I have given a number of recent seminars and webinars on periodical payments, including one combined with discussion of pensions with Rhys Taylor and Clive Weir.  While working through these talks a potential problem for lawyers and clients became apparent. It was also starkly illustrated to me recently when my advice was sought by a lady who accepted about a decade ago a clean break based on the payment of a lump sum calculated on the basis of the Duxbury formulas. She left her divorce believing that she had enough cash to provide her with an income for the rest of her life.  Now, 10 years later, the fund is nearly exhausted and she is still only in her early 70s. How did this happen? It is not because he has lived extravagantly.  It is partly down to the extremely poor investment returns since the 'crunch' in 2007/8 but it also due to a failure on her part to understand that safe investments could never get anywhere near the assumed Duxbury rate of return of 3.75% net.  She took a Duxbury based settlement without then investing her fund with the Duxbury assumptions in mind.

This illustrates that a failure to ensure that the client understands how the Duxbury returns are calculated can result in the fund being exhausted long before the recipient's death. 

The Duxbury tables and the default settings in programmes such as Capitalise are based on the recommendations of the panel who prepare the Duxbury tables.  Although there are a large number of assumptions the core is essentially based around an assumption of a 3.75% net rate of capital growth, a 3% net rate of income from investments and 3% inflation. As I understand it, the calculations are based on a medium risk investment strategy and are designed to replicate the risks which are inherent in relying upon an income stream from periodical payments which are, unless secured against a capital fund, always susceptible the vagaries and vicissitudes of life e.g. death, ill-health, unemployment etc. 



The Ogden committee performs a similar task in providing calculation tables for personal injury lawyers, but with a key difference. In PI cases the discounting rate of return is set by statute at 2.5% (which has itself been the subject to withering criticism, including recently by Lord Sumption in a case in the Jersey Court of Appeal) . The Duxbury rate of return, by contrast, has no statutory basis but relies on the courts adopting the Duxbury tables. 



My experience is that, certainly away from the really specialist judges and practitioners in this field (and, consequently, the parties whose wealth allows for specialist accountancy, actuarial and investment advice), many judges and lawyers do not really grasp the basis upon which Duxbury works and use the tables literally. Clients are then left walking away with a settlement which they are told will provide for their needs for life, but without really understanding the assumptions upon which that has been based. Using the Capitalise programme can demonstrate very graphically how a single change in one of the assumptions as to the future can massively change the outcome. These are the sort of hypothetical illustrations which Thorpe LJ referred to in Harris v Harris [2001] 1 FCR 78 (at para 22) as providing the basis for moving from the Duxbury 'starting point'. If there are real concerns and unusual aspects to the case, expert evidence may also be required (at least from a ‘shadow’ expert, even if not one authorised by the court).



I am amazed Capitalise is not used more routinely. In two recent seminars to solicitors on this topic I asked for a show of hands as to how many in the audience used Capitalise. Out of nearly 100 attendees only one hand went up! Trouble ahead?

In CS v ACS and Another [2015] EWHC 1005 (Fam) the President, Sir James Munby, ruled that paragraph 14.1 of Practice Direction 30A of the Family Procedure Rules 2010 was ultra vires or made without the power to make it.  The material part of para 14.1 of PD30A read as follows:

" An appeal is the only way in which a consent order can be challenged"

This statement conflicted with long-standing common law practice in the courts and with the specific statutory powers of the Family Court conferred by s.31F(6) of the Matrimonial and Family Proceedings Act 1984. The President ruled that the procedural rules could not fetter the long-standing right of a party to proceedings to seek a set-aside of that order where that right was enshrined in statute.  The words set out above were struck down as being a nullity.

It seems to me that paragraph 14.1 may not be the only part of PD30A which is ultra vires.  Although I spotted this a while ago I have been too diffident to mention it publically until the revelation in CS v ACS that the authors of the FPR and its Practice Directions may have feet of clay gave me confidence to do so.  Its rather technical, but bear with me.

Let me invite you to consider the terms of paragraphs 11.1 to 11.3 of PD30A. They read as follows:

Appeals against pension orders and pension compensation sharing orders

11.1  Paragraph 11.2 below applies to appeals against –

(a) a pension sharing order under section 24B of the Matrimonial Causes Act 1973 or the variation of such an order under section 31 of that Act;

(b) a pension sharing order under Part 4 of Schedule 5 to the Civil Partnership Act 2004 or the variation of such an order under Part 11 of Schedule 5 to that Act;

(c) a pension compensation sharing order under section 24E of the Matrimonial Causes Act 1973 or a variation of such an order under section 31 of that Act; and

(d) a pension compensation sharing order under Part 4 of Schedule 5 to the Civil Partnership Act 2004or a variation of such an order under Part 11 of Schedule 5 to that Act.

