Gina Rinehart’s feuds with father, son laid out in mining royalties court case

The complexities of Australia’s richest woman’s relationships with her family have been aired out in open court, as Gina Rinehart fends off claims to her mining empire.

Gina Rinehart’s family feuds have been shared in open court amid a battle for royalties from the Hope Downs iron ore mine. Picture: Supplied

Feuds, schemes, and claims of dodgy deals have all been laid bare in a Perth court, as lawyers for Gina Rinehart’s Hancock Prospecting attempt to stave off multiple claims to the family fortune.

Mrs Rinehart’s own children joined proceedings alongside the families of their grandfather’s former best friend and business partner, Peter Wright, and associate Don Rhodes.

It’s all part of a mammoth claim to a portion of ownership and royalty rights over part of the mining magnate’s Pilbara operations, with the Hope Downs iron ore mines at the centre.

Mrs Rinehart hired gun Sydney barrister Noel Hutley SC to represent Hancock Prospecting in the legal stoush – the former NSW Bar President who reportedly charges up to $35,000 per day.

Mr Hutley revealed his case against the claims in week three of the civil trial, arguing ownership of the contended tenements had always been held by Hancock Prospecting, founded by Mrs Rinehart’s father, Lang Hancock.

Gina Rinehart’s family feuds have been aired in open court amid a mammoth battle over her company’s lucrative mining portfolio. Photo by Quinn Rooney/Getty Images

Party to the case is her daughter Bianca Rinehart. Picture: NCA NewsWIRE/Philip Gostelow

The court heard this week Gina Rinehart made “not-so-subtle threats” towards her eldest son John when he began asking questions about his inheritance from grandfather Lang Hancock. Picture: NCA NewsWire / David Geraghty

Lang’s lavish lifestyle sparked bitter feud

Throughout weeks of opening submissions, the court heard intimate details about what was evidently a complex family and business history.

Hancock Prospecting’s legal team told the court Lang Hancock had left the company in such a precarious position when he died, he almost sent it bankrupt.

The court heard that in a bid to placate his second wife, Rose Porteous, he made a series of “errors”.

Without notifying the board, the court heard Mr Hancock had been wheeling and dealing company assets between a raft of family companies to bankroll mansions, luxury cars, jewellery and a private jet.

Mr Hancock shuffled tenements at the centre of the now-lucrative Hope Downs operation between his family companies, HPPL and the Hancock Family Memorial Foundation, in a bid to withdraw “vast sums of money” to fund his lavish lifestyle.

Correspondence between Mr Hancock and Ms Rinehart from the time brought to light just how bad tensions were between the pair in the lead up to his death as a result.

“As you are currently spending all three thirds of the company income, do you believe that all income is attached only to your one third, and that nothing is attached to the other two thirds?” Mrs Rinehart wrote to her father sometime after he married Mrs Porteous in 1985.

“As Governing Director, what are you going to do to safeguard our company from any further spending from (Rose).”

Lang Hancock had left his children a trust worth $61 million, which included the Hope Downs iron ore mine. Source: YouTube

So concerned about Mr Hancock’s “unauthorised” and “unlawful” spending of company funds, Mrs Rinehart continued to ask questions throughout 1985 and as her concerns became more pointed, so too did her father’s replies.

Mr Hancock eventually responded by removing Mrs Rinehart from all positions of prominence.

“Please remember it is my company, and I will say how its money is spent,” Mr Hancock wrote to his daughter.

Mr Hutley argued Mrs Rinehart was personally responsible for bringing Hancock Prospecting back from the brink following her father’s marriage, telling the court Lang had an epiphany before his death in 1992 and began undoing the “errors” he made regarding the company assets.

Those moves towards rectification were continued by Gina in the years following.

But lawyers representing two of her children, John Hancock and Bianca Rinehart, say her actions brought her more riches – at their expense.

Rinehart’s move to push out children

On Thursday, the court heard Mrs Rinehart instigated a “special project” to increase her own shareholding in the family assets to the detriment of her children.

