Can I Shear the Sheep? Unequal Division of Family Property When a Spouse Reduces Its Value

British Columbia's Family Law Act starts from a presumption that family property and family debt should be divided equally between spouses, regardless of whose name the property is in. But that presumption is not absolute. Section 95 of the Act allows the Supreme Court of British Columbia to order an unequal division where an equal division would be significantly unfair — and one of the listed factors is a spouse's conduct that reduces the value of family property.

Would a logger be reducing the value of family assets by rushing to cut down more trees before separation? Would a chef be reducing the value of their business by discontinuing a popular menu item? Would a wool farmer be reducing the value of the flock by shearing the sheep right before division?

The Equal Division Starting Point

Under the Family Law Act, family property is generally divided equally on separation, subject to the concept of excluded property — property a spouse brought into the relationship, gifts, inheritances, and certain other categories, which is not divided but whose growth in value during the relationship is shared. Family debt is divided the same way.

When Will a Court Order an Unequal Division?

Section 95(2) of the Family Law Act sets out a non-exhaustive list of factors the court may consider in deciding whether an equal division would be significantly unfair, including:

• the duration of the relationship between the spouses;
• the terms of any agreement between the spouses, other than an agreement respecting the division of family property;
• a spouse's contribution to the career or career potential of the other spouse;
• whether family debt was incurred in the normal course of the relationship;
• whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market changes;
• the fact that family property is a business, and the extent to which the business would be affected by an equal division; and
• tax consequences that may arise from the division of family property or family debt.

The provision that most often comes up when one spouse is accused of dissipating or depleting assets is the requirement to look at whether a spouse's conduct after separation caused a significant decrease in value beyond what ordinary market forces would explain.

What the Court Looks At

In assessing whether post-separation conduct justifies an unequal division, courts generally consider:

• whether the decrease in value goes beyond what market conditions would explain;
• whether the spending or conduct was reasonable in the ordinary course of managing the property or business;
• whether the conduct was unilateral and primarily benefited one spouse;
• whether the proceeds can be traced to another asset still available for division; and
• the overall fairness of the division in light of everything else that happened between the spouses.

A Sheepish Example

Imagine a farming couple going through separation near Kelowna. Spouse A operates the livestock portion of the farm; spouse B owns the crop and orchard side. The division of family property is almost finalized — A keeps their operation, B keeps theirs, except for one item: B wants the sheep.

B loves the 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, they had already been sheared!

Did A reduce the value of what B received? Arguably yes — but the court would ask whether that reduction was reasonable in the circumstances. It would look mainly at timing, intent, and whether the shearing reflected ordinary business practice rather than a deliberate attempt to strip value before the exchange. If the shearing happened at the wrong time of year or outside normal operations, that would support a finding of unfairness; if it reflected the flock's regular shearing schedule, it likely would not.

Conclusion — Not Every Decrease in Value Is Unfair

Section 95 gives the Supreme Court of British Columbia real flexibility to correct an equal division that would otherwise be significantly unfair, but the outcome always depends on the specific facts. If you believe family property has been deliberately depleted or devalued before or after separation, it is important to gather documentation early and speak with our team.