She was drunk and she wanted Declan to break up with Holly J. Because she thought she was all Declan needed.
In other words, she was jealous of HJ as she was Declan's other ex's who she invited to the party in an attempt to get Holly J to back away. She then saw this hadn't worked so while drunk, she kissed her brother which made the front page and drove Holly J away until Declan convinced her he wouldn't be so naive and they got back together. yay.
So ironic how later in first half of season 11 Fiona became a lesbian, had a crush on HJ, got over it and they became best friends while Landon Liborin (Declan portrayer) left Degrassi for Terra Nova :'(