UK Global Healthcare Limited v Secretary of State for Health and Social Care

Summary

A government department that had paid over £15 million in advance for medical gloves during the pandemic, none of which were delivered, applied for summary judgment on its counterclaim to recover the advance and to strike out the supplier's claim. The supplier said the department itself had prevented delivery and that there were issues fit only for trial.

The department relied on a contract term entitling it to the return of the advance payment for goods not delivered, and on the termination and expiry of the contracts. The supplier argued that the department had caused the non-delivery by imposing extra-contractual testing and rejecting the gloves on grounds the contracts did not permit.

Mr Justice Constable dismissed the application. The supplier had a real prospect of arguing that, read in line with the prevention principle, the repayment term did not apply where the department's own breach had caused the non-delivery, and there were other triable issues. The claim and counterclaim would go to trial.

Background and facts

The dispute arose from two contracts made in May and June 2020 for the supply of 320 million medical gloves during the Covid-19 pandemic. Time was of the essence, with delivery deadlines in mid-2020, and the department made a cumulative upfront payment of £15,350,000. No gloves were delivered, though the supplier said it had remained ready, willing and able to supply.

The department wrote terminating the contracts in October 2020. It accepted that the grounds it had then given were not valid, but maintained that the termination was lawful because other valid grounds existed at the time, and that the contracts had in any event expired. On that basis it sought summary repayment of the advance and to strike out the supplier's claim.

The issue

The court had to decide whether the department was entitled to summary judgment, that is, whether the supplier had no real prospect of resisting repayment of the advance and no real prospect on its own claim. That turned on the construction of the repayment term and on whether the supplier's case that the department had prevented delivery raised triable issues.

The decision

Mr Justice Constable held that the supplier's case was fit for trial. He accepted that the supplier had a real prospect of relying on the prevention principle as a principle of construction, that a contract should so far as possible not be read to let a party take advantage of its own breach, as explained in Carlton Vale v Gapper [2023] UKUT 141 (LC), and on the prevention principle itself, drawn from Trollope and Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601 and Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848. On that footing the repayment term might not operate where the department had caused the non-delivery:

"UKGH have a reasonable prospect of arguing that, properly construed in accordance with the prevention principle of interpretation, clause 13.1 is not operative to require reimbursement in circumstances where the non-delivery of the goods has been caused by a breach on the part of DHSC."Mr Justice Constable, paragraph 99

To read the term as allowing repayment even where the paying party had itself caused the non-delivery would be an exceptional construction that would need the clearest of words, which were absent. Even if that were wrong, there was a triable issue on the supplier's substantial damages claim, which might equal or exceed the counterclaim, and a possible equitable set-off. The judge was more sceptical of the supplier's waiver case on the expiry dates, but declined to strike it out where there was to be a trial in any event:

"For the reasons given the Application is dismissed."Mr Justice Constable, paragraph 103

The result was that the department obtained neither summary repayment of the advance nor strike-out of the claim, and the whole dispute proceeded to trial.

Practical implications

The prevention principle can shape how a repayment clause is read. A term entitling a party to recover an advance for goods not delivered may not operate where that party's own breach caused the non-delivery. A court will lean against reading a clause to let a party benefit from its own default, and clear words are needed to achieve that result.

Preventing performance can put contractual time at large. Where one party, even by otherwise legitimate conduct, makes it impossible or impracticable for the other to perform within the agreed time, it may lose the right to insist on strict compliance with the delivery dates. A buyer imposing requirements the contract does not permit risks that consequence.

A stated ground for termination is not the only one available. A party may justify a termination on grounds that in fact existed at the time, even if not the grounds it gave, though the other party may meet that with waiver or estoppel. Parties should keep in mind both the reasons given and the reasons available.

Summary judgment is unsuitable where construction and causation are in issue. Where the case turns on the true construction of a clause against disputed facts about who caused non-performance, and where a substantial cross-claim may offset the counterclaim, the issues will usually be for trial rather than summary determination.

UK Global Healthcare Limited v Secretary of State for Health and Social Care [2026] EWHC 561 (TCC), Technology and Construction Court, Mr Justice Constable. Judgment handed down 12 March 2026.