Shinohara & Shinohara [2025] FedCFamC1A 126 is the first appellate decision to consider the amended section 79 of the Family Law Act 1975 (Cth), which commenced on 10 June 2025. In practical terms, it marks a major shift in Australian family law property settlements and strongly indicates the end of the traditional concept of “notional property” or “addbacks.”
Facts of the case
The matter involved a couple who lived together for about six years before separating in February 2023. They had two young children, aged six and four.
The wife entered the relationship with substantially greater financial contributions. Most notably, in 2021 her father gave her $400,000 to assist with the purchase of the former matrimonial home.
After separation, the children lived primarily with the father. The mother, who was experiencing mental health difficulties, spent limited supervised time with them.
By the time the case came before the trial judge, both parties had presented a balance sheet that included $592,768 said to be “notional property” or addbacks. That figure reflected money already spent by the parties from partial property distributions and from the proceeds of sale of two properties.
At first instance, the trial judge removed those agreed addbacks from the balance sheet without putting the parties on notice. That became a central issue on appeal, with the wife arguing that she had been denied procedural fairness.
The law before Shinohara
For many years, courts dealing with property settlements often treated money that no longer existed as if it were still part of the asset pool.
This usually occurred where one party had spent funds on legal fees, received an early distribution of property, or dissipated assets through reckless or wasteful conduct.
In practice, the amount spent would be added back into the balance sheet as though that party still held it. The result was effectively a dollar for dollar reduction in that party’s entitlement to the remaining assets.
Although this approach had become common, appellate authority had long raised doubts about whether money that no longer existed could properly be treated as “property” for the purpose of section 79.
The position after the amendments and Shinohara
Following the Family Law Amendment Act 2024, the Full Court in Shinohara made clear that the previous addback approach is no longer the correct method.
Under the new section 79(3)(a), the Court must identify the parties’ existing legal and equitable rights and interests at the date of determination. Property that has already been spent cannot simply be inserted into the balance sheet as if it still exists.
Instead, the effect of spent funds is to be considered later in the process under section 79(5), as part of the broader assessment of the parties’ circumstances.
The Court identified different provisions that may now deal with these issues, including:
- section 79(5)(d), which addresses wastage or reckless dissipation of assets
• section 79(5)(n), which may apply to partial settlements or funds that have contributed to a party’s present financial position
• section 79(5)(v), which operates as a broader discretionary factor, including matters such as legal fees paid from property otherwise available for division
The practical outcome in Shinohara
On appeal, the Full Court excluded the $592,768 in addbacks from the property pool. It then assessed contributions at 70 per cent in favour of the wife, largely because of her significant initial financial contribution, including the $400,000 gift from her father.
The Court also took into account that the wife had already received the benefit of $112,784 more in spent funds than the husband.
Rather than applying a direct dollar for dollar deduction, the Court treated that issue as a relevant circumstance and made a 2.5 per cent adjustment in the husband’s favour.
The final result was that the wife received 67.5 per cent and the husband 32.5 per cent of the remaining non superannuation assets.
This is not legal advice and should not be relied as such.