After more than two dozen hearings spent poring over 60 years worth of history, the multibillion-dollar showdown between magnate Gina Rinehart, her children, and two rival mining dynasties over iron ore riches flowing from Western Australia’s remote Pilbara is drawing to a close.
About 30 lawyers will converge on WA’s Supreme Court on Thursday for closing submissions in the high-stakes legal battle between the rich-lister descendants of mining pioneer business partners Peter Wright and Lang Hancock.
Western Australia’s mining dynasty, of which the nation’s richest person Gina Rinehart is the most famous member, is embroiled in a court fight over the rights to the Hope Downs projects in the state’s iron-rich Pilbara region.Credit: Marija Ercegovac
The legal stoush, launched in 2010, over the ownership of Hancock Prospecting’s Hope Downs has pitted Australia’s richest person against the heirs to Wright’s fortune and Pilbara engineer Don Rhodes’ family company.
But Rinehart is also fending off a bid by her eldest children, who joined the lawsuit in 2016 claiming their grandfather intended to leave the sprawling mine she now owns with Rio Tinto to them.
Wright Prospecting claims it is entitled to royalties from Hope Downs under a 1980s partnership deed, while DFD Rhodes insists the oft-forgotten pioneer was entitled to a 1.25 per cent stake, as per a 1969 agreement with Hancock and Wright.
The long-awaited civil trial comes nearly 50 years after the school friends-turned-business partners began laying claim to some of the country’s most resource-rich tenements.
To date, it has unearthed hundreds of documents, including letters shedding light on the pioneers’ quest for assets in WA’s premier iron ore heartland that would elevate their descendants to the top of the country’s rich-list but drive a wedge between them.
Silks for each of the parties will spend the next four weeks revisiting that evidence in a bid to discredit the cases of their opponents and convince Justice Jennifer Smith to find in their favour.
The ‘bombshell’ letter
Wright Prospecting kicked off the trial with what its lawyer Julie Taylor hailed as “significant evidence” – a 37-year-old letter Lang Hancock penned to Rinehart shortly after the death of Peter Wright.
The letter, unearthed during Bianca Rinehart and John Hancock’s discovery process, outlined the division of assets and stipulated Lang’s company Hancock Prospecting was to retain the East Angelas precinct – now known as Hope Downs 4, 5, and 6 – jointly for the “HanWright” partnership.
Taylor said it demonstrated Lang’s understanding of the partnership, but more importantly proved Rinehart had known since 1986 that the spoils of the asset were supposed to be shared.
But Hancock Prospecting’s lawyer Noel Hutley was quick to point out the deed underpinning that letter was rendered redundant by a 1987 deal inked with Wright’s son Michael, which he argued clearly divided the assets and laid to rest any ambiguity over rights to the mine.
And the court heard Lang was emphatically opposed to anything short of a clean break, with a second letter showing he foresaw the lengthy battle the pair’s heirs were now locked in.
Rinehart’s company also produced a 1989 memorandum signed off by Michael, and Wright’s daughter Angela, offering a breakdown of the partnership’s assets which Hutley said proved the controlling minds behind Wright Prospecting had long known they weren’t entitled to a single cent.
Rio Tinto may have to cut a check
Mining giant Rio Tinto has long downplayed its role in the trial, declaring it to be that of a third-party observer as the co-owner of the mines at the centre of the tug-of-war.
But correspondence between the miner and Hancock Prospecting ahead of their 2005 joint venture deal and tendered as evidence showed the companies readied themselves for a royalty row and revealed for the first time that the trial may have financial implications for Rio.
Rapid-fire emails sent as the June 30 deal deadline drew closer showed the companies discussed the possibility the Wright family and Don Rhodes may claim a royalty on the joint venture’s proceeds.
The court was told one iteration of the joint venture deed even incorporated rules for how that “liability” was to be met, with Hancock and Rio Tinto assuming joint responsibility.
Taylor said Hancock Prospecting’s royalty obligations were also noted in a feasibility study for one of the Hope Downs mines.
An analysis of the potential financial impact, requested by the Sydney Morning Herald and undertaken by an investor services firm, found a 1.25 per cent royalty stake in the proceeds of the Hope Downs mines from first production of iron ore to date, plus interest, would amount to $1.22 billion.
Is that Bianca?
The fourth week of the civil trial kicked off with a bang, with Rinehart’s eldest daughter, Bianca, making a surprise appearance at the David Malcolm Justice Centre flanked by lawyers.
Just 800 metres away, her mining magnate mother had been preparing to make a rare public speech at The Australian Bush Summit.
Bianca sat in the public gallery and watched on as lawyers for her and her brother John told the court they had proof that Lang left mining assets, including Hope Downs, in the family trust for his grandchildren – only for Rinehart to take them back in a “calculated” fraud.
John and Bianca’s lawyer Christopher Withers, SC, claimed Rinehart devised a plan to regain control over the lucrative mining assets after her father’s death in 1992, engaging in an “egregious” fraud until 1995 intended to destroy the wealth of the trust left to her children.
When John found out about his grandfather’s intentions for the assets, the court was told he quizzed his mother about how they came to be in Hancock Prospecting’s possession, only to be met with a “barrage of lies”, “threats”, and “deception”.
