September 18, 2013

Social Networking, Superstars & Substituted Service

In 2008, in what is believed to be a world-first decision, an Australian Supreme Court allowed a lender to serve a default judgement on borrowers via Facebook, after conventional means of contacting the borrowers had failed.

Given the overwhelming popularity of social networking sites such as Facebook and Twitter, there have been a number of more recent cases where courts have ordered that service can take place using a social networking site.

One such case concerned an application by Mothership Music Pty Ltd for substituted service on Facebook, which was granted and then held to be ineffective on appeal was Flo Rida v Mothership Music Pty Ltd [2013] NSWCA 268.

Service & Substituted Service

When commencing proceedings, the court usually requires that the originating process (for example, a Claim and Statement of Claim) be personally served on the other parties.

In circumstances where personal service cannot be achieved, orders may be sought from the court allowing the originating process to be served in another way – this is called substituted service.

A court will only grant an order for substituted service where it is satisfied that:

  1.  there exists a practical impossibility of actual service; and
  2.  the method of substituted service proposed is one that is reasonably likely to bring the person’s attention to the originating process.

Flo Rida v Mothership Music Pty Ltd [2013] NSWCA 268

Flo Rida, an American rap music artist, was contracted to perform as the headline act at the “Fat as Butter” music festival held in Newcastle, NSW in October 2011. Flo Rida failed to appear, despite receiving a $55,000 advance for the performance.

The promoter of the festival, Mothership Music Pty Ltd (“Mothership Music”), commenced court proceedings against Flo Rida for breach of contract, claiming the advance paid to Flo Rida, along with other damages (Mothership Music Pty Ltd v Darren Ayre trading as VIP Entertainment & Concepts Pty Ltd and Flo Rida (also known as Tramar Dillar) [2012] NSWDC 42).

Attempts at personal service of the originating process on Flo Rida failed due to the level of security surrounding the rap artist.

In April 2012, Mothership Music applied to the District Court for orders allowing it to carry out substituted service, permitting Mothership Music to serve Flo Rida with the originating process via his official Facebook page by posting (among other things) the following:

On Friday, 13 April 2012, Mothership Music Pty Ltd commenced proceedings against you in the District Court of New South Wales, Australia, seeking damages for breach of contract in respect of your non-appearance on 22 October 2011 at the “Fat as Butter” Concert.

If you do not file a defence to these proceedings within 28 days of service, the Court may enter judgement against you without further notice to you.

Flo Rida did not respond to the message left on Facebook or file a defence to the claim, and judgement was awarded against Flo Rida for damages in excess of $400,000 which included claims for:

  •  loss of revenue suffered by Mothership Music at the 2011 festival;
  •  loss suffered for poor ticket sales; and
  •  loss of sponsorship revenue for the 2012 event.

Flo Rida then appealed the decision to the NSW Court of Appeal, claiming that the service of the originating process via Facebook was ineffective.

Flo Rida won.

On 20 August 2013, the NSW Court of Appeal upheld Flo Rida’s appeal, for a number of reasons. In relation to the service on Facebook, the Court found that the evidence did not establish, other than by mere assertion, that the Facebook page was in fact that of Flo Rida, and did not prove that posting on the Facebook page that it was likely to come to his attention in a timely fashion while he was in Australia.

Using social media as a method of service

The decision in Flo Rida means that courts will require detailed background information before making orders for substituted service via social media, which may not be easy to obtain.

When making an application for substituted service, courts will require some evidence that the social media platform is actually connected with the other party. In the Flo Rida case, the mere fact that Flo Rida’s official website was linked to his official Facebook page was not enough, and there was nothing to indicate that Flo Rida managed, checked or was notified of the posts on his Facebook page.

Along with these challenges, as any sort of social media will also be governed by the provider’s terms of use, you need to ascertain whether the platform can actually be used for substituted service and then comply with privacy and any other applicable laws in doing so.