Gina Rinehart fights appeal over $5bn family trust

Mining billionaire Gina Rinehart is fighting a legal challenge by her daughter Bianca, who has alleged her mother moved a multibillion-dollar asset out of a $5bn trust for her four children.

Gina Rinehart has fought a decade-long court battle against her children, Bianca and John Hancock, over a $5bn family trust.

Gina Rinehart is fighting a legal challenge by her daughter Bianca, who is alleging her mother moved a multibillion-dollar asset out of a $5bn trust for her four children.

The appeal is the latest battle in a long-running legal war between Bianca Rinehart and her mother in which it is alleged Gina Rinehart wrongfully prevented her four children from inheriting rights to own a multibillion-dollar mine in Hope Downs via the family trust.

Bianca Rinehart is appealing a 2020 Supreme Court of NSW decision by Justice Julie Ward refusing to force Gina Rinehart to hand over documents concerning the creation of the Hope Margaret Hancock trust for use in separate Federal Court proceedings.

In a hearing in the Court of Appeal on Wednesday, David Thomas SC, for Bianca Rinehart, said his client would use the documents to investigate the creation of the trust, its assets and “potential misconduct” by Gina Rinehart in managing the trust.

“Gina Rinehart has demonstrated she is prepared to go to extraordinary lengths to exert control over the trust [and] attempt to overbear any trustee who acted against her interests,” Mr Thomas said, quoting a decision to appoint Bianca Rinehart as replacement trustee in 2015.

The $5bn trust was created in December 1988 by Gina Rinehart’s father, Langley Hancock, for his grandchildren. Its only asset is a 23.45 per cent stake in Hancock Prospecting, currently headed by Gina Rinehart, who owns the rest of the shares.

Gina Rinehart’s children, including John Hancock, Ginia Rinehart, Hope Walker and Bianca Rinehart were the beneficiaries of the trust. Gina Rinehart became the trustee after Mr Hancock died in March 1992.

John, Bianca, Ginia and Hope started proceedings in the Supreme Court of NSW in September 2011 seeking to remove Gina as trustee. Ginia and Hope have since switched sides and become defendants with their mother.

Allegedly facing “very serious” claims by Bianca Rinehart that she breached her duties as trustee, Gina Rinehart resigned from the role and former Supreme Court Justice Paul Brereton appointed her daughter as a replacement in May 2014.

Bianca Rinehart has argued the deeds governing the trust were invalid because the children only agreed to the terms because of misconduct by their mother.

John Hancock and Bianca Rinehart agreed to the first of the three deeds in 2005, including a clause that disputes were to be resolved through confidential arbitration, amid negotiations between Mrs Rinehart and Rio Tinto over an iron ore joint venture.

Additional agreements were struck in 2006 and 2007 — the last of which, the Hope Downs Deed, bound all of Mrs Rinehart’s four children.

The Hope Downs deed allegedly included a term holding that if any of the four children “disparaged” Gina Rinehart, all four siblings would lose their entitlement to Hancock Prospecting dividends, which would instead go to Gina Rinehart.

Mr Thomas said on Wednesday the documents could prove useful to Bianca Rinehart’s personal case against her mother and Hancock Prospecting in confidential proceedings running in the Federal Court.

Bianca’s Federal Court arbitration will argue to restructure assets owned by Hancock Prospecting that the four Rinehart children have ownership over as beneficiaries of the trust.

“The result of that claim would be, if successful, to substantially improve the position of the children,” Mr Thomas said.

Mr Thomas argued that Gina Rinehart, who was being sued in the Federal Court arbitration, had a “personal interest” in preventing Bianca’s investigation into her alleged misconduct and restricting her four children from controlling Hancock Prospecting’s assets.

“The person who will lose the most out of the personal claims advanced by my client is Gina Rinehart,” said Mr Thomas.

“[Justice Brereton] recognised the new trustee would need to withstand enormous pressure that Gina Rinehart would inevitably bring to bear in the administration of the trust.

“My client … has a duty in getting the trust property and to investigate the affairs to the trust to determine if there are any claims that can be advanced against the previous trustee.”

Quoting Justice Brereton, Mr Thomas said Bianca’s appointment as trustee was “very much like a poisoned chalice” because the trust had relatively small income and its assets were difficult to realise.

Christian Bova SC, acting for Gina Rinehart, argued that if the mining billionaire had to hand over the documents it would damage the HMH trust.

If Bianca won her personal claim against Gina Rinehart, using the disputed documents, Hancock Prospecting would lose rights to a mine in Hope Downs and “significantly diminish” the value of the company’s shares, Mr Bova said.

This would disadvantage the four Rinehart children because HMH trust’s only asset was a stake in Hancock Prospecting, Mr Bova said.

“Any success that Bianca Rinehart enjoys regarding those personal claims will be at the direct detriment of the trust,” he said.

Mr Bova said if Bianca won her personal claim against Gina, Hancock Prospecting’s assets would be “stripped” and decrease the value of the trust.

The disputed documents include transcripts of Gina Rinehart’s public examinations from September 1999 to February 2001 and advice to Hancock Prospecting concerning the formation of the Hope Margaret Hancock trust.

The Hope Downs venture spins off lucrative royalties for Gina Rinehart’s Hancock Prospecting and has helped make her Australia’s ­second-richest person, worth $36.28bn according to The Australian’s The List.

The Court of Appeal has reserved judgment.