Previously the Courts have used addbacks to notionally reintroduce spent or wasted assets to the property pool to account for intentional or negligent conduct by a party in relation to matrimonial assets. It was considered the exception to the rule, but it was a neat way of having wasted assets added back to the pool on the other party’s side of the ledger, to equitably account for the other party’s wasteful conduct. The only other option was seeking an ‘adjustment’ for contributions or future needs to the innocent party, due to the other party’s conduct involving the wastage of the property pool.
Now, following the case of Shinohara & Shinohara, the Full Court has made clear that addbacks do not fall within the definition of property, as the property no longer exists.
The 4 step approach in property settlements
In most family law cases, the Court adopts a 4 step approach when determining the just and equitable outcome in a property settlement matter:
1. Identify and determine the value of all assets, liabilities and financial resources of the parties;
2. Consider the various contributions of the parties, financial, non-financial and as parent and homemaker, which the parties have made to the property pool/relationship;
3. Assess the future needs of each of the parties in relation to matters such as health, care of children and income earning capacity;
4. Determine what adjustment, if any, to the property pool, is just and equitable.
Importantly, there is no automatic right to a property settlement. This means the court first needs to determine whether any alteration of the interests of property of the parties is just and equitable. Some call this the real ‘step one’ before embarking on the 4 step process above. In reality, the assessment of whether an alteration of interests is just and equitable occurs holistically throughout the 4-step process outlined above.
With respect to step one, until recently, property pools were sometimes made up of addbacks, but following Shinohara, the Full Court mas made clear that given notional assets do not fall within the definition of property, you can no longer add back wasted assets to the property pool, regardless of the circumstances of the wastage.
Current Law moving forward in relation to addbacks
In Shinohara, the Full Court determined that addbacks cannot be included in the property pool. Only legal interests or equitable interests are relevant.
What does this mean in relation to addbacks and how they are relevant moving forward in property matters?
Any alleged dissipation of assets intentionally or negligently must now be considered by the Court at Steps 2 and 3. In other words, addbacks are considered in terms of how they impact the contributions of the parties to the property pool and their future needs.
Want more information?
See our articles:
- How does the property settlement process work?
- What is just and equitable?
- My ex is selling assets. What can I do?
- Serious consequences for Husband due to failure to disclose
Get Urgent Advice
Overall, if you think ‘my ex is selling assets’, the bottom line is to get urgent legal advice about what to do in your circumstances to minimise the losses suffered. By promptly engaging an experienced Brisbane Family & Divorce Lawyer we will provide you with invaluable advice about your specific circumstances so that you can avoid asset dissipation and preserve your property settlement entitlements.
If you are worried my ex is selling assets following separation, please do not hesitate to contact one of our experienced Brisbane Family & Divorce lawyers and book a reduced rate clean slate consultation to have a confidential discussion about your individual circumstances.
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