Apr 21, 2020

Retired Dentist Must Continue to Pay Spousal Support

M.Y.T.C. v L.H.N, 2020 BCSC 414 (CanLII)

Retirement and divorce is the most recent growth area in family litigation. This case illustrates some of the issues that arise.

In MYTC V. LHN 2020 BCSC 414, the court considered the income earning potential of a dentist who sold his practice and retired because, as he put it, his “human capital is depleted”. He was 51 years old. He began practicing dentistry in 1993 and over the last several years before his retirement, had reduced his working hours. His evidence was that he had no intention of returning to work but may teach piano lessons. He suggested that “burn out” provided a medical reason for his retirement.

The contract for the sale and purchase of his practice contained a restrictive covenant that barred him from practicing dentistry for a period of three years and only beyond a five- kilometre distance from his former office.

Madam Justice Forth agreed that it was reasonable for him to reduce his practice activities by 20 to 25% due to the stress of the separation and the ensuing litigation. However, she found that it was not reasonable, given his education, work history, and lack of medical evidence to support his departure from his profession, to earn no income. She found that he was capable of earning $170,000, arriving at this income by averaging his previous three years “income from operations” and “practitioner’s wages”, and that interim support should be paid based on that imputed income. Ultimately however, Forth J. acceded to his wife’s argument that his income should be based on the net pre-tax income of the business, his reported wages, and one-half of certain business expenses improperly deducted from his gross revenues, and she imputed income of $192,000.

LHN’s decision to sell his practice and retire at 51, was foolhardy. As a former piano teacher, I can attest that he will need a lot more than piano students to fulfil his legal obligations to his wife. If he had bothered to obtain legal advice prior to taking such precipitous actions, he would have saved himself a lot of trouble. On the other hand, he may have...