Shinohara Shuts the Door on Notional Add Backs

Shinohara Shuts the Door on Notional Add Backs

Shinohara v Shinohara [2025] FedCFamC1A 126

In Shinohara v Shinohara [2025] FedCFamC1A 126, the Full Court confirms that, as a result of the amendments made by the Family Law Amendment Act 2024, it is no longer possible to include property that no longer exists in the hands of either party as an add back on the balance sheet.

Shinohara was an appeal both on parenting and property matters. This summary focuses only on the property appeal.

The parties’ marriage was brief, lasting approximately five years. Excluding the property added back, the asset pool was $616,330 plus superannuation, which the parties had agreed to divide separately.

The mother argued that the primary judge failed to take into account her more substantial contributions both by way of funds brought into the relationship and through inheritance. While not a ground of appeal, the mother also argued that the primary judge failed to engage “with the mutual position of the parties that the amounts from the sale of both investment properties, included in the balance sheet be added back as they had been exhausted on legal fees, and rather finds, without referring to add backs, that they should not be included as they had been spent”.[1]

Procedural fairness

The mother claimed she was denied the opportunity to make submissions on the weight of contributions to the actual pool being considered by the primary judge, excluding add backs, rather than the pool adopted by both parties.

The Full Court found that the primary judge had not afforded the parties procedural fairness; his Honour had not contemplated the identification and value of the property of the parties, including the notional adding back of the proceeds of sale of real properties exhausted by them. The primary judge’s errors were not confined to the denial of procedural fairness, but extended to discretionary errors by failures to consider material considerations and an inadequacy of reasons.

Re-exercise of discretion

On a re-exercise of discretion, the facts and the law to be applied are those that exist at the time of the hearing of the appeal. While the case was heard before the commencement of the Family Law Amendment Act 2024, the appeal was heard after commencement. Accordingly, the Full Court considered whether s 79(3)(a)(i) of the Act, mandating the identification of the existing legal and equitable rights and interests in any property of the parties to the marriage or either of them at the time of trial in a balance sheet, permitted as part of that identification items notionally added back being property which no longer existed.

The Full Court held:

“The text of s 79(3)(a)(i) is clear. Only the existing property of the parties is to be identified and only that existing property is to be divided or adjusted.”[2]

The Full Court further noted:

“So that it is clear, s 79 now directs that the categories identified in Omacini [[2005] FamCA 195] 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…

The holistic approach in assessing and determining contributions and adjustments thereto…remains applicable. Each of the considerations, by either s 79(4) or s 79(5), requires engagement with the circumstances of the disposal of property, the value it achieved, and its use and application being considered and weighed to achieve the mandate of justice and equity that permeates s 79 of the Act.

As notional property does not exist, it cannot be identified to form part of the balance sheet recording the current items of the parties’ property.[3]

The Court assessed the contributions to the non-superannuation pool as favouring the mother as to 67.5 per cent and the father as to 32.5 per cent.

[1] Shinohara at [91].

[2] Ibid at [121].

[3] Ibid at [125]-[127].