What Shinohara Changes Everything
A landmark appellate ruling reshapes how courts treat dissipated and disposed-of assets in Australian family property proceedings
Glance
Every generation or so, an appellate court delivers a judgment that does not merely resolve the dispute before it, it reshapes the legal landscape for all disputes that follow. Shinohara & Shinohara [2025] FedCFamC1A 126 is one such judgment.
On 23 July 2025, a Full Court of the Federal Circuit and Family Court of Australia delivered the decision. It addresses one of the most litigated concepts in Australian family property law: the doctrine of addbacks, the practice of “notionally” returning to the asset pool money one party has already spent, wasted, or disposed of.
The Old Addbacks Doctrine — A History
To understand what Shinohara changes, one must first understand the world before it.
The addbacks doctrine emerged from a practical problem: what should a court do when, by the time of trial, one party has frittered away, gambled, wasted, or dissipated assets that would otherwise have been available for division? Allowing a party to simply “spend their way out” of an equitable division was obviously unjust.
Courts responded by developing a practice of notionally adding back the dissipated funds to the asset pool treating the money as if it still existed for the purposes of calculation then awarding the non-dissipating party a greater proportionate share of what actually remained.
Historic Categories of Addbacks
Cases such as Kowaliw v Kowaliw (1981) FLC 91-092 established the three traditionally recognised categories that justify an addback, and courts refined them over four decades:
- Reckless, negligent or wanton dissipation of assets by one party
- Deliberate non-disclosure or concealment of assets
- Payments made by one party for their own benefit post-separation (sometimes called “sole use” expenditure)
For practitioners, the addbacks approach became standard operating procedure. The “balance sheet” method — listing assets and liabilities on each side of a ledger — routinely included notional addback figures, inflating the paper asset pool and enabling courts to deliver what appeared to be proportionate outcomes.
“The asset pool includes not only what exists, but what should have existed.”
The conventional approach, now challenged
Many critics argued the doctrine was a legal fiction dressed up as pragmatism. How can a court divide property that does not exist? How can the “pool” include a sum that cannot be physically distributed? The doctrine distorted the mathematics, encouraged satellite litigation, and placed excessive emphasis on a binary finding of “waste” that parties often contested and litigated at significant cost.
The enactment of the Family Law Amendment Act 2024 (Cth), inserting a revised s 79(3) into the Family Law Act 1975 (Cth), crystallised the issue. The new provision defines property for adjustment in terms of legal and equitable interests at the date of assessment. The question became unavoidable: can a notional addback, something that does not exist constitute a “legal and equitable interest in property”?
Shinohara answers that question emphatically: No.
The Court’s Ruling — A New Framework
The Threshold Finding: Addbacks Are Not Property
The Full Court held that addbacks are not the parties’ legal and equitable interests in property at the date of assessment. Because they do not meet that definition, the Court cannot include them in the balance sheet of property available for adjustment under s 79.
Where addbacks are not the legal and equitable interests of the parties, or either of them, in property at the date of assessment, the Court cannot include them in the balance sheet that identifies and values property for adjustment.
This is not a technical point about accounting methodology. It is a fundamental reconceptualisation of the statutory framework. By anchoring the analysis to s 79(3) and the requirement that adjusted property consists of actual legal and equitable interests, the Court has removed the doctrinal foundation on which the old addbacks balance-sheet approach rested.
The New Home for Addbacks: ss 79(4) and 79(5)
Crucially, the Court did not hold that dissipation or waste is now irrelevant to property adjustment. Far from it. Rather, the Court held that the historic categories of addbacks operate within two alternative, or concurrent, analytical streams:
| Old Approach | New Framework |
| Balance Sheet Addback | s 79(4) — Contribution History |
| Notional sum added to pool as if it were existing property. Pool inflated. Winner awarded larger “percentage” of the notional pool. | Waste or dissipation treated as a negative contribution (or failure to protect the pool) assessed in the contributions analysis. |
| Binary “waste” gateway | s 79(5) — Future Circumstances |
| Focus on a fictional enlarged pool | Impact of the disposal on the financial position of each party going forward — addressed in the future needs / justice and equity assessment. |
The Core Principle
The circumstances of each case shape the mandate of justice and equity under s 79. Whether under s 79(4) or s 79(5) — or both — this consideration forms part of a holistic assessment. The mischief is addressed; the methodology changes.
Why This Matters: The Holistic Method
The shift from balance-sheet addbacks to holistic consideration is not merely semantic. In practical terms:
- The pool of property for distribution is smaller and more accurately reflects reality
- The court adjusts percentages or outcomes to account for dissipation rather than fabricating a larger asset base
- There is less incentive for satellite litigation over whether a specific expenditure technically qualifies as “wanton waste”
- The analysis integrates with the contributions and future needs framework rather than sitting awkwardly outside it
- No longer can inflated “paper pools” create disproportionate or illusory outcomes
- No longer is a finding of “waste” required as a binary gateway to relevance
Key Takeaways
Shinohara & Shinohara [2025] FedCFamC1A 126 will be cited for years to come. Its significance extends far beyond the facts of one marriage and one disputed home sale. It resets the methodological foundation for dealing with dissipated, disposed-of, and non-existent assets in Australian family property proceedings.
- Addbacks are not property. They cannot be included in the balance sheet as items for adjustment under s 79(3) of the Family Law Act 1975 (Cth).
- The conduct is still relevant. Historic addbacks categories (dissipation, waste, non-disclosure, post-separation sole benefit) remain live considerations — but under ss 79(4) and/or 79(5).
- Holistic assessment governs. Justice and equity is achieved through the overall adjustment of real property, not through notional inflation of a pool with fictitious figures.
- Reformulate your submissions. Practitioners must shift from balance-sheet addback methodology to contribution-adjustment and future-circumstances framing.
- The Family Law Amendment Act 2024 matters. The new s 79(3) was central to the court’s reasoning. Practitioners must understand how the 2024 amendments interact with the pre-existing case law architecture.
- Centrelink debts and incidental liabilities can be apportioned between parties regardless of which name they are registered under, as part of the overall s 79 exercise.
- The addbacks doctrine was always a workaround for a hard problem.
- Shinohara replaces the workaround with a principled framework — one that is honest about what property is, and what it is not.
For practitioners navigating property disputes in 2025 and beyond, the Full Court sends a clear message: abandon the fiction of the notional pool, adopt a holistic adjustment, and build evidence and submissions around the actual property that exists.
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
Article Written by Peter Raykhman, Solicitor
