Author: Lauren Santas | Senior Associate at Gramelis Attorneys Family Lawyers
The treatment of interim property distributions in Australian family law property proceedings has changed significantly following the Full Court’s decision in Shinohara & Shinohara [2025] FedCFamC1A 126.
The decision, together with subsequent appellate authority including Warszawski & Warszawski [2025] FedCFamC1A 165 and Voight & Zunino [2025] FedCFamC1A 201, has important practical consequences for the preparation of balance sheets, the conduct of interim applications and the way property settlement cases should be prepared for final hearing.
The traditional approach was often to treat a partial property settlement or other expenditure of property as an “addback”. The amount would be notionally returned to the balance sheet even though the money no longer existed. The purpose was generally to ensure that a party who had already received or spent part of the property pool was not seen to have obtained an advantage at the expense of the other party.
That approach is no longer the correct way to identify the property available for adjustment under the amended section 79 of the Family Law Act 1975 (Cth).
What changed after 10 June 2025
The amendments to Part VIII of the Act commenced on 10 June 2025. Section 79(3) now requires the Court, when considering what property adjustment orders should be made, to identify the parties’ existing legal and equitable rights and interests in property and their existing liabilities.
In Shinohara, the Full Court made clear that property which no longer exists cannot be treated as existing property merely by describing it as an addback. Notional property does not exist and therefore cannot form part of the balance sheet recording the parties’ current property.
That does not mean, however, that an interim distribution or other expenditure simply disappears from the case.
This distinction is important. The amount may no longer form part of the balance sheet, but the fact that one party has received, used or disposed of property can still be highly relevant to the ultimate determination of a just and equitable outcome.
The Full Court explained that matters which would previously have been dealt with through addbacks are now to be considered within the statutory framework, including as part of the parties’ contribution history under section 79(4) and, where relevant, in assessing current and future circumstances under section 79(5).
Interim distributions are still relevant
One of the most important practical points from Shinohara is that interim or partial property distributions remain capable of being taken into account.
The Full Court specifically identified section 79(5)(n) as potentially encompassing interim or partial property adjustments and payments made by way of litigation funding. Section 79(5)(v), the broad “catch all” provision, may also be relevant depending upon the circumstances of the case.
The appropriate treatment will depend upon the circumstances.
For example, if a party receives $200,000 pursuant to an interim property distribution and still has $80,000 of those funds at the final hearing, the $80,000 is existing property and will ordinarily form part of the balance sheet. The remaining $120,000 does not become a fictional asset simply because it was previously part of the property pool.
The Court may nevertheless take the $120,000 into account when determining the appropriate adjustment. Relevant considerations may include how the money was obtained, what it was used for, whether it was used for reasonable living expenses or litigation costs, whether it was dissipated recklessly or intentionally, and the extent to which the payment has already advantaged one party.
This is therefore no longer a simple accounting exercise.
The importance of evidence
The post Shinohara approach makes the evidence surrounding interim distributions particularly important.
Practitioners should be able to establish when the payment was made, the precise terms and legal basis of the order, the amount received, what happened to the funds and what remains at the date of the final hearing.
Where the funds have been spent, evidence should ideally identify the nature and purpose of the expenditure. A bare assertion that an interim distribution was “spent” may not be sufficient to explain its significance to the ultimate exercise of discretion.
The distinction between funds used for legal fees, reasonable living expenses, the acquisition of another asset, payment of liabilities and discretionary or potentially wasteful expenditure may become particularly important.
This also means that the traditional balance sheet should not be the only document recording the history of interim distributions. A clear chronology of significant payments and expenditure can assist the Court in understanding how the parties’ financial circumstances have changed during the proceedings.
The practical lesson from Warszawski
Warszawski & Warszawski provides a useful example of the approach being applied in the context of an appeal and re exercise of discretion.
Justice Christie recognised that interim distributions could no longer simply be treated as property held by a party where the funds had been spent. However, because the payments in that case arose from the sale of the wife’s property pursuant to a Court order, the payments remained relevant to the final assessment and were afforded their full significance under section 79(5)(v).
The practical point is that removing an amount from the balance sheet does not necessarily remove it from the case.
The question becomes how the circumstances surrounding the payment should influence the statutory assessment rather than whether the amount should be notionally restored as property.
Voight and the importance of getting interim orders right
The Full Court’s decision in Voight & Zunino [2025] FedCFamC1A 201 is also particularly important for practitioners dealing with interim lump sum payments.
During the proceedings, the de facto wife received $300,000 pursuant to a consent order, with the order providing that the payment was to be “characterised” by the trial judge. The Full Court subsequently held that an order compelling one party to pay money to another must have an identifiable source of power when the order is made. The available bases included an interim distribution of property, spousal maintenance, costs or a mandatory injunction.
The Court cautioned against the practice of making an interim payment and leaving its legal characterisation to be determined at the final hearing.
This has an obvious practical implication. When seeking or consenting to an interim lump sum payment, practitioners should identify the statutory basis upon which the order is sought and ensure that the order is properly framed at the time it is made.
In Voight, the Full Court ultimately recognised the earlier $300,000 payment in determining the de facto wife’s entitlement. Of that amount, $31,106 remained in her bank account and formed part of her existing property. The balance of $268,894 was taken into account through the statutory adjustment process rather than being treated as property still held by her.
The case illustrates the practical difference between identifying property and accounting for the consequences of a previous payment.
What this means for everyday family law practice
For practitioners preparing a property matter for negotiation, mediation or final hearing, the post Shinohara position warrants a review of the way interim distributions are recorded and presented.
A balance sheet should identify the property and liabilities that actually exist at the relevant date. Former addbacks should not simply be inserted as fictional assets.
At the same time, practitioners should maintain a clear record of significant interim distributions and other substantial disposals of property. The fact and purpose of those transactions may remain important to the Court’s assessment of contributions and current and future circumstances.
It is also important to distinguish between an interim property distribution and other forms of interim financial relief. An order for a lump sum payment should not simply be described as an “interim payment” with its legal basis left unresolved. The source of the Court’s power should be identified and the relevant statutory requirements satisfied when the order is made.
For negotiations and mediations, the change also requires some care when advising clients about settlement ranges. A party who has already received a substantial payment may not have that amount notionally added back to the pool, but the payment can still materially affect the appropriate outcome. The ultimate question is how the payment should be recognised within the Court’s statutory and evaluative assessment.
The broader significance of Shinohara
Shinohara does not mean that the financial history of a relationship stops at the date of separation or that money spent during proceedings is irrelevant.
Rather, it changes the mechanism through which those matters are taken into account.
The Court is required to work from the property and liabilities that actually exist, while considering the history of the parties’ contributions and the relevant current and future circumstances in determining whether, and to what extent, an adjustment should be made.
For family lawyers, the practical shift is therefore from a notional accounting exercise to a more fact specific and evaluative assessment.
The days of simply placing a spent interim distribution into an “addbacks” column and treating it as though the money were still sitting in a bank account are over. The more important questions are now why the money was paid, what happened to it, what benefit each party obtained from it and how those matters should properly influence the ultimate property settlement.
About Lauren Santas: I am a Senior Associate at Gramelis Attorneys and would be pleased to assist with complex family law matters where a client needs strategic advice and representation in relation to property settlement proceedings.
You can also read this article on our website along with other helpful family law articles on our blog and resources.
If you would like to speak to me about your family law matter, please feel free to call us on
1300 888 FAM (1300 888 326)
Or email me at lauren@gramelis.com.au
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