Factual and Procedural Background
Company A (the operator of a metropolitan transit system) and two recognised trade unions—Union A and Union B—reached a 2012 collective agreement (the “letter agreement”) consolidating a 25.5% productivity bonus into basic pay for employees in grades 1-3. A dispute later arose: the unions asserted that the consolidation increased both basic pay and the percentage-based shift allowance; Company A disagreed and paid the allowance on the pre-existing base.
Seventy employees (“Employees Group 1”) brought claims in the Employment Tribunal alleging unauthorised deductions from wages. The tribunal, the Employment Appeal Tribunal, and the Court of Appeal all held for the employees; the Supreme Court refused Company A permission to appeal (“Anderson proceedings”). Several similar wage-deduction claims are stayed pending resolution of the present issue.
Having lost on interpretation, Company A issued Chancery Division proceedings in 2020 seeking rectification of the letter agreement on the grounds of common or, alternatively, unilateral mistake. It sued Union A and Union B only, not the individual employees whose contracts incorporate the agreement.
The High Court dismissed the unions’ strike-out application and rejected estoppel defences. The Court of Appeal reversed, holding (i) the letter agreement was not rectifiable because it was not legally enforceable and (ii) even if rectification were conceptually possible, Company A had sued the wrong defendants; the proper defendants were the affected employees. Company A appealed to the Supreme Court.
Legal Issues Presented
- Whether a written record of a non-binding collective agreement can be rectified in equity.
- If rectification is theoretically available, whether the proper “target” is the collective agreement itself or the individual contracts of employment into which it is incorporated.
- Who are the necessary defendants to a rectification claim affecting incorporated terms—trade unions or the employees whose contractual rights will be altered?
- Whether Company A is precluded (by estoppel or abuse of process) from relying on rectification because it did not raise the issue in the Anderson proceedings.
- Whether an Employment Tribunal can treat a document as rectified (without formally ordering rectification) when deciding a wages-deduction claim.
Arguments of the Parties
Company A’s Arguments
- The letter agreement, although non-contractual between Company A and the unions, should be rectified because its wording mistakenly omitted an express exclusion of the shift-allowance uplift.
- Rectification of the collective document would automatically alter the incorporated terms in employees’ contracts; therefore, suing the unions suffices.
- Cause-of-action estoppel and abuse-of-process principles do not bar the claim because rectification could not have been sought in the Employment Tribunal.
Unions’ Arguments
- A non-binding collective agreement is incapable of rectification; only the employment contracts could, in theory, be rectified, and the employees—not the unions—would be the proper defendants.
- The Anderson litigation gives rise to cause-of-action or issue estoppel and, in any event, it is an abuse of process for Company A to relitigate matters it could have raised earlier.
- Even if rectification were available, practical considerations and natural justice require joinder of employees because their contractual pay would be reduced.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Marley v Forward Trust Group Ltd [1986] ICR 891 |
Terms of collective agreements may become enforceable when incorporated into individual contracts. |
Confirmed that the letter agreement’s terms are enforceable once incorporated, despite the agreement’s own unenforceability. |
| Joscelyne v Nissen [1970] 2 QB 86 |
Rectification does not require a prior enforceable contract; a common continuing intention suffices. |
Used to reject the Court of Appeal’s view that unenforceability bars rectification. |
| FSHC Group Holdings v GLAS Trust [2019] EWCA Civ 1361 |
Rectification depends on parties’ shared subjective intention plus outward expression of accord. |
Reiterated the need for subjective mistake in evaluating potential rectification. |
| Persimmon Homes Ltd v Hillier [2019] EWCA Civ 800 |
Documents without intrinsic legal force can be rectified if rectification affects legal rights. |
Analogy for rectifying a non-binding collective agreement that indirectly affects contracts. |
| Domb v Isoz [1980] Ch 548 |
Court may rectify exchange documents to give effect to parties’ intention even where no contract otherwise arises. |
Supports possibility of rectifying documents that, alone, create no enforceable rights. |
| National Coal Board v National Union of Mineworkers [1986] ICR 736 |
Court lacks jurisdiction over interpretation of non-binding collective agreements. |
Cited to explain why unions lack a justiciable stake and why employees must be parties. |
| Mostyn v West Mostyn Coal & Iron Co (1876) 1 CPD 145 |
Court may treat a document as rectified for present purposes without a formal order. |
Foundation for view that Employment Tribunals can apply rectification principles defensively. |
| Johnson v Gore Wood & Co [2002] 2 AC 1 |
Sets abuse-of-process test based on merits-based assessment and finality in litigation. |
Ground for holding it abusive for Company A to revisit wages already adjudicated in Anderson. |
Court's Reasoning and Analysis
1. Rectifiability of a Non-binding Collective Agreement. Rectification corrects documents, not the underlying enforceable transaction. Absence of contractual enforceability is not a bar if rectification will alter legal rights elsewhere (here, in employees’ contracts). Analogous authority (e.g., Persimmon v Hillier) shows courts may rectify documents that indirectly affect legal obligations.
2. Wrong “Target” Analysis. The Court of Appeal erred in bifurcating the collective agreement from its contractual incorporations: there is only one document (the 10 October 2012 letter). Rectifying that single document would automatically modify the incorporated terms; there is no separate employment-contract document capable of independent rectification.
3. Proper Defendants. Despite rectifiability, Company A sued parties with no legal stake. The unions hold no contractual rights or obligations under the letter agreement due to statutory presumption against enforceability. The employees’ contractual pay would be reduced by rectification; natural justice requires their joinder (directly or via representative action under CPR Part 19).
4. Tribunal Competence. Employment Tribunals lack statutory power to issue rectification orders but may, when adjudicating deductions-from-wages claims, treat a document as rectified if equity requires (“equity treats as done that which ought to be done”). Company A therefore could—and should—have raised the mistake/rectification defence in the Anderson proceedings.
5. Abuse of Process. Given Company A’s failure to raise rectification earlier, its attempt to deploy the doctrine now to defeat judgments already finalised in Anderson is an abuse of process under the Johnson v Gore Wood principles. Finality, procedural economy, and fairness to Employees Group 1 outweigh Company A’s interests.
Holding and Implications
APPEAL DISMISSED.
Although the Supreme Court found the collective agreement in principle rectifiable, it upheld dismissal because Company A sued the wrong parties. Any future rectification action must be brought against the employees (or representative employees), not the unions. Furthermore, it would be an abuse of process to use rectification to disturb the sums already adjudicated in the Anderson proceedings. The decision clarifies (i) the scope of rectification for non-binding collective agreements, (ii) the necessity of joining parties whose contractual rights will change, and (iii) the availability of rectification arguments before Employment Tribunals even absent formal rectification powers.