Introduction
How will the Court deal with your financial property dispute now that wastage, stealing, or other losses by one party will now not be added back to the balance sheet (asset pool of the parties).
Goldman Law provides planning tips to avoid property injustices in family law disputes.
What Was The Problem With Add Backs?
In Australian family law financial matters, “addbacks” refer to amounts of money or assets added back into the matrimonial asset pool during property settlements. Addbacks address financial conduct by one party that has unfairly reduced the available assets for distribution.
Common reasons for addbacks include:
- Wasteful Expenditure:
Funds spent recklessly, extravagantly, or without mutual agreement after separation.
- Assets Hidden or Disposed of:
Assets deliberately hidden, transferred, or sold at undervalue to diminish the pool available for division.
- Legal Costs Paid from Joint Assets:
Legal fees paid from joint funds without mutual consent or inappropriately.
- Unilateral Use of Joint Assets:
One party unilaterally accessing joint funds for personal use post-separation, significantly reducing the pool.
- Premature Distribution:
Taking and using property or funds without agreement prior to a formal property settlement, thus altering the equity of distribution.
The Law Prior to the Shinohara Decision
The Australian courts consider addbacks carefully, following the principles established in the landmark case Stanford v Stanford[1], focusing primarily on whether an addback is just and equitable in the context of the overall settlement.
After Stanford v Stanford, In Bevan,[1] Bryant CJ and Thackray J said “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them” and that such add backs form part of the forms part of the history of the marriage.
The Decision In Shinohara
The Full Court of the Federal Circuit and Family Court of Australia has considered how the post-10 June 2025 amendments to the Family Law Act affect the inclusion of add backs in financial proceedings.
The Full Court rejected the father’s argument that the statutory amendments merely codified case law allowing such add backs. Instead, their Honours clarified:
- Section 79(3) requires a court to identify and adjust only current property.
- Add backs must not be placed in the balance sheet for division purposes.
The Court has said that the categories of “notional add-backs” and principles as to adding back property items or expenditure on a ‘dollar for dollar’ basis must not be added back into the balance sheet at all, but taken up as part of either a holistic weighting of contributions, or via s79(5) (i.e. formerly, s75(2)).
In the Shinohara case, the trial judge thus had erred in adding to the balance the “addbacks” and this was notional property, or property that did not exist.
The recent amendments to the Family Law Act were considered not to codify such an action but rather to look at “addbacks” in the context of the history of the relationship; and considerations as to “current and future” circumstances.
…“Section 79(5)(d) directs consideration as to whether a party has engaged in wastage of property or financial resources and its impact on the financial circumstances of the parties at the time of the assessment, being the date of trial,..”[1]
“So that it is clear, s 79 now directs that the categories identified in Omancini 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. “[2]
What Has Changed ?
What Does This Mean For Clients?
Family lawyers debate about changing the “form” in the FCFOA to remove addbacks. Sadly, this misses the point as far as what clients now need to do to be protected from wasteful spouses. It is the consideration of such acts holistically to arrive at a just and equitable position between the parties. However, if a party wastes assets, AND there are insufficient assets for a just and equitable division of assets. This remains a serious issue in terms of what is then possible to reallocate in terms of the remaining assets for a fair split.
Client Strategies. You MUST Consider this!
Clients need to ensure that prior to financial proceedings or separation that they:
- Make sure that the opportunity to waste assets is minimized.
- The keeping of separate assets accounts and possibly separate liquid assets.
- Great care is taken in joint liabilities and things such as joint mortgages.
YOU must protect your assets whilst you are married otherwise it may be too late! Goldman Lawyers are experts in asset protection strategies and we welcome an initial strategy discussion.
It’s not just creditors that you have to worry about. Worry about the protection assets from a spendthrift, wasteful or gambling spouse.
Endnotes
[1] (2012) 247 CLR 108
[2] (2013) FLC 93-545 at [79]
[3] Shinhora ibid at para [124]
[4] Ibid at para [125]
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