“Can My Spouse Spend All of Our Money on Legal Fees in a Separation and Get Away With It”?
Many people facing separation ask a critical question: can my spouse spend all of our money on legal fees and leave me at a disadvantage? This issue has become increasingly relevant following recent developments in family law regarding how courts approach “add-backs” in property settlement matters.
The short answer? Not usually. Courts still have mechanisms to ensure fairness at the final hearing. Here’s what you need to know.
Understanding Legal Fees in Family Law Property Settlements
Under the Family Law Act 1975 (Cth), particularly Section 79, the Court has the power to adjust property settlements to achieve a just outcome between parties. While recent decisions—such as the Full Court’s decision in Shinohara—have made courts less inclined to notionally “add back” spent funds, Section 79(5) still allows the Court to consider payments like legal fees when assessing each party’s current and future financial circumstances.
In practice, this means:
- The Court can make a monetary adjustment rather than a percentage-based adjustment.
- Paid legal fees can be treated as either a contribution or a relevant fact or circumstance that justice requires the Court to consider.
This ensures that no party can completely “get away with” spending substantial joint resources on legal costs without the Court taking it into account.
The Mihova & Mihova (No 3) [2025] FedCFamC1F 750 Case
A recent and important example is the decision in Mihova & Mihova (No 3) [2025] FedCFamC1F 750 (“Mihova”).
This case involved a complex, high-value property dispute with multiple parties. The central question was whether the wife should receive litigation funding exceeding $2 million so she could properly participate in proceedings, given that the husband had already paid significant legal fees from the couple’s available resources.
Key Takeaways from the Court’s Decision:
- Schonnell J ordered the litigation funding for the wife.
- His Honour confirmed that paid legal fees can still be taken into account in the final property adjustment, but not by notionally “adding back” the funds. Instead, the Court may treat them as:
- A contribution by one party, or
- A relevant fact or circumstance requiring a monetary adjustment where justice demands it.
As stated in the judgment:
“Sections 79(4) and 79(5) of the Act permit the Court to consider the payment either as a contribution under s 79(4) or s 79(5)(r) of the Act as a fact or circumstance the justice of the case requires be taken into account. There is nothing preventing a court under s 79(5) of the Act making an adjustment in a monetary sum as opposed to percentage.”
This confirms that spending joint money on legal fees does not automatically shield a spouse from the Court’s assessment in property settlements.
What This Means for Separating Couples
The Mihova case provides clear guidance for anyone navigating family law property settlements:
- Courts will look beyond simple “add-back” rules when assessing fairness.
- Legal fees paid from shared funds may be considered in final property adjustments.
- Adjustments are more likely to be monetary, rather than a percentage-based addition to property pools.
For separating couples, this underscores the importance of documenting contributions, legal costs, and financial transactions. Courts will take a holistic view of each party’s circumstances to ensure the outcome is just.
What Next?
While it may feel concerning if your spouse is spending heavily on legal fees during separation, the Court retains the power to account for these payments in the final property settlement. Cases like Mihova & Mihova (No 3) demonstrate that legal fees can influence property adjustments—either as a contribution or as a factor requiring monetary adjustment—ensuring justice is served.
If you are facing a high-value or complex family law property matter, it is crucial to seek guidance from an experienced family lawyer who understands the nuances of Section 79 adjustments and recent case law developments.
Wanting to understand more around your unique circumstances? Book a free 15-minute call with our client care team here.
Reference:
Mihova & Mihova (No 3) [2025] FedCFamC1F 750 (24 October 2025)
Written by Sarah Williams – Senior Solicitor at Resolve