The passing of time between when a relationship ends and a property settlement can mean that there are assets that change during that time.
For many years, the shorthand way that family lawyers and the court dealt with this was to “add back” such property to the asset pool.
A recent Full Court case has changed that approach. In Shinohara [2025] the court interpreted that you can’t treat as property something that has been spent, transferred or destroyed, so it can’t be included or “added back” into the pool.
What are examples of ‘property’ that was ‘added back’
This issue often arises where property that existed at separation, or when court proceedings began, is no longer available by the time the matter reaches trial. For example:
- One party sends money from a bank account or transfers shares that would otherwise have been available for division.
- Joint savings are used to pay one party’s legal fees.
- An asset, such as a car, is destroyed or sold.
- Interim distributions or part property settlements
- Amounts that a party was considered to have wasted such as selling an asseet for less than it was worth
The Full Court’s interpretation in Shinohara case
The Full Court has clarified that only property and liabilities that exist at the time of trial can be included in the asset pool.
This means notional property, including assets that have been spent, transferred, or destroyed, cannot be added back.
Instead, the court must consider these issues when assessing each party’s contributions and their current and future circumstances. Rather than adjusting the asset pool mathematically, the court will take a broader approach and consider the overall fairness of the outcome.
Potential consequences of this change
This change has several important consequences:
- Asset protection applications:
Parties may be more likely to start court proceedings early to obtain asset preservation orders, rather than relying on the possibility of addbacks at trial. - Caution with interim payments:
There may be fewer agreements for interim payments or “part property settlements” unless both parties benefit equally, as these amounts cannot be notionally restored to the asset pool later. - Risk of asset dissipation:
There is a risk that some parties may feel emboldened to dispose of or reduce assets before trial, knowing that the court cannot add back the value of property that no longer exists. - Third party involvement:
In some cases, parties may need to apply to undo transactions. This can require bringing third parties into the proceedings, increasing complexity and costs.
How do you obtain protection
To ensure you are protected from being at the wrong end of “no addbacks”:
- Seek legal advice as early as possible, especially if there is a risk assets may be spent, transferred, or reduced.
- Carefully consider the consequences before agreeing to interim payments or early distributions of assets.
- Don’t try to minimise the pool by trying to get rid of assets as there is a risk the adjusment could be worse than it being in the pool, and it certainly will make your matter more complex.
This blog post is intended as general information only and does not constitute legal advice.
OFRM Lawyers initial advice & strategy appointment is the ideal way to commence your family law matters so you can ensure you are well placed regarding this development in family law. You can book an appointment with one of our Bendigo family lawyers either via online appointment or at our office.