11.2  Rule 4.1(3)(a) (court’s power to extend or shorten the time for compliance with a rule, practice direction or court order) does not apply to an appeal against the making of the orders referred to in paragraph 11.1 above in so far as that rule gives the court power to extend the time set out in rule 30.4 for filing and serving an appellant’s notice after the time for filing and serving that notice has expired.

11.3  In so far as rule 30.7 (Variation of time) may permit any application for variation of the time limit for filing an appellant’s notice after the time for filing the appellant’s notice has expired, that rule shall not apply to an appeal made against the orders referred to in paragraph 11.1 above.

The terms of paragraphs 11.2 and 11.3 make it very clear that the authors of PD30A intended that there should be no scope for an appeal against a pension sharing order or pension compensation sharing order outside the standard 21 days from the decision or order.  This indicates that although there can be an appeal against a pension sharing order or a pension sharing compensation order the appeal may only be brought within the standard 21 day period.  According to those paragraphs of PD30A there can be no extension of the 21 days, prospectively or retrospectively, even if the pension sharing order has not been implemented.

Consider next, if you will, section 40A of the Matrimonial Causes Act 1973.  Section 40A sets out limitations on when a court may allow an appeal and set aside or vary a pension sharing order.  According to its heading and s.40A(1), this section applies where ‘an appeal is begun on or after the day on which the order takes effect’ (s. 40A(1)).  In such a case ‘the appeal court may not set aside or vary the order if the person for the pension arrangement has acted to his detriment in reliance on the taking effect of the order’ but ‘the appeal court may disregard any detriment which in its opinion is insignificant’.  Section 40B makes similar provision with regard to pension compensation sharing orders.

Immediately something appears to be odd here.  Here is a statutory provision which envisages that there will be appeals against pension sharing orders after they have taken effect. Although it sets some restrictions on how the court may deal with pension sharing orders after they have taken effect it does not place any limitation upon when such an order setting aside or varying the order may be made.  Why then do paragraphs 11.1 – 11.3 of FPR PD30A set a very clear and absolute 21 days limit for any appeal against a pension sharing order?

It is odder still when we look at the meaning of ‘the day on which the order takes effect’. Section 24C of the Matrimonial Causes Act 1973 specifies that ‘no pension sharing order may be made to take effect before the end of such period after the making of the order as may be prescribed by regulations made by the Lord Chancellor’.  Those regulations are the Divorce etc (Pensions) Regulations 2000 which specify at regulation 9 that the pension sharing order cannot take effect until 7 days have elapsed after expiry of the time for filing a notice of appeal.  In other words, the pensions sharing order takes effect 28 days after the date the order was made.  That provision is boldly stated on every pension sharing annex in Form P1. 

From the statutory provision at s.40A we know that the court hearing any appeal brought after the 28 days have elapsed and the order has taken effect may set aside or vary the order only in accordance with section 40A.  But hang on a minute! According to paragraphs 11.1 to 11.3 of FPR PD30A it is impossible to bring an appeal more than 21 days after the date the pension sharing order was made. If the Practice Direction is correct section 40A is never going to come into play because there cannot be any appeal after the pension sharing order has taken effect.  So is s.40A a dead letter?  More likely is the same conclusion as in CS v ACS: those three paragraphs in PD30A conflict with the express terms of the statute and the former must yield to the latter. 

Will the Rules committee rectify the error before a declaration of ultra vires is required?

I have just completed my review of the 6th edition of the Matrimonial and Civil Partnership volumes of Halsbury's Laws of England.  It is a quite unique publication in terms of the sheer breadth and depth of its content.  Nowhere else provides the same level of historical perspective and complete coverage of the law. It has been a real privilege to work on bringing it up to date. I have tweeted some of the more obscure and fascinating nuggets of information on my Twitter account with the hashtag #halsburygems.

I finished the Jungfrau Marathon in a little over 4 hours and 27 minutes.  It was an unforgettable experience on a really beautiful September day amidst the most sublime Alpine scenery.  

Best of all I am really grateful to all the generous donors who helped me to raise a total of £1,755 for The Brain Tumour Charity.

