SHINOHARA’S CASE
-TURNING FAMILY LAW ON ITS HEAD
From time to time the Federal Circuit and Family Court (“Fcfcoa”) produces a case that is a watershed in the law. The recent case of Shinohara is one such case.
This case has already had an enormous impact on the conduct of Family Law and in particular property settlements.
The case involves highly complex legal principles. In this article we will simplify and summarise those principles.
Prior to this case it was common for funds that were expended by one or both of the parties to a de facto relationship or marriage to be notionally added back to the pool of assets to be divided. Commonly, if a party expended funds on their own legal fees or if there was an interim property settlement of if there was wastage, (reckless, negligent or wanton spending) then those funds expended could notionally be added back to the asset pool so that the other party could receive their share of those funds from other assets. This was known as addbacks.
The Full Court of the Fcfcoa in its interpretation of some recent changes to the Family Law Act decreed that the Court can only deal with existing funds or assets not funds or assets that have been spent or dissipated. The Full Court found that such expenditure could still be taken into account in assessing the contributions of the parties to assets that do exist at the time of the Court case. There is also an amendment to the Family Law Act that allows the Court to take into account wastage.
Nevertheless, the actual result in the case of Shinohara was very different to what would have occurred before.
In the case of Shinohara the wife expended (incredibly) almost $350,000 on legal fees. That is vastly greater than the usual costs expended even in the heaviest litigation. The husband obviously received no benefit from that expenditure. The Court did take the wife’s expenditure on legal fees into account but the amount “compensated” to the husband was far less than he could have expected prior to this case when such a sum would have been added back to the asset pool in most cases.
The practical effects of Shinohara’s case are as follows:-
- A party can’t assume that there will be complete restitution if the other party spends recklessly or spends large amounts on legal fees.
- Interim property settlements may not be factored back in at the conclusion of the matter.
- Parties may well need to seek urgent restraining orders and injunctions early on to prevent reckless expenditure.
- Addbacks are out.
- Record keeping is critical, including detailed records of all asset sales and expenditure during any separation in order to support your position in Court.
As at the date of this article (29 October 2025) there have been a few cases by single Judges (in their Appellate capacity) since Shinohara which indicate a possible broader interpretation of that case, as part of a holistic approach. For example, the Court may be more inclined to give more weight to arguments around legal fees spent or interim property settlements. These cases involve complex legal concepts.
Freeman Family Law has the expertise to advise clients in relation to the effects of Shinohara and like cases and generally in Family Law property settlements.
Speak to one of our team today.
This article was written by Graeme Freeman, Accredited Family Law Specialist and copyright is claimed.
Freeman Family Law
e: graeme@freemanfamilylaw.com.au
w:www.freemanfamilylaw.com.au
t: 03 9326 4433
