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Tax mitigation uncertainty for financial settlements
Connie Atkinson
On 30 July 2025, Mr Justice Peel handed down a judgment in the case of BC v BC [2025] EWHC 2016 (Fam), confirming the “sanctity of confidentiality” in relation to Financial Dispute Resolution (‘FDR’) and private FDR (‘pFDR’) hearings.
What are FDRs and pFDRs?
An FDR is a key part of all court proceedings dealing with financial settlements on divorce. The FDR is a hearing at which the judge will consider the available financial information and evidence at a relatively early stage and provide the parties with an indication of the likely outcome of the case, were it to proceed to a final hearing in court. This process aims to provide a yardstick for negotiation, to focus their minds and encourage collaborative settlement without proceeding to a final hearing at great cost.
These hearings can also be paid for and provided privately. This is the pFDR (i.e. a private FDR). The role of the judge is taken by a specialist family law barrister or retired judge, and it will take place at a venue such as our offices, rather than at court. The popularity of this private route has increased enormously in recent years due to a number of advantages they have compared to their court-based counterpart. For example, private FDRs allow the parties jointly to select a judge who will be solely dedicated to that case for the duration of the FDR and have had ample time to prepare. By contrast, a judge dealing with an FDR will usually have several other cases on the same day, which can mean that the time and attention they devote to individual cases can be more limited.
Can you disclose anything about a pFDR to a judge in later court proceedings?
If you do not settle at pFDR, there are circumstances in which you may wish to tell a judge various things about that pFDR in the later proceedings. For example, you may want to give details of the negotiations, or why you believed they failed, particularly if you think your spouse behaved unreasonably at the pFDR. This happened in the recent case of BC v BC [2025] EWHC 2016 (Fam).
In that case, in the husband’s open proposal following the pFDR, the husband referred to the wife’s “retrograde decision to leave the building… not thirty minutes after receiving [the private FDR evaluator’s] written indication” and her “impulsive decision to end the private FDR process so immediately”. The husband’s legal representatives argued that these statements referred only to logistical details of the private FDR process and were therefore not confidential.
However, Mr Justice Peel confirmed that the confidentiality of the FDR process is subject only to the following limited factual exceptions, which parties can disclose:
- whether or not the FDR took place;
- whether both parties attended the FDR;
- the length of the FDR;
- the identity of the private FDR judge; and
- the location of the private FDR.
There are also very exceptional circumstances where a party’s statement or actions may be disclosed at the trial of a person for an offence committed at the FDR hearing itself, or where a statement clearly indicates a past or likely future risk of serious harm to a child.
Mr Justice Peel ruled that the husband could not disclose these statements because they referred to the wife’s alleged behaviour during the FDR and portrayed her apparent responsibility for their failure to reach a settlement. He made it clear that the confidentiality of the pFDR process extends to anything said or done by either party for the duration of the pFDR hearing.
Why does confidentiality matter?
As outlined in paragraph 6.2 of FPR 2010 Practice Direction 9A:
“In order for the FDR to be effective, both parties must approach the occasion openly and without reserve. Non-disclosure of the content of such meetings is vital and is an essential prerequisite for fruitful discussion directed to the settlement of the dispute between the parties.”
The very value of the FDR process lies in its confidentiality and privacy, offering a safe space for both parties to freely discuss their options and priorities without the fear that they may later be held to it by the court. It also allows a subsequent judge to, in Mr Justice Peel’s view, “look behind the litigation posturing…and give a clear robust view” at a later hearing.
Bolstered by their confidentiality, both FDRs and private FDRs have facilitated resolutions between parties in a significant number of cases which may have otherwise gone to trial. In turn, saving parties the time, uncertainty, stress and increased costs associated with litigation.” to “Bolstered by their confidentiality, both FDRs and private FDRs have facilitated a resolution in many cases, saving parties the time, uncertainty, stress and litigation cost.
further information
If you have any questions regarding this blog, please contact Charlotte Daintith or Hannah Muress in our Family and Divorce team.
about the authors
Charlotte is a trainee solicitor at Kingsley Napley and is currently in her second seat with the Family & Divorce team. Charlotte joined the firm in September 2024. Before joining Kingsley Napley, Charlotte worked at the Law Commission of England and Wales in the Criminal Law team where she undertook research on evidence in sexual offence prosecutions and the legislation surrounding contempt of court.
Hannah is responsible for knowledge management and practice development for the family team. She is now a Senior Practice Development Lawyer, having been the team’s Professional Support Lawyer since 2017, and previously working as an Associate in the team.
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