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Property – Treatment of deed of gift – Adducing further evidence on appeal – Majority of High Court reaffirms wide discretion of trial judge

In Hsiao v Fazarri [2020] HCA 35 (14 October 2020) the High Court (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ) considered the Full Court’s dismissal of a wife’s appeal against property adjustment orders made by Cronin J at an undefended hearing.

The parties began their relationship in August 2012 but maintained separate residences. In 2014 the husband bought a property for $2,200,000 and gifted the wife a 10 per cent interest in it. In December 2014 while in hospital recovering from a suspected heart attack the husband, under pressure from the wife, signed a transfer of land giving the wife a further 40 per cent interest in the property.

In February 2015, when the husband was no longer under pressure, the transfer was registered and the parties became proprietors of the property as joint tenants. Shortly afterwards, the parties executed a deed of gift (“the deed”) which provided for the husband to pay a sum (about half the value of the property) to the wife’s siblings in the event that she predeceased him while they remained joint tenants. The deed also provided that the payment should be taken into account if the parties separated or divorced ([21]).

The parties married in August 2016. The marriage lasted 23 days. Although each party subsequently sought property adjustment orders, the wife did not appear at the hearing. Cronin J severed the joint tenancy and ordered the wife to transfer her interest in the property to the husband in exchange for $100,000, finding that the husband’s transfer was not a gift because the wife had pressured the respondent at a time when he was vulnerable [36].

After the wife’s unsuccessful appeal to the Full Court, her High Court appeal contended that the deed was a material consideration that Cronin J had failed to take into account ([6]). She argued that the deed evinced the parties’ intention that should they separate or divorce, her interest in the property should be reflected in a payment to her by the husband of half of its value. She also argued that the Full Court’s refusal to receive further evidence on the appeal was in error.

As to the Full Court’s refusal to allow further evidence, the majority (Kiefel CJ, Bell and Keane JJ) said (at [43]):

“The discretion that s 93A(2) confers on the Full Court to receive further evidence on an appeal exists to serve the demands of justice. ( … ) Not later than when the respondent filed his evidence prior to trial the appellant may be taken to have understood its significance to her case. At that time the appellant was in possession of the further evidence or in a position to obtain it ( … ) The trial was the opportunity for the appellant to put her case and the appellant chose not to participate in it.”

(Footnote omitted)

As to the deed and whether Cronin J had erred, the majority concluded (at [53]):

“His Honour is not to be taken to task for not making a close examination of the facts to determine whether the transfer of the 40 per cent interest was voidable by reason of vitiating factors such as duress, undue influence or unconscionable conduct. His Honour made no such finding. Nor is his Honour to be taken to task for failing to give more comprehensive reasons for the distinction drawn between the appellant’s acquisition of the initial ten per cent interest and subsequent acquisition of the additional 40 per cent interest in the property in assessing the parties’ respective direct and indirect financial contributions. His Honour’s reasons reflected the arguments that were put to him. The trial was the place to adduce such evidence and put such arguments as might favour a different finding as to the parties’ respective financial contributions for the purposes of s 79(4)(a). The trial was not some preliminary skirmish which the appellant was at liberty to choose not to participate in without consequence. Her right of appeal was a right to have the Full Court review whether the primary judge’s discretion to make a property settlement order had miscarried, applying the well-established principles expressed in House v The King ((1936) HCA 40. It was not an opportunity for the appellant to make a case that she chose not to make at the trial. The Court is invested with a wide discretion under s 79(1) to make such order as it considers appropriate. It should not be concluded that his Honour’s assessment of the parties’ respective financial contributions, in this singular case, was not open.”

(Footnotes omitted)

In dissent, the minority (Nettle and Gordon JJ) said (at [55]):

“( … ) [T]he primary judge treated the appellant’s interest as a joint tenant in the property as in effect abrogated by ‘pressure’. But, … it was not open on the evidence to find ‘pressure’ sufficient to vitiate the appellant’s interest as joint tenant, and, in any event, the vitiating effect of such ‘pressure’ as there may have been was negated by the respondent’s subsequent execution of the deed of gift … As a result, the primary judge failed to give proper effect to the existing legal and equitable interests of the parties. …”

(Footnotes omitted)

The appeal was dismissed with costs.

 

 

 

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