Tonkin Drysdale Partners examines the landmark decision in Shinohara & Shinohara [2025] FedCFamC1A 126 to explore its implications for property settlement laws in family law matters. This case represents a pivotal shift in how the courts will now approach the treatment of dissipated assets and the concept of “add-backs” in financial proceedings following separation.
The Full Court’s ruling in Shinohara & Shinohara [2025] FedCFamC1A 126 marks a critical turning point in how property is treated under the Family Law Act. The decision confirms that property no longer existing at the date of determination of a property settlement cannot be notionally added back to the asset pool but may only be considered as part of contributions (s 79(4)) or current and future circumstances (s 79(5)) in achieving a just and equitable outcome.
This effectively brings an end to the longstanding practice of ‘add-backs’, where dissipated or transferred assets were notionally included in the property pool to offset financial misconduct or unilateral dealings. The Court has now made it abundantly clear that assets which no longer exist, cannot be treated as if they do.
Where previously the Court would attempt to ‘restore’ lost assets, the Court must now deal with the actual property before it. The implications:
- Evidence of asset dissipation is relevant to issues of contribution and fairness, rather than the asset pool itself;
- Redress for clients must now be sought under the discretionary matrix, instead of strict mathematical adjustments calculated on a dollar-for-dollar basis;
- Parties must shift their strategic focus away from reconstructing balance sheets and purely financial calculations, and instead concentrate on the conduct of the parties, the broader context of the matter, and the need for timely protective measures.
- Compelling evidence becomes crucial to support claims about asset dissipation, contributions, or the need for injunctive relief.
For clients, this decision reinforces the urgency of protecting assets from the other party’s misuse or reckless disposal. Prompt applications for injunctions or interim orders to preserve the property pool before any depletion will be necessary.
In practical terms, these developments are likely to extend the duration and increase the complexity of already intricate financial proceedings.
Ultimately, Shinohara delivers a clear message: the property pool must reflect actual, existing assets – not hypothetical or notional reconstructions.
The law has shifted and family law practice must evolve with it.
At Tonkin Drysdale Partners, we are experts in financial matters after separation.
Should you wish to discuss a family law matter, call one of our specialist family lawyers today or book your free 15-minute case call via our website here.
