Stuart William Evans & Ors v JNP Group Consulting Engineers Limited
| Judge | His Honour Judge Charman, sitting as a Judge of the High Court |
| Hearing | 20 to 24 April, 27 to 30 April, 1 May and 3 June 2026 |
| Judgment | 14 August 2026 |
| Court | Circuit Commercial Court, King's Bench Division, Business and Property Courts in Birmingham |
| Jurisdiction | England & Wales |
| Claimants | Stuart William Evans, Michael John Walters and John Arthur Wood |
| Defendant | JNP Group Consulting Engineers Limited |
| Case reference | CC-2024-BHM-000018 |
Summary
Two limited liability partnerships of civil engineers merged into one company on 31 December 2016. The members took shares, and their capital accounts became directors' loan accounts. Three of the former northern members left during 2018, each signing a letter setting out what he would be paid and what would be deducted.
Each then sued, saying a meeting on 24 February 2016 had fixed their combined remuneration at £390,000 a year and that money was still owing on their loan accounts. The company said nothing bound it, that all had been settled on retirement, and counterclaimed on warranties given about the fee debts brought across.
Both sides lost. The judge held, in the alternative on the claim and as his operative ground on the counterclaim, that the retirement letters settled everything each way.
Background and facts
The northern partnership traded from Brighouse and Sheffield, the southern one from Chesham and Leamington. The members approved the financial structure of a reward model on 24 February 2016. The company was incorporated on 16 June 2016, and the business sale agreements and shareholders agreement followed on 31 December 2016, with warranties from each vendor about the recoverability of the debts transferred.
Cash did not arrive as forecast. At an owners' meeting on 5 September 2017 the minutes record agreement that debts uncollected by the end of November would be written off and the relevant owner's account adjusted. One engineer retired in May 2018 and the other two later that year, each signing a letter listing his loan account balance, the deductions and the sums payable for salary, pension, shares and dividends. One signed with four manuscript notes, one asking for the aged debts to be finalised over time.
The issue
Whether the February 2016 meeting bound a company that did not then exist; whether the deductions from the loan accounts were authorised; whether the retirement letters compromised the claims; and whether the debt warranty was broken.
The decision
The February meeting produced an agreement, but not the one claimed. The members agreed that remuneration would be calculated by the model on the company's actual profits, and the £390,000 in the papers was neither a cap nor a floor. The company was not incorporated until four months later, so section 51(1) of the Companies Act 2006 stood in the way.
The loan account claim failed on the minutes. None of the three spoke against the deduction at the September meeting, none objected when the minutes were circulated, and none objected when they were approved at the next meeting. The judge found they had agreed by conduct.
That disposed of the claim, so the effect of the retirement letters did not arise. The judge dealt with it because the counterclaim turned on it.
Whether the effect of each Retirement Letter was to compromise any claims that the recipient may have had against the Company is a question of its true construction.His Honour Judge Charman, paragraph 112
No letter said full and final settlement and none carried an entire agreement clause. Each set out every head on which money was or might be due, said what would be paid and when, and asked for a signature confirming agreement with its contents.
It would not make commercial sense for either the Company or the individual to make a partial agreement of what was due on the individual's retirement.His Honour Judge Charman, paragraph 114
The manuscript notes made the signature a counteroffer on the same terms as modified, and no more. The note asking for the debts to be finalised over time carried an implied reasonable time, set at three months. The challenge came in March 2021, once almost all the money had been paid.
In my judgment, that was far too late.His Honour Judge Charman, paragraph 121
The same reasoning killed the counterclaim, and there it was the operative ground. The company had drafted the letters, knew which debts had gone unpaid, provided expressly for deductions on account of those very debts, and reserved nothing.
The judge then said what he would have awarded had it survived. The warranty covered the invoiced sums less the bad and doubtful debt provision in the accounts as they stood at completion, and the vendors carried that risk because the agreement had no completion accounts mechanism.
I agree that a debt which is only recoverable following adjudication is worth less to JNP North and to the Company than one which will be paid by the client on invoice.His Honour Judge Charman, paragraph 142
On that footing the award would have been £65,737.60, and it was hypothetical.
For the reasons I have given, both the claim and the counterclaim are dismissed.His Honour Judge Charman, paragraph 158
Practical implications
A settlement does not need the words. A letter that walks through every head of account, gives the figure for each, states the total and the payment dates and asks for a signature is likely to be read as closing the account both ways. The party who drafts it carries that risk more heavily than the party who signs.
Silence at a meeting becomes agreement once the minutes say so and nobody corrects them. Three engineers who thought objection pointless said nothing and let the minutes pass twice.
For anyone merging a consultancy, two things bite. Debt warranties are measured against the accounts in existence on the day of completion, so an agreement with no completion accounts mechanism leaves the vendor exposed. And a fee debt that will only be paid after an adjudication is worth less than one paid on invoice.
Practice points
- Put the reservation in the settlement letter. If a claim is to survive the payment of a final account, name it in the document that records the payment. A letter that is silent about a known claim is evidence that the claim was given up.
- Read the letter you drafted against yourself. The company here lost a counterclaim worth about £65,000 on a letter it wrote, sent and asked to have signed, at a time when it already knew about the unpaid debts.
- Object in writing on the day. Where minutes record an agreement you did not make, correct them before they are approved. Approval at the next meeting closes the point, and an explanation years later that the atmosphere discouraged objection will not reopen it.
- Watch the wording added by hand. Signing with manuscript amendments is a counteroffer, not a reservation of rights. It preserves what it says and nothing else, and an open ended note such as finalised over time will be given a reasonable time by the court.
- In a merger of practices, negotiate the debt warranty. Fix the accounts it is measured against, provide for completion accounts, and price the debts that only come in through adjudication or proceedings separately from the rest.