The moment he/she left the circuit for the next section (presumably the Nav.) he/she should have been failed there and then and then flown back incurring minimal cost.
Why? If I had been failed after 5 minutes in such circumstances and asked to fly back I would not have been happy. Time spent in an aircraft is seldom wasted - the experience gained in the remaining sections would likely have contributed positively to the OP's subsequent sucessful test. It would also have added a couple of hours TT towards his ATPL issue - hours he would have to fly in any event (and thus his additional costs if sucessful in Court would seem to me to be limited to 1 extra landing fee, perhaps £20?)