Inside the family feud: The ‘death warrant deals’ that sparked the kids’ coup
A flurry of correspondence laid bare during the trial also offered fresh insight into the long-running feud between Rinehart and her children over the lucrative trust fund Lang left behind, much of which has remained shrouded in secrecy under deals signed to keep details from being aired in public.
A string of emails between the magnate’s four children in the early days of a failed coup of the family trust showed Rinehart’s son John Hancock attempted to rally the support of his siblings to remove their mother as head of the trust.
In them, John contemplated inserting his own trustee after claims Rinehart had breached her fiduciary duty by removing assets from the Hope Margaret Hancock Trust – which housed Lang’s mining assets, including Hope Downs – and boosting her stake at their expense.
John emailed his sister Hope outlining his plans to sue their mother and the company she inherited – Hancock Prospecting – for rights to the trust, but revealed he had assured Rio the stoush would be kept under wraps and wouldn’t jeopardise the project or its financing.
In an email chain Bianca forwarded to an address understood to belong to their mother, she labelled her brother “idiot John”.
Lawyers arrive at the WA Supreme Court in July, where Hancock Prospecting is defending a royalties claim by Wright Prospecting over the Hope Downs tenement in WA’s Pilbara region.Credit: Trevor Collens
The coup was triggered by John’s discovery that his mother had inked what his lawyers claimed were “death warrant” deals that destroyed the value of the trust left to him and his sisters Bianca, Hope and Ginia.
Withers said the trust housed more than $61 million in mining assets, including Hope Downs, when Lang died in 1992.
The division of his estate was to be executed as per a 1988 agreement, with Rinehart to inherit a 51 per cent shareholding in Hancock Prospecting and her children to be handed control of the trust.
But within two years the trust was in a “precarious” financial position, one Withers said Rinehart manufactured while at the helm through a series of manoeuvres that saw it stripped of its mining assets, “frozen in time”, and beholden to her.
Withers told the court Rinehart’s conduct was a breach of her duties to safeguard the trust, producing confidential memorandums exchanged in the 1990s he claimed showed she sought advice on ways to take back the shares at a deflated price.
Hancock Prospecting insisted Rinehart was merely undoing the “textbook” breach of fiduciary duty her father had embarked on in the final years of his life, transferring assets – including Hope Downs – from the company to family trust entities to siphon money out in an attempt to fund the luxurious lifestyle of his new wife, Rose Porteous.
Lang and Gina’s declining relationship, and a last-days epiphany
After a four-year row over his dying wishes, the court was shown a 1989 letter a gravely ill Lang penned to Rinehart pleading for her to leave him alone to live the rest of his life in peace.
In it, Lang told his only daughter she would gain a majority shareholding in Hancock Prospecting upon his death, with her children to control the trust under the fresh agreement inked in 1988.
The letter was the culmination of years of infighting over Lang’s estate, according to Bianca and John’s lawyers, which became a point of contention when he wed his housekeeper Porteous in 1985.
But Hancock Prospecting’s lawyer Hutley told the court Lang realised the error of his ways shortly before his death and, faced with the prospect of leaving a bankrupt estate, began attempting to reverse it.
However, he died in 1992 before that could be completed.
Evidence also offered insight into the matters that led to the relationship decline, including a 1985 letter in which Lang threatened to remove his daughter from the family empire for “disloyalty” after she allegedly tried to have Porteous deported, and left the country with her mother’s will.
The letters, produced by Rinehart’s children, showed Rinehart referred to Lang’s newlywed wife Porteous as an “oriental concubine” and a “prostitute” before berating Lang for the way he was administering the company.
Rose Porteous was the third wife of mining magnate Lang Hancock.Credit: Archives
Lang accused Rinehart of going to the Department of Immigration with claims the family company had paid wages to a person without a functional visa, which he said was disloyal to the family and a breach of her duty as a director.
Another string of emails exchanged between John and Rinehart following her protracted battle with Porteous over Lang’s estate showed the children had their own issues with Porteous, with John declaring he had been “very much aligned with my mother” in “fighting the Porteous camp”.
“I hope you will remember the effort I have put in, especially in turning the tide in the media against the Porteous camp,” John wrote.
The secrecy clause: May the best man win
A secrecy clause within Lang and Wright’s historic business partnership was also revealed, which Wright Prospecting’s lawyer Taylor claimed Hancock Prospecting had incorrectly leveraged to claim iron ore-rich sites in the Pilbara as its own.
A clause in the agreement allowed either partner to claim ownership of discovered assets if it won the race to develop them.
But Taylor told the court it was not the “golden bullet” Hancock Prospecting deemed it to be because it did not apply to areas the partnership had begun pursuing as a mining prospect.
She argued Hancock’s subsidiary Hancock Mining Limited clawed back the rights to the sprawling tenement from the state government in the 1980s using the partnership’s exploration work, its goodwill and solid reputation.
Wright Prospecting is expected to open the closing submissions on Thursday, followed by Rhodes, Hancock Prospecting, and John and Bianca, with each party allocated four days to conclude their submissions.
Hope and Ginia, and Rio Tinto have also been allocated a day to say their final piece.
The court has set aside six days between November and December to allow each of the parties to reply to the closing submissions.
Smith is expected to hand down her judgment before she retires in mid-2024.
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