auckland law firm Legal Vision.

It is now commonplace for many business relationship communications to be conducted predominantly in email form. Construction contracts are no exception.

Typically, the key device used for the said communications are smart phones which conveniently allow these communications to take place on and off the building site.

With the advent of construction industry-targeted legislation such as the Construction Contracts Act 2002, the proof of service and delivery of key documents such as payment claims, payment schedules and suspension notices, and the timing of their delivery, has become critical in terms of a party securing the advantages that this legislation provides to contracting parties.

The starting point for this discussion is the Construction Contracts Act 2002. Section 80 sets out the usual methods of service, such as personal service, last known business address or post.

However, Section 80(d) opens up the possibility of an alternative method of service as stipulated in the Construction Contract Regulations 2003.

In particular, Regulation 9 provides that any document prescribed by the Act can be served by email or other means of electronic communication so long as Regulation 10 is adhered to.

Regulation 9(3) then addresses what must be established to prove service via method of electronic communication, and when service is to have effect.

It records that where the recipient has designated an information system for the purpose of receiving email or other electronic communications, it will be deemed received/served at the time the email or communication enters that information system or, alternatively, at the time the email communication comes to the attention of the recipient.

It is to be noted at Regulation 9(4) information system is defined to mean a system for producing, sending, receiving, storing, displaying or otherwise processing emails or other electronic communications.

Regulation 10 states that a document may be sent by email or other electronic communication only if the information contained within the notice/document is readily accessible, and the recipient has consented to being served in that manner.

However, Regulation 10(2)(b) goes on to explain that consent may be inferred from a person’s conduct.

Potentially, the provisions contained within the Contract and Commercial Law Act 2017, which absorbed the provisions on electronic communications formerly included in the Electronic Transactions Act 2002 (now repealed), are of application.

However, they add nothing to the position under Regulations 9 and 10 of the Construction Contracts Regulations 2003.

So to summarise, the Construction Contracts Act 2002 and its Regulations contemplate service by way of email.

However, service by email must be consented to either expressly or by route of inferred consent through a party’s conduct.

In order to establish service is complete, the email must have entered the recipient party’s designated information system or, failing that, be brought to the attention of said recipient.

It is apparent though, that Regulation 9(3) creates a potential difficulty in terms of proving service of an email.

Whilst the sender may be able to establish that the email was sent to a specific email address, this is not the same as establishing that the email sent entered the recipient’s designated information system.

In particular, there are a whole host of reasons why an email would not ultimately reach the prescribed information system.

By way of example, there may be a problem with the host server where emails are not being dispersed or, alternatively, a virus scan may prevent an email/attachment being delivered.

This list of reasons why an email sent may not reach an intended recipient is not meant to be exhaustive.

It seems to me that in light of the potential difficulty with the interpretation of Regulation 9(3), the sender of a required document under the Construction Contracts Act 2002 is vulnerable to an argument to the effect that the said document was not received in my designated information system.

In order to prevent any possibility of such an argument on service being raised, the fool-proof method to prove service is for the sender to activate the “delivery receipt” and “read receipt” tools in its own information system as it sends the email, and to print the confirmations when they arrive.

In this way, the proof requirements of email set out in Regulation 9(3)(a) and (b) are easily met. It is noted that on some systems though, the reader receipt tool can be controlled by the recipient.

Therefore, it is not surprising some construction contracts expressly require the additional steps (“read receipt” and/or “delivery receipt”) before service is deemed effective.

However, these express terms contained in the contract would still be subject to the less specific wording contained in section 80 of the Construction Contracts Act 2002 and Regulations 9 and 10.

 

Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by Legal Vision or Building Today to anyone who relies on the information contained in this article.