He Demolished the House So His Ex Couldn't Have It: Wasting Assets in Property Settlements Australia

There is a story that has been doing the rounds online recently, and if you have not come across it yet, it is worth a moment of your time. A man, facing a property settlement with his former partner, reportedly demolished the family home rather than allow her to receive it. Bulldozed it. Reduced it to rubble. His apparent logic: if he could not have it, neither could she.

It is, depending on your perspective, either darkly funny or deeply alarming. Possibly both.

But here is what makes it genuinely interesting from a family law perspective: in Australia, it would not have worked the way he likely imagined. The house might be gone, but the legal consequences of destroying it are very much still alive. The rules around how courts deal with this kind of conduct have recently shifted significantly -and the new position is something every separating couple should understand.

What Is Asset Dissipation in Family Law Property Settlements Australia?

When a relationship breaks down, both parties typically become aware - sometimes very quickly - that what they own together is about to become the subject of negotiation, mediation, or court proceedings. Most people respond by documenting their assets and seeking advice on how property settlements in Australia are likely to be approached. Some, however, respond by trying to reduce what is available to divide.

This is called dissipation or wasting of assets. It can take many forms: selling property at a significant undervalue, making large unexplained cash withdrawals, gifting assets to family members, running up debts without justification, or - in the more spectacular cases - literally demolishing a house.

Australian family law courts have always been aware that this kind of behaviour occurs. The question is what they can do about it. And the answer to that question changed materially in 2025.

What the Law Used to Say: Notional Add-Backs

Under the old approach, courts had a mechanism called a notional add-back. If a court was satisfied that a party had deliberately or recklessly wasted an asset, it could treat that asset as though it still existed when calculating the property pool. The destroyed or dissipated asset was added back notionally, the pool was assessed on that inflated basis, and the party responsible received a correspondingly smaller share.

It was a direct and relatively predictable remedy. And for many years it was the standard response to this kind of conduct.

What Shinohara Changed

In July 2025, the Full Court of the Federal Circuit and Family Court of Australia handed down its decision in Shinohara & Shinohara [2025] FedCFamC1A 126. The decision confirmed that, under the amended section 79 of the Family Law Act 1975 (as reformed by the Family Law Amendment Act 2024), only property that actually exists at the time of the hearing can be included in the asset pool. Notional add-backs - where a destroyed or dissipated asset is treated as if it still exists on the balance sheet - are no longer available.

So if someone demolishes a house in anticipation of a property settlement today, the court cannot simply add its value back to the pool and divide accordingly. That mechanism is gone.

Does That Mean Destruction Goes Unpunished?

Not at all - and this is the important nuance.

Wasted or dissipated assets do not simply disappear from consideration. They can no longer sit on the balance sheet as notional property, but courts are still required to factor them in through two other pathways.

The first is contributions. When the court assesses what each party contributed to the relationship - financially, practically, and otherwise - the destruction or dissipation of assets by one party is directly relevant. A court can adjust the percentage split of the remaining pool to reflect the fact that one party's conduct reduced what was available. Rather than inflating the pool, the court gives the other party a larger share of what remains.

The second is the broad discretionary factors the court applies when assessing what is just and equitable in the circumstances. This includes considering the current and future financial position of each party, including the impact of how assets were dealt with during and after the relationship.

The end result may look similar in some cases. But the mechanism is now more discretionary, and the outcome less predictable. A party who has suffered the consequences of the other's destructive conduct needs to make sure that conduct is clearly evidenced and properly put before the court - because it will not automatically flow through to the settlement the way it once did under the add-back approach.

What This Means for Separating Couples

The shift in the law following Shinohara does not make asset dissipation a free pass. It makes the legal response to it more nuanced - and more dependent on how well the affected party presents their case.

If you are in a situation where you believe the other party is wasting, hiding, or destroying assets, understanding your current legal position is essential. The old assumptions about how courts would respond may no longer hold, and the strategy for protecting your interests needs to reflect where the law actually sits now.

This is precisely the kind of issue a strategic advisory session is designed to address. Knowing what the court can and cannot do, and how to ensure that relevant conduct is properly before it, is not something to piece together in the middle of negotiations.

Ready to Understand Your Position?

At KD & Co Lawyers, our Strategic Advisory Sessions are designed for people who want clear, practical guidance on where they stand - without committing to ongoing legal fees. Whether you are at the very beginning of separation or already navigating a property dispute, understanding the current state of the law is the foundation for every good decision that follows.

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