The Queensland Court of Appeal has overturned a first instance decision which held that a statutory compliance certificate, issued in relation to a warehouse slab design that was known to carry a risk of significant subsidence, was not in breach of the relevant standard (and therefore did not amount to misleading conduct) because the design was suitable for the requirements of the person who commissioned the construction of the warehouse, albeit not suitable for later owners for the intended purpose as a warehouse.

Actron Investments Queensland Pty Ltd brought proceedings against DEQ Consulting Pty Ltd (DEQ) and its director, Mr Henry (a registered engineer and a "competent person" for the purposes of issuing a compliance certificate) in relation to a "Form 15 – Compliance Certificate – Design" that Mr Henry prepared and DEQ submitted as part of a development application for the construction of a warehouse slab. In a report which formed part of the compliance certificate, Mr Henry indicated that, given the soil conditions, the floating slab design was likely to result in significant subsidence and movement. Notwithstanding this, Mr Henry (by DEQ) issued a Form 15 certifying the design as compliant, which resulted in the approval of the Development Application.

Following Actron's purchase of the warehouse in 2007, significant subsidence of the slab occurred making it difficult (and in some areas of the warehouse, impossible) to drive a forklift or store materials in the packing racks. Actron claimed that the issuance of the compliance certificate by DEQ was misleading conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth) (TPA) as it implied that the slab design complied with AS3600 when the design was, in fact, not compliant.

Mr Henry accepted in cross-examination at trial that his report "calculated typical surface settlement of over 100mm" of the slab design and "that would be a 'red flag' to 'someone doing a due diligence review of these drawings.'" Mr Henry also accepted that the likely settlement of the slab was "undue" but did not consider it to be in breach of AS3600 "because what was "undue" depended upon what the client wanted." The trial judge accepted Mr Henry's evidence that, as the anticipated subsidence of the slab identified in Mr Henry's reports was not undue for the original owner's purposes, the design did not breach AS3600 even if "the settlement of the slab was unsatisfactory for the appellant's use of the building."

However, the decision was overturned on appeal (Actron Investments Queensland Pty Limited v DEQ Consulting Pty Ltd [2018] QCA 147), on the basis that:

"A competent person who puts into circulation a Form 15 … potentially affects, not only the interests of a client of that competent person, but all persons who might be exposed to risks of personal or financial injury as a result of an approval of a non-conforming design of the specified structural elements of a building. It is the appropriately qualified person … designated as a "competent person" who is obliged to make any judgments necessary for a decision whether or not a Form 15 should be issued … the regulatory scheme is irreconcilable with Mr Henry's thesis that a client … is entitled to decide whether anticipated settlement is "undue" in terms of cl 16.2.1 of AS3600." (at [39])

The Court of Appeal held that "the issue of the Form 15 was seriously misleading as to the implicit compliance with AS3600."