Background - What Happened in Shinohara
- The parties were married for around six years and had two young children (aged 6 and 4).
- Their asset pool included approximately $616,330 in superannuation and about $616,631 in other property.
- A further $592,768 in “notional assets” was listed as addbacks - amounts that had been spent or dissipated (such as on legal fees or personal expenses).
- Both parties initially agreed to include these addbacks in the balance sheet.
At trial, the judge excluded those addbacks from the property pool without giving either party notice or the chance to respond.
Issues on Appeal
The appeal raised two key questions:
1. Procedural Fairness - Was it fair for the trial judge to exclude the agreed addbacks without warning?
2. Treatment of Addbacks Post-Amendment - Do the recent amendments to section 79 of the Family Law Act still allow notional addbacks to be included in the asset pool?
The Court’s Decision
The Full Court allowed the appeal, finding:
- Procedural fairness was denied: the parties should have been given notice before addbacks were excluded.
- Addbacks are no longer valid: After the Family Law Amendment Act 2024 came into effect on 10 June 2025, section 79(3)(a)(i) limits property settlement orders to existing legal and equitable interests. This means that assets no longer in existence cannot be “added back” into the pool.
However, the Court confirmed that the concepts behind addbacks remain relevant. Past expenditure or wastage can still be considered when assessing:
- Contributions (s 79(4)),
- Circumstances and wastage (s 79(5)(d)),
- Future needs and fairness (s 79(5)(n) and (v)).
In the re-exercise of discretion, the wife was awarded 67.5% of the non-superannuation pool, and the husband received 32.5%.
Why This Case Matters - The End of Addbacks
This case confirms that:
- Addbacks are abolished - they can’t be included in the property pool if the asset no longer exists.
- Evidence matters - it is still vital to provide proof of how funds were used or dissipated.
- Strategic shift for lawyers - arguments should now focus on contributions, wastage, and fairness under sections 79(4) and (5), rather than inflating the pool.
For clients, this means greater clarity: only what exists at the date of trial is divided. Any money spent before trial is not notionally reinstated but may still affect how the Court weighs contributions and fairness.
Practical Implications for Separated Couples
- Keep records: If your ex-partner has spent or wasted funds, evidence of how and when this occurred will be critical.
- Manage funds carefully during separation: Large withdrawals, selling property, or paying legal fees will not be “added back” later.
- Expect a different approach to fairness: Courts will no longer inflate the pool but can adjust entitlements to reflect wastage or misconduct.
Key Takeaway
Shinohara & Shinohara [2025] FedCFamC1A 126 marks a decisive shift in Australian family law property settlements. The days of addbacks are over. From now on, the property pool is restricted to what actually exists, with fairness adjustments made through the contribution and needs analysis.
If you are separating or already in property settlement negotiations, it’s crucial to get legal advice tailored to the new family law framework.
