In the 14 February edition of  New Law Journal, our Divorce and Family team provided the latest in a series of quarterly updates on the state of family law in England and Wales, exploring recent, published judgments and other news to help practitioners stay up to date.

In this update, senior associate Ellie Hampson-Jones and knowledge development lawyer Carla Ditz consider:

• The Family Court Annual Report 2024
• The Law Commission scoping report on the laws governing finances on divorce and the ending of a civil partnership
• The final report of the Duxbury Working Party
• Interpreting a final order in light of the parties’ intentions: XP and YP [2024] EWFC 319 (B)

The Family Court Annual Report 2024

On 2 December 2024, the President of the Family Division, Sir Andrew McFarlane, published the Family Court Annual Report. This report, the first of its kind, focuses on developments and activity in the family court between October 2023 and September 2024. It is all the more significant as it marks 10 years since the creation of the family court.

The report sets out notable progress over the period but equally reminds us that there is much more to be done, particularly to address court delays in private and public law proceedings and the volume of cases.

Two significant developments are:

1. Non-court dispute resolution (NCDR) and supporting earlier resolution

Changes were made to the Family Procedure Rules 2010 in April 2024 to support and promote earlier resolution in family law matters. There is now a stronger emphasis on couples engaging with NCDR before issuing court proceedings, bolstered by pre-action protocols in both private law and financial remedy proceedings. Importantly, judges are able to adjourn proceedings so that the couple can explore NCDR, and failure to engage with NCDR without good reason may result in cost consequences. The result? Greater impetus for resolving disputes away from the court and engaging with what is often a far more suitable process, such as mediation, arbitration or private financial dispute resolution hearings.

To facilitate this overarching aim and address what has been seen as a public “information deficit”, parties to a child arrangements application are now sent a letter from the President of the Family Division outlining options for reaching agreements away from the court provided it is safe and appropriate to do so. Further, stricter requirements to attend Mediation Information and Assessment Meetings (MIAM) have been imposed with the aim of putting NCDR at the forefront of everyone’s minds. A new online tool to provide reliable and accessible information about NCDR is also being developed.

2. Reporting pilot

From 27 January 2025, the family court reporting pilot was rolled out nationally. The pilot was launched in January 2023 in Leeds, Cardiff and Carlisle family courts, initially for public law proceedings before being extended to cover private law children proceedings. The pilot was further extended in January 2024 to cover nearly half of the family courts in England and Wales. The aim of the pilot is to permit accredited media representatives and legal bloggers (together known as ‘reporters’) to report on what they see and hear in family court hearings. This is known as “the transparency principle”. The reporting of proceedings is subject to a transparency order in each case, which sets out what can (and cannot) be reported and is crucial to preserve the anonymity of any children involved.

The reporting pilot in the financial remedies court was launched in January 2024. It initially operated in the Central Family Court, Birmingham and Leeds and was rolled out to the Royal Courts of Justice in November 2024. From 29 January 2025, the pilot will apply to proceedings in all courts as the pilot is extended until 29 January 2026.

Other key updates in the report relate to:

• the Family Drug and Alcohol Courts (FDAC), which offer an alternative to standard care proceedings involving parental drug or alcohol use.
• the Pathfinder Court pilot, which focuses on improving the family court experience and outcomes for survivors of domestic abuse by adopting a more investigative and “problem-solving” approach for those involved. Importantly, evidence suggests the pilot has been a success, with children in particular feeling the positive effects of early engagement and having their voices heard.
• where there is physical abuse, emotional and psychological abuse or coercive and controlling behaviour (including financial abuse), training for judges continues to enable them to better understand and manage cases where domestic abuse is alleged.

The drive towards greater transparency is in full force, and this report is just one part of fulfilling that ambition.

The Report of the Duxbury Working Party

A Duxbury calculation is adopted in financial remedy cases as a ‘tool of choice’ where a clean break is to be achieved in place of an ongoing spousal maintenance order. The Duxbury tables (which are based on several core assumptions), produce a capitalised maintenance figure (a lump sum) to be paid now in lieu of regular periodical payments. However, the underlying assumptions on which the calculation is based have been subject to some criticism.

In particular, case law in relation to the duration of periodical payments on divorce has developed significantly since the Duxbury tables were first established some four decades ago. A financially weaker spouse can no longer expect to be awarded periodical payments on a joint-lives basis (ie, where payments cease on remarriage of the receiving party or death). Instead, such periodical payments, where ordered, tend to be for a fixed and limited duration to encourage less reliance on a former spouse for ongoing financial support (the so-called “meal ticket for life”) and to promote financial independence.

This evolution of the law, however, is not reflected in the Duxbury model, which is still based on the assumption of joint-lives maintenance. Further criticism has arisen on the basis that the sums produced by the Duxbury calculation are insufficient to provide the level of spending power intended for the lifetime of the receiving party. In the absence of review, the calculation could be said to have become outdated and in need of modernisation.

