Tyne and Wear Passenger Transport Executive (trading as Nexus) v National Union of Rail, Maritime and Transport Workers & Anor.

The Court of Appeal allowed the defendants’ appeal against the Deputy High Court Judge’s refusal to strike out or give summary judgment on the claimant’s rectification claim. The court held that a collective agreement which is not intended to be legally binding within the meaning of section 179(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 cannot itself be the proper subject of a rectification order; any rectification must target the individual contracts of employment into which the collective agreement is incorporated. The action as pleaded against the trade unions alone was therefore formally defective because Nexus should have sued the employees whose contracts are said to incorporate the Letter Agreement. The court also concluded that Nexus could, in principle, have raised a rectification-for-mistake defence in the earlier Employment Tribunal proceedings (and should have done so), and that rectification cannot now be relied on to defeat the Anderson claimants’ claims for pre-complaint unlawful deductions because of res judicata/issue estoppel and/or abuse of process. The court dismissed the present action and left it open to Nexus to bring fresh proceedings against the appropriate employees.

This is an appeal from a decision of the High Court (Stuart Isaacs QC, sitting as a deputy High Court Judge) dismissing the trade unions’ strike-out/summary judgment application and finding that Nexus could pursue a rectification claim against the unions.

Factual and procedural background

• Nexus (Tyne and Wear Passenger Transport Executive) operates the Metro and recognises the RMT and Unite for collective bargaining. A 2012 pay round produced a Letter Agreement (amending the “Red Book”) which Nexus later consolidated into pay. Dispute arose about whether shift allowances should be calculated on the enhanced (consolidated) basic pay.
• The Anderson group of employees brought Employment Tribunal (ET) claims in 2015 under Part II of the Employment Rights Act 1996 for unlawful deductions of wages. The ET upheld the employees’ construction of the Letter Agreement and found Nexus had made unauthorised deductions; remedies were deferred. That decision was upheld on appeal to the EAT and this Court (reported with Agarwal) and permission to appeal to the Supreme Court was refused.
• In 2019 Nexus issued fresh proceedings seeking rectification of the Letter Agreement (to exclude any effect of consolidation on shift allowance) against the Unions alone rather than against the employees. The Unions applied to strike out / obtain summary judgment on several grounds including that the court had no power to rectify an unenforceable collective agreement and that it would be an abuse of process or barred by res judicata to bring such a claim now.

Issues for this Court

• Whether the court has power to rectify a collective agreement which is not a legally binding contract under section 179(1) of the 1992 Act, or whether rectification must be directed to the individual contracts into which the collective terms are incorporated.
• Whether Nexus was estopped or otherwise precluded (by res judicata, issue estoppel or abuse of process) from advancing a rectification claim when it had not raised the mistake case in the Anderson ET proceedings or on earlier appeals.
• Whether the Employment Tribunal could, as part of a Part II unlawful deductions claim, determine a rectification‑for‑mistake issue or whether rectification could only be sought in separate proceedings.

Court’s reasoning and conclusions

• The Letter Agreement is a collective agreement within the meaning of section 179(1) and, because it contains no provision that the parties intended it to be legally enforceable, it has no independent legal effect. Rectification of the collective agreement as such would not change legal obligations; the correct target for rectification is the individual employment contracts into which the collective terms have been incorporated.
• Accordingly, the action was formally defective because Nexus sued the Unions alone rather than the employees whose contracts were said to require rectification. The appropriate remedy was to dismiss the action and permit Nexus, if it chose, to bring fresh proceedings against the relevant employees (including by representative procedure where appropriate), rather than to allow amendment in the present proceedings.
• On res judicata/abuse of process the court held that the mistake case could, in principle, have been raised in the Anderson ET proceedings (the ET has power to determine issues necessary to decide an unlawful deduction claim) and that Nexus should have advanced it. For that reason Nexus cannot rely on rectification to defeat the Anderson claimants’ claims for pre-complaint deductions by way of cause of action estoppel, issue estoppel or abuse of process. As to post-complaint deductions the court was not prepared on the present material to make a definitive ruling: issue estoppel or an abuse argument might operate in respect of future deductions, but the appropriate limits (if any) should be determined by the court hearing the rectification claim and by reference to the balance of justice; equitable remedies could be made subject to temporal or other terms.
• The court accepted that the Unions are in privity of interest with the Anderson claimants for res judicata purposes and could rely on the ET’s decision.

Remedy and practical outcome

• The Court of Appeal allowed the Unions’ appeal on ground (iii) and dismissed Nexus’s action as pleaded. Nexus may, if it chooses, bring fresh proceedings against the employees; but it is precluded from using any rectification obtained to defeat the Anderson claimants’ pre-complaint claims, and any wider effect of rectification in respect of other or future claims will require determination by the court that hears any rectification claim.

Appeal allowed and the action dismissed. The court held that a collective agreement not intended as legally binding under section 179(1) TULRCA 1992 cannot itself be the proper subject of rectification; rectification must be directed at the individual employment contracts incorporating the collective terms. Nexus had therefore sued the wrong defendants. Further, Nexus could and should have raised any rectification/mistake defence in the Employment Tribunal proceedings; as a result rectification cannot now be used to defeat the Anderson claimants’ claims for pre-complaint unlawful deductions (res judicata / issue estoppel and/or abuse of process). The scope and timing of any effect of rectification as regards other or future claims should be decided by the court hearing a rectification claim against the proper defendants.

Appeal from the decision of Stuart Isaacs QC (Deputy High Court Judge), Business and Property Courts (Chancery Division), [2021] EWHC 1388 (Ch). Background litigation included Employment Tribunal claims (Anderson) and appeals to the Employment Appeal Tribunal and this Court (reported under Agarwal, [2018] EWCA Civ 2084). The Supreme Court refused permission to appeal in March 2019. This appeal was determined in the Court of Appeal, citation [2022] EWCA Civ 1408.