SUMMARYA three-dimensional ÿnite element method for incompressible multiphase ows with capillary interfaces is developed based on a (formally) second-order projection scheme. The discretization is on a ÿxed (Eulerian) reference grid with an edge-based local h-reÿnement in the neighbourhood of the interfaces. The uid phases are identiÿed and advected using the level-set function. The reference grid is then temporarily reconnected around the interface to maintain optimal interpolations accounting for the singularities of the primary variables. Using a time splitting procedure, the convection substep is integrated with an explicit scheme. The remaining generalized Stokes problem is solved by means of a pressure-stabilized projection. This method is simple and e cient, as demonstrated by a wide range of di cult free-surface validation problems, considered in the paper.