In the recent and unusual matter of Hsiao v Fazarri, the Husband, who had only been married for 23 days, sought a property settlement in the Family Court. The matter seems straight forward, so how did it end up in the High Court of Australia?

The Husband, Mr Fazarri, a very wealthy man and a lawyer, commenced a relationship with the Wife, Ms Hsiao, who was unemployed, whilst he was still married to his now former wife in August 2012. By March 2013, the Husband had moved out of the former matrimonial home and into rental accommodation. Although the parties started spending some nights together they continued to retain separate residences.

Mr Fazarri provided Ms Hsiao access to his credit cards and bank accounts. Mr Fazarri also paid for Ms Hsiao’s expenses, contributed $20,000 towards her superannuation, gave her a brand new car and made her a beneficiary of his family trust.

In April 2014, Mr Fazarri purchased an uninhabitable property in Melbourne (‘the Melbourne property’) for $2.2 million to renovate and gifted 10% share to Ms Hsiao. Mr Fazarri solely paid for the renovations to the Melbourne property.

In December 2014, tragedy struck and Mr Fazarri suffered from what was a suspected heart attack. Whilst in the hospital, Ms Hsiao convinced Mr Fazarri to sign a document which provided for the parties to be joint tenants on the Melbourne  property. The transfer was registered in February 2015.

In March 2015, the parties executed a ‘Deed of Gift’ which required Mr Fazarri to pay a sum that equated to half the value of the Melbourne property to Ms Hsiao’s siblings in the event that she passed away before him. Ordinarily, in joint tenancy, unless otherwise provided for, the surviving tenant will receive the deceased tenant’s interest.

Later in 2015, Ms Hsiao withdrew $40,000 from Mr Fazarri’s bank accounts without his agreement.

Whilst this did not appear to initially affect the parties’ relationship, as they married in August 2016, they separated shortly after, 23 days after to be precise.

Property Settlement

In November 2016, Mr Fazarri initiated proceedings in the Federal Circuit Court seeking Ms Hsiao’s interest in the Melbourne property be transferred back to him. Ms Hsiao response was to seek 50% of Mr Fazarri’s assets, which at the commencement of the relationship was $9 million.

The matter was transferred to the Family Court in September 2017. At this point, Ms Hsiao sought an interlocutory order for Mr Fazarri to pay her a lump sum on account of her legal fees. The Court ordered Mr Fazarri to pay Ms Hsiao $80,000. Interestingly, Ms Hsiao had already spent $200,000 on legal fees to date.

Despite the lump sum payment, Ms Hsiao’s solicitors withdrew from acting for her and she went forward self-represented. Ms Hsiao did not turn up at the trial and the trial proceeded.

The proceedings went as follows:

Decision 1 – the Family Court

The Primary Judge found that the parties did not have a de facto relationship prior to their marriage.

The Primary Judge found Ms Hsiao made no real financial or non-financial contributions to the Melbourne property.

The Primary Judge also found Ms Hsiao’s initial contribution to the marriage was only her initial 10% interest in the Melbourne property as the Primary Judge found that Ms Hsiao had ‘badgered’ and ‘pressured’ Mr Fazarri to give her the additional 40% interest. Ms Hsiao, who was not present and did not provide any pre-trial material, did not provide any evidence to dispute this.

The Primary Judge ordered Mr Fazarri to pay Ms Hsiao $100,000 and for Ms Hsiao to transfer her entire interest in the Melbourne property back to Mr Fazarri.

The result being, Mr Fazarri retained property of over $12 million, whilst Ms Hsiao retained property of about $430,000.

Decision 2 – Full Court of the Family Court

Ms Hsiao appealed to the Full Court of the Family Court and sought to rely on three affidavits as further evidence and a medical certificate.

The Full Court found that all the ‘new’ evidence Ms Hsiao relied upon could have been obtained and used prior to the final hearing in the Family Court. Ms Hsiao’s appeal was dismissed.

Decision 3 – High Court of Australia

Ms Hsiao then appealed to the High Court of Australia. The High Court dismissed Ms Hsiao’s appeal in a 3/2 majority decision.

The majority found that Ms Hsiao had the opportunity to present her arguments at the trial but she simply chose not to participate. The majority also found that the Primary Judge did not err in finding Ms Hsiao’s initial contribution was her 10% interest in the Melbourne property.

The minority disagreed. The minority found that Ms Hsiao’s additional 40% interest in the Melbourne property was not properly considered by the Primary Judge and that there was no basis for depriving Ms Hsiao of the total interest in the Melbourne property, that is her 50% interest, as ‘pressure’ was not an equitable ground, particularly as any “pressure” was later negated by the ‘Deed of Gift’. It is important to note that Mr Fazzari was a commercial partner in one of Australia’s top law firms and had his own solicitor’s advice in the preparation and execution of the ‘Deed of Gift’. The minority held that the Primary Judge erred in not taking into account the Ms Hsiao’s 50% interest in the Melbourne property, which would have increased her settlement five times what she received. Therefore, the minority were not required to consider whether Ms Hsiao’s ‘new evidence’ should be admitted.

Ordinarily, in short marriages such as this, initial contributions are given greater weight. If the Primary Judge had found that Ms Hsiao’s initial contribution was a 50% legal interest in the Melbourne property, it is likely she would have received a greater property settlement.

It is important that any evidence you intend to rely upon is filed prior to trial as it will be difficult to rely upon as a grounds for appeal.

If you need advice in relation to property settlements, including initiating or ongoing litigation, please contact Rowan Skinner & Associates Lawyers to arrange a complimentary 15-minute consultation.