CL-2022-000676 - [2025] EWHC 2486 (Comm)

As already described:

Medpro contends that:

DHSC did not join issue on this point. It relies rather on clause 4.6 of the Contract. That provides:

“Without prejudice to any other provisions of this Contract or any other warranties or guarantees applicable to the Goods supplied and subject to Clause 4.7 of this Schedule 2, if at any time following the date of delivery of any Goods, all or any part of such Goods are found to be defective or otherwise not in accordance with the requirements of this Contract (“Defective Goods”), the Supplier shall, at the Authority’s discretion:

4.6.1

upon written request and without charge, promptly (and in any event within twenty (20) Business Days or such other time agreed by the Parties in writing acting reasonably) remedy the deficiency by repairing such Defective Goods; or

4.6.2

upon written notice of rejection from the Authority, treat such Defective Goods as Rejected Goods in accordance with Clauses 4.2 to 4.5 of this Schedule 2.”

Pursuant to cl. 4.8, that right to reject had to be exercised “within a reasonable period of time from the date on which the Authority discovers or might reasonably be expected to discover that the Goods are Defective Goods or within such other period as may be set out in the Key Provisions, if any”. DHSC also relies on the common law and Sch. 2, cl. 7.3, which gives a right of rejection in the event of breach of cl. 7.2 (which required valid CE marking).

Medpro contends that DHSC lost the right to avail itself any purported rights of timely inspection and rejection under clause 4.6 of Sch. 2, because of the portion of clause 4.8 of Sch. 2 which stated that the clause 4.6 “rights and remedies … shall cease within a reasonable period of time from the date on which the Authority discovers or might reasonably be expected to discover that the Goods are Defective Goods …..” Medpro says that it is obvious that DHSC “might reasonably be expected to discover” that the boxes carried a CE mark and no NB number and that accordingly, DHSC cannot rely on the “first inspections” carried out “on or around 11 September 2020”.

DHSC’s argument is not on its face attractive, but requires to be carefully considered because of the highly unusual factual circumstances – and the rather recherche nature of the breaches. DHSC says that the reality is that Covid made it practically impossible to carry out meaningful investigations in China, where the goods were already packed and sealed in containers at the sterilisation plants, and from which they were then transferred (in sealed containers) for shipping. It also obviously put enormous pressure on those inspecting goods and clarifying apparent gaps in documentation, who had to give priority to the most urgently needed goods (which the gowns were not).DHSC therefore says that the first real opportunity for any inspection therefore occurred when the goods arrived at Daventry, which was the “delivery address” specified in the Order Form. The first goods arrived there at some point in late August, and they were inspected (through photographs) by Ms Naeem of the MHRA on 11 September 2020.

Ms Naeem first queried the compliance of the goods following her (remote) inspection on 11 September 2020. At that point, the DHSC knew that the CE marking of the gowns was apparently defective (in that it did not bear any notified body number), but it claims that it would not have been apparent whether this was simply a formal error (e.g. the inadvertent omission of the notified body number in printing) or something more important. Nothing was at that point known about failure to comply with BS EN 556-1:2001, or the actual sterility of the gowns.

After that DHSC points out that between 22 October 2020 and November 2020 there were communications between the parties (and the MHRA) about the gowns and what would be done in relation to them. It is evident from the communications that Mr Page and Mr Ellis of 4C Associates (for DHSC) spoke over the phone. Medpro did not challenge Ms Naeem’s evidence on the steps she took, and the time she took, to inspect the goods and for an incident to be raised by the MHRA, and it did not cross-examine Mr Taylor at all.

Overall DHSC’s submission was that, bearing in mind (a) the circumstances under which it, the MHRA, and Medpro were working because of Covid, (b) the need to understand why the gowns were not validly CE-marked and what information was actually available to attest their sterility, (c) the need to explore whether there were ways, short of rejection, to resolve those issues, it cannot be said that more than a reasonable time had passed since discovery of the defect. Moreover, on 23 December 2020, DHSC still knew only of the CE marking breach. It follows that rejection was permissible under Schedule 2, clause 4.6.

One point which DHSC skated over throughout was the position of Uniserve. Up until the start of trial it had been in issue whether Uniserve was DHSC’s agent. That was reluctantly conceded; and in closing it was said that “even assuming Uniserve to have been an agent in a relevant sense” DHSC could not have discovered any breaches (though CE marking alone might be arguable – it being contended that even for that it was necessary to seek documents from Medpro and to inquire into the nature of the defect).

The reason for this coyness as regards Uniserve was the consequence of an admission that Uniserve was the agent of DHSC – as it plainly was. The contract was an ex works contract. DHSC retained Uniserve to act for it. It is not right to say that no useful inspection could be performed by Uniserve on delivery. Obviously Uniserve could not conduct empirical tests for sterility; but as made clear above it was inherent in the nature of the goods and the terms of the contract that no-one would ever expect that to be done. The better and significant question is: could Uniserve inspect for CE marking? Again no-one would expect each item to be inspected; but it is tolerably clear that individually wrapped and CE marked gowns would be expected to be packed in boxes with CE marking. Uniserve plainly could inspect for that and indeed could open a box and check a few wrapped gowns visually. There was no reason why such inspection had to wait until the goods arrived in the UK. And indeed Ms Naeem’s initial inspection was never designed to do more than Uniserve could have done – and in the circumstances (they live on the ground and she being necessarily inspecting remotely via photos) it was less thorough than anything Uniserve could have done. Against that background was the rejection for failure to CE mark within a reasonable time? The answer is self evident: no it was not.

Does that mean that there was an existing right to reject for the other breaches? I consider that there was not, essentially for similar reasons to those which drive the conclusions on the CE marking. In essence validated process is the proxy for sterility in the sense of SAL, and in the absence of an agreed alternative means of giving the assurance of the SAL, CE marking is the outwards and visible sign of the validated process which is the proxy for SAL. The three breaches in this case stand or fall together at this stage, as they were established together at the earlier stage. This also forms the reason why the DHSC’s argument that more time should be allowed to enable it to determine if the inadequate CE marking was a “formal error” is misconceived (and contrary to DHSC’s arguments at an earlier stage). There has been no evidence to explain how there could be such a thing; indeed the backbone of the “validated process” argument was that there could be no such thing.

It need not have been so, of course. Had the Contract stipulated for a genuine “equivalent technical solution” to the default means of having a validated process for the requisite SAL it is possible that it would have been one which could not sensibly have been deputed to Uniserve; though an ex works contract where compliance could not be judged until after international transport would be a little surprising. The likelihood however is that such a process would have equated to the presentation of each batch with a portfolio of certificates speaking to the relevant stages, and that could have been checked. However this is a counterfactual which does not arise in this case.

It therefore follows that DHSC lost the right to reject when it did not perform an inspection and communicate rejection within a reasonable time.

This effectively dictates the answer so far as any statutory right to reject is concerned: whether as a matter of contract or common law, rejection must occur within a reasonable time. That reasonable time must take into account time of delivery, contract terms and so forth. Thus the same answer would result.