On 13 September 2013 I will be running the Jungfrau Marathon in Switzerland. Described as the world's most beautiful marathon, it is also one of the hardest. The first half of the course is relatively standard with no major hills but in the last 10 miles or so the route rises by about a vertical mile right up to the base of the north faces of the mighty Eiger, Monch and Jungfrau mountains.

I am trying to raise money for The Brain Tumour Charity.  Brain tumours often strike the very young and the otherwise very fit and healthy.  They can be devastating.  Having lost friends to brain tumours I was surprised to learn that this cruel form of cancer receives less funding for research into cure and prevention than many other kinds of cancer.  I would like help in changing that.  If you are able to, please visit my page at www.virginmoneygiving.com/AndrzejBojarski and sponsor my effort.  Although it will not make the run shorter or the climb less steep every donation will help me remember that I am suffering for a good reason.

Thanks to all the generous support I have already received.  I hope to post updates on how the training is going and the race itself in due course.

I am delighted and excited to become a contributing member of FamilyArbitrator.com.  It is, in my view, the most complete and accessible resource for information about the IFLA Family Arbitration Scheme available on the web. I regularly refer everyone to www.FamilyArbitrator.com when (as increasingly they do) they ask about family arbitration. It is also my own personal point of reference when I act as an arbitrator.

I look forward to working with Sir Peter Singer, Gavin Smith and Rhys Taylor and helping to add to those resources. Together with the input which comes from the wide-ranging discussions to which so many contribute in the FamilyArbitrator forum on LinkedIn, I hope our website will provide the corpus of knowledge and experience as family arbitration continues to develop as a key non-court dispute resolution technique. I hope that we can also continue to continue to inform and spread word to the professions and the public about the benefits of family arbitration, including via the digital social media.

More on this at the FamilyArbitrator website.

Dennis Sheridan has written an excellent guide to family arbitration.  Having attended the party to launch the book yesterday I have written about it on www.familyarbitrator.com.  It is an excellent book and should give any practitioner the confidence to embark on an arbitration without any fear.

On 9 and 16 July Rhys Taylor, Paul Infield, Julian Ribet and I will be holding two seminars to provide a very practical guide to how to commence and proceed with a family arbitration.  There are still some spaces so please contact Danny Chapman ([email protected]) if you would like to come.

An article I have written jointly with Rhys Taylor in which we consider whether family lawyers are assuming unlimited liability when advising upon or drafting nuptial agreements and look at the practicalities of limiting that liability.  

The full article can be found on the Family Law Week website

Since 22 April 2014 the Child Arrangements Programme set out in Practice Direction 12B to the Family Procedure Rules 2010 has set out the manner in which private law disputes over children must be handled by the courts.  The importance of out of court resolution of such disputes, particularly by way of mediation, is now a core part of the whole process.  In this post I consider whether there is enough clarity over when negotiations between the parties to a dispute over children are protected by without prejudice privilege.

At the very outset of almost all private law proceedings about children the applicant must now attend a meeting with a suitably qualified mediator (a Mediation Information and Assessment Meeting or 'MIAM') to be provided with information about the use of mediation to resolve the dispute without a court process.  At each stage of the proceedings the judge must also consider whether the proceedings should be adjourned to allow non-court dispute resolution to take place (but only if the parties agree to do so).  It is not yet possible for the courts to simply refuse to hear proceedings in order to require out of court resolution (but that may happen in the future - see my earlier post on this issue).  

The encouragement of a negotiated resolution of the case is also built into the court process itself.  The first hearing in nearly every case will be the First Hearing Dispute Resolution Appointment ('FHDRA') at which the parties will be asked to discuss the dispute with an officer from CAFCASS who will seek to 'conciliate' between them.  There may also be a mediator available at court who may formally 'mediate' between the parties.  The judge may also try to assist the parties find some level of agreement during the four hearing itself.  If no agreement is reached at the FHDRA there will be a Dispute Resolution Appointment ('DRA') later in the case.  At this hearing the judge will review the evidence and determine the extent to which any issues can be resolved or narrowed at that hearing.  Only after that hearing will any matters which are not agreed be listed for a final hearing where the court will finally determine them.

Given that it has been reported that around half of all private law proceedings concerning children now involve parties who are not legally represented since he virtual abolition of legal aid for private law children proceedings in 2013, many of the case proceeding through the above process will have one or both parties acting in person.  One particular matter all litigants will have to have in mind is understanding when what they say may be 'privileged' or effectively 'off the record' for the purposes of negotiations and when such discussions are a matter which can be referred to in court when the judge is being asked to make a decision.  A proper understanding of this may well assist frank and constructive negotiations which lead to more compromise and agreements.

