According to the court in Dobrovolsky v Dobrovolsky, dissipation is the dissipation of assets where one party "intends to dissipate assets (usually for their own enjoyment), and that dissipation arises in detriment to the other spouse". The rules around dissipation are sophisticated — not all dissipation is at the detriment of the spouse.

Would a logger be dissipating his assets by rushing to cut down more trees? Would a chef be dissipating their assets by taking a hot item off their menu? Would a wool farmer be dissipating their assets by shearing sheep?

Cox v Cox, 1998 ABQB 987

Cox v Cox established nine principles that the law uses to understand if an asset is dissipated:

Pursuant to the Family Property Act s. 7(4), a presumption of equal distribution unless it would be unjust or inequitable to do so.
Dissipation of assets to the detriment of the other as stated in the Family Property Act s. 8.
Dissipation requires a degree of intent.
There must be actual detriment to the spouse.
Dissipation does not occur if there was a reasonable expenditure.
It is not dissipation if the proceeds can be traced to another asset.
Hasty sale of assets that raises questions of fraud.
The actual dissipation that is detrimental to the spouse is one-half the value.
The courts have the ultimate discretion for dissipation.

For simplicity, the courts look at the overall picture of the dissipation and determine if it was reasonable.

Dobrovolsky v Dobrovolsky, 2021 ABQB 62

Dobrovolsky adjusted the main principles to allow more flexibility, where the following would all be considered dissipation even without proof of malice or a deliberate plan to cause detriment:

Imprudent spending;
Unilateral depletion of family assets;
Spending that primarily benefited one person;
Conduct that reduced family property after breakup.

A Sheepish Example

Imagine a farming couple going through separation. Spouse A operates the cattle/farm-animal portion of the farm; spouse B owns the crop part. The division of property is almost finalized — A keeps their operation, B keeps theirs, except for one portion: B wants the sheep.

B loves sheep and enjoys making and selling wool socks, sweaters, and garments to friends for little, if any, profit. B is currently working on sweaters for 12 friends for their winter softball team. A agreed to give the sheep over so B can continue the hobby — but when B received the sheep, the sheep were bare!

Did A dissipate the assets by giving B sheared sheep? Yes, A dissipated value — but we need to determine whether that dissipation was reasonable. The courts will look mainly at principles 3, 4, and 5.

Intent (principle 3) could be shown if the sheep were sheared too early, at the wrong time of year, or outside of normal business operations. Actual detriment (principle 4) is debatable — since the sweaters are a hobby and wool can be replaced, there may not be true detriment. Reasonable expenditure (principle 5) asks whether the shearing was an ordinary business move; an ill-timed shearing with no wool deal in sight may be unreasonable.

Conclusion — Not All Dissipation Is Bad

Cox and Dobrovolsky give good guidance, but the outcome is ultimately in the hands of the court. Dissipation can cause harm — and it is important to protect your rights to property that may have been dissipated. If you think family property has been dissipated, speak with our team early.

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