In determining the financial provision to be made on divorce, the court must consider ending the parties’ financial obligations to each other as soon as is just and reasonable. One tool used to achieve this is capitalising maintenance – ordering that one party pay the other an upfront lump sum to meet their future income needs, rather than ongoing monthly payments.  Where affordable, this offers finality and independence.

The appropriate lump sum is generally calculated on the “Duxbury” basis, named after the 1992 case in which the method was first employed. Until recent years, practitioners worked from a set of tables (“the Duxbury tables”), which set out the sum required to provide an individual of a certain age with a certain income for the rest of their life. The calculations behind the tables factor in standard life expectancy rates (based on age and sex), as well as anticipated annual income yield on investments (currently 1.5% in the first year and 3% thereafter), capital growth (currently 3.75%), rates of inflation (currently 3%) and tax rates. These are adjusted each year and a fresh set of tables produced.

Family practitioners now use specialist software to create bespoke calculations, relying on the same underlying assumptions as the Duxbury tables. This allows calculations covering set periods rather than for life, for example if it is agreed that support for income needs should cover a fixed period during which the recipient will retrain and establish a career. It also allows significant flexibility; for example to reflect that income needs will reduce at a certain age, or that at a certain point the recipient will start generating an income of their own to contribute to their outgoings. A capital injection at a fixed future point can also be incorporated, for example to reflect that the recipient could at that stage downsize their home, releasing capital. Of course, whether it is appropriate to make any such adjustments is likely to be a matter of debate between the parties.

Duxbury is widely acknowledged as providing a broad estimate; as recalled by Mr Justice Mostyn in AZ v FM [2021] EWFC 2 “Mr Tim Lawrence, the creator of the Duxbury programme, which is invariably used in spousal capitalisation cases, often would remark that the one thing about Duxbury about which you could be certain is that it would give the wrong result”. As memorably put by Sir Peter Singer, in few cases will the recipient of a Duxbury sum “put down her last glass of champagne and expire as predicted by the life tables”.

There is no guarantee the recipient will be provided with the necessary income for the required period (as there would be with an annuity, which would be considerably more expensive to provide), nor does the opportunity exist to seek a further payment should the sum prove insufficient. Equally, there is no redress for the payer if they have overpaid, nor in the case that the recipient remarries or dies, both of which would terminate ongoing maintenance.

However, given that there is a reasonable chance that Duxbury will underestimate need, particularly for those receiving a sum intended to meet their income needs for life, the recipient should ensure they arrange for appropriate regular oversight and management of the fund into future.

Duxbury’s advantage, that it severs financial ties between a divorcing couple and thus avoids future disputes, is perceived by the family court as justifying its shortcomings, and it would be rare for a party to successfully persuade a judge that recourse should not be had to Duxbury in their case. It is, however, often described as a “tool, not a rule”, meaning that it is simply a starting point in a judge’s consideration of the appropriate order in all the circumstances. This reflects that  the parties’ needs are only one of the factors the court must consider, such that, for example, where there has been a long marriage, or where the other party is very wealthy, the court may consider a greater degree of financial security appropriate.

Ultimately, the court must arrive at a solution which is “fair”, and Duxbury is one of the tools available to guide judges – and negotiating parties – towards this goal.

If you have any questions about Duxbury or other aspects of family law please contact Henry Hood on 020 7412 0050 or Henry.Hood@hunterslaw.com.