The working party (an ad hoc, self-selected group of interested professionals) was established to review the underlying assumptions and methodology. The final report was published in November 2024 and concludes with several recommendations and proposed new Duxbury tables. The key proposal is to reformat the Duxbury tables to enable the capitalisation of a term, rather than joint lives periodical payment orders so that the calculation no longer defaults to the life expectancy of the recipient (unless appropriate). Other conclusions include:

• assumptions as to income yield (3%), capital growth (3.75%) and inflation (3%) remain essentially sound,
• there should be an allowance for management charges for investment of the fund,
• the computation should not default to the inclusion of the state pension,
• where whole-of-life is determined to be the appropriate duration for the calculation of maintenance, caution should be exercised in undertaking a Duxbury calculation for any payee whose life expectancy is less than about 15 years.

Ultimately, it will be for the court to decide whether or not to adopt the working party’s recommendations.

The Law Commission Scoping Report

On 18 December 2024, the Law Commission released its long-awaited Scoping Report in relation to the reform of the law of financial remedies on divorce and dissolution of civil partnerships. The fundamental question addressed in the report is whether the current law provides a cohesive framework in which parties to a divorce or dissolution can expect fair and sufficiently certain outcomes. The Law Commission concluded it does not.

The Law Commission carried out a detailed analysis of the current law on financial remedies, identifying problems with the current framework and what the options for reform might look like.

The overarching criticism of the present law centres around the wide discretion available to judges, which leads to uncertain and inconsistent outcomes. Given that the majority of divorcing couples do not have the benefit of legal advice, there are further criticisms that the law is inaccessible and difficult to understand. Supporters of the present system, however, point to the fact that judicial discretion within the present system allows for flexibility to ensure fair outcomes in most cases. The Law Commission has said any reform of the law would need to balance fairness with greater certainty.

The Law Commission does not make recommendations for reform, but consideration is made of four possible models on which future reform could be based: codification, codification plus, guided discretion and default regime.

Codification: this would require minimal changes to the existing law contained in section 25 of the Matrimonial Causes Act 1973. Established principles such as fairness, needs and sharing developed in case law such as White v White [2000] UKHL 54 and Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 and, in relation to nuptial agreements, Radmacher v Granatino [2010] UKSC 42 would be “codified” or incorporated into statute, but the substance of the law would not change. The court would still retain wide discretion.

Codification Plus: this would go one step further and require specific changes to the law where case law is not yet settled. The court retains discretion but limitations on this discretion may be introduced in relation to any areas of reform, for example, nuptial agreements.

Guided Discretion: this would involve introducing a set of principles and objectives that would guide the exercise of the court’s discretion and application of the law.

Default Regime: this would involve wholesale reform of the law to create a matrimonial property regime so couples would know when marrying how their property will be divided on divorce. This would provide a high level of certainty and limit the court’s discretion.

As for next steps, it will be for the government to decide whether or not to proceed with reform and what model to adopt. An interim response is expected within six months.

Interpreting a final order in light of parties’ intentions

The judgment in XP and YP [2024] EWFC 319 (B) is important for family law practitioners dealing with company interests. It is a cautionary tale in respect of drafting and the construction and interpretation of an order.

In this judgment, the court dealt with the enforcement of an order originally made in July 2007 but amended on 25 October 2011. The final 2011 order provided for the wife to receive a specified share of the “net proceeds of sale of [the husband’s] shares in Company X plc”. The husband argued that the true construction of the final order would result in the wife receiving nothing as the shares were never sold. Rather, the underlying assets, the subsidiary’s shares, were sold for cash and the majority of the proceeds then held by Company X were distributed as a dividend that represented a capital distribution of the shareholdings. The ‘dividend’ paid to the husband was in the region of £32m. This was significantly higher than had been anticipated when the final order was agreed.

The relevant wording of the amended 2011 order was: “The respondent do pay to the petitioner 25% of the net proceeds of sale of his shares in Company X plc for the first £12million company valuation and 15% of the net proceeds of sale of his share [sic] in Company X plc on any company valuation in excess of £12million, or in such other acquiring company in which those shares may be transferred, or a proportion of said sale with the balance to follow, such proceeds to be commensurate with the net monies received from the sale of the Company forthwith upon receipt.”

The judge concluded that he must consider the words of the order in light of the context, background and intentions of the parties in so far as they could be ascertained objectively and were obvious or patent to the court and the parties.

He considered that when doing so, it is clear the parties were seeking to divide their assets in a fair way. In construing the order in light of that agreement and intention, he was satisfied that the drafting should be read as meaning to provide for the applicant to share in any capital monies received by the respondent in respect of the effective disposition or realisation of his shareholding by any means, not limited to a sale of those shares. As such, the wife should share in the monies received by the respondent, notwithstanding that these were much higher than anyone had anticipated at the time of the order.

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