It is unfortunate but, if an examiner HAS to take control during a test then is anyone surprised that the test is failed? What would have happened if the examiner was not there? The test is assessing the canditate's ability to operate solo safely and to assure the safety of his passengers.
Carrying on with further circuits is a bad idea as the candidate is clearly not fit to fly (and probably stinks of vomit). Maybe he would have been prudent to take the practical a little sooner so that one single 'hiccup' would not cause the theory to expire.