National Union of Rail, Maritime and Transport Workers and another v Tyne and Wear Passenger Transport Executive T/A Nexus

The Supreme Court considered whether a written record of a collective agreement that is not itself a legally enforceable contract can be rectified where its wording has been incorporated into individual contracts of employment, and if so which parties are the proper defendants. The court reaffirmed the equitable principles governing rectification (including the requirement of a common or unilateral mistake and an "outward expression of accord") and held that rectification is aimed at documents, not transactions, and may be ordered where doing so will not be legally futile because it will alter legal rights.

The Court held that it is not a legal bar to rectification that the document records a non-binding collective agreement when the rectified wording would alter employees' contractual rights as incorporated from that document. However, the proper defendants to such a claim are the individual employees whose rights would be affected, not the recognised trade unions, because no legal rights between the employer and the unions would be altered by rectification. The claim against the unions was therefore defective and properly dismissed. Finally, the court held that it would be an abuse of process for the employer to seek, in fresh proceedings, to undo the effect of the earlier employment tribunal and appellate decisions in Anderson and related proceedings concerning unpaid shift allowances.

Background and parties: Nexus (Tyne and Wear Passenger Transport Executive) sought rectification of a 2012 letter recording a collective agreement with two recognised trade unions (RMT and Unite) which consolidated a non-discretionary "productivity bonus" (25.5%) into basic pay. Employees contended that consolidation increased the basic pay for calculating shift allowances; Nexus disputed that effect and, having lost on interpretation in the Anderson proceedings, brought rectification proceedings in the High Court against the unions to correct the recorded terms.

Procedural history:

• Employment tribunal found for employees in Anderson proceedings; decisions upheld on appeal: Tyne and Wear Passenger Transport Executive v Anderson [2018] ICR 1207 and Agarwal v Cardiff University [2018] EWCA Civ 2084; [2019] ICR 433 (Supreme Court refused permission to appeal in March 2019).
• Nexus commenced Chancery Division proceedings for rectification in May 2020. The High Court (Isaacs QC as deputy) rejected preliminary objections by the unions and refused strike-out: [2021] EWHC 1388 (Ch).
• The Court of Appeal allowed the unions' appeal and dismissed the claim: [2022] EWCA Civ 1408; [2023] ICR 148.
• The Supreme Court dismissed Nexus's appeal: [2024] UKSC 37.

Nature of the claim (relief sought): rectification of the 10 October 2012 letter (the "letter agreement") that forms part of the Red Book, so as to insert express wording that consolidation of the productivity bonus would not increase shift allowances.

Issues before the Supreme Court: (i) whether a court may in principle rectify the record of a collective agreement that is not intended to be legally enforceable; (ii) whether, alternatively, the employer could achieve its aim by rectifying the individual employment contracts that incorporate the collective terms; (iii) who are the proper parties to proceedings for rectification; (iv) whether rectification could have been raised or determined in the employment tribunal; and (v) whether it would be an abuse of process (or subject to estoppel) to seek rectification after the Anderson decisions.

Reasoning and conclusions:

• The court explained rectification doctrine: it corrects mistakes in written instruments and is concerned with what the document records, not with rewriting the underlying transaction. The governing test is subjective: the parties must in fact have had the same intention and there must have been an outward expression of accord; unilateral-mistake rectification requires knowledge or unconscionable conduct by the other party.
• Rectification is not limited to documents that themselves create legal rights; it may be ordered where rectifying the document will change legal rights. Accordingly, the mere fact that a collective agreement is legally unenforceable does not in principle bar rectification if, by rectifying its wording, legally enforceable rights of third parties (employees) would change.
• The court rejected the contention that Nexus could pursue rectification of the individual employment contracts: there is no basis to treat employees as having shared the employer's subjective intention or as having authorised the unions in law to act as their agents for this purpose; the incorporation clause binds employees to the text of the Red Book as written, so their contracts do not provide an independent target for rectification on Nexus's pleaded grounds.
• Because rectifying the letter would alter the legal rights of individual employees, the proper defendants to such a claim are the employees (or representative defendants under CPR Part 19), not the unions with whom Nexus has no legal obligations affected by rectification. Nexus's proceedings against the unions were therefore defective and dismissal was appropriate.
• Employment tribunals do not have power to make formal orders for rectification under the Employment Rights Act 1996, but equity permits a tribunal to treat a document as if rectified for the purpose of determining whether a deduction from wages was unauthorised; Nexus could and should have raised the rectification point as a defence in the Anderson proceedings. Having not done so, and having pursued litigation to finality on a contrary basis, it would be an abuse of process to seek, in fresh proceedings, to deprive the Anderson claimants of the outcome already achieved.
• Finally, earlier authorities such as Rolls-Royce were criticised as an illegitimate precedent for proceeding against unions rather than affected employees.

Disposition: appeal dismissed. The Court of Appeal was right to dismiss the action; Nexus may, if advised, bring fresh proceedings against affected employees but may not use such proceedings to undo the Anderson rulings.

Appeal dismissed. The Supreme Court held that (i) rectification is a remedy directed at correcting mistakes in documents and may in principle be ordered even where the document records a collective agreement that is not itself legally enforceable if rectifying the wording will alter legal rights incorporated into individual employment contracts; (ii) however, the proper defendants to such a claim are the employees whose contractual rights would be affected (or representative defendants), not the recognised trade unions, and Nexus’s claim against the unions was therefore defective and rightly dismissed; and (iii) it would be an abuse of process for Nexus now to seek to overturn the result of the Anderson employment tribunal and appellate proceedings on the wages claimed there.

Chancery Division (High Court) preliminary decision in favour of Nexus and refusal of strike-out: [2021] EWHC 1388 (Ch); Court of Appeal allowed unions' appeal and dismissed claim: [2022] EWCA Civ 1408; [2023] ICR 148; Supreme Court dismissed appeal: [2024] UKSC 37. Underlying employment litigation: Tyne and Wear Passenger Transport Executive v Anderson [2018] ICR 1207; Agarwal v Cardiff University [2018] EWCA Civ 2084; [2019] ICR 433 (Supreme Court refused permission to appeal in March 2019).