Mr Hancock had left Mrs Rinehart’s four children more than $61 million in mining assets, including the contested Hope Downs, when he died.

But through her own wheeling and dealing of company assets, which her own lawyers claim was intended to undo her father’s mistakes, Mrs Rinehart increased her share in family assets from 51 per cent to 76 per cent – against Mr Hancock’s wishes.

The court was told Mrs Rinehart made a series of transactions that included entering deeds that saw the trust take on the debts Hancock Resources owed to Hancock Prospecting (HPPL), and transferring the trust’s mining tenements to HPPL.

Mr Withers told the court this was effectively “a death warrant” for Hancock Resources.

“Hancock Resources (Limited) was a company that was in full-blown development, but in 1992 it became a company effectively frozen in time with no mining assets, no money for exploration and no prospects,” Mr Withers said.

In the final week of opening submissions for the case, lawyer for Bianca Rinehart and John Hancock, Christopher Withers SC, sifted through a raft of communications which showed just how tense things were between Mrs Rinehart and her eldest son in the early 2000s, as he began questioning his mother’s actions surrounding the tenements when his grandfather died.

Mr Withers said his client was “extremely financial constrained” at the time, even asking Mrs Rinehart for money.

Gina Rinehart had instigated a “special project” to increase her shares in the family company and decrease those of her children, the court heard. Picture: Supplied

“Such was the imbalance of power between him and (Hancock Prospecting) that he had even requested Gina and (Hancock Prospecting) to meet some of his expenses,” Mr Withers said.

“He didn’t have enough money to buy new brake pads for his car … or to get a service.”

Correspondence revealed in court showed Mr Hancock’s lawyer writing to Hancock’s general counsel to ask Mrs Rinehart to place money in John’s account as “the wolf was knocking”.

Mr Withers sifted through rafts of letters and documents from the time, telling the court they included many “not so subtle threats” against the younger Hancock for continuing to ask questions about the makeup of family trusts and his claim to them, as well as assertions from Hancock Prospecting that any suggestion that things weren’t above board was wholly wrong.

“In 2003 when John started to ask questions about why his grandfather’s wishes … had not been fulfilled. Gina’s reaction was not to calmly explain the true history of the Hope Downs tenements and how they came to be in the hands of (Hancock Prospecting),” Mr Withers said.

“Gina couldn’t do that because explaining it in that way would be admitting a fraud.”

Bianca Rinehart (pictured centre) and her brother are also in the midst of a confidential arbitration with their mother. Picture: NCA NewsWIRE/Philip Gostelow

Failed bid for secrecy

John Hancock and Bianca Rinehart – who are currently also going through confidential arbitration with their mum – had objected to a Supreme Court request by her in the lead up to the case to have thousands of documents relating to her conduct made confidential.

If granted, that request would have seen large parts of the civil case – which required a courtroom renovation to be able to house all of the legal representatives involved – held behind closed doors.

In her ruling on that matter, Justice Jennifer Smith – who is also presiding over the current case – gave weight to arguments the request would make the trial “practically unworkable”.

“There are a number of factors which weigh strongly against the making of the orders sought by the HPPL parties, and reveal that there is no necessity in the interests of justice in the orders sought,” the court heard.

For their part, the DFD Rhodes party claim a 1.25 per cent share of iron ore royalties from the six tenements is owed to them.

Lawyer Jeremy Stoljar SC argued the fact that iron ore is being produced “from the very ground identified in the 1969 agreement” meant that it is ore that is susceptible to the royalty obligation included within it.

To make matters more complex, lawyers for the Rinehart children have argued both claims by the Wright and Rhodes parties had no basis.

They said Wright Prospecting Pty Ltd had previously received the full legal value of its rights to Hope Downs, adding the 1969 agreement in fact gave DFD Rhodes no rights to any of the Hope Downs tenements.

Party to the case too is Hamersley Iron – whose lawyer Grant Donaldson did not make any opening submissions.

The trial is due to return to the David Malcolm Justice Centre in the WA Supreme Court at the beginning of September.