The Full Court confirmed that addbacks are no longer permissible in the traditional sense. Following the commencement of the Family Law Amendment Act 2024, section 79(3)(a)(i) now mandates that only existing legal and equitable rights and interests can be included in the pool for adjustment. This means that notional property (addbacks)—assets that no longer exist in the hands of either party—cannot be included in the balance sheet.

The Case
• A short marriage (~6 years), modest pool (approx. $600K + super).
• The wife had brought in substantial assets and potential inheritances.
• Procedural fairness was breached: both parties had framed their cases assuming addbacks would apply (they were substantial, almost doubling the pool). The Judge ignored substantial addbacks due to poor evidence as to their relevance however failed to warn them or allow submissions as to the weight of contributions to the pool as a whole.

Appeal Outcome
• The Full Court allowed the appeal on the property grounds due to procedural unfairness, particularly to the wife.
• It re-exercised the discretion under current law (post-Amendment Act, by the time of the appeal) and found the trial judge’s reliance on addbacks impermissible, under the new legislation.
Note this key quote from the Full Court (Williams, Altobelli & Campton JJ):
“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.”

This means:
• The concept of “addbacks” is now legally dead.
• The pre-2024 case law (e.g. Omacini) remains relevant (i.e. legal fees), but only to the extent that it informs contributions already made or impacts upon current and future financial circumstances.
• Wastage is to be argued in the context of s79(5)(d).

It remains to be seen how the Court applies its discretion to these considerations, perhaps on a case by case basis and whether they are considered on the basis of a defined dollar amount, or a percentage adjustment.

Practical Implications for Lawyers
• No more adjusting the balance sheet to “add back” legal fees, dissipated assets, or gifts unless they are still held.
• Still gather evidence of inheritances, pre-marriage property, and how funds were used.
• Consider arguing such assets as contributions (s79(4)), current and future circumstances (s79(5)) or as part of the overall equity consideration (s79(2)), not as part of the asset pool – they should no longer be on the balance sheet.