It is a general principal of English law that any statements or admissions made in the course of negotiations in an effort to compromise a dispute are protected by without prejudice privilege.  The privilege means that neither party may use the without prejudice material or statements in the course of the proceedings.  The result of this is that a party can speak frankly in negotiations without fear of being confronted by the adverse admissions before the judge later in the proceedings.  It is extremely useful.  A party can 'test the water' by making admissions and offering to settle on terms which are not as good as those he or she will seek if the matter goes to court in the hope that this will lead to fruitful discussions and compromise.  If there is no compromise nothing has been lost.  The privilege is not absolute, but the grounds upon which it is disapplied are quite narrow.  

Most of the case law relating to without privilege is in the context of commercial disputes.  In my experience, quite a few family lawyers seem to believe that the privilege does not apply in proceedings concerning children.  It is not really clear to me how they reach that view.  The confidentiality of any process of family mediation is covered by an existing precedent: Re D (Minors)(Conciliation: Privilege) Disclosure of Information) [1993] 1 FLR 932, which states that “parents would not achieve a compromise unless they approached conciliation openly and were prepared to give and take. They would not make admissions or conciliatory gestures unless they were confident that these could not be used against them. Any attempt at conciliation must be off the record but there were exceptions . . . “ and further “the only exception would be in rare cases where a statement made during conciliation indicates that the maker has caused or is likely to cause serious harm to a child”.  This case continues to be cited as part of guidance issued to the judges by the Family Mediation Council and the Family Justice Council.  It seems likely, although it has not yet been tested by a reported case decision, that the same principles also apply to settlement negotiations taking place between the parties, whether with a lawyer or mediator involved or not.

So which parts of the process of set out by the Child Arrangements Programme are potentially privileged and which are not?  Somewhat, unhelpfully, the Child Arrangements Programme does not really make this clear at all.  Only at paragraph 14.9 is there a reference to privilege: 'The FHDRA is not privileged. That is to say that what is said at the FHDRA may be referred to at later hearings.'  OK, that is clear enough, or is it? What does the FHDRA actually include? Clearly what is said inside the courtroom to the judge during the hearing is not privileged; but surely what is said to a mediator at court is privileged in the usual way.  What about what is said to the CAFCASS officer during the conciliation meeting?  This will feel like a mediation meeting to the parties but is what they say 'open' or 'without prejudice'.  According to Re D, these discussions should be privileged, but past experience suggests that many CAFCASS officers do not regard them as being without prejudice.  Clarity would be very useful.  

The same difficulties may arise at the DRA.  In financial proceedings there is a hearing called the Financial Dispute Resolution Hearing ('FDRH' - just to add more to the acronym heap so loved by modern family lawyers).  The rules say that this is a hearing at which comments are treated as being without prejudice and the judge who hears the FDRH may play no further role in resolving any of the contested issues in the proceedings (other than to preside over another FDRH, of course).  The DRA in proceedings over children does not have those provisions to protect anything which is said during the appointment with the judge.  In fact, the judge hearing the DRA will often be the judge who will conduct any final hearing. Yet again, the parties may feel as though they are in a mediation type situation but they are not.  Any admission or concession they make at the DRA will be treated as being 'open' and to be used by the court at any subsequent hearing.  Either the parties will realise that this is the case and be much more cautious in making any concessions at all (so that compromise of the dispute or any issue is made more difficult) or they will not realise that what they are saying can be used against them and then feel cheated or hard done by when their concessions made in good faith and in a spirit of compromise are used against them.  If they do not realise that they can have without prejudice negotiations outside the DRA without prejudicing their position in court then a compromise is even less likely.

This is an area of law which requires greater clarity in the way it is stated and presented to those using the family justice system, particularly now that far more litigants in these case are acting in person.  One side may be legally represented and aware of the rules over without prejudice privilege while the other is not.  It is a matter of some surprise that despite the growth in mediation and alternative dispute resolution it is now over two decades since the decision in Re D and yet there has been no further clarification of the law.  The introduction of the Child Arrangements Programme is an opportunity to grasp the nettle.

36Mediation has 9 highly experienced family barristers who are trained as family mediators.  Choose from experts in various aspects of child law and family finance issues to find a more civilised and better way to resolve your dispute.