July, 2017 - Parry Field Lawyers

What is a De Facto Relationship?

If you are in a de facto relationship, there could be significant financial implications for you if you separate, or if your partner (or you) dies. The principal piece of legislation which deals with the division of property belonging to couples or married couples is the Property (Relationships) Act 1976 (the PRA). Substantial reforms in 2001 extended the scope of the PRA to cover de facto relationships. But what exactly constitutes a de facto relationship in the eyes of the law?

The PRA states that the basic criteria for a de facto relationship are:

There must be a relationship between two people
The relationship maybe heterosexual or homosexual
Both parties must be aged 18 years or over
They must not be married to each other, although they may be married to someone else, and
The parties must ‘live together as a couple’.

Living together as a couple

The PRA sets out a list of matters to be taken into account in considering whether two people ‘live together as a couple’. These matters are:

The duration of the relationship: the longer that two people have been associated together, the more likely it is they will be found to be living together as a couple
The nature and extent of common residence: two people may live together (in terms of the PRA) even if they do not reside at the same address. But the more time they spend together at the same place, the easier it will be to regard them as a couple
Whether a sexual relationship exists
The degree of financial dependence or interdependence, and any arrangements for financial support between them
The ownership, use and acquisition of property: coownership, particularly of the common residence, is a sign of living together as a couple. The same can be said of using property in common, such as a car, and buying items together
The degree of mutual commitment to a shared life: commitment is an important test of whether there is a de facto relationship. Certain objective criteria such as a common address is important, but there must also be a subjective element of their commitment to a shared life
The care and support of children: where two people have a child it does not follow that they are necessarily de facto partners. However, children of a relationship will often be relevant in identifying a further level of commitment by the couple
The performance of household duties; for example, the sharing of domestic duties may indicate a commitment to a shared life, and
The reputation and public aspects of the relationship; if two people appear together in public and attend events together as a couple this can provide evidence they are a couple.

This is not an exclusive list; any other circumstances can be considered. There will be situations where some circumstances are more relevant than others. Also, no one specific factor is a necessary condition to determine whether or not there is a de facto relationship.

There have been cases where the court has found there to be a de facto relationship even though the two people are not residing together. That said, whilst cohabitation isn’t absolutely necessary for a de facto relationship to exist, it is a very persuasive factor.

What is not a de facto relationship?

Various relationships can easily be identified as falling outside the definition of a de facto relationship. For example, a boyfriend/ girlfriend relationship where both people have independent lives and do not cohabit does not have the hallmarks of a de facto relationship, even if it is a close, personal and sexual one.

If two people’s relationship is not a de facto relationship (or they’re not married or not in a civil union) they fall outside the scope of the PRA. If these people have issues relating to property, they must therefore use some other legal remedy to try to resolve their property-related dispute.

The question that often arises in these cases is just when a relationship shifts from being a more casual type of relationship to a qualifying de facto relationship to which the PRA applies. In each case, that will involve a detailed consideration of the above factors, and possibly others.

How we can help

If you need further advice about how the PRA could apply to you, and possible steps you may be able to take to contract out of it, please be in touch.

Used by permission, Copyright of NZ Law Limited, 2017

This article is not a substitute for legal advice, and you should talk to a lawyer about your specific situation. Should you need any assistance please contact Hannah Carey – hannahcarey@parryfield.com or call us at Parry Field Lawyers (348-8480).

Great vision and ideas take resources to realise. Whether you are starting a company, a non-profit venture, or even a charitable project, one of the first things you need to find is money to fund the research and development of your new idea.

Banks are the traditional source of funding, but sometimes, you can look instead to your family, friends, professional contacts or other people with similar vision for financial contributions. What are some of the key things to think about if you want to go down that route and seek contributions from them?

1. Will This Ruin the Relationship?

The first point is not a legal consideration as such – more of a home grown truth: money has a unique way of affecting relationships (often in a bad way). You may think your relationships are above this and of course there is 100% certainty your new idea will be a tremendous success. But if whatever your friend or family member invested was lost how would this impact that relationship?

If you can foresee that there could be hard feelings and resentment then you need to seriously weigh up if it is worth risking that relationship.

2. What Contribution Will They Make?

Second, think about what form the contribution will take. Will you be seeking loans from people with a fixed end date and payment of interest? Or do you actually want to bring people on board as partners in a partnership or shareholders in a company and involve them in the future success that you will hopefully enjoy?

What will fit best for you, your contributors and the future of your project?

3. How Involved Will they Be?

Third, consider what level of say each person will have in the decision making for the project. How involved will these people be in the decision making or are they simply silent contributors with limited rights – these points should be clearly agreed and documented.

4. Do I need to comply with the Financial Markets Conduct Act?

Fourth, understand the rules relating to fundraising and what exclusions might apply – some of these are outlined below. The Financial Markets Conduct Act 2013 is incredibly long and detailed but the basic policy approach is that you will be caught by it and need to provide disclosure of information to investors unless there is an exemption for what you want to do.

What are the key exclusions that might apply?

Some of the most relevant exemptions in the context being discussed in this article would be:

Close business associates

Offers to people who already know the business are subject to an exclusion because they would be unlikely to need full disclosure before making an informed decision about whether to invest or not. They need to be able to assess the merits of the offer and obtain information from the person making the offer.

Whether a person actually is a close business associate will need to be assessed on the facts but the term is defined to include situations such as the person being a director or senior manager of the company, holding 5% or more of the votes of the company, is a spouse, partner or de facto partner of a person who is a close business associate (these are just some of the examples to show the nature of the relationships caught).

Relatives

Along similar lines to the last exclusion, offers can be made to relatives. They are defined to include the following: A spouse, civil union partner, de facto partner, grandparent, parent, child, grandchild, brother, sister, nephew, niece, uncle, aunt, first cousin. The list also includes spouses, partners and de facto partners of those people listed as well as whether or not they result from a step relationship or not. Also included are trustees of a trust where one of the above is a beneficiary.

We had an interesting one recently where a person said that their Godfather wanted to invest – there was a close relationship but they were not a “relative” under this definition, so you need to objectively think about things each time and not just make assumptions that someone is a relative as they need to fit the definition.

Small Offers

A small offer must be for debt or equity securities and for up to a maximum of 20 investors and raising a maximum of $2 million in any 12 month period.

Such offers need to be a “personal offer” which can only be made to certain individuals, such as those who are likely to be interested in the offer (eg some previous connection and interest known), a person with a high annual gross income (at least $200k in each of last two income years) or someone who is controlled by such a person.

Some other key points:

Small offers also have an advertising prohibition so it is important to check what you will do to get the word out and make sure it is not going to breach that requirement.
Notification is required of certain information about the offer to the FMA within one month of the end of the relevant accounting period that the small offer was made.
A warning needs to go on the front of documents which looks like this:

“Warning

You are being offered [name of financial product type (for example, ordinary shares)] in [name of issuer].

New Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires those offering financial products to have disclosed information that is important for investors to make an informed decision.

The usual rules do not apply to this offer because it is a small offer. As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment.

Ask questions, read all documents carefully, and seek independent financial advice before committing yourself.”

Other Exclusions

This article has been focused on investments by family and friends so has not looked at every possible exclusion. In fact the above are the ones that we see most commonly being used in most situations. However, for more detail on other exclusions have a look at this article on Wholesale Investors and Crowdfunding and/or the FMA site here.

We often provide advice to people around the appropriate fundraising strategy for their start-up and from experience every situation is unique. This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. If you would like to discuss the options and work out what might fit best for you then drop us a line (Kris Morrison at krismorrison@parryfield.com or Steven Moe at stevenmoe@parryfield.com) and we would be happy to discuss.

The Education (Update) Amendment Act 2017 came into effect on 19 May 2017, introducing significant changes to the Education Act 1989. Some commentators have described the changes as the most significant changes to New Zealand’s education system since the introduction of Tomorrows Schools.

Key changes that came into force on 19 May 2017 include:

Introduction of National Education and Learning Priorities

The Minister of Education now has authority to issue a statement of National Education and Learning Priorities (NELP) for the early childhood and compulsory education sectors. School Boards of Trustees must have particular regard to the NELP in their strategic planning.

The announced intention is for the first NELP to be issued in 2018. It will be interesting to see what range of priorities are included in the NELP.

Clarification of Role of Board of Trustees

The role and responsibilities of the Board of Trustees are now set out in detail in Schedule 6 of the Education Act 1989.

Previously, the objectives of the Board of Trustees were summarised in section 75. Prior to 2013, section 75 stated that, subject to the general law of New Zealand, a school’s board had ‘complete discretion to control the management of the school as it thinks fit’. In 2013, this section was amended to state that a school’s board ‘must perform its functions and exercise its powers in such a way as to ensure that every student at the school is able to attain his or her highest possible standard in educational achievement’.

Section 75 has now been completely replaced. The new section 75 does not relate to Boards of Trustees at all. It is now in a part of the Education Act that relates to communities of learning.

The key objectives of the Board of Trustees are now described in clause 5 of Schedule 6. The primary objective is still stated to be ‘to ensure that every student at the school is able to attain his or her highest possible standard in educational achievement’. The statement that the Board of Trustees ‘has complete discretion to control the management of the school as it thinks fit‘ has been removed.

Clause 5 of schedule 6 also sets out a list of things that the Board of Trustees must do to meet its primary objective. These are:

ensure that the school—
1. is a physically and emotionally safe place for all students and staff; and
2. is inclusive of and caters for students with differing needs; and
have particular regard to any statement of National Education and Learning Priorities issued under section 1A; and
comply with its obligations under sections 60A (in relation to curriculum statements and national performance measures), 61 (in relation to teaching and learning programmes), and 62 (in relation to monitoring of student performance); and
if the school is a member of a community of learning that has a community of learning agreement under section 72, comply with its obligations under that agreement as a member of that community; and
comply with all of its other obligations under this or any other Act.

Increased Range of intervention options

The Minister and Secretary of Education now have an increased range of options for intervening in schools. New intervention options include case conferences, specialist audits, performance notices and statutory appointees (to Board of Trustees).

Clearer Framework for Communities of Learning (COLs)

The Act clarifies the process for approval of a Community of Learning and for entry into an agreement on the activities the COL will undertaking.

The Community of Learning concept was already in place prior to the passing of these amendments, but it is probably an improvement to have the COL framework clearly set out in the legislation.

Management of Enrolment Schemes

The Secretary of Education can now implement an enrolment scheme for a school if the school fails to put one in place within a reasonable time after being asked to do so.

Previously, the Ministry of Education could ask a school to implement an enrolment scheme, but did not have the authority to implement one itself for a school that was slow in responding.

New Purpose Provision for closure and merger of schools

Closure and merger of schools is nearly always a controversial issue, and is an area where the government is frequently criticised for failing to properly consult with the school community and take its concerns into account.

A new section 145AAA introduces objectives to guide decision making on establishment, closure and merger of schools. The objectives are to:

enable the provision of a schooling network that assists parents to meet their obligations to enrol their children at school;
assist the efficient and effective use of the Government’s investment in schooling; and
recognise the role of diversity in the provision of schooling, including the provision of Māori-medium education.

Enabling the Minister to combine school boards of trustees in certain circumstances

Before these amendments were made, the Education Act already permitted multiple schools to have combined BoTs and one principal for multiple schools – section 110.

The Minister can now initiate the process to combine BoTs if the Minister has reasonable cause to believe that there are serious problems with the governance of 1 or more of the schools or institutions concerned; and those problems could be addressed by the combined board.

The Minister must first consult the Board of Trustees and Proprietor of the affected schools.

Updating the legislative framework for state integrated schools

One of the biggest changes in the Amendment Act relates to Integrated Schools.

The Private Schools Conditional Integration Act 1975 has been repealed, with all relevant provisions being incorporated directly into the Education Act 1989 in a new part 33.

The Ministry of Education has said that the intention was not to change the substance of the Private Schools Conditional Integration Act. The language has been modernised in places, but in substance the PSCI provisions are unchanged except that new provisions have been added:

requiring proprietors to provide financial and other information to the Crown to improve decision-making when issues arise.
introducing new criteria to guide decision-making by proprietors.
creating a bespoke merger process for state-integrated schools.

Establishing a Competence Authority for teachers

The competence authority was initially created under the Education Council’s rules in 2016, but without specific recognition and powers under the Education Act. The role of the competence authority is now specifically recognised in the Act.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source. Contact Kris Morrison at krismorrison@parryfield.com to request this or for any other questions. Copyright © Parry Field Lawyers 2017.