The decision on 23 July 2025 in Shinohara v Shinohara [2025] FedCFamC1A 126, handed down by the Full Court of the Federal Circuit and Family Court of Australia (Division 1) signifies a substantial change in the way courts deal with “addbacks” . The parties were engaged in property settlement proceedings following the breakdown of their marriage. Among the disputed items were several agreed “addbacks” – amounts representing property that had existed earlier in the relationship but had been spent by one or both parties before the hearing.
Historically, the court has been willing to treat these amounts as current assets, adding them back to the asset pool, however, between the trial and the appeal, the Family Law Amendment Act 2024 commenced. This Act, among other changes, narrowed the definition of “property” that could be considered at Step 1 to only property that exists at the time of the hearing.
One of the issues was that the trial judge removed agreed addbacks from the financial statement, without giving either party prior notice or the opportunity to make a proposal about the impact, which was a serious procedural fairness issue. Both parties had run their cases based on an understanding that those assets would be included in the pool and removing them deeply changed the initial point for separation of property.
Read more at https://www.phoenix-law.com.au/family-law-how-marriage-or-defacto-assets-are-divided/
Key points for you to consider;
Appointing a lawyer as soon as possible after separation; in addition to reducing your stress and increasing your understanding of the law, will assist you in a number of ways .
- Evidence is more important than ever. Without the “ addback” strategy, ensure you collect compelling evidence and provide it to your lawyer e.g. : Transaction records, Bank statements, Contracts and Witness testimony to explain the circumstances. The better your evidence, the more persuasive your Step 3 arguments will be.
- Don’t panic if your spouse has spent assets—those actions can still be accounted for, but in a different way. Lawyers will now approach these situations with a different strategy than in past years.
- Just and Equitable ; Step 3, relating to current circumstances and future needs ,must be “just and equitable” considering contributions and other factors. Your lawyer will argue on your behalf adjustments in your favour.
The Full Court’s Decision
- Addbacks are no longer permitted at Step 1
Under the new legislation, the only property that can be included in the Step 1 balance sheet is property currently in existence. - Conduct still relevant—just at Step 3
While addbacks are gone from Step 1, the conduct leading to asset dissipation is still relevant to the final division. This conduct can be considered: e.g., one party’s wastage may reduce their overall contributions. - Re-exercise of discretion
The Full Court recalculated the division, ultimately awarding the wife 67.5% of non-superannuation assets (approximately $416,226) and the husband 32.5% (approximately $200,405), factoring in contributions, wastage, and other considerations at Step 3—not Step 1.
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