High Court issues disclosure ruling in £100m dispute over alleged wrongful termination of contract for supply of Covid-19 lateral flow test kits

The Technology and Construction Court has granted a declaration sought by the Secretary of State for Health and Social Care that certain documents relating to an aborted contract for Covid-19 lateral flow test kits are under the control of the main contractor in the dispute.

Jason Coppel KC, sitting as a deputy High Court judge, heard a contract was concluded between the department and claimants Mornington 2000 - trading as Sterilab Services - and Santé Global in which the latter had a sub-contract with German supplier MP Biomedicals Germany GmbH, which in turn had a sub-contract with the manufacturer of the test kits in China, Xiamen Boson Biotech.

The Secretary of State terminated the contract on account of alleged violations of labour law, health and safety and worker payment obligations in Boson's factory in China, following an audit.

These violations were alleged to constitute breaches of contract, giving a right to terminate it on account of the goods not being in accordance with the contract, and the claimants and Boson having providing inaccurate and misleading information in the procurement process.

The claimants disputed this and have claimed damages and interest in excess of £100m for wrongful termination of the contract.

Mr Coppel said the application before him “principally concerns whether, as a result of the arrangements between Santé, Bio and Boson, documents in possession of Bio and Boson are to be regarded as within the control of Santé for the purposes of discharging its disclosure obligations”.

Waxman J had earlier ordered extended disclosure and with the date for this now imminent the Secretary of State “wishes to ensure that relevant material is provided, in particular, from Boson, whose role is central to the key disputes regarding the justification for the defendant's termination of the contract”, Mr Coppel said.

The department sought a declaration that documents within the possession of Bio and/or Boson are within the control of Santé for the purposes of their extended disclosure obligations.

Mr Coppel said in his judgment: “The balance of the evidence in this case demonstrates that Santé enjoys practical control over documents held by Bio and in particular Boson which may contain information which is required for the determination of the claims.”

He said it appeared the relationship between Santé, Bio and Boson “was a close one in the sense that they participated in what was in substance a joint venture, in seeking to be awarded contracts for the supply of lateral flow tests.

“And that it has been close during this litigation, which had at its commencement, and continues to have, a strong flavour of being a joint enterprise.”

He said it was appropriate to make the declaration sought by the Secretary of State in relation to Bio as well as Boson as while there had been a direct relationship between Santé and Boson, “the precise terms and nature of the relationships between the parties on the claimants' side remains opaque and it may be that the requests to Boson for the actions necessary to ensure compliance with the claimants' disclosure obligations will need to go through Bio, which will provide reasonable assistance to Santé by making the requests of Boson and procuring that Boson complies with them.

"If documents are then provided by Boson to Bio, rather than to Santé, there must be no doubt that they remain within the scope of the claimants' disclosure obligations”.

Mark Smulian