UK Global Healthcare Ltd v Secretary of State for Health and Social Care: DHSC's summary judgement bid fails over pandemic gloves dispute

The High Court has dismissed an application by the Department of Health and Social Care for summary judgement and strike-out in a dispute arising from two pandemic-era contracts for the supply of 320 million nitrile examination gloves. Mr Justice Constable, sitting in the Technology and Construction Court, held that the claimant, UK Global Healthcare Limited (UKGH), had a real prospect of success on multiple grounds sufficient to warrant a full trial.

The contracts, signed in May and June 2020, required delivery of the gloves by 30 June and 31 July 2020 respectively. Time was expressly of the essence. DHSC made cumulative advance payments of £15,350,000. No gloves were ever delivered. DHSC purported to terminate in October 2020, acknowledging in these proceedings that the stated grounds were not valid, whilst maintaining that alternative valid grounds existed at the time. It also contended that both contracts had since expired. On either basis, DHSC sought summary recovery of the advance payments.

The testing dispute

The central factual controversy concerned whether DHSC had, prior to the contractual delivery deadlines, insisted upon testing and inspection requirements for which the contracts provided no entitlement. DHSC accepted there was no contractual basis for pre-delivery inspection or testing in relation to the First Contract or Phase 1 of the Second Contract. The court found it at least arguable that demands made from mid-June 2020 onwards — including requirements for ASTM D6319 or EN455 testing through accredited laboratories — went beyond what the contracts required and caused UKGH to place shipments on hold.

Waiver, estoppel and the prevention principle

Constable J identified several interlocking bases upon which UKGH had a real prospect of success. On 23 June 2020, a DHSC representative responded to UKGH's formal request for an extension by stating it "makes total sense to vary the original dates in the contract", and asking a colleague to work with UKGH to amend the delivery dates. The court held this gave rise to an arguable case of waiver by estoppel and, crucially, may constitute the "something more" required by MWB Business Exchange v Rock Advertising [2019] AC 119 to defeat the no oral modification clause — namely, an explicit recognition by both parties that a contractual formalisation of the extension would follow.

The prevention principle provided an independent route. Where DHSC's conduct — even if otherwise permissible — had rendered timely delivery impossible, time for performance was arguably put at large. Since the contracts contained no extension of time mechanism triggered by acts of prevention, the original deadlines ceased to be operative.

Rejection and the SMTL testing

The court further held there was a triable issue as to whether DHSC's rejection of the V-Gloves on 21 July 2020, based on SMTL laboratory results, was itself unlawful. UKGH adduced evidence that SMTL lacked UKAS accreditation for ASTM D6319 testing, that sample sizes and chain of custody were inadequate, and that ten subsequent tests on the same batch between 2020 and 2024 — including the very batch tested by SMTL — all passed to EN455 or ASTM D6319 standard. DHSC did not contend that the adequacy of the testing was not a triable issue.

Clause 13.1 and the advance payment

On the contractual entitlement to repayment on expiry, Constable J held that clause 13.1 was not plainly operative where non-delivery had been caused by DHSC's own breach. Applying the prevention principle of interpretation, a clause permitting recovery of advance payments should not, absent the clearest language, be construed to operate in favour of the party whose conduct caused the non-delivery. The advance payments had, on unchallenged evidence, been committed in the supply chain.

The application was dismissed in its entirety.

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