The recent decision of Jakobsson & Jakobsson (No 2) [2025] FedCFamC1A 137 provides valuable guidance for separating couples and practitioners on disclosure obligations, addbacks, and the limits of appellate review in property settlements under s 79 of the Family Law Act 1975 (Cth).
Background of the parties
The parties, who married in 2005 and separated in 2020, had two children aged 19 and 17. They had established a successful business overseas before relocating to Australia. Following separation, the key dispute concerned the composition of the property pool, particularly whether overseas assets and certain “add-backs” – for example, a dissipation by the Husband of sale proceeds of a house withdrawn from a SMSF – should be included, and how contributions should be assessed.
The primary judge found that the husband had failed to make full and frank disclosure, particularly regarding funds withdrawn from his Self-Managed Superannuation Fund (SMSF). The judge “added back to the pool of assets monies the appellant had received from his SMSF for which he had failed to adequately account,” [14] ultimately dividing the property 60/40 in favour of the wife. He gave her a 10% adjustment because of income disparity and the wife had the care of the parties’ 17 year old child.
What is an “add-back”?
For context, ‘add-backs’ are funds that once existed but were spent before trial (on legal fees or wasted on things like gambling or risky share trading). Historically, this has meant they can still be notionally included in the property pool if the court finds it just and equitable to do so.
However, in the recent case of Shinohara & Shinohara [2025] FedCFamC1A 126, the Full Court definitively rejected the practice of adding notional property to the balance sheet, as it does not exist and thus cannot be identified.
Their re-exercise of discretion is focused instead now on s 79(5) factors (eg, future financial needs), as well as the parties’ contributions during the relationship, embracing a holistic approach which moves beyond the mathematics of add-backs.
This means that evidence of how assets were dissipated is paramount. These assets are still considered by the court, but through a contributions and needs assessment.
For a more detailed discussion on the Shinohara decision, see our recent post here.
What was the appeal about in this case?
On appeal, the husband raised six grounds of appeal, alleging both factual and discretionary error. It is worth noting that appeals from discretionary judgments face a high threshold, as an appellate court will not intervene simply because it might have reached a different conclusion.
It is necessary first to consider the husband’s grounds of appeal and where he succeeded.
Ground 1: Procedural Fairness to the Superannuation Trustee
The husband’s first ground of appeal succeeded. The trial judge had made a default superannuation splitting order without giving procedural fairness to the superannuation trustee. Justice Schonell agreed that this constituted an error of law, referencing Naisby & Naisby (2021) FLC 94-025.
As Austin J had earlier observed in related proceedings:
“The primary judge was evidently conscious that the default superannuation splitting order was being made without the superannuation trustee first having had procedural fairness … [which] deprived his Honour of statutory power to make the order.” [28]
The correct approach, Justice Schonell explained, would have been to adjourn the trial briefly to allow notice to be given to the trustee. Because the order was made without power, this ground was upheld.
Grounds 2–6: Addbacks, Contributions, and Factual Findings
The remaining grounds failed.
The husband argued that the trial judge had impermissibly “added back” funds withdrawn from his SMSF, effectively making a splitting order. Justice Schonell rejected this argument, clarifying that once funds are withdrawn, “they are no longer a superannuation interest … and are amenable to adjustment” [35] under s 79.
Citing Omacini v Omacini (2005) FLC 93-218, his Honour confirmed that addbacks remain a discretionary tool for achieving justice and equity, but only in exceptional circumstances.
The Court also dismissed challenges to the assessment of contributions, noting that the primary judge had appropriately recognised both parties’ financial and non-financial contributions, including the wife’s early business investment, a family loan of $125,000, and her predominant care of the children. As Justice Schonell explained, simply disagreeing with the weight given to evidence is insufficient to demonstrate error:
“Absent other error, that is insufficient to give rise to appellate intervention. It was not contended that the result was unreasonable or plainly unjust.” [40]
So how are add-backs treated after the Shinohara decision?
Because only one ground succeeded, the Court opted to re-exercise discretion rather than remit the case. Importantly, this re-exercise occurred under the amended s 79 of the Family Law Act, following the Family Law Amendment Act 2024 (Cth).
Justice Schonell emphasised that the amended s 79(3)(a) directs courts to identify the parties’ existing legal and equitable rights, effectively excluding “notional” property created by addbacks:
“By very definition, that excludes the concept of an addback … What might, pre-amendments, have been dealt with as an addback, is now to be addressed in the consideration of contributions or at the s 79(5) stage.” [62]
Each of the parties contended for various addbacks, which Schonell J deals with in turn.
- For the respondent:
- Mr Jakobsson unilaterally sold the property held by the SMSF after the proceedings had commenced, and after orders for disclosure had been made. He used the proceeds of this sale unilaterally and did not disclose his actions in completing the sale.
- Therefore, Schonell J is satisfied that pursuant to s 79(5) of the Family Law Act, the amount spent of $87,833 should be considered
- For the appellant:
- The appellant contended for various addbacks against the respondent arising from the disposal of real estate in Country E in 2016 of a value of $35,897, the sale of a motor vehicle valued at $19,500, monies from Country E totalling $98,000, and monies from a company totalling $38,000.
- Schonell J does not add any of these back into the pool as he considers that the appellant did not meet the standards for such an order to be made.
As a consequence of the above findings, Schonell J was satisfied that the only matters that warrant consideration under s 79(5) of the Family Law Act by way of adjustment to the non-superannuation property of the parties is the disparity as to income and earning capacity, the respondent’s care of a child under 18 for a matter of a few months, and the use by the appellant of the monies from his SMSF totalling $87,833.
After considering the parties’ financial disparity and the husband’s misuse of SMSF funds, Schonell J adjusted the division to 63/37 in favour of the wife, ordering the sale of the family home to achieve a just and equitable outcome.
Key Takeaways
- Full and frank disclosure remains critical. The Court took a dim view of the husband’s unilateral dealings with SMSF assets after proceedings began. Non-disclosure can seriously affect credibility and lead to unfavourable financial adjustments.
- Addbacks are exceptional, not routine. Courts continue to treat addbacks cautiously, particularly following the 2024 legislative reforms which focus on “existing property” rather than notional inclusions.
How property settlements are affected post-Shinohara
Jakobsson & Jakobsson (No 2) reinforces the importance of transparency, procedural compliance, and fairness in family property proceedings. In the post-Shinohara landscape, this has become more fundamental than ever, as notional add-backs are now considered under s 79 factors.
For separating parties, it’s a timely reminder that incomplete disclosure or procedural shortcuts can have significant legal and financial consequences.
How we can help
At Rowan Skinner & Associates Lawyers, we are accredited specialists in Family law and we understand how stressful and complicated property disputes can be, especially when significant assets are involved.
If you are struggling with your current situation, call our team at (03) 9995 9155 for a non-obligation discussion. We service clients in Melbourne, Melbourne Northern Suburbs, such as Northcote, Alphington, Carlton, Fitzroy, North Fitzroy, Kew and Heidelberg, as well as South Melbourne and South Yarra.
Case: Jakobsson & Jakobsson (No 2) [2025] FedCFamC1A 137
Rowan Skinner is a highly skilled family lawyer with over 35 years of experience across various legal roles and jurisdictions. Rowan specialises in resolving family law disputes such as divorce, financial settlements, child custody and domestic violence cases. Through his diverse and extensive experience, Rowan has a deep understanding of the complexities and nuances involved in family law. Rowan is a skilled negotiator and litigator who follows a compassionate and client-focused approach which prioritises helping you navigate what can be an emotional and challenging time.