Bidding Farewell to “Addbacks” – What Shinohara & Shinohara (No 2) Means for Property Settlements in 2025

Written By: Simran Suvarna

Until recently, Courts were permitted to ‘add back’ certain assets on a notional basis when determining the division of property, namely – assets contributed by either party that may have dissipated by the time of the settlement.

However, the 2025 decision in Shinohara & Shinohara (No 2) by the Full Court of the Federal Circuit and Family Court of Australia has made it clear that, following amendments introduced under the Family Law Amendment Act 2024, addbacks are out.

The Story Behind the Case:

This appeal dealt with both property and parenting matters following a relatively short marriage of about six years. The total asset pool, excluding any notional adjustments (addbacks), was slightly over $600,000. The parties agreed that superannuation would be considered separately.

Grounds for the Appeal:

A significant issue at trial was the inclusion of “addbacks,” particularly regarding contributions made by the wife in the form of pre-marital funds and an inheritance, that were no longer present in the asset pool. These addbacks were not considered by the Trial Judge, and the wife was not provided with the opportunity to present submissions regarding the impact of the contributions on the current asset pool, following the assumption that no addbacks would be included.

The Full Court found that the Trial Judge had failed to ensure procedural fairness and as a result, re – exercised the discretion itself. As the appeal was heard following the amendments imposed by the Family Law Amendment Act 2024, the Full Court reassessed the division of property using the revised framework.

The Decision:

Addbacks were excluded as Section 79(3)(a)(i) now expressly limits the pool of divisible property to that which presently exists. Justices Williams, Altobelli and Campton asserted: “Statutory interpretation focuses on the plain and ordinary meaning of the words in the section. The text of s 79(3)(a)(i) is clear. Only the existing property of the parties is to be identified and only that existing property is to be divided or adjusted.”

However, it should be noted that such contributions still possess the ability to influence property division, if they are instead considered under the statutory provisions relating to historical contributions (s79(4)) or current and future circumstances (s 79(5)). Justices Williams, Altobelli and Campton referred to the case of Omacini (2005) FLC 93-218 in their decision and stated: “So that it is clear, s 79 now directs that the categories identified in Omacini pre-amendment that were notionally added back are to be considered in ensuring a just and equitable outcome, either by way of historical contributions, or by way of their relationship to and impact upon the current and future circumstances at the s 79(5) stage.”

What it Means?

The decision in Shinohara & Shinohara (No 2) marks a significant shift in Australian Family Law, confirming the end of notional addbacks under the amended section 79(3) of the Family Law Act.

It seems even legal fees and partial property which were standard and accepted add backs to the asset pool are a thing of the past, although those two specific add-backs were not mentioned in this case, the judgement is clear – Add-backs are out!

This means that legal strategies must also be amended accordingly. To ensure that substantial past financial contributions remain relevant and are given due weight in proceedings, they must now be addressed through the statutory framework for historical contributions and future needs, rather than through adjustments to the asset pool. Further, family lawyers regularly seek the early release of funds from parties to assist them in the day-to-day expenses and legal fees pending a final property division, on the basis that this will form a part of their final property settlement. This case indicates that any early release of funds is in fact just money spent and will not be considered as part of the final property pool. Therefore, careful consideration is now needed before asking or agreeing to an early release of funds.

How can we help?

Lewis Family Lawyers are experienced in dealing with complex property settlements and addressing the wide range of considerations that may influence them.

If you or someone you know is navigating a complex property settlement, do not hesitate to contact us on (02) 9159 9049.