PROPERTY CASE WITH HUSBAND AND WIFE WHO SEPARATED AFTER 23 DAYS GOES ALL THE WAY TO THE HIGH COURT
Hsiao v Fazarri [2020] HCA 35 (14 October 2020)
This case involves the parties seeking property settlement orders where the appellant contends that the primary judge failed to take existing legal and equitable interests of parties into account.
Facts:
Prior to their marriage, the respondent husband made a gift to the appellant wife of a ten per cent interest in a residential dwelling ("the property"). Around eight months later, while in hospital receiving treatment for a suspected heart attack, the respondent, under pressure from the appellant, signed a transfer of land ("the transfer"), giving her a further 40 per cent interest in the property. A little over two months later, at a time when the respondent was no longer under pressure, the transfer was registered and the parties became proprietors of the property as joint tenants. Shortly thereafter, they executed a deed of gift ("the deed") which provided for the respondent to pay a sum, approximately one half of the value of the property, to the appellant's siblings in the event that she predeceased him while they remained joint tenants.
In August 2016, the parties married. The marriage lasted 23 days. Thereafter each party sought orders under s79(1) of the Family Law Act 1975, altering their interests in property.
The Full Court rejected the appellant's contention that the primary judge erred by treating the transfer as in effect set aside. Their Honours held that: "The focus of the appellant's submissions, which were about the circumstances in which the appellant obtained the 40 per cent interest in [the property] and the Deed of Gift the parties signed in about March 2015, are distractions. What the primary judge was bound to do, as part of making a determination under s 79 of the Act, was to assess contributions to the acquisition, conservation and improvement of [the property]. The primary judge concluded that the appellant could only claim the most moderate non-financial contributions and that the respondent had made the overwhelming financial contributions to the acquisition, conservation and improvement of [the property] during a short relationship and a very short marriage. When considering s 79(4)(d)-(f), the primary judge was cognizant of the respondent's financial position and earning capacity as compared to those of the appellant. The primary judge made the property settlement order after considering the relevant evidence in light of the statutory requirements."
Issue: Did the court erred in rejecting the appellant’s contention?
Law:
Analysis:
To hold compounded the primary judge's error by decreeing that the circumstances surrounding the execution of the transfer, and thus in effect why the appellant's 40 per cent interest in the property should be regarded as not a gift, were a "distraction". That was erroneous in three respects.
First, the existence of the appellant's 40 per cent interest in the property was not a "distraction". As was made clear in Stanford v Stanford, because that interest was one of the existing legal and equitable interests of the parties in the property to be settled, it should have been front and centre – the very starting point – in the determination of what was "just and equitable" for the purposes of s79.
Secondly, although the parties' respective financial and non-financial contributions, financial positions and earning capacities were unquestionably relevant considerations in the adjustment of the parties' existing legal and equitable interests in the property to be settled, and although, for the sake of argument (but no more), it may be supposed that it would have been open to the primary judge to conclude on the basis of his Honour's assessment of the appellant's contributions to the aggregation of the property and otherwise that she should be stripped of her 50 per cent interest in the property in return for a payment of $100,000 (plus $80,000 that had been advanced on account of costs), that is not what his Honour did. As has already been explained, the primary judge excluded the appellant's 40 per cent interest in the property from consideration as something other than a gift because it was the product of "badgering" and "pressure".
Thirdly, it is altogether unrealistic to suppose that the primary judge could have arrived at the same conclusion, or made the same orders, if his Honour had not treated the appellant's 40 per cent interest in the property as something other than a gift and therefore as such to be excluded from consideration. For even allowing for the primary judge's assessment of the exiguousness of the appellant's financial and other contributions, which the Full Court so much emphasised, what justice and equity could there be in stripping the appellant of the totality of her 50 per cent legal and beneficial interest in the property and conferring it on the respondent, who, on the evidence, was an extremely wealthy man with assets worth more than $9 million, in return for a payment to the appellant of $100,000 and $80,000 for legal costs previously advanced? To the contrary, assuming the propriety of the value of contributions relative to value of total assets which found favour with the primary judge and was endorsed by the Full Court, if the primary judge had taken the appellant's 40 per cent interest into account, rather than treating her as having no more than a 10 per cent interest, his Honour should logically have awarded the appellant approximately five times what she recovered.
Conclusion: The appeal is dismissed with costs.
