By Carly Mirza-Price, Partner and Jenna Georgopoulos, Senior Associate

Addbacks were previously a common principle used in family law property to notionally “add back”, or reinsert, property or funds that had been spent or dissipated by one party, treating them as if they still existed for the purposes of dividing the asset pool. This often included funds spent on legal fees, reckless spending or unexplained withdrawals.

The Family Law Amendment Act 2024 (Cth) (“the Amendment Act”) changed this, and this issue has now been considered by the Full Court of the Federal Circuit and Family Court of Australia in Shinohara & Shinohara [2025] FedCFamC1A 126 (“Shinohara”) which has found that, under the new section 79(3) of the Family Law Act 1975 (Cth) (“the Act”), only property that still exists can be divided.

Shinohara represents a significant shift in how Courts approach addbacks and confirms that:

• Property which no longer exists cannot be treated as “property” under s 79(3)(a) of the Act when the Court is making property adjustment orders pursuant to s 79(1).
• Rather, such property should ordinarily be considered as a current or future circumstance under 79(5) of the Act.
• Addbacks can no longer appear on the balance sheet, although they remain relevant to the Court’s broader discretionary exercise.

Shinohara reflects a significant shift in property settlement disputes. It is important for both lawyers and separating couples to be aware of its implications.

Pre-Shinohara

Prior to July 2025, and pursuant to a number of previous decisions including the case of Omacini & Omacini (2005) FLC 93-218 (“Omacini”), there were three primary categories where addbacks were applied, namely:

1. Legal fees paid from joint or individual assets – that is, where one party used matrimonial funds to pay for their legal fees. This principle was outlined in DJM v JLM (1998) FamCA 97; (1998) FLC 92-816 and Farnell & Farnell (1996) FLC 92-681.
2. Premature distribution of assets – that is, where one party unilaterally distributes or dissipates matrimonial assets prematurely. This principle was outlined in Townsend & Townsend (1995) FLC 92-569).
3. Waste or reckless expenditure or conduct – that is, where one party’s negligent, reckless or wanton conduct resulted in the reduction of value of an asset or dissipation of matrimonial assets. This principle was outlined in Kowaliw & Kowaliw (1981) FLC 91-092.

Ultimately, this meant notionally adding back property that should have been part of the asset pool but for the actions and behaviour of one of the parties.

While the concept of addbacks was aimed to ensure just and equitable outcomes, its application was dependent upon the specific facts of each case and the Court’s discretion. Omacini made it clear that adding back was a discretionary exercise, and that the discretion should be used when particular circumstances of the case meant that justice and equity required an addback.

Post-Shinohara

In July 2025, the Full Court in Shinohara determined that as a result of the amendments made by the Family Law Amendment Act 2024, it is no longer possible to include property or assets in the balance sheet as an addback if they no longer exist.

The key facts of Shinohara were as follows.

The parties cohabited for slightly more than six years and separated in February 2023. There were two children aged 6 and 4 years. The asset pool consisted of $616,331 in existing assets plus superannuation (which the parties had agreed to divide separately);

The parties agreed to include addbacks of $592,768 in the balance sheet/schedule, being funds that had largely been spent on legal fees and other personal expenses.

At Trial, the primary judge did not notionally add back the funds that had been spent by the parties, despite the parties agreeing that they ought to be “added back” to the pool. The Wife appealed the primary judge’s decision on the basis of procedural fairness and the treatment of addbacks post the amendments of section 79.

The Full Court confirmed that, as a result of the amendments made by the Family Law Amendment Act 2024, it is no longer possible (or appropriate) to include property in the balance sheet/schedule that no longer exists, concluding that:

• At [124] – the text of s 79(3)(a)(i) was clear and that only the existing property of the parties is to be considered at step 1 in any application for the alteration of property interests.
• At [124] – the text of s 79(5) might now be relevantly engaged to deal with notional assets:

• • s 79(5)(d) wastage: consideration as to whether a party has engaged in wastage of property or financial resources; and
  • s 79(5)(n) contributions to the other parties’ current and future circumstances; and
  • s 79(5)(v): ‘catchall’ provision.

The Full Court however, was careful not to extinguish the Court’s discretion to consider parties’ conduct when assessing the justice and equity of property orders. For example, at [126] the Full Court held that the previous approach, being a holistic assessment of considering and determining contributions, should not change.

Practical Implications of Shinohara

While Shinohara marks the end of addbacks in property settlements, this does not mean that wastage, or a party’s conduct in dissipating assets, is irrelevant. Whilst such funds can no longer be added back to a balance sheet or the pool of assets available for division, evidence will be required to support any claim that the expenditure ought to be taken into account by the Court when assessing the parties’ respective contributions and future needs.

The onus falls to the party who asserts a premature distribution of property that would otherwise be available for distribution between the parties, by setting out the circumstances of the disposal, the value it achieved and the use and application of the property disposed. This can be achieved through thorough record keeping and carefully assessing whether disposed assets are relevant to contributions or need to be raised under wastage principles. Further, in the event one party suspects the other party might dissipate or dispose of assets, immediate steps may include freezing orders, injunctions or interim property orders.

Case Law Post-Shinohara

Recent Full Court discussions in relation to Shinohara include:

• Jakobsson & Jakobsson (No 2) [2025] FedCFamC1A 137 – Where the Court reached the same conclusion as the Full Court in relation to the effect of the new s 79(3), that is, that the Court can only adjust property that exists as at the date of the trial.
• Warszawski & Warszawski [2025] FedCFamC1A 165 – Where the Court, at [30] held, “I accept that the parties’ interim distributions may no longer be property in their possession or control. However, given that the distributions came directly from the sale of the wife’s property, pursuant to court order, I find that it is in the interests of justice that I consider them (and afford them their full value) pursuant to the discretion which is provided by s 79(5)(v) of the Act. I do so not by adding them back to the pool of assets as notional assets of the parties but by taking into account that each has had the benefit of that sum since separation.”
• Koroma & Ishak [2026] FedCFamC1A 18 – The Full Court dismissed a property appeal that attempted to apply Shinohara to undo an addback approach taken under the pre–Amendment Act 2024 regime. This decision is significant as it draws a clear transitional line: Shinohara’s post-amendment s 79 reasoning about notional property has no application to cases governed by the earlier legislative framework.

The Mills Oakley Family Law team have vast experience in dealing with expenditure post separation. If you need advice, please do not hesitate